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Reply #28: Yes, but you don't break off chunks of a nation's gold reserve to buy stuff. [View All]

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Robb Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Nov-25-11 09:54 PM
Response to Reply #27
28. Yes, but you don't break off chunks of a nation's gold reserve to buy stuff.
You use it's existence as collateral to finance national projects -- guns or butter.

What happens to a loan made on collateral that's just become more difficult to seize in a default? The terms become less favorable to the borrower, as compensation for increased risk on the part of the lender. Venezuela is about to find that out, I expect.

And Chavez will blame the west. "For no reason whatsoever, no one will loan us money. It's not my fault you don't have a water plant, it's the imperialists!!" etc etc
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