Infrastructure Bank

[Mr.Mcknowitall]

Our Government is suggesting that a possible tool to aid in our economic recovery is the establishment of an Infrastructure Bank.

 

Questions:

 

Is this a form of "Biddle's Bank"?

 

What would be the impact on gold and silver values upon the creation of this Bank?

 

 

As a point of discussion, if your opinion is that the Bank would cause the price of gold or silver to increase, how does this help economic recovery?

 

 

If it causes a decrease in the value of gold or silver, how does this help economic recovery?

 

How would it help our Hobby?

 

As Numismatists, how would the creation of this Bank effect your participation in our Hobby?

 

Respectfully,

John Curlis

 

 

[michael]

i like it (thumbs u

 

http://news.yahoo.com/infrastructure-bank-could-part-jobs-package-070206676.html

[rons]

After all the mess caused by the bankers already I can just imagine government banks and bankers "The Kerry bill would require $10 billion in start-up money from the government to get the first loans going and cover administrative costs" andthat amount would build about 2 miles of highway in todays world. John Scary indeed

[JStull]

Our Government is suggesting that a possible tool to aid in our economic recovery is the establishment of an Infrastructure Bank.

 

 

 

As a point of discussion, if your opinion is that the Bank would cause the price of gold or silver to increase, how does this help economic recovery?

 

 

Respectfully,

John Curlis

 

If you think back to the Great Depression of the late 20's and most of the 30's, people began hoarding gold in order to maintain some financial strength on a personal level.

 

President Roosevelt signed his famous executive order 6012, in 1933, to stop the hoarding of gold, which was stalling economic growth.

 

This order required all citizens to surrender to the Federal Reserve, all but a small quantity of gold, coins, jewelry, and gold certificates, etc.

 

A year later, Congress passed the Gold Reserve Act of 1934, which set the price of gold at $35 per troy ounce, and outlawed private possession of gold and forced individuals to sell it to the Treasury at a set price of $20.67 per troy ounce. The gold that was surrendered to the Fed., much of which was melted and formed into large bars, was then put on deposit at the U.S. Bullion Depository at Fort Knox.

 

However, there was an exemption on the Presidents order of 1933 for customary use in industry, profession or art. This meant that collectors of world or rare coins could keep their collections, up to $100 face value, of coins containing gold in any amount.

 

It also covered artists, dentists, jewelers, and sign makers.

 

The theory was that by taking the U.S. off the world gold standard and markets, and setting the price of gold, this would help to strengthen our economy, and it worked.

 

[RWB]

A few small corrections to the previous post:

1. Hoarding of money did not become a problem until mid-1930 and again in early 1932. People hoarded very little gold (coin or bullion) but did hoard gold certificates, FRB notes and a wide selection of coins.

2. Both Hoover and Roosevelt recognized that hoarding of money created huge problems for the economy. Hoover’s efforts failed; FDR’s succeeded. FDR’s EO was aimed only at hoarding – the administration specifically rejected coin collections, keepsakes an other gold items from individuals.

3. The reserve act did not “outlaw private possession of gold and forced individuals to sell it to the Treasury at a set price of $20.67 per troy ounce.” Individuals could hold gold coins in a collection in any amount and businesses that used gold could hold it in amounts similar to their past needs. Gold coins surrendered to the government were paid for at face value, and commercial bars were paid at $20.67. Newly mined and imported gold was paid for at $35 as were domestic scrap accumulated before Jan 30, 1934.

4. The $100 face value exemption was removed in mid-1933. It was realized that if everyone kept $100 in gold coins, they would have more gold than the country ever issued.

 

[Mr.Mcknowitall]

I sincerely appreciate all the responses.

 

To clarify the intent of the Post, I am interested in opinions as to what the effect, if any, this would have in the numismatic world.

 

micheal, do you like it as a Numismatist, and if so, why? Toyoda was famous for instituting the "5 Whys" to solve an issue. You obviously have sound reasons for liking the formation of the Bank.

 

But (there is always a "but") is it a form of "Biddle's Bank"?

 

Would it assist the numismatic community?

 

Rons, while we only have a thumbnail sketch of the form the proposed Bank may entail, at its Heart is that it be an independent "non-government" institution, with private support, after "seed" money from the Government-deposits,transactions, contract management, etc. The latest gossip from the Government is that 30 Billion would be "contributed" by the Government.

 

Again, is this "Biddle's Bank"? It may be possibly scary. Would it be scary to Numismatists?

 

I should have also stated in clear language that when I refer to the effect on silver and gold, I was referring to numismatic items.

 

JStull, Thank You. You are very close to the type of numismatic opinion I was seeking. So, the next step is the "5 Whys".

 

Respectfully,

John Curlis

[Mr.Mcknowitall]

RWB, you are closer.

 

Now, the "5 Whys" have to be asked.

Possible starting points:

Hoarding?

Possession?

Collection?

 

Did Bittle's Bank have an effect on Numismatics, and,moving back in time from the 20th Century to the 19th, how did it help or hurt Numismatics?

 

Respectfully,

John Curlis

[Mr.Mcknowitall]

 

RWB,

Oops- sorry- "Biddles", not Bittles.

Bad mistake to make in front of the "Bard".

 

With sticky fingers,

John Curlis

[World Colonial]

I'm not sure what Obana is going to propose tonight and in my opinion, it will make no ultimate difference whatsoever.

 

There is no reason whatsoever to believe this will have any lasting impact. I am not very familiar with the specifics with the programs from the 1930's but from I know, they did not have any lasting impact. It was all temporary. But I do know how "successful" both the stimulus in Japan and recently in the United States has been.

 

Japan has increased their national debt to over 200% of GDP in the last 20 years. They have also tried everything the US Fed has tried, whether under the same name or another one. That economy has not experienced anything more than a temportary recovery from any of them.

 

In the US, "cash for clunkers" and housing tax credits did nothing to create lasting demand and whatever was spent of the $700B "stimulus", that did not either. It was all temporary (at best) and as soon as the program ended or the spending stopped, the supposed benefits ended with it.

 

Personally, if the goal is to improve the economic environment, I consider all of these "efforts" ridiculous. The long term effect of all of them is only to increase debt and make the overall economy poorer because it is a waste of resources.

 

I will admit that there is some merit conceptually to repairing infrastructure such as roads and bridges, but not at the cost of more debt. If this is the "Policy" direction the US Government is going to take, it should only be done so through offsetting and actual reductions in other spending.

 

As for what impact it will have on gold and silver prices, the answer is zero. There is no method to correlate the future change in the price of these metals to it.

[Mr.Mcknowitall]

world colonial, Thank You.

 

But (there is always a "but") is it a form of Biddle's Bank?

 

Would it have an effect on the numismatic community?

 

 

Note that I did not limit my questions to the U.S. numismatic community, and with your "name" in my mind, the numismatic community I refer to is the world numismatic community.

 

Also please note that I intended the questions I posed to be about gold and/or silver numismatic items, as opposed to bullion.

 

Respectfully,

John Curlis

[RWB]

Local, state and Federal governments have frequently created temporary facilities to promote business and fund new ideas and things that the private sector views as too high in risk. Most of these, whether they are called “development banks” or “foundations” or “enterprise commissions,” disappear after the goals are accomplished and private business has had a chance to see that the ideas work (or fail). The Alaska Rural Rehabilitation Corporation changed direction after the original experiment largely failed; the Tennessee Valley Authority remains in operation after it brought electricity and business to a huge part of the southern states.

[michael]

john c. i guess we shall see after thurs prez speech and if it is implementated correctly and witrh no greed it could work

 

i guess time will tell but based on past experiences

 

 

 

well i dont know

 

but we got to do something

 

and i can only go by whats is put down on paper so it looks great but weather it can be correctly implimentated and with no greed and/or waste this remains to be seen

 

but it is good for some in the numismatic community and for some coins EVEN if it is implimentated and the money is mostly all pissed down the drain

[World Colonial]

I do not believe that anyone can draw any conclusions between this type of government policy and either coin or bullion prices. Many people believe that because they consider it inflationary, but there have been long periods of time in the past when governments ran deficits, prices rose and metals at least still lost value.

 

As for numismatic coins, whether there is any correlation at all and how much, I would say it depends upon what coins someone is talking about.

 

I collect primarily Spanish colonial and South Africa Union. I do not see how anyone could believe that fiscal policy in the United States could have anything to do with the prices of these coins. There is no evidence of that at all.

 

With US coins, to the extent that there is any correlation at all, I would say that the biggest beneficiaries would be "investor" coins such as Morgan dollars and common type gold. But the main reason for this is that they are bought by many as bullion substitutes.

 

The most logical explanation as to why coin prices generally will or will not rise is the level of prosperity or lack of it. When times are good, people will have more money to spend on luxuries and that is what collectible coins are. They function as a limited store of value but no one needs them for any purpose whatsoever.

 

Recently out of curiosity, I did some searching on Heritage to compare current sales versus those over the last four years, from before the start of the "Great Recession". I looked at several "key" Morgan dollar dates in MS-63 to MS-65 and a few other coins such as MS-64 Capped Bust halves from the 1830's and the 1916-D dime in MS-63.

 

Granted, this is a very narrow sample, but all of them were either essentially flat, losing or gaining what I would describe as minimal amounts. Given that silver prices are much higher than they were in late 2007, I would have expected the "investor" coins from this list to have done much better than they have. I acknowledge that probably some others have done better, but I also expect that most coins, especially the typical "collector" coin, to have done much worse.

 

Most people are worse off than in 2007, many much worse off. And I expect most people to be even worse off than now in another four years. I have sold or traded a substantial portion of my collection in the last 18 months because I expect almost all coins to lose value. I mean, if coins have done so poorly in a major metals "bull" market, what is going to happen without it?

[michael]

agreed not for any of your items