Dear Friend of GATA and Gold:
Maybe the other day GATA was too quick to endorse the report in Space Daily --
https://www.gata.org/node/24890
-- that nothing would ever come of mining asteroids for gold, and particularly not the asteroid Psyche, which is believed to contain zillions of tonnes of gold and which NASA is hoping to explore soon. Space Daily said getting up to the asteroid, mining it, and bringing any substantial amount of metal back to Earth would be prohibitively expensive, and even if it could be done, the new supply would drive the metal's price down to zero.
But who says the metal has to be brought back to be incorporated into the world's financial system?
Economists of a certain age may recall the story about the monetary system of the South Pacific island of Yap, which had put itself on what might be called the limestone standard.
There wasn't much gold around Yap, but there was limestone on nearby islands, and the Yappers adapted to their circumstances. They created money coins out of round limestone slabs with holes in the middle. The larger coins were difficult to move, so their ownership sometimes was settled by community consensus.
One day a boat carrying a huge limestone coin to Yap from a nearby island was caught in a storm and lost its valuable cargo overboard. But everyone knew the limestone coin was real and, while not recoverable, was on the ocean floor nearby. So it was credited to the person who had purchased it and from time to time it was traded and credited to someone new.
The economist Milton Friedman is said to have likened this bit of Yap lore to the gold standard of more advanced civilizations, insofar as the gold, while forming the basis of international monetary reserves, seldom actually moved out of central bank vaults, particularly out of the vaults of the Bank of England and Federal Reserve Bank of New York.
But Friedman's metaphor to Yap's limestone standard was false. While the gold of the modern Western financial system seldom moved, it was readily accessible and could be moved, at least originally -- and, indeed, now is moving fairly rapidly from Western vaults to Eastern ones.
Even so, the Western financial system long has been following the Yap example to cling to and exploit what remains of its gold underpinnings. As GATA long has documented --
https://www.gata.org/node/20925
-- for decades Western gold price suppression policy has been largely a matter of creating huge imaginary supplies of gold, as with the exaggeration and dishonest attribution of gold reserves via derivatives and false accounting, whereby many entities and investors have had claim to the same gold. The system has worked as long as few of the purported gold owners demanded delivery and most instead left the oversubscribed metal on deposit with the banks and governments participating in the supply-falsification scheme.
At least on Yap, the limestone coin at the bottom of the sea does not seem to have been oversubscribed. For the Yappers were not as sophisticated -- that is, not as dishonest and gullible -- as modern Westerners. (Of course the Yappers had the advantage of doing without financial news organizations and big financial houses like those that control financial news organizations in the West.)
But maybe the West's oversubscription of gold still could be extended some more with the help of that asteroid and NASA. Suppose that it could be generally agreed that Psyche contains zillions of tonnes of gold, and suppose that ownership of this gold, by international agreement, could be allocated fairly among the major governments and central banks.
That gold then might be paperized and its price brought as low as it would be as if all that metal was actually delivered to Earth. Indeed, the new beyond-reach gold might make obsolete the International Monetary Fund's "Special Drawing Rights," which are always awaiting formal monetization if the gold price control scheme collapses.
With "Money for Nothing" 40 years ago, the Dire Straits boys got it right but aimed a little too low:
Now look at them yo-yos. That's the way you do it.
You play the guitar on the MTV.
That ain't working. That's the way you do it.
Money for nothing and your chicks for free.
Now that ain't working. That's the way you do it.
Lemme tell ya, them guys ain't dumb.
Maybe get a blister on your little finger.
Maybe get a blister on your thumb.
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