I started a thread at the other place called
Has anyone heard of Seeking Alpha , James West, or the Midas Letter? mike762, (who's been so patient with me as try to understand this stuff over there,) said something that caused a lightbulb to come on
...Gold and silver have no counterparty who must perform to give them value. ...
One side of the deal fails to perform, like pay his mortgage or his credit card bill, then the products based upon that fail too.
...If there's not enough money in capital reserves to cover the loss, then the entity is insolvent. That is where our system is today. ...
...The Federal Reserve and other central banks are trying to hide this ...
by taking these [insolvent entities] as "collateral" and giving out dollars in return.
[But] The banks are not loaning out this money because they have to strengthen their balance sheets, ....
...the various derivatives that are floating around...There are more than $1,000,000,000,000,000 (that's a quadrillion) notional value
of derivatives in the financial system worldwide
held by banks, pension funds, individuals, municipalities etc.
When these products fail, that notional value becomes real value,
and the loss must be accounted for on the books.
