great interview. She is actually watchable whereas I get 10 seconds or less
into most cnbc host or foxcons.

Jim's new name for Ben and co the "monetary priesthood" seems appra-po.

Does he really think Mitt and more R's will take on the fed though ?
One can certainly hope the courts overturn Ocare.
As far as the lobbyists allowing lawmakers to institute an clawback law...
that would signal a major + change has come over the land.

Once CIPSA is passed (through House yesterday) any voice that does not tow the Government line will be removed.
Then only their truth will be available.

About 16:29 he talks about defining "deflation"..

Quote:

Deflation is a derangement of debt. In a debt crisis you can't finance, borrow, hold inventory... Therefore, you sell stuff. You can't hire, therefore you discharge employees. The sum total leads to falls in wages and prices. What deflation is NOT is a reduction in the cost of producing things through the use of technology, opening new areas to enterprise and production... That, to me is progress. The symptom of both deflation and progress is falling prices but the Fed doesn't differentiate between the two.

Wow. Over time, that is devistating to the average mid/lower-class families cost of living.. It's no wonder it now takes 2 full-time wage earners to do what one used to do 30 years ago...

If the Fed doesn't see a difference between productivity gains and debt-caused deflation it's because they don't want to.

If someone knows how to download and cut the video you have got to post a video just of 2:50ish to 4 where she asks if you'd allow a politburo of 12 to control the weather for you. There is a minute there that is just perfect.

A beautiful gal who is sharp as a tack. The excellent weather comparison (would you want these people in control of the weather; if not, why then do you want them messing with the economy, a system nearly as complex) made it obvious that she's a "Keensian" (like me).

Her questions were also excellent and showed a real understanding. For instance, she asked Grant how likely it would be that because of the mountains of debt worldwide and the profits made from it how amenable financiers worldwide would be to the establishment of a gold standard to which he replied that they'd be very amenable to it. I say BS. The established system in control of governments worldwide doesn't want change of any kind with the exception of any changes that would make their thieving efforts even more profitable or make them even less accountable (if that's possible). They're doing fine for themselves right now, thank you. Heads they win, tails we lose.

Another excellent question, the last one, which Grant didn't even answer was her question about how central banks worldwide would handle the massive national debts accrued during their efforts to stimulate (in actuality, just to _sustain_) their economies after any "recovery." Grant simply explained how they would remove liquidity from the system, not how the sovereign debts would be handled. And the US is close to being in the same sort of ZIRP trap as Japan where raising interest rates would result in ruinous interest payments on the debt.

The problem with Grant's view is that gold never stopped bubbles and explosions because the problem isn't found in fiat currency, it's found in the unbacked emission of credit.

Let's see...we have 3 types of TV in the US IMHO:

1) PBS - staffed with liberals who are friendly with the current administration
2) Private Financial Channels - who are paid for by sponsors who have a vested interest in seeing the Ponzi continue and stocks go higher. Look who buys all the add airtime on them...it's all the big money banks, brokers, and fund managers. They only ask just enough tough questions to try and have some credibility but they are bought and paid for ad conduits for the banksters. **** when they go “off air” on the live programing, they go into paid programming that are nothing but Ponzi infomercials.
3) Dedicated news channels who exist on add revenue from consumer products. The idea here is be “put on a show”, bring on guests…but mostly importantly get as many of the idol crowd as possible to watch their commercials. So they cover every stupid ass thing they thing will attract people to watch…fires, racial issues, plane crashes, football highlights, star watching, etc. They know people who understand American financial issues don’t follow this trash so they don’t report on it.

Bottom line is TF and people who understand this **** make up such a small minority, no one sees fit to build content targeted at that group. Once we hit a wall, then the news channels will run with the drama and do 60 minute like pieces that are 5 years old to tell us why we’re here and point fingers but they have no interest in preventing good programing from materializing by people doing the right thing al la COPS, Spring, and the rest.

In Atlanta we have a big hill that ice’s up every time we get some snow or sleet. The news media all send trucks to the bottom of the hill and film cars sliding down and running into ****. They could sit at the top of the hill and prevent them all but why do something that stupid? That my friends is American Journalism in a nut shell.

Jim also wants to bring back the gold standard. He states that the current system is destined to fail.

He's wrong about the gold standard -- it will fix NOTHING.

Quote:

The problem with Grant's view is that gold never stopped bubbles and explosions because the problem isn't found in fiat currency, it's found in the unbacked emission of credit.

But that's the best part of the system...the explosions followed the bubbles quickly and flushed the fraud out of the system before it got to such extremes that the unwind will destroy the entire system (as we have now).

I'm starting to believe more and more that due to the sociopaths running the show it would be impossible to enforce proper collateralization of credit and you need a kind of "safety valve" like gold that allows ALL market participants to call out the fraud by redeeming notes into gold.

No it didn't Obs. That's the problem.

The history is right in front of everyone's face.

RE: your P.S., Gen: It is for the same reason that Russia has no press that tells the truth about Russia.

Also a lot of those bubbles in the 19th century were caused by disruptive technology and the accompanying speculation (railroads, steamships, canals). No monetary system is going to stop that anyway, nor should it.

More cherry-picking and ignoring the tree in front of you.

Which is?

How many times do I need to repeat it?

Ignoring someone's point in a debate rather than refuting it is not a valid tactic. The fact is that the alleged "stability" the goldbugs claim we would receive has been empirically disproved as an attribute of the gold standard over its entire history, yet they continue to run a knowingly-false claim as one of their primary "selling points."

A gold standard would work combined with your $1 of capital (or even 100% reserve banking) to eliminate unbacked emission at the same time. Whether it would work in one country when all the others can inflate at will is another question above my pay grade.

Quote:

A gold standard would work combined with your $1 of capital (or even 100% reserve banking) to eliminate unbacked emission at the same time.

If One Dollar of Capital were in place why would there be any need for a gold standard?

You don't -- that's the point.

The bugs are simply trying to advocate for something they believe will make them rich, which makes them dishonest at the same time.

Gen

If you refer to the massive credit boom of the 20's and then GD 1.0, realize that we no longer had a gold standard after 1914 as many European countries suspended redeemability. Also in the 20's the Fed started buying government debt (even foreign debt) so you no longer had real collateral behind every dollar. This was illegal at the time which was later legalized retroactively. Of course modern day economists love to blame the gold standard (and the real bills doctrine) for GD 1.0 while conveniently ignoring the run-up of unbacked credit (much of it left over from the war) which of course, was the real cause.

Modern economists also love to claim that the gold standard was the cause of bank runs since only a fraction of gold on deposit is held by the bank, the rest is loaned out for long term and thus those assets are illiquid. That's of course pure unadulterated horse****, bank runs are possible only because of duration mismatch (borrow short, lend long). If you don't want a run on your bank, match the duration of your ****ing deposits to your ****ing assets! I personally don't have a problem if a bank were to suspend redemption of savings deposits until maturity, as those are SUPPOSED to be illiquid, and demand deposits are supposed to be backed by liquid assets like cash and short term commercial paper (backed by real goods, not the bull**** financial games that were being played with ABCP).

If you refer to the boom (and subsequent bust) in Spain caused by the massive inflows of gold looted out of South America, you have a point but that's unlikely to repeat unless someone finds a giant unexploited gold deposit. The supply of gold nowadays is quite stable and the situation today is not comparable to 500 years ago.

If you refer to the fluctuating prices of commodities, that is not something you can control with any success in any monetary system since increases in supply will tend to lag increases in demand (it takes time to ramp up production) and this necessarily produces an oscillatory response, guaranteed by the laws of mathematics. You're right that there are some people running around claiming that a gold standard would stabilize prices but this is demonstrably horse****, the empirical evidence on this is clear, as you say. However, it does stabilize prices over the long term, being somewhat deflationary only because of increases in productivity. It also tends to stabilize interest rates (over the long term) because gold acts as a competitor to bonds, forcing a reduction in credit when you withdraw it from the banking system, forcing interest rates higher. This is not the same as buying gold with irredeemable currency, because in that case total system credit stays the same (the person selling you the gold just redeposits the money you withdrew). The proof for this is the fact that today gold prices have gone up massively but interest rates keep falling. Under the gold standard, rates would have risen

I suppose the real question is, can you have a non-inflationary (over the long term) irredeemable currency system that's impossible to abuse in the first place, one dollar of capital or not. I'm not aware of any irredeemable currency system that wasn't inflationary, but of course it doesn't mean it can't be made to work.

I fail to see how gold bugs would become richer if we went back to the gold standard. Chances are the gold they have would buy the same amount of oil then as it did today. Though you're probably right that there is a lot of them thinking they will get rich but they won't: assuming the economy continues to function, that gold will buy the same amount of real estate, stocks, oil and hookers as it did the day before the conversion. Other assets will not lose their value in gold terms.

Do you consider James Grant a gold bug and therefore dishonest?

Also I should mention that if we were to switch over to a gold standard, the USA and Europe would get instantly horse****ed as the gold would immediately try to move to places like China, India and Brazil, driving up rates immediately and destroying the government's ability to finance its huge budget and trade deficits. That WOULD put a stop to the bull**** real fast, wouldn't it? So you don't have to worry about this becoming reality anytime soon.

I consider those who advocate this either pushing an agenda or they have not thought out the argument well.

Jim and I have never personally sparred on this or discussed it, so I cannot judge whether he's blinded by the trees or there's something else going on.

But this much I do know -- gold does nothing to resolve the problem of unbridled credit creation, and it is that imbalance that causes the problem. Further, by constraining supply during times of economic expansion a hard money standard forces deflationary policy into the marketplace and thus can CAUSE an expanding economy to detonate.

In a world where rapid innovation is the rule rather than the exception in real terms (not financial shenanigans) you need an actual positive impact to offset the known net negatives. Gold doesn't have one.

If gold removal causes an expanding economy to blow up, chances are it was because the "growth" was based on unbridled credit creation and fraudulent bull**** in the first place. I view this feature as a positive, rather than a negative. There is no reason to pull gold out of a healthy non-fraudulent economy, and if someone tries to pull that **** anyway (say, a certain country that wants to **** with us), others will step in to offset the outflows, taking advantage of higher rates). Also, if duration matching is enforced in the banking system, those outflows become slower and more controlled, allowing the economy time to react.

The 19th century saw unprecedented technological advance despite the alleged negatives of the gold standard. No, the gold standard did NOT cause that advancement, in fact both came out of the Enlightenment. We started the 19th century with horse-drawn carriages and sailboats. By 1914, we had steamships, planes, trains and automobiles, electronics, radio and a bunch of other stuff. I simply don't see the gold standard as an obstacle to rapid innovation.