Where Is Gold Going In This Market

[Naam]

Yes we are reaping the benefits of a dual purpose currency here

it's not that bad. i wish i had a fistful millions more of that dual purpose currency.

[flying]

Yes we are reaping the benefits of a dual purpose currency here

it's not that bad. i wish i had a fistful millions more of that dual purpose currency.

hahah tis true so do I.

But you know I would convert it quickly.....well 50% for starters

[Naam]

Yes we are reaping the benefits of a dual purpose currency here

it's not that bad. i wish i had a fistful millions more of that dual purpose currency.

hahah tis true so do I.

But you know I would convert it quickly.....well 50% for starters

i precious metals i suppose?

[Naam]

Flying,

inspite of having heard death announcements and obituaries for the USD as long as i think back as an investor and even before when i was still a poor boy, i am convinced that the US-Dollar will still be one of the dominating currencies when they drive me to the crematorium.

disclaimer: 18% of my capital holdings are denominated in USD and i have presently no plans to reduce this percentage. however, these assets provide a return that (in my not so humble view) provides an adequate risk/return ratio.

Edited September 29, 2010 by Naam

[flying]

Flying,

inspite of having heard death announcements and obituaries for the USD as long as i think back as an investor and even before when i was still a poor boy, i am convinced that the US-Dollar will still be one of the dominating currencies when they drive me to the crematorium.

disclaimer: 18% of my capital holdings are denominated in USD and i have presently no plans to reduce this percentage. however, these assets provide a return that (in my not so humble view) provides an adequate risk/return ratio.

Yes I joke a lot about the USD but do realize it will for all intent continue & if it was truly going kapoot any time soon the rest of the world would probably be in an equal state.

Having said that...when I talk about my 50/50 it is my liquid assets & I am sure they pale next to yours

Of course I have property denominated in USD too but do not count that.

My 50/50 thinking is just based on what I perceive/feel about the whole mess personally.

Not that there are many alternatives for me.

USD is surly in a mess & I think most agree but as you say it will more or less stumble along as the dominant currency. After all they dont keep that massive military budget just for terror skirmishes do they

Edited September 29, 2010 by flying

[churchill]

For those waiting for a pull back before investing - It seems there is plenty of demand to take up selling pressure -

From http://www.financialsense.com/contributors/bill-fleckenstein/currency-wars

'As for precious metals, they were all weaker initially (despite the news). However, something occurred in the gold market that is definitely worth discussing. A very well connected friend of mine (and long-time commodity trader) called me this morning to point out that an unusually large trade had taken place very early in London to the tune of over 8,600 contracts, all within roughly a $12 range. As he noted, this was approximately a $1.1 billion sale, and it didn't really cause much price damage.

The reason he brought it to my attention is because many folks have felt that the gold market was crowded, and the first time a big seller appeared gold might crack for $25 or $30 on its way to an even bigger slide. Thus, the fact that this trade (and it was very large) could be absorbed so easily meant that the gold market was potentially deeper than a lot of people thought (him included).

These conclusions are all sort of theoretical, as is the thought that gold is crowded. Nonetheless, if a trade that size was on the up-and-up and not some completely coincidental bit of noise (which would be hard to imagine), it is bullish in the sense that it does show increased resiliency in gold, contrary to what used to be the norm.'

[churchill]

Gold: now the world’s hottest fiat commodity

http://www.cityam.com/markets-and-investments/gold-now-the-world%E2%80%99s-hottest-fiat-commodity

'This means that when the gold crash comes, it will all happen at lightning speed. Reynolds writes: “Gold bulls cite the lack of confidence in fiat currencies as a motivation for the price rise. ‘Fiat’ is used to describe anything that has no intrinsic value apart from that which is placed on it by society. This clearly applies to all paper money, but it also applies to gold.” Ironically, when the crash comes, it could be those in liquid products they can exit quickly who will be safer than those with bars stored under their mattress.'

[Abrak]

Very sound advice from the bank of England. I have never met anybody who got rich by saving money in a bank.

Personally I think it is immoral and that time belongs to God.

As Flying said 'you shouldnt feed the beast.'

Well yes & no

I did say dont feed the beast and in fact I dont. I intend to do my part to help starve the beast but....

In that same post I also said...

It is almost tempting to just throw my hands up & say ok they want us to consume like we use to.....go in debt like we use to..All just to keep this illusion/emperors clothes in tact...

Fine lets go....how hard can it be? We can consume, go in debt etc.. If that is all it takes we are up for it.

But I have kids and someday probably grand kids too. I feel this mess is ours to clean up & hopefully we will find a way. If that means obliteration of the current system so be it.

So in reality I do still save.... 50% cash & 50% metals I just do it outside of the system.

If I were to tell anyone to spend it would not be in support of the beast & lets face it that is how most consumers do spend.

They like to say savers but the reality is the majority of middle class has little or no savings now.

I think when they encourage spending they are hoping for the old over spending/ credit card debts to resume their old pace. That in turn feeds the beast best not folks living within their means & putting a little away for a rainy day.

Still with gold you dont expect it to pay you interest because it doesnt do anything or generate income. So I dont see why banks should be allowed to pay interest on your money you keep on deposit. We all need cash access to atms etc but there is no reason you should get interest and a government backed guarantee. If you want a Government guaranteed 1 year rate of return then buy a gilt. You are then lending money to the Government and anyways you can sell it at any time and get cash. It just seems a very old fashioned concept reaped full of incompetency and moral hazard.

[flying]

Still with gold you dont expect it to pay you interest because it doesnt do anything or generate income. So I dont see why banks should be allowed to pay interest on your money you keep on deposit. We all need cash access to atms etc but there is no reason you should get interest and a government backed guarantee. If you want a Government guaranteed 1 year rate of return then buy a gilt. You are then lending money to the Government and anyways you can sell it at any time and get cash. It just seems a very old fashioned concept reaped full of incompetency and moral hazard.

No argument there.

I think they give you small amount of interest in the hopes it keeps the attention off the fact they then magically create 10x what you gave them power over.

Also the fact that interest has been zip for the most part is just another reason to not use them as a safe. Get your own...be creative.

I am all for investing or business use but I still believe folks should have something on the side. If that is called savings so be it. But it is not imperative to me that every dollar be working/earning.

That may not be the way for everyone. Some need a return on every dollar even if that means 1% & enables the beast to create 10 more for BS usage.

[Naam]

i find it quite interesting that nobody of the participating gold bugs aficionados mention that gold valued in THB has performed very poorly since quite some time. interesting because, with a few exceptions, most of us live in Thailand and the lion share of our expenses are in Baht.

signed:

closet bug cum advocatus diaboli

[cloudhopper]

i find it quite interesting that nobody of the participating gold bugs aficionados mention that gold valued in THB has performed very poorly since quite some time. interesting because, with a few exceptions, most of us live in Thailand and the lion share of our expenses are in Baht.

signed:

closet bug cum advocatus diaboli

What do you mean by poorly? It seems to me the THB/Baht price has held fairly steady. In either case this means to me that the THB is a relatively healthy currency.

[Abrak]

Still with gold you dont expect it to pay you interest because it doesnt do anything or generate income. So I dont see why banks should be allowed to pay interest on your money you keep on deposit. We all need cash access to atms etc but there is no reason you should get interest and a government backed guarantee. If you want a Government guaranteed 1 year rate of return then buy a gilt. You are then lending money to the Government and anyways you can sell it at any time and get cash. It just seems a very old fashioned concept reaped full of incompetency and moral hazard.

No argument there.

I think they give you small amount of interest in the hopes it keeps the attention off the fact they then magically create 10x what you gave them power over.

Also the fact that interest has been zip for the most part is just another reason to not use them as a safe. Get your own...be creative.

I am all for investing or business use but I still believe folks should have something on the side. If that is called savings so be it. But it is not imperative to me that every dollar be working/earning.

That may not be the way for everyone. Some need a return on every dollar even if that means 1% & enables the beast to create 10 more for BS usage.

Actually Flying my concept is slightly different.

We need access to instant cash because it provides a function a 'use'. We have to accept there is a cost to that for the provider and we wish for no risk. So banks compete for providing a very important service by providing good 'service' and 'prudence'. Rather like gold has a certain merit but no real use, cash has a certain use but no particular merit. If the bank starts taking unnecessary risks, is undercapitalized or provides a useless service, I will simply go somewhere that does.

Another role of deposits is saving and investment. We accept a risk/reward from the borrower in terms of both the borrowers business risk and in terms of maturity mismatch. We tend to often hold cash because we prepare for an investment opportunity or unexpected cost. Banks and the inherent banking business model has consistently proved to be dysfunctional, inefficient and very costly for this role of allocating capital partly because it mixes both bankers and Government. We only put up with bankers because we dont trust the Government to be any better.

In fact we dont need either. The Government can issue 1 yr bonds or far greater maturities in the form of gilts. This would give a risk free guaranteed rate of return if we hold for a year or we can sell and get cash in a couple of days. So can corporates etc. The banks are merely serving as intermediaries and we do not need them. There is not much value to add.

In terms of allocating capital it should be very much more efficient because say mortgage brokers who require 30% deposits will have a lower cost of funds. And housing market bubbles will not just see enthusiastic buyers but face skeptical funders (who will require higher rates of return if housing appreciates rapidly.

Very importantly people will see how little value bankers add in this role. To some extent people will realize that profits that they are now making cannot actually be profits because they are largely made by taking value from the depositor or taking value from the borrower. Priveleged funding that they have now does not mean they are adding value and an intermediary has very little value to add it is simply a subsidy from the Government. What are these profits that they claim they are making now - for doing what? Not lending zero percent funding?

We are stuck with a gun pressed to our heads and being told who should allocate savings and investment - the Government or bankers. And the answer is pull the trigger. We should seperate the two distinct functions of deposits. Once we do that we avoid systemic risks and moral hazard to a large degree and we expose the role of bankers as intermediaries. The ridiculous profits they declared in 2006 where they accounted for 40% of corporate profits does not reflect value creation because an intermediary cannot really create much value it simply tries to create profits by imposing costs on the two parties.

I believe the banking system has destroyed value in the recovery. The profits they are so proud of is simply a result of screwing depositors, screwing lenders, priveleged access to Government finance and a public sector arbitrage. They are now claiming to be a valuable industry that has 'created' profits and deserve bonuses. Gold investors should really appreciate the underlying sentiment on the basis that we wish to take this process out of the hands of both GOVERNMENT and BANKERS rather than trying to create a balance between the two. In fact, to some extent that is exactly what gold is. I am sure that 3 or 4 years ago Ireland rapidly expanding banking sector talked about how Ireland as building a 'financial centre'.

I also think that banks are actually pretty good at providing the service of access instant cash and always have been. These ATM machines are great and they are everywhere. Quite frankly they are a bit cocky giving me no interest and charging me for this. Once they start competing for this service I suspect it would be free and I also think that based on your cash deposits you would get much better credit card services etc..

And Flying as the European banks have an average loan deposit ratio of 140%, we are clearly not in a fractional reserve environment. We have an infinite money multiplier in theory whereby banks have such a huge funding gap with the gap guaranteed by the government and with individual banks buying bonds from other banks guaranteed by their government, that it is in effect a huge ponzi scheme. I was rather keen on Ireland not paying back Allied Irish's senior debt because as well as destroying Ireland's economy it could have collapsed the entire Euro system. BBVA has a spanish asset loan deposit ratio of over 200%. Bank debt is only guaranteed because it has to be because they are so leveraged. Loan deposit ratios over 100% is a ridiculous banking concept but is a fantastic game.

To be honest, I am surprised bankers havent asked to give up the whole deposit thing all together because it is a bit of a hassle and simply issue Government guaranteed bank debt and lend that. I suspect that the ECB has been incredibly busy behind the scenes funding PIGS banks. I am sure others think that the ECB is a central bank of moral vertitude. I guess it will all come out in the wash. It is a bit of a shame there isnt a bigger maturity mismatch.

[flying]

Actually Flying my concept is slightly different.

---snipped to save space-------

Very good post Abrak thanks

Lots of possibilities to make one wonder.

Edited October 1, 2010 by flying

[flying]

I know it is the gold thread but....Silver has passed into the USD $22/oz area here in the US

Not too shabby

[Naam]

i find it quite interesting that nobody of the participating gold bugs aficionados mention that gold valued in THB has performed very poorly since quite some time. interesting because, with a few exceptions, most of us live in Thailand and the lion share of our expenses are in Baht.

signed:

closet bug cum advocatus diaboli

What do you mean by poorly? It seems to me the THB/Baht price has held fairly steady. In either case this means to me that the THB is a relatively healthy currency.

the Thai Baht / Baht???

[cloudhopper]

the Thai Baht / Baht???

Yes the current price of gold is around 18,800 THB/Baht weight of gold. I don't have a chart but it seems to be near it's all time high.

[Naam]

the Thai Baht / Baht???

Yes the current price of gold is around 18,800 THB/Baht weight of gold. I don't have a chart but it seems to be near it's all time high.

the same as it was several months ago and that means poor respectively zero performance of gold.

[ThaiFelix]

the Thai Baht / Baht???

Yes the current price of gold is around 18,800 THB/Baht weight of gold. I don't have a chart but it seems to be near it's all time high.

the same as it was several months ago and that means poor respectively zero performance of gold.

Excuse my ignorance on such matters, but can someone clarify as to why the local price for gold has not really gone anywhere in the last week or so compared to the spot gold price. I bought some 96.5 thai gold about a week ago and the price today is the same as then according to the Gold Traders Assoc website whereas the spotgold has has gone up by US$25 -30 in the same period. I know we are talking different purities and the US$ has weakened while they say the Baht has strengthened..but by that much?? Can anyone help me get my tiny brain around it please. It hardly seems worth hanging on to if this is the norm.

[cloudhopper]

Excuse my ignorance on such matters, but can someone clarify as to why the local price for gold has not really gone anywhere in the last week or so compared to the spot gold price. I bought some 96.5 thai gold about a week ago and the price today is the same as then according to the Gold Traders Assoc website whereas the spotgold has has gone up by US$25 -30 in the same period. I know we are talking different purities and the US$ has weakened while they say the Baht has strengthened..but by that much?? Can anyone help me get my tiny brain around it please. It hardly seems worth hanging on to if this is the norm.

Yes the THB has strengthened by that much vs the USD that the 999 gold price is usually quoted in. During the period under discussion the THB held it's value to the USD as well as gold (ie the USD weakened about equally compared to both). In your case the USD value of your 965 would have risen, which may or may not be important to you. Reasons for hanging on to either THB, USD, 965 or 999 bullion vary with the individual situation; some want income while others seek to preserve (or even increase!) monetary value i.e. purchasing power.

edit-and of course the particular currencies you earn and spend (usually not the same for retired expats).

Edited October 2, 2010 by cloudhopper

[Naam]

Excuse my ignorance on such matters, but can someone clarify as to why the local price for gold has not really gone anywhere in the last week or so compared to the spot gold price. I bought some 96.5 thai gold about a week ago and the price today is the same as then according to the Gold Traders Assoc website whereas the spotgold has has gone up by US$25 -30 in the same period. I know we are talking different purities and the US$ has weakened while they say the Baht has strengthened..but by that much?? Can anyone help me get my tiny brain around it please. It hardly seems worth hanging on to if this is the norm.

the price would be the same if you had bought gold some months ago and paid in Baht. gold is quoted in US-Dollars. if the gold price goes up 5% and the Thai Baht appreciates 5% vs. US-Dollar the price will remain the same. the different "purities" are irrelevant. prices of 999 and 965 gold move parallel.

[Naam]

"Reasons for hanging on to either THB, USD, 965 or 999 bullion vary with the individual situation; some want income while others seek to preserve (or even increase!) monetary value i.e. purchasing power."

but if the price in local currency did not increase then, due to inflation, neither monetary value was preserved nor purchasing power increased but both decreased.

[Englander]

Bank of England tells savers: Screw you; we're debasing the currency

http://www.telegraph...t-spending.html

Very sound advice from the bank of England. I have never met anybody who got rich by saving money in a bank.

Yes cracking advice from the aptly named Mr Bean, i think everyone should spend their savings on flights out the country and blow it on a holiday of a lifetime, thatll be good for the economy wont it.

Thing is id say my savings have dropped almost 30%, due to spending it because of the 2.75% interest rates and expecting it to be inflated away (so he has achieved what was intended by the 0.5% with me), however most this money was spent overseas, since these not very bright civil servants decided to bail out the indebted ... ironically it was set aside to spend in England on a property once the bubble burst.

To stick to the topic i know only the basics about why one should invest in gold but i do know those who bought in 1980 didnt do too well, and from this data, it seems to be the biggest gold boom in history. http://www.onlygold....ces200yrsfs.htm

Edited October 2, 2010 by Englander

[neverdie]

bug cum

Naam?

Its not just doing badly against the baht, I mentioned it earlier, the price of gold has also dropped against the Aussie.....now if only the Aussie would roll over

[Naam]

To stick to the topic i know only the basics about why one should invest in gold but i do know those who bought in 1980 didnt do too well, and from this data, it seems to be the biggest gold boom in history.

in reality it is not [yet] a boom. adjusted by inflation (U.S. and USD based) the present price of gold has still a long way to reach USD 2,300 an ounce. when using the inflation rate of some other countries and currencies the amount increases to the equivalent of USD 2,600-2,800. but using the short peak of 1980, which lasted only for a few days, for an extrapolation is of course arbitrary.

[Abrak]

Bank of England tells savers: Screw you; we're debasing the currency

http://www.telegraph...t-spending.html

Very sound advice from the bank of England. I have never met anybody who got rich by saving money in a bank.

Yes cracking advice from the aptly named Mr Bean, i think everyone should spend their savings on flights out the country and blow it on a holiday of a lifetime, thatll be good for the economy wont it.

Thing is id say my savings have dropped almost 30%, due to spending it because of the 2.75% interest rates and expecting it to be inflated away (so he has achieved what was intended by the 0.5% with me), however most this money was spent overseas, since these not very bright civil servants decided to bail out the indebted ... ironically it was set aside to spend in England on a property once the bubble burst.

To stick to the topic i know only the basics about why one should invest in gold but i do know those who bought in 1980 didnt do too well, and from this data, it seems to be the biggest gold boom in history. http://www.onlygold....ces200yrsfs.htm

I wasnt implying that keeping your money in the bank should be taken out and spent was good advice but merely that their advice that you should take your money out of the bank if you wished to 'save' was good advice. Interest bearing time deposits are not actually saving. In fact it is not really a deposit at all, it is merely a a risk free return on a loan to a banker (risk free return to you because it is guaranteed by the tax payer which is actually you) and who will then both on lend at a 'profit' which isnt really a real profit (because you dont know whether it will be repaid) and which is paid out as dividends and bonuses and usually eventually ends up in losses which he actually asks the depositor to repay in one form or another through taxes.

Any concept that say a 1 year term deposit interest rate at bank is actually saving compared to an actual return on a 1 year gilt/UST which is a real risk free guaranteed saving is an illusion at the macro level. Clearly lending to the bank should not be risk free compared to the Government and is only risk free because of the guarantee by the taxpayer (namely you) based on his leverage against his risk free rate borrowing rate against the (non risk free rate) at which he will lends it out.

The actual fact is that you dont often get a return on one year deposits much higher than a real risk free return from the Government often because banks have privileged access to borrowing from the Government ( a subsidy at your expense as a tax payer) that noone else has as well as a guarantee they can offer risk free rates on deposits at your expense. The fact is that your risk free return on saving is a return on term deposits guaranteed by yourself at the macro level and is in fact a risk free loan to a banker that spends it via lending at much higher returns - the profits of which while interest is being paid he keeps, and losses when he doesnt get repaid on the principal are yours.

People in Ireland did not save in Allied Irish because everyone whether they deposited there or not has been left with a US$30,000 bill. Essentially when you 'save' at a bank through term deposits, you are in fact 'spending'.

[cloudhopper]

Interesting comment lifted from a ZH post. This is a realistic scenario IMO because the Fed knows that if they print to infinity it's game over for the USD and US domination of the world financial markets. Hugh Hendry said it best - inflation is a monetary event but hyperinflation is a political event.

The post-

"I've been long physical gold since 2007 but I just sold most of it today. Except for a very small bit left in case of bribery requirements in a truly worst-case scenario, I am now flat gold and long the poor old FRN.

Why you ask, when I am believe as strongly as anyone on this board that we are thoroughly hosed.

A couple of reasons...

One, I think Bernanke will blink in the end. With three Fed governors arguably reticent to print print print, I think the tide will turn on this experiment. Moreover, the existence of the dollar as a functioning currency is an existential requirement for the Fed, and in the end when thinks start to blow up, I think that entity will protect itself, which means protecting the dollar.

Two, I think deflation is still winning. Similar to the potato exchange rate above, there is often the mention that an ounce of gold will buy you a good suit. Now, I'm not sure specifically what qualifies as a good suit, but I saw Cornelianis and other generally high quality names on sale today for $600. Arguably, you can buy a decent suit for less than $500, thanks to your friendly neighboorhood Shenzen sweatshop. So if the suit/gold ratio should eternally be 1, gold may have a lot of downside.

Three, I remained confused by all this hyperinflationist talk. If we are talking money supply and it is booming as everyone states, than M3 should be taking off, and it's not. It's nose-diving. Arguably, with M2 growing, an M3 explosion is just a matter of an increase in velocity and/or a loss of faith in the currency, and while it may happen, to take that view, i think you have to believe the Fed is purposefully going to destroy the U.S. economy in the pursuit of some other aim (choose you tinfoil target - global government, depopulation, etc.). I have no illusions to the criminality of the elite, but I just don't buy that view, and if something like that transpires, unless you have a private army, your gold is probably forfeit anyway.

Four, and this is bullshit technicals, but all the markets have been in low-vol rallies of late, which to end violently the other way, and as I think the Euro is headed for dollar parity, I would expect that move to clobber gold.

And finally and importantly, I just bought a house with a laughable 3.5% down (thank you FHA for helping my poor, poverty-stricken self afford a house. what a joke.). So if hyperinflation occurs, I get a free house courtesy of the Federal Governments endless subsidy and distortion factory. Personally, I think I will lose 25% on the house over the next few years, but that will not happen in tandem with a gold rallly.

Anyway, it has been a good run, and I will never be short gold, but for now, I leave the upside to others."

edit -format

Edited October 2, 2010 by cloudhopper

[Naam]

as I think the Euro is headed for dollar parity, I would expect that...

another dreamer who needs a rubber sheet between the linen and the mattress

[cloudhopper]

as I think the Euro is headed for dollar parity, I would expect that...

another dreamer who needs a rubber sheet between the linen and the mattress

OT but where do you think the Euro is headed vs the USD and why?

[Abrak]

Bank of England tells savers: Screw you; we're debasing the currency

http://www.telegraph...t-spending.html

Very sound advice from the bank of England. I have never met anybody who got rich by saving money in a bank.

Yes cracking advice from the aptly named Mr Bean, i think everyone should spend their savings on flights out the country and blow it on a holiday of a lifetime, thatll be good for the economy wont it.

Thing is id say my savings have dropped almost 30%, due to spending it because of the 2.75% interest rates and expecting it to be inflated away (so he has achieved what was intended by the 0.5% with me), however most this money was spent overseas, since these not very bright civil servants decided to bail out the indebted ... ironically it was set aside to spend in England on a property once the bubble burst.

To stick to the topic i know only the basics about why one should invest in gold but i do know those who bought in 1980 didnt do too well, and from this data, it seems to be the biggest gold boom in history. http://www.onlygold....ces200yrsfs.htm

No please get a grip of the reality.

What the BOE is saying is that you shouldnt save through a bank. Saving through a bank is spending in terms of paying bankers bonuses etc..

Lets keep this very simple.

You put your money in a bank to save because you get a return that is guaranteed by the government. That is in fact you as a tax payer. This is very different to the cash you keep in an account to meet your cash needs.

Once you seperate the two you will get what you are actually doing.

Your 'saving' (long term assets) are not actually deposits they are loans guaranteed by the Government to bankers who can do with them what they wish. They typically lend them out in high risk ways, take the profits when the interest differential is being paid and then ask the Government (i.e. you to pay for the losses) when they are not repaid. As I say if you want a guaranteed time deposit by a gilt/UST - you can sell it if you need immediate cash.

And you cannot say I get a better interest on one year deposits from a bank because the reality is that that interest is based on the taxpayers guarantee (i .e. yours) and their profits are pretend profits (you dont know if you have a profit on a loan until it is repaid - if you dont understand this concept let me know) go out in dividends and bonuses and the losses go back to you.

And once you begin to view banks as an intermediary you will soon find out how dysfunctional you are. Everyone needs them to access instant cash. If they did that they would attract cash by service. One of those services would be a debit card. Typically in Thailand you have both an ATM and a credit card. There is a limit on your ATM so you use the credit card. Actually what you want is a debit card. Banks make money out of credit cards (say 15% interest, 3% one off fee) by telling both parties that they have costs of free interest credit of 30 days to the card holder, bad debt, fraud.

In reality in a zero interest cash deposit environment, you dont want 30 days credit on your deposit cash, you cannot be a bad debt because the reason you have the cash is so that it can be debited, and the vendor would like the money right away. So why doesnt the bank do anything about this. Because it justifies all the charges. The only risk is fraud and they dont even try to minimalize it. Say put a photo on your credit card, put in a number code instead of a signatory, for large transactions immediately send you an sms which you confirm and gives you a confirmation code.

Actually the depositor is happy to be debited straight away and the vendor of large priced items is happy to accept a credit card and 30 days delayed payment. You can tell it is dysfunctional because when you pay for a cash item say US$50 for a meal with a credit card the vendor doesnt ask for the fee back and when you pay with a credit card because cash cant be got out of an ATM, the vendor asks for his fee back.

My point is that even under an intermediary situation, the bank tries to create a lack of transparency and risk to generate interest margins and fees rather than adding value as an intermediary by reducing it. It creates credit when no credit is necessary and increases risk by making it not transparent about whether there is no risk to them in terms of payment, and not reducing risk of identification of the customer and his card through proper measures.

The concept of saving through a bank is a nonsense you are actually spending or loaning to bankers which is the same thing. If you wish to save take it out and invest from anything from a risk free government bond or seek more risk and reward that is more akin to saving relative to investment.

[cloudhopper]

My point is that even under an intermediary situation, the bank tries to create a lack of transparency and risk to generate interest margins and fees rather than adding value as an intermediary by reducing it. It creates credit when no credit is necessary and increases risk by making it not transparent about whether there is no risk to them in terms of payment, and not reducing risk of identification of the customer and his card through proper measures.

The concept of saving through a bank is a nonsense you are actually spending or loaning to bankers which is the same thing. If you wish to save take it out and invest from anything from a risk free government bond or seek more risk and reward that is more akin to saving relative to investment.

The first paragraph could describe the Fed or any sovereign bank. Gov't = big banks Abrack.