It was that weekend around the Fourth of July, and six entire consecutive days away from the office is a welcome rarity for Gretchen. And as it turned out this morning, she certainly needed the equanimity a short vacation can confer, as Austin Houston Crockett Bowie Bonham III – married horndog Texan who should know better – spent nearly five minutes on trying to pry a home telephone number out of her before giving up in frustration and allowing Gretchen to transfer the call to me.
Austin: Hello, Tom?
Tom: Yes Austin, it’s me. How are you doing?
Austin: Mighty disappointed with that there receptionist of yours, for one thing, that’s for sure.
Tom: She’s my private secretary.
Austin: A mite too private if you ask me.
Tom: Would it make you feel better if I told you she’s a lesbian?
Austin: What? Is she?
Tom: No, but I could tell you that and maybe you could rationalize her rejecting your persistent advances. It isn’t that you’re not tall, handsome and rich, Austin. You’re just not her type, okay? And every time you call or visit the office, it’s the same routine, and frankly, it’s driving the poor girl to distraction.
Austin: I think she don’t know what she’s missing.
Tom: And I think she does, and what’s more, I’m pretty sure that’s the point. Now, what can I do for you?
Austin: Well, the Texas Bullion Depository Commission has gone and appointed me to figger out some really important stuff concernin’ uh… well, the Texas Bullion Depository.
Tom: Indeed. What stuff?
Austin: Um… well, first of all, where to put it.
Tom: So let me get this straight – the Texas state legislature passes a law, sponsored by state Representative Giovanni Capriglione…
Austin: That’s right – he’s out of Tarrant County, near Dallas and Fort Worth. District ninety-eight.
Tom: Uh-huh, and this new law says that the State of Texas has to pull all of its gold bullion deposits from out-of-state banks operating in the Federal Reserve System and place the gold in a special depository in Texas.
Austin: Exactly! He figgers Texas ain’t got no business storing its gold up north in some Yankee bank run by the Federal Reserve and under the control of the New World Order and the Illuminati!
Tom: New World Order? Illuminati?
Austin: Damn Freemasons! Knights Templar, Davos, Skull and Bones, Bohemian Grove, all that [expletive]! Between them and Obama’s Socialist Moslem conspiracy, no real American – much less any real Texan – has a hootin’ hollerin’ ice cube’s chance in Hell! You know where all that Texas gold is right now, Tom? It’s in the Hong Kong Shanghai Bank of New York, that’s where! All six hundred and fifty million dollars worth of it! Now I ask you, is that any place for Texan gold – in some chinky Chinaman bank in Jew York City? Lemme tell you this, Tom – when the [expletive] hits the fan because them lazy shiftless freeloadin’ Greeks can’t make the payments on all those [expletive] loans they done run up livin’ high on the hog instead of workin’ for a livin’ like they’re supposed to, how long do you think that Texan gold is gonna be safe, huh? You know what’s gonna happen, Tom? Why, the Bilderbergers, the Socialists, the Elders of Zion, the Pope, Obama’s jihadis and them chinky Chinamen from Shanghai are gonna be fallin’ all over each other tryin’ to be the first one to steal every last [expletive] ounce of it, that’s what! And we Texans ain’t about to let that happen, no way! That gold is coming back to the Lone Star State where it belongs, and pronto, partner, before it disappears up Wall Street’s fat, pimply [expletive]!
Tom: Gee whiz, Austin, sounds like you’ve got everything figured out already. What do you need me for?
Austin: Um… to tell the truth, good buddy, I’d say not particularly figgered out, in fact. I got the “why” part figgered up certain sure, yeah, it’s that [expletive] “how” [expletive] that’s makin’ my [expletive] head hurt, you know what I mean?
Tom: Well, I do remember that George W. Bush used to tell me how much it made his head hurt to think about “gnarly stinkin’ bull [expletive] with a [expletive] load of SAT words,” as he put it. Actually, it seems to be a common Texan reaction to complexity, sophistication, ambiguity, nuance, relativism…
Austin: Will you cut the [expletive] out with all those [expletive] SAT words, please? Just listenin’ to ’em makes my head feel like I fell off a two-ton bull at the [expletive] San Antonio rodeo after only holdin’ on for three [expletive] seconds!
Tom: Is there something in the water down there in Texas, perhaps?
Austin: Are you kiddin’ me? This is oil and gas country, my friend! There’s all kinds of [expletive] in the [expletive] water down here! What about it?
Tom: Well, I was just thinking…
Austin: Thinking? What the hell are you doin’ that for?
Tom: Ah… maybe because it’s my job?
Austin: Oh, yeah. Makes sense, sorta. Okay, it’s your job, you do that for a livin’, you can’t help it. Present company excepted, then. Come to think of it… heh-heh… yeah… that’s what I’m payin’ you for, ain’t it?
Tom: Ostensibly, yes.
Austin: God damned SAT word! Makin’ my head hurt!
Tom: Oh, sorry. I mean, yeah, looks like that’s what you pay me for.
Austin: Damn right. So, first of all, how do we get that [expletive] gold down here?
Tom: Ah… well, how about Brinks?
Austin: Brinks?
Tom: Yeah, you know – Dunbar, Garda, like that.
Austin: Dunbar?
Tom: Okay, how about Wells Fargo? They’re big out West, I’m sure you know who they are.
Austin: You’re sayin’ the best thing to do is hire an armored car service?
Tom: Gee whiz, Austin, it’s about the only thing you can do. How about Rochester Armored Car – they’re from Texas.
Austin: How ’bout we send the Texas Guard up there with a convoy of tanks?
Tom: Um… tanks don’t go all that fast and I’m pretty sure they aren’t allowed on state highways in New York – or in several states in between Texas and where the gold is.
Austin: All right – suppose we do use somebody like Wells Fargo. What would they charge to haul six hundred and fifty million dollars in gold from New York to… say… Houston?
Tom: Oh… gosh… maybe three tenths of a percent or thereabouts.
Austin: And… uh… what’s three tenths of a percent of six hundred and fifty million dollars?
Tom: Well, Austin, what’s three times sixty-five?
Austin: It’s… uh… it’s… dammit all Tom, what are you askin’ me for? You’re the [expletive] Brainiac here!
Tom: About two million dollars.
Austin: Two million dollars! Holy [expletive]! For Christ’s sake, Tom, do you know of anybody who would charge less?
Tom: Possibly you could get somebody like Rochester to do it for one million.
Austin: Those greedy [expletive]!
Tom: Oh, I wouldn’t say that – most of the money would go for payroll and insurance. A company like Well Fargo might net a profit of two or three hundred grand after the dust clears. That’s the thing about moving a substantial stash of valuable metal out in the open.
Austin: What do you mean, “out in the open?”
Tom: I mean that now that Texas has announced its intentions to the world, the risk of moving that bullion went up exponentially. If it were an less high-profile transfer, the extra insurance and security personnel wouldn’t run the bill up nearly so much – you could have had it done for five or six hundred thousand, perhaps even less. But be that as it may; what kind of plans does Texas have for construction of the Depository?
Austin: Uh… ah… well, we ain’t really got around to anything too specific on that matter yet.
Tom: Have you obtained any quotes from qualified construction firms?
Austin: Yeah, sorta. I’ve heard the number twenty-three million getting’ thrown around a lot.
Tom: They’re pulling your leg, Austin. Double that for starters and expect at least a fifteen percent cost over-run by completion and that’s going to be your low-ball figure – a minimum of eight percent of your six hundred and fifty million, just to give it a nice, cozy home in Texas.
Austin: [Expletive]! What’s eight percent of six hundred and fifty million?
Tom: Fifty-two million.
Austin: So after we’ve built a place to put the gold and moved it back to Texas…
Tom: You’ll have about five hundred and ninety-six million dollars worth of gold left. And after that, of course, you’ll have to pay about a million dollars a year to keep it from being stolen.
Austin: Well, at least we thought of that, anyhow. That there new law says that any Texan can store their gold or silver bullion in the Depository. So when all them fine Texans come a runnin’ with their gold and silver bullion, the state of Texas outta be gittin’ some pretty handsome fees from its own citizens for a service like that! A damn right sight more than a million a year, I reckon!
Tom: Actually, there are a couple of salient…
Austin: Goddamn SAT words! Makin’ my [expletive] head hurt!
Tom: Oh – sorry. There are a couple of overarching…
Austin: [Expletive] SAT words!
Tom: Ah… predominant…
Austin: [Expletive]!
Tom: Okay… listen up. Number One – Texas is a mighty big place.
Austin: Damn right it is!
Tom: So no matter where you put the Depository, there are going to be plenty of Texans who live a long, long way from it. And those Texans are going to have to hire Wells Fargo or somebody like that to deliver their gold and silver, or else they are going to have to bring it there in person.
Austin: Yeah, well, I suppose you got yourself a point there, partner. There’s gonna be winners and there’s gonna be losers, just like with everything else.
Tom: Then there’s the security issue. If you allow ordinary Texans to bring gold and silver bullion to the Depository, who is going to provide them with protection from robbers on their way to deposit it? And what kind of mechanisms are you going to put in place to ensure that what the citizens of Texas bring to your Depository is, in fact, twenty-four carat gold or pure 0.999 fine silver bullion? And what about when they come to pick it up? Same problem – if they want to sell it to the state of Texas and leave with cash, can you be sure their bullion deposits are real? Furthermore, whether they leave with cash or bullion, can you provide them with protection from Houston or Dallas or wherever you decide to put the Depository – all the way back to their homes in El Paso or Galveston?
Austin: Smith and Wesson provide protection for honest Texans, Tom. And when Smith and Wesson talks, people listen, believe me!
Tom: Okay, well – running gun battles between the honest citizens and gold crazy desperados aside, then, the real problem here is liquidity.
Austin: God… Damned… S… A… T… words!
Tom: No, now wait a minute, Austin. If you are going to advise the state of Texas on the policy of operations for a state-run gold and silver bullion Depository, then you have to understand the concept of liquidity, even if it’s hard for you to say and even harder to spell.
Austin: All right then, guess I gotta bite the bullet. What the [expletive] are you talkin’ about, Tom Collins?
Tom: Very well, I will explain. Suppose a Texan has a hundred thousand dollars in the bank.
Austin: Okay.
Tom: And he buys fifty thousand dollars worth of gold and takes it to the Texas Depository.
Austin: Yeah, let’s say he does.
Tom: And let’s assume he makes it there without being robbed and let’s also assume the Texas Depository accepts deposits of forty-one and two-thirds ounces, because at today’s price of about twelve hundred dollars an once, that’s what he would have.
Austin: Well hell, at sixteen ounces in a pound that’s… uh… how many pounds of gold is that?
Tom: Actually, gold isn’t measured in avoirdupois.
Austin: More… [expletive]… SAT words! You already got my head poundin’ but that ain’t enough is it? Now you got my ears ringing, too!
Tom: Gold is measured in Troy ounces, Austin, not in the ounces you buy beefsteaks with. Troy pounds have twelve ounces and Troy ounces are seven percent larger than ounces avoirdupois. Forty one and two-thirds Troy ounces of gold is about three and one half Troy pounds. Gold is pretty dense, and any practical Texan would probably just put fifty thousand dollars worth of bullion in their safe deposit box at the bank, but this is just an example. That new law wouldn’t prohibit our hypothetical Texan from bringing a mere fifty thousand dollars worth of gold to the Depository, would it?
Austin: Hypothetical Texan? You just don’t give up on them there [expletive] SAT words, do you? At least I know what “hypothetical” means, ’cause you told me all about it last year – it means “make believe,” or somethin’ thereabouts, which I’m only willin’ to do because that’s the way everybody in [expletive] Washington DC likes to talk! But lemme tell you, Tom Collins, no, I don’t reckon it should make any difference how much gold or silver they bring to the Depository. I mean, I ain’t heard anybody say you gotta deposit at least so-and-so many ounces or whatever, so I guess as long as it’s bullion and not gold coins or your granny’s gold teeth or something, you could take it there and the state of Texas would look after it for you – for a fee.
Tom: Right – and let’s also assume somebody took a little saw to an ounce of bullion and cut off a chunk that’s exactly two-thirds of an ounce, so our hypothetical Texan could deposit half of his hundred thousand dollars, just for the sake of discussion. Now, let’s look at the situation from his banker’s perspective. Monday, that banker had a hundred grand – less his margin requirement, naturally – to lend out. But let’s keep it simple and just say here was a hundred grand the bank could lend out on Monday. And on Tuesday, there’s only fifty grand in cash, because our hypothetical Texan went out and bought fifty thousand dollars worth of gold bullion and then drove all the way from Waco to wherever the Depository is and put it there for safekeeping under the auspices…
Austin: [Expletive]! Another [expletive] SAT word!
Tom: Under the protection of the great state of Texas. Now, suppose a qualified borrower happens to have been a customer of that bank for a number of years and wants to borrow a hundred thousand dollars. But our hypothetical banker only has fifty thousand on Tuesday because our hypothetical Texan gold bug is down at the Depository with the other half in gold bullion, handing it over to be kept and guarded at considerable expense to the taxpayers of the great state of Texas – and himself, for that matter, given your talk about storage fees. So now our hypothetical banker has to borrow fifty grand from another bank so he actually has the hundred thousand bucks his other customer needs for that business loan. Bottom line, given the way the system works, the other bank customer has to pay a higher interest rate on his hundred thousand dollar loan. Then on Wednesday, our hypothetical Texan’s house gets flattened by an F-5 size Texas twister and then he suddenly needs a hundred thousand dollars right away to cover the insurance gap and provide a roof over his family’s head while they wait for the construction company to build them a new home. But now, he’s got to drive from Waco back to the Depository, and sell his gold bullion to the state of Texas so he has fifty thousand dollars cash, like he did on Monday. But on Wednesday, the price of gold is eleven hundred and forty dollars an ounce, so the Depository only gives him forty-seven thousand five hundred and three dollars and eighty cents. That’s enough to cover the insurance gap, but it means our hypothetical Texan’s family is going to spend five months living out of their SUV and F-150 pickup truck instead of parking those vehicles at the local Motel 6. See what I’m getting at?
Austin: Um… not exactly, no.
Tom: Well, what if I told you that other customer who had to borrow a hundred thousand dollars at a higher interest rate was the owner of the construction company that rebuilt our hypothetical Texan’s house after it was destroyed by a tornado? And what if, because now the construction business owner has to pay higher interest on his debt to the bank, our hypothetical Texan gold bug gets less of his house build back to replace the one he lost?
Austin: Oh… oh… yeah… so you’re sayin’… uh… that if that make-believe Texan guy had just kept all his money in cash instead of changin’ half of it into gold and left the cash in the bank instead of driving all hell and gone from Waco to the Depository and back, then that other feller that owns the construction company would have been able to build the house back like it was instead of leaving out… oh, I don’t know…
Tom: The guest bedroom and the half bath in the basement, for instance.
Austin: Yeah, stuff like that. So… uh… hey, wait just a [expletive] minute here! Are you tellin’ me that the Texas Bullion Depository is a stupid idea?
Tom: Extremely stupid.
Austin: Aw, come on, Tom! It’s can’t be all that damn stupid, can it? I mean, Ron Paul said we gotta go back to the the gold standard, didn’t he?
Tom: If your plan is to use the Depository to do that, it’s even more stupid than I thought.
Austin: You gotta be [expletive] me, Tom! How come goin’ back to the gold standard is even more stupid?
Tom: Because doing that would limit economic growth to the annual rate of gold extraction. And if you limit economic growth to a rate that is exceeded by the rate of population growth, the result is, at best. massive financial collapse and extended economic depression.
Austin: And at worst?
Tom: Violent revolution to overthrow the ruling class.
Austin: Naw! No way! That could never happen in Texas!
Tom: Austin, it’s exactly what Mexico did to the province of Texas in 1830.
Austin: Oh. Look, Tom, thinkin’ about all this [expletive] is really makin’ my head hurt real [expletive] bad. Can I go take a hand full of Tylenol, drink a quart of bourbon and call you back?
Tom: Sure. Why not? But one thing.
Austin: What’s that?
Tom: Do me a favor and take a hand full of aspirins and drink a quart of potato vodka instead.
Austin: Huh? Yeah, sure – anything for a friend.
Tom: Okay. Goodbye now.
Austin: Yep – adios, amigo.