fractional reserves (was Re: Gox)

[dan at geer.org]

It was quoted:

> "Injections in coin are most useful (enough to run the exchange) but
> some cash is also needed to not run a fractional reserve"

Those who find BitCoin interesting and wish it was more like
world class banking will perhaps also be interested in this
(de-html-ized) description of what that means:

21stcenturywire.com/2014/03/21/the-latest-heist-us-quietly-snatches-the-ukraines-gold-reserves/

   The Latest Heist: US Quietly Snatches the Ukraine's Gold Reserves
   March 21, 2014 

   As the dust settles in Kiev, another money trail has been
   revealed...  According to reports out of Kiev (see links below),
   the US has quietly transfers 33 tons of Ukrainian gold out of
   the country and back to vaults in the US. Presumably, this
   sovereign wealth transfer would be counted as partial "collateral"
   for a fresh round of IMF, US FED, and ECB paper debt that is
   currently being organised for dumping into the Ukraine's economic
   black hole.

   Multiple inquiries to US Federal Reserve administrators into the
   location of the Ukraine's gold have been met with the proverbial
   `pass the buck', making tracking and tracking the final resting
   place of these 33 tonnes very difficult indeed - but one can
   expect that the NY Fed is probably the institution who has
   masterminded this financial heist.

   Note how gold flows into New York, but has difficulty flowing
   out of US private banking hands as is the case with the
   `confiscation' of Germany's gold. Numerous attempts by Bundesbank
   to repatriate its gold reserves have been met with a brick wall,
   and to date, Germany has only recovered a miniscule 5 tonnes
   directly from the NY Fed - out of the total 674 tonnes (an
   additional 32 tonnes were recovered via French central bank).

   It's worth pointing out here that when NATO sacked Libya in 2011,
   one of the first items that came into question was the gold in
   Libya's state-run central bank. Prior to the NATO takeover of
   that country, Libya had one of the highest per capita gold
   reserves in the world, alongside Lebanon, giving Libya a distinct
   advantage should it carry out former Libyan leader Muammar
   Muhammad al-Gaddafi's long-term financial transition to a
   gold-backed Libyan Dinar. As you can imagine, this is no longer
   the case in Tripoli.

   Additionally, like Libya, both Syria and Iran are two of the
   world's last remaining nation states who both have state-run
   central banks and gold reserves which fall outside of the world's
   private central banking syndicate.

   Needless to say, you can see an obvious pattern emerging here.

And the story continues...

   The Big Lie + What Happened To Ukraine's Gold?
   By PM Fund Manager Dave Kranzler Investment Research Dynamics

   The Big Lie is that Central Banks don't care about gold. Nothing
   could be further from the truth.  Ben Bernanke, more than once,
   claimed that he didn't understand gold.  When Ron Paul asked
   Bernanke in front of Congress why Central Banks own gold if it's
   irrelevant, Bernanke flippantly suggested that it was out of
   tradition. In both cases Bernanke was lying and he knew it.

   In comparison, Greenspan seemed to have some respect for the
   laws of economics and - at least that I can recall - never would
   outright state that gold was not an economic factor.   Greenspan
   lied as much as Bernanke did about everything else but he never
   committed himself to lie about gold.  Most of you have probably
   read Greenspan's 1966 essay, "Gold and Economic Freedom" (linked).
   I have read it several times because it explains as well as
   anything out there why gold works as a currency and why
   Government-issued fiat currency does not.

   What I find amazing about The Big Lie about Central Banks and
   gold is that if gold really is considered to be irrelevant, the
   how come Central Banks - especially the Fed - are so secretive
   about their gold storage and trading activities?  What's even
   more amazing is that no one other than Ron Paul and GATA asks
   them about this. Think about it.  GATA spent a lot of money on
   legal fees attempting to get the Fed to publicly disclose its
   records related to the Fed's gold activities. The Fed spent even
   more money denying GATA's quest. And how come the Fed won't
   submit to a public, independent audit of its gold vaults?

   This brings me to the issue of the Ukraine's gold. According to
   public records, the Government of Ukraine owns 33 tonnes of gold
   that was being safekept in Ukraine. Last week a Ukrainian newspaper
   reported that acting PM Arseny Yatsenyuk ordered the transfer
   of that gold to the United States. The actual report is here:
   LINK. Jesse's Cafe Americain provided a translated version here:
   LINK.

   On the assumption that the report is true, and so far I have not
   seen any commentary or articles suggesting it is not true, the
   biggest question is, how come the U.S. has absolutely no problem
   loading up and transporting 33 tonnes of gold from Ukraine to
   the U.S. but seems to have difficulty loading up and transporting
   any of Germany's gold from New York to Berlin? And how come the
   U.S. and Ukraine seem to care about that gold at all, if indeed
   gold is irrelevant? It would seem that it would be a lot less
   expensive  and logistically complicated just to have the U.S.
   military post a few armed guards around the gold if they're
   worried about theft. On the other hand, I'm sure Putin would be
   happy to buy the gold from Ukraine.

   What makes the story even more interesting is that GATA's Chris
   Powell has spent considerable time trying to get an answer to
   the question of whether or not the U.S. has taken custody of
   Ukraine's gold. When he queried the NY Fed, they responded with:

   "A spokesman for the New York Fed said simply: "Any inquiry
   regarding gold accounts should be directed to the account holder.
   You may want to contact the National Bank of Ukraine to discuss
   this report" (LINK).

   After trying for two days to get an answer from the U.S. State
   Department, they finally responded by referring him to the NY
   Fed (LINK).

   The final piece in verifying that the report is true is deflection
   from Ukraine. Mr. Powell has queried the National Bank of Ukraine,
   the Ukrainian Embassy in DC, and the Ukrainian mission to the
   UN in NYC.  Crickets. As Chris states the case:

   "The difficulty in getting a straight answer here is pretty good
   evidence that the Ukrainian gold indeed has been sent to the
   United States."

   Unfortunately, it is likely that the citizens of Ukraine will
   end up paying the same price for allowing the U.S. to "safekeep"
   their sovereign gold. That price is the comforting knowledge
   that their gold has been delivered safely to vaults in China
   under U.S./UK bullion bank contractual delivery obligations,
   where it will be locked away for centuries.