WEBVTT NOTE A New Currency for the World 1 00:00:00.000 --> 00:00:06.320 The emergence of a single-world currency is a central element of the natural tendency of the market economy 2 00:00:06.320 --> 00:00:12.800 to expand, to unify all people, all regions and all nations in one global division of labor. 3 00:00:12.800 --> 00:00:18.200 Since the collapse of the USSR and other centrally planned economies almost two decades ago, 4 00:00:18.200 --> 00:00:21.360 the pace of this expansion has significantly accelerated, 5 00:00:21.360 --> 00:00:26.160 bringing previously unimagined prosperity to countries like China and India, 6 00:00:26.160 --> 00:00:30.600 while improving living standards in the US and other developed countries. 7 00:00:30.600 --> 00:00:36.320 Unfortunately, the current semi-barter arrangement of national fiat currencies 8 00:00:36.320 --> 00:00:39.400 that wildly fluctuate in value against one another 9 00:00:39.400 --> 00:00:43.200 greatly impedes the growth of international trade and investment 10 00:00:43.200 --> 00:00:47.800 that is the outcome of this process of peacefully integrating all nations 11 00:00:47.800 --> 00:00:50.440 into the social division of labor. 12 00:00:50.440 --> 00:00:54.280 The time is now right to scrap this chaotic monetary regime. 13 00:00:54.280 --> 00:01:05.880 In its place, we must now consider implementing a bonafide world monetary system that will facilitate peacefully and mutually beneficial transactions between all nations. 14 00:01:05.880 --> 00:01:13.180 Before describing such a system, let us briefly review the historical development of our current monetary arrangements. 15 00:01:13.180 --> 00:01:21.480 The present disarray in international monetary relations is a result of continual and intensifying government intervention into the monetary sphere, 16 00:01:21.480 --> 00:01:30.440 which culminated after World War II in the absolute monopoly and central planning of the supply of national fiat monies by central banks. 17 00:01:30.440 --> 00:01:38.200 Government intervention in money began almost concurrently with the reintroduction of coinage into Europe in the 13th century. 18 00:01:38.200 --> 00:01:46.040 Kings immediately recognized that money was the necessary means to greatly enhance their power domestically and expand their domains. 19 00:01:46.040 --> 00:01:53.440 In order to acquire more money, the king established a royal monopoly of minting coins in his realm. 20 00:01:53.440 --> 00:02:01.160 Once in control of the mint, the king began debasing the coinage, that is, reducing the weight of gold or silver in the coins he had issued, 21 00:02:01.160 --> 00:02:07.360 while maintaining their face value and declaring them legal tender for all debts outstanding. 22 00:02:07.360 --> 00:02:13.880 By retaining and coining on his own account the residual gold and silver that was shaved off and stolen from his subjects 23 00:02:13.880 --> 00:02:20.120 When their coins were reminted at the lighter weight, the king effectively inflated the supply of money. 24 00:02:20.120 --> 00:02:25.320 He then used this stolen money to pay for the building of more palaces, the maintenance of a royal court, 25 00:02:25.320 --> 00:02:29.880 the bribery of powerful domestic interests, and the financing of wars. 26 00:02:29.880 --> 00:02:35.880 In the latter case, the central importance of money in waging war quickly became generally recognized, 27 00:02:35.880 --> 00:02:43.480 and a new principle that is still with us today emerged and was formulated into a maxim of political wisdom. 28 00:02:43.480 --> 00:02:50.720 In Latin, pecunia nervis belli, that is, money is a sin use of war. 29 00:02:50.720 --> 00:02:56.920 From the 13th to the 17th centuries, the kings used this device to the greatest extent possible. 30 00:02:56.920 --> 00:03:05.120 There was, however, a natural technological limit to how much money a king could get his hands on by currency debasement under a gold or silver standard, 31 00:03:05.120 --> 00:03:10.920 namely, the minimum size of a coin that could still feasibly circulate in exchange. 32 00:03:10.920 --> 00:03:18.320 So by the 18th century, the kings and later, increasingly, democratic parliaments of the larger European nations 33 00:03:18.320 --> 00:03:24.620 began to turn to the issuance of paper money to help finance their wars and other spending schemes. 34 00:03:24.620 --> 00:03:31.020 Since the ability to inflate the money supply by printing paper fiat currency is practically limitless, 35 00:03:31.020 --> 00:03:38.120 the result was that wars during the dawning democratic era became broader in scope, more bloody and more destructive, 36 00:03:38.120 --> 00:03:43.680 beginning with the wars of the French Jacobins and Napoleon, including the American Civil War, 37 00:03:43.680 --> 00:03:47.400 and culminating in the horrors of World War I. 38 00:03:47.400 --> 00:03:51.920 Actually, many people believe that World War I would come to an end after a few months 39 00:03:51.920 --> 00:03:56.480 because the treasuries of the various belligerents would quickly run out of money 40 00:03:56.480 --> 00:03:59.440 to pay the troops with and buy weapons. 41 00:03:59.440 --> 00:04:02.120 However, within two weeks after World War I started, 42 00:04:02.120 --> 00:04:08.120 Every Single Belligerent Suspended the Gold Standard 43 00:04:08.120 --> 00:04:14.120 Nonetheless, even during this period, it was never questioned that money was fundamentally a market commodity 44 00:04:14.120 --> 00:04:21.120 and that paper money inflation was a wartime expedient that was to be terminated as soon as hostility ceased 45 00:04:21.120 --> 00:04:24.120 after which a gold or silver standard would be restored. 46 00:04:24.120 --> 00:04:30.120 Thus, for example, during the brief period of the Paris Commune in 1871, 47 00:04:30.120 --> 00:04:39.800 The fanatical, revolutionary French Communards took over every single public and private institution in Paris, except for the Bank of France. 48 00:04:39.800 --> 00:04:47.640 The latter institution, with its vast reserves of gold and silver, was left unmolested to continue operating the gold standard. 49 00:04:47.640 --> 00:04:56.120 It was only with the acceptance of the ideology of central planning by most Western academics, intellectuals and policy makers between the First and Second World Wars 50 00:04:56.120 --> 00:04:59.080 that government control the money supply came to be seen as a permanent and 51 00:04:59.080 --> 00:05:00.920 desirable policy 52 00:05:00.920 --> 00:05:04.280 one after the other the governments of european and north american countries 53 00:05:04.280 --> 00:05:08.440 abandon the gold standard the nineteen thirties in favor of independent national 54 00:05:08.440 --> 00:05:09.960 fiat currencies 55 00:05:09.960 --> 00:05:13.720 which they tried to centrally plan in order to extricate their economies from 56 00:05:13.720 --> 00:05:15.440 the great depression 57 00:05:15.440 --> 00:05:18.960 this peacetime abandonment of the gold standard was unprecedented 58 00:05:18.960 --> 00:05:24.100 again even these crazed communards abided by the gold standard 59 00:05:24.100 --> 00:05:29.700 The experiment failed miserably and the international monetary disarray that resulted caused a huge 60 00:05:29.700 --> 00:05:34.060 decline of international trade and a complete drawing up of international investment in 61 00:05:34.060 --> 00:05:41.060 the 1930s. In addition, the political monopoly of national money supplies was indispensable 62 00:05:41.260 --> 00:05:46.260 in financing the unimaginable and indiscriminate bloodletting and property destruction of World 63 00:05:46.260 --> 00:05:53.260 War II and the imposition of fascist war economies by allied as well as axis governments. 64 00:05:53.260 --> 00:06:06.260 Predictably, once governments had experienced the enormous augmentation of power that absolute monopoly of the money supply conferred, they were reluctant, understandably, to surrender it again. 65 00:06:06.260 --> 00:06:17.260 Yet they also wished to avoid the monetary chaos and protectionism of the 1930s, which they dimly perceived had led to war. 66 00:06:17.260 --> 00:06:28.260 So when World War II ended, the allied powers, primarily the US and Great Britain, primarily the US, imposed a pseudo gold standard known as the Bretton Woods system on the rest of the world. 67 00:06:28.260 --> 00:06:36.260 And I recommend the book that David mentioned, The Monetary Sin of the West, to show that this system was doomed to collapse. 68 00:06:36.260 --> 00:06:41.260 And no one but the Austrians and a few other continental economists saw this. 69 00:06:41.260 --> 00:06:59.260 This system was designed to allow governments to have their cake and eat it too, that is, governments were free to continue to exploit their national monopolies of the money supply, again, especially the U.S., while international trade and investment were supposed to grow steadily under a regime of pegged exchange rates. 70 00:06:59.260 --> 00:07:13.260 This system quickly ran to trouble as governments or their central banks inflated their money supplies at different rates, causing chronic and severe balance of payments problems. 71 00:07:13.260 --> 00:07:22.260 The U.S. government in particular exploited its monetary monopoly to the hilt, building up a hugely expensive welfare warfare state in the 1960s, 72 00:07:22.260 --> 00:07:38.260 which combined a domestic war on poverty with a cold war against the USSR together or all the while perpetrating imperialist hot wars and military adventures in smaller countries like Vietnam, Laos, the Dominican Republic and so on. 73 00:07:38.260 --> 00:07:54.260 The Bretton Woods system eventually collapsed in the late 1960s and was finally interred by President Nixon in 1971 when he reneged on the solemn pledge of the U.S. at Bretton Woods to convert the dollar into gold at the rate of $35 per ounce. 74 00:07:54.260 --> 00:08:06.260 Since then, the world has been in the throes of monetary disorder with numerous ad hoc intergovernmental treaties and agreements negotiated and then quickly and quietly cast aside. 75 00:08:06.260 --> 00:08:34.260 All of these agreements have been futile attempts to reestablish the monetary order of the gold standard without abolishing the national fiat money monopolies, so governments in a way are always trying to reestablish the gold standard or what the gold standard did, but yet they don't want, they hold with all their power to their monopolies. 76 00:08:34.260 --> 00:08:44.260 The gold standard will eventually win out. All fiat money systems will eventually collapse. 77 00:08:44.260 --> 00:08:54.260 This is like trying to square the circle, doing both these things, having the order of the gold standard while having national fiat money monopolies. 78 00:08:54.260 --> 00:08:58.260 It's like trying to square the circle or invent the perpetual motion machine. 79 00:08:58.260 --> 00:09:06.260 Instead of criticizing these nonsensical policies, however, mainstream economists have jumped in with inane policy proposals of their own. 80 00:09:06.260 --> 00:09:13.260 The intellectual level of these proposals is unwittingly betrayed by the titles their authors have chosen for them. 81 00:09:13.260 --> 00:09:26.260 One is named by a very famous Stanford economist, A Gold Standard Without Gold, which sounds like the ultimate Randian heresy and nightmare, A is not A. 82 00:09:26.260 --> 00:09:34.260 My personal favorite is A Crawling Peg, which sounds like the title of some cheesy 1950s science fiction movie. 83 00:09:34.260 --> 00:09:41.260 In fact, the author, a former IMF bureaucrat, has provided a choice of variations, 84 00:09:41.260 --> 00:09:46.260 a crawling peg with soft buffers or a crawling peg without soft buffers. 85 00:09:46.260 --> 00:09:51.260 I will spare you the gory details, but suffice it to say that the proposal, like its name, 86 00:09:51.260 --> 00:10:02.760 is a consummate product of a bureaucratic mind for which every detail must be centrally planned. 87 00:10:02.760 --> 00:10:12.260 So, as a result, there continues in existence today a superannuated, an outmoded, quasi-border regime 88 00:10:12.260 --> 00:10:19.260 with numerous national and now supranational currencies like the euro fluctuating erratically in value against one another 89 00:10:19.260 --> 00:10:23.260 and undermining the emerging global division of labor. 90 00:10:23.260 --> 00:10:27.260 Ironically, the latter-day followers of John Maynard Keynes, 91 00:10:27.260 --> 00:10:32.260 who constitute the vast majority of a contemporary economics profession, 92 00:10:32.260 --> 00:10:38.260 persist in referring to the gold standard in Keynes's hackneyed phrase as a, quote, 93 00:10:38.260 --> 00:10:41.260 barbarous relic. 94 00:10:41.260 --> 00:10:48.260 In fact, it is a national fiat currency that is a barbarous relic of a barbaric and bloody century. 95 00:10:48.260 --> 00:11:04.260 Since the death of the classical gold standard in 1914, fiat money has financed homicidal dictatorships, two world wars, the incendiary and atomic bombing of civilian populations, 96 00:11:04.260 --> 00:11:13.260 massive standing armies and a nuclear arms race during peacetime, ethnic cleansing and the economic despotism of socialist central planning. 97 00:11:13.260 --> 00:11:36.260 Thus, the most important characteristic of an ideal world money is that its supply and value be determined completely independently of political institutions, including national governments, as well as supranational intergovernmental agencies and organizations, like the International Monetary Fund or the European Central Bank. 98 00:11:36.260 --> 00:11:50.260 The variations in the supply and value of a viable world currency must be immune to the plans and machinations of the political elites, who always stand to benefit from deliberate inflation of the supply of money. 99 00:11:50.260 --> 00:11:57.260 This means that the world currency must have its value determined wholly and exclusively by market forces. 100 00:11:57.260 --> 00:12:12.260 Such a currency therefore must be a market commodity, whose supply, like any other commodity, is dependent on consumer demand and the technical conditions of production, such as technology and the relative scarcities of inputs. 101 00:12:12.260 --> 00:12:21.260 Also, like all other market commodities, the money commodity must be free to fluctuate in value according to changes in the market forces of supply and demand. 102 00:12:21.260 --> 00:12:51.260 demand. While overall money prices would continually rise and fall depending on market conditions, these fluctuations would be minor, as they were in the 19th century, and would not interfere with entrepreneurial calculations of profit and loss, and the efficient allocation of resources to the different branches and stages of production. We built up a tremendous capital structure that entrepreneurs did during the 19th century under the gold standard, despite the fact that prices fluctuated up and down, but nothing like they have in the 103 00:12:51.260 --> 00:13:09.260 The immunity of the value of money to the influence of politicians and special interest groups and from large fluctuations in purchasing power caused by the intentional manipulation of its supply is the primary feature of what Ludwig von Mises called a sound money. 104 00:13:09.260 --> 00:13:17.260 We don't want a stable money, which involves a central bank continuously and feverishly printing money to prevent prices from going down. 105 00:13:17.260 --> 00:13:20.780 Okay, we never seem to worry about prices going up though. 106 00:13:20.780 --> 00:13:22.060 We don't need a stable money. 107 00:13:22.060 --> 00:13:24.620 What we want and what we need is a sound money 108 00:13:24.620 --> 00:13:27.060 in the sense that I've presented it. 109 00:13:27.060 --> 00:13:29.760 This brings us to this crucial question. 110 00:13:29.760 --> 00:13:32.460 Is there a commodity available that is fit to function 111 00:13:32.460 --> 00:13:35.020 as a sound global currency? 112 00:13:35.020 --> 00:13:38.900 For if there is not, then such a currency remains 113 00:13:38.900 --> 00:13:42.180 nothing more than an unattainable ideal, 114 00:13:42.180 --> 00:13:44.500 an idle fancy, a utopian dream. 115 00:13:44.500 --> 00:13:56.500 And we are then stuck with the grim reality of national fiat currencies, or worse yet, the nightmare of a world paper currency issued by a World Central Bank, and there have been proposals among academic economists for this also. 116 00:13:56.500 --> 00:14:06.500 The commodity composing a sound world currency would need to be a blend of so many different physical qualities and attributes that its existence would be a literal marvel. 117 00:14:06.500 --> 00:14:13.500 Almost any of the hundreds of thousands of natural resources, capital goods or consumer goods that one might name would be rejected out of hand. 118 00:14:13.500 --> 00:14:25.500 Ordinables, cattle, wheat, PCs, Big Macs, diamonds, etc. None of these things would do for a lack of one or more important attributes. 119 00:14:25.500 --> 00:14:33.500 First and foremost, such a commodity would have to consist of a substance that is both naturally rare and yet familiar to and widely desired by 120 00:14:33.500 --> 00:15:03.500 This would ensure its general acceptability, the indispensable quality of a global medium of exchange. The item would have to be absolutely homogeneous, that is, identical in quality, wherever and by whomever it was produced, so that all that was relevant in valuing and appraising it was simply its weight. It would need to be almost unimaginable to be able to do so. 121 00:15:03.500 --> 00:15:22.500 Unimaginably durable in all its uses, so that unless destroyed by fire or lost in marine or aeronautic disasters, once produced it would retain its original molecular structure and never disappear from the world, outlasting dozens of generations, over a hundred generations, of its producers and users. 122 00:15:22.500 --> 00:15:30.500 Combined with its natural rarity, such durability would ensure that its supply changed very slowly over time. 123 00:15:30.500 --> 00:15:40.500 This secular stability of supply in turn would lend itself to a relative but not perfect steadiness of value over time that is essential to entrepreneurial calculation. 124 00:15:40.500 --> 00:15:47.500 At the same time, the material of which the commodity is composed would have to be both highly divisible and malleable, 125 00:15:47.500 --> 00:15:53.500 so that it would be fashioned into the various shapes that were most convenient and desirable in monetary and non-monetary uses. 126 00:15:53.500 --> 00:16:04.500 It would need to retain these properties of divisibility and malleability as it was repeatedly transformed between the shapes appropriate for monetary use and those appropriate for industrial or consumption uses. 127 00:16:04.500 --> 00:16:15.500 And the stock of gold has been continuously transformed back and forth, specific pieces, from jewelry and other uses to money and then back again, okay, 128 00:16:15.500 --> 00:16:22.500 without being destroyed, without disappearing from the world. 129 00:16:22.540 --> 00:16:27.100 It would need to be... 130 00:16:27.100 --> 00:16:30.340 To permit inexpensive and convenient transportation of the currency, it is also 131 00:16:30.340 --> 00:16:34.380 important that the money commodity possesses a high value to weight 132 00:16:34.380 --> 00:16:38.380 ratio, a property derived from its relative scarcity. 133 00:16:38.380 --> 00:16:41.900 Finally, to minimize counterfeiting, the authenticity of the commodity must be easy to 134 00:16:41.900 --> 00:16:43.140 verify 135 00:16:43.140 --> 00:16:48.580 by direct inspection or inexpensive tests, these qualities of easy portability, great 136 00:16:48.580 --> 00:16:54.420 visibility and malleability and ready authentication are combined to endow the commodity with the 137 00:16:54.420 --> 00:17:00.540 low transactions costs required for a general medium of exchange. In fact, such commodities 138 00:17:00.540 --> 00:17:05.540 blending such disparate qualities do exist and more successfully used for centuries as 139 00:17:05.540 --> 00:17:11.320 general media of exchange in large parts of the civilized world from ancient Greece to 140 00:17:11.320 --> 00:17:41.320 of 19th Century Europe and North America, and in China and India. I am, of course, referring to gold and silver. Unfortunately, the world never received the full benefits of these money commodities because, as I mentioned, government intervention in one form or another always influenced their supply and value. In an ancient Greek work, Economica, formerly attributed to Aristotle and compiled shortly after the death of Alexander the Great, 141 00:17:41.320 --> 00:17:49.320 It was stated, quote, that only a monarch and not a provincial governor or city should be concerned with the issue of currency, unquote. 142 00:17:49.320 --> 00:17:56.320 This idea that it was the exclusive prerogative of the sovereign to issue currency was picked up by the Roman emperors 143 00:17:56.320 --> 00:18:02.320 and passed on to the medieval kings and even informed enlightenment thought, famously repeated in the U.S. Constitution. 144 00:18:02.320 --> 00:18:05.320 Congress will have the power to coin money, etc. 145 00:18:05.320 --> 00:18:20.320 In the 20th century, this idea has degenerated into the belief that money is primarily a tool of government policy which should be used by central bank bureaucrats to attain statistical goals set by their vote-seeking political masters. 146 00:18:20.320 --> 00:18:30.320 Private property rights and money have essentially been abolished in all but name only, as ownership of the money supply has effectively passed to the state and its central banking arm. 147 00:18:30.320 --> 00:18:45.320 This is exemplified in a chilling statement made by our current Fed Chairman, Ben Bernanke, shortly before he ascended to his exalted position as, quote, the second most powerful man in the world, unquote. 148 00:18:45.320 --> 00:19:15.320 In November 2002, he assured the American public that the Fed had the means to fight an imminent deflation that the Fed had conjured up to terrify the markets and public into accepting a return to inflationary policies of the 1990s that had resulted in the high-tech bubble and its recessionary aftermath, which they were trying then to escape in the early part of the millennium, 2000-2001. 149 00:19:15.320 --> 00:19:19.720 that Chairman Greenspan had repeatedly denied existed. 150 00:19:19.720 --> 00:19:23.520 What Bernanke proposed was inflation pure and simple, and plenty of it, 151 00:19:23.520 --> 00:19:27.620 as a panacea for an economy facing a falling price level. 152 00:19:27.620 --> 00:19:33.420 Bernanke makes this explicit in the following passage. 153 00:19:33.420 --> 00:19:34.620 He says, quote, 154 00:19:34.620 --> 00:19:39.020 The conclusion that deflation is always reversible under a fiat money system 155 00:19:39.020 --> 00:19:41.420 follows from basic economic reasoning. 156 00:19:41.420 --> 00:19:44.120 A little parable may prove useful. 157 00:19:44.120 --> 00:19:50.920 Today, an ounce of gold sells for $300. That was 2002, more or less. 158 00:19:50.920 --> 00:19:55.800 Now suppose that a modern alchemist solves his subject's oldest problem 159 00:19:55.800 --> 00:20:01.160 by finding a way to produce unlimited amounts of new gold that essentially no cost. 160 00:20:01.160 --> 00:20:07.800 Moreover, his invention is widely publicized and scientifically verified, 161 00:20:07.800 --> 00:20:11.560 and he announces his intention to begin massive production of gold within days. 162 00:20:11.560 --> 00:20:13.400 What would happen to the price of gold? 163 00:20:13.400 --> 00:20:19.960 Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. 164 00:20:19.960 --> 00:20:27.120 Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, 165 00:20:27.120 --> 00:20:31.880 before the alchemist had produced and marketed a single ounce of yellow metal. 166 00:20:31.880 --> 00:20:35.320 What has this got to do with monetary policy, Bernanke continues. 167 00:20:35.320 --> 00:20:40.760 Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. 168 00:20:40.760 --> 00:20:51.200 But the U.S. government has a technology called a printing press, or today it's electronic equivalent, that allows it to produce as many U.S. dollars as it wishes at essentially no cost. 169 00:20:51.200 --> 00:21:05.400 By increasing the number of U.S. dollars in circulation, or even credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices and dollars of those goods and services. 170 00:21:05.400 --> 00:21:12.100 We conclude then that under a paper money system, a determined government can always generate higher spending and positive inflation. 171 00:21:12.100 --> 00:21:22.720 In other words, in essence, Bernanke is here proposing to risk destroying the value of the U.S. dollar to prevent a small decline in the price of commodities. 172 00:21:22.720 --> 00:21:33.080 What he was reacting to was the fact that prices in Japan had fallen for maybe three or four quarters in a row in the late 1990s by about one percent per year. 173 00:21:33.080 --> 00:21:47.280 and he and Greenspan had set off this, or attempted to set off this frenzy of fear that the deflation was going to be upon the U.S. soon, which was just total nonsense. 174 00:21:47.280 --> 00:21:57.800 So what he's proposing is that the government announce a large increase in the supply of money to set off inflationary expectations. 175 00:21:57.800 --> 00:22:02.440 In other words, as soon as people expect inflation, even if none has occurred, they'll immediately begin spending. 176 00:22:02.440 --> 00:22:08.040 Well, this is an essential component of hyperinflation, okay? 177 00:22:08.040 --> 00:22:14.740 That is, people fear the government's going to inflate the money supply so velocity increases, meaning that they spend money more quickly. 178 00:22:14.740 --> 00:22:23.940 A French economist named Charles Rist once said, the government may be the master of the money supply, but the public is the master of velocity, meaning that 179 00:22:23.940 --> 00:22:29.340 the government can start an inflation, and then it can get out of control because people fear that there will be more inflation in the future, 180 00:22:29.340 --> 00:22:59.340 Bernanke proposes to use that mechanism to prevent a small deflation of prices, which, by the way, is a natural result of a market economy increasing goods and services and productivity over time. We had prices naturally falling in the 19th century, and we did not have any problems. We did not have any deep recessions as a result. Now that the U.S. financial system is melting down as a result of the inflation of the currency, 181 00:22:59.340 --> 00:23:21.340 The inflationary policy of the Greenspan-Bernanke Fed, which began in 2002 and ended in around 2005, Chairman Bernanke has made good on his promise and is trying every trick in the inflationist's book and even devising new ones like the temporary auction facility to prevent the downward readjustment of inflated asset prices. 182 00:23:21.340 --> 00:23:27.660 But the modern monetary alchemists that man the Fed really have only one device at their disposal 183 00:23:27.660 --> 00:23:33.180 and that is to create money from nothing with the stroke of a pen or rather the stroke of a keyboard 184 00:23:33.180 --> 00:23:39.180 as Bernanke has admitted in instituting a new world currency based on gold 185 00:23:39.180 --> 00:23:44.060 it is of utmost importance to abolish every form of government control of money 186 00:23:44.060 --> 00:24:05.060 This includes central banks, legal tender laws, sales and capital gains taxes on gold and silver, and especially laws that permit banks to treat customers' demand deposits as loans from those customers, when in fact they're promising to pay those customers back immediately. 187 00:24:05.060 --> 00:24:16.060 This would really spell the end of the fractional reserve banking system, which again is supported by government laws and judicial decisions. 188 00:24:16.060 --> 00:24:28.060 Money must become, for the first time in human history, an exclusively market phenomenon, its supply and value governed strictly by private property rights and voluntary contract. 189 00:24:37.060 --> 00:24:39.060 Do I have one more minute? 190 00:24:39.060 --> 00:24:42.060 I just want to pose the following question, which occurred to me. 191 00:24:42.060 --> 00:24:46.060 Why is it that we're all afraid of falling asset prices, 192 00:24:46.060 --> 00:24:48.060 or we're told to be afraid of falling asset prices, 193 00:24:48.060 --> 00:24:54.060 like securitized mortgages, Fannie Mae and Freddie Mac bonds. 194 00:24:54.060 --> 00:24:56.060 Why is that bad? 195 00:24:56.060 --> 00:25:06.340 Okay? And on the other hand, why is falling price of gasoline and of oil and of oil company stocks good? Okay? 196 00:25:06.340 --> 00:25:14.060 And also a sort of subsidiary question, why is it that I recently bought a car three weeks ago and the car dealers, 197 00:25:14.060 --> 00:25:21.500 I went to Volvo and I went to a number of other dealers, were more or less gloating over the fact, 198 00:25:21.500 --> 00:25:25.060 I went to some foreign car dealers, gloating over the fact that GM was in such trouble. 199 00:25:25.060 --> 00:25:36.060 So when GM is about to go under, for example, or is having problems, GM and Ford, it's great for the competitors, right? It's a chance to expand at the expense of one's rival. 200 00:25:36.060 --> 00:25:50.060 But what do we see in the asset markets? We see banks and financial institutions urging government, urging the Fed to bail out their fiercest competitors. 201 00:25:50.060 --> 00:26:06.060 Why is that? That's all because of fractional reserve banking, okay? It's different, the banking industry is different than any other industry, precisely because we have this cancer of fractional reserve banking that has really eaten away at our financial system. Okay, thank you.