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March 11, 2021 - The Delingpod - James Delingpole
01:47:52
Sir Steven Wilkinson
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Welcome to The Deling Pod with me, James Delingpole.
And I know I always say I'm excited about this week's special guest, but I really am excited.
I've been lining up or hoping to have Stephen Wilkinson, or rather Sir Stephen Wilkinson, on the podcast for quite some time.
And I heard you, Stephen, on The podcast of our good friend, Tim Price.
And that was, what, about three or four months ago?
Yeah, I've been on Tim's podcast twice.
Once in the summer of 2019, I think, and the last, oh, no, three times.
We had a Brexit evening roundtable, which was a lot of fun in Tim's flat in London on the 31st of October, when we thought we were going to go Go to get over the finishing line.
But then didn't.
And then again, I think you probably heard me about four months ago, three months ago, end of last year.
Yeah.
And something like that.
So so okay, so we're talking about so it is now what, what's the month now?
It's the beginning of March in 2021.
And Three months ago, four months ago, things were feeling pretty bleak, but I don't think we had any idea then just how bleak they were going to get by now.
We can talk about that in a moment.
First of all, I want to introduce you to everyone, because The first thing that struck me about you is that you have a beautifully modulated accent.
You're probably the most nicely spoken person I've had on my podcast.
I'm sure there are other contenders.
Are you actually from quite a smart background?
I don't know.
I don't know.
I am from a business background.
My grandfather and father were both commercial men.
And my grandfather was a pioneer in the development of the UK television industry in the 1940s and 50s.
And as is the wont of all religions, reasonably successful commercial families.
They wanted to move their children up the ladder, so they sent us to better schools than they went to.
And I think that probably has something to do with it.
I have a theory about that, about why business people should not pretend, should not aim for squiredom with their children, because the business model of aristocracy is an entirely different one to the business model of of commercial people.
One is based on things staying the same and not making changes, and the other one is predicated on making changes very, very often and rapidly.
So as business people educate their children to be sort of semi-aristocrats and squires, they in fact take out the very thing that makes them successful in the first place.
Which is always very, I find this an interesting observation, but if you're hearing that, then I've probably had the Lancastrian beaten out of me, although I don't think I ever had it.
No, it's really, the thing is I'm slightly worried that we've only got an hour roughly and there are going to be so many tangents I want to go on.
This was exactly my thought when I heard you on that podcast.
I thought Stephen's a really interesting bloke and you know you are, you're cultured.
You've got that very interesting combination of having a kind of literary sort of poetic brain At the same time, you come from the world of business.
We're going to talk about that more in a moment.
But that point you made just then is so bloody true.
who sort of built up our family nuts and bolts business.
Actually, no, he inherited it.
He inherited it from his father.
So the family nuts and bolts business was established by Grandpa Dellingpole.
I don't know whether he was privately educated, but he was basically Midlands, you know, Birmingham.
Yeah, probably lower middle class.
Then my grandfather took over the company.
And at each stage of each generation, each generation went to a smarter public school.
By the time it got to me, I went to Malvern and I went to, you know, I went to Oxford, being prepared exactly for that kind of effete, squirarchical background.
And then the icing on the cake, I sent my son to Eton, where he's now completely, he's born to a life that basically he can't, we can't afford.
I've given him all the tastes, you know, he, he shot his first grouse in a buck next to me last year.
There is the additional problem that your children's friends all have houses that own them rather than owning their own properties, which makes life very complicated.
What do you mean by that?
Houses that own them?
Well, if you own a pile out in Yorkshire with 60 rooms.
You don't own the property, it owns you.
Yeah, that's true.
And the weight of ancestral responsibility groaning on the shoulders of the scions of the owners of these large houses, you know, eventually crushes them.
But if you've got a square kilometre of lead to put on the roof, at whatever the current LME price for lead is, that, you know, that most people That don't earn that much in a lifetime.
Yeah, yeah, that's absolutely true.
The house owns, you have an asset that is wasting and that requires enormous upkeep and, you know, you can't get rid of it.
Yes, yes, and also I made a documentary, a TV documentary.
I thought this was going to be the beginning of my TV career, but it wasn't because I'm just not, I'm not suitable.
I mean, I'm too much of a kind of, well, The fact that here I am, completely outside the mainstream media now, I think, I think this, this was, this was not... In your broom cupboard, in your broom cupboard!
Yeah, it wasn't meant to be.
But that point you made about, you, you've got the generation that, that makes the money, the entrepreneurial generation.
And you see this with families like the Rockefellers, where you've got this the patriarch who is a man of a ruthless but very good businessman.
And then by the time you get to the second or the third generation, this is the generation that inherits the foundation or is on the board of the foundation.
And the foundation always espouses or almost invariably espouses causes which are inimicable to the business of doing business.
They're all about sort of Liberal lefty woo and about undermining free markets and all the things that make us prosperous.
Are you with me on that one?
Absolutely, I agree.
It has to do with the slow gentrification and the rejection of the very things that made them successful in the first place.
Now there are plenty of families who manage that transition, but most of them don't.
I think the statistic is something like 3 or 5% of all fortunes actually make it intact to the third generation or to the end of the third generation.
And that has an enormous amount to do with an understanding of how transgenerational wealth has to be managed and the structures that are required and the education that's required.
I mean, I tell my children That one of the, you know, my boys are, I don't know whether this is a UK thing as well, but my boys, in a way that is, that we never ever thought of, are completely obsessed with their bodies and doing bodybuilding and going to the gym.
And I, you know, I always said to them, having money, inheriting money is very much the same as training with weights.
You just cannot give Children, young people, anybody in their 20s or 30s or 40s, access to capital and the responsibility for it without training.
You know, if you give somebody, I don't know, an 80 kilo weight and tell them to lift it or hold it, they just can't do it.
But you need training over a long, long period of time in order to manage the responsibility of it.
And that doesn't happen very often because money and the The rules governing how capital works, how it's accumulated, the difference between capital and income, just setting up simple structures for managing money are just not things that most families talk about.
They just don't.
And so where are the children supposed to learn it?
They have to guess it or make it up.
But there is very little education.
And the very best families that manage transgenerational wealth, they know this.
And they educate the children from a very, very early age In just the way money works.
That simple.
They train them as capitalists.
And that's the only way to do it.
Now, aristocrats have a different business model.
Because most of the... If you own land and forests, and forests will grow whether you have a debauched lord of the manor or a thrifty one.
It doesn't make any difference.
The forest will still grow.
And it needs those assets managing over generations rather than every year.
But the principle is the same.
Yes.
Yes.
You don't want you as long as you hold on to your land and you don't sell portions off.
That's that's that's the beginning of the end, isn't it?
When you start eating into your capital.
Yeah, it is.
And I'm sure that's the topic we'll get to later, the difference between Income and capital that has now been entirely eroded.
There is no difference between income and capital anymore.
Yeah.
We'll get to that later, I'm sure.
There's an annoying dog here and I'm just going to get rid of the dog because it's annoying me.
- The dog's annoyed me. - Right.
Do you edit things like that out of the conversation?
Do you just let it run warts and all?
I can't be asked.
The thing is, Stephen, look how we've gone into this already.
You've got loads of really interesting stuff to say and people still really have no idea who you are or why I'm talking to you.
This is my problem that I just can't... and you noticed this as well.
I'm dying to find that out.
Well, before... I'm dying to find that out myself.
Ah, good.
Okay, well, before we did this podcast, you being familiar with my oeuvre, sent me an email saying, I know you don't do any research for your podcasts, so here's a thing you might want to read.
It was very helpful, but it was basically a primer on Stephen Wilkinson and It gave me some background stuff that I didn't know.
It reminded me that your company is called Good & Prosper.
Good name, by the way.
Good & Prosper.
I've got that right, haven't I?
I haven't invented that.
You have.
No, no, no, you have.
Yeah, yeah, yeah.
I thought that was very clever of you.
I reckon that I sometimes complain, you know, given that your job basically is advising people how to create a good business, isn't it?
In a nutshell.
In a nutshell.
Yeah.
And if you were advising me about my business, which increasingly is podcasts and vidcasts or whatever you want to call them, I know that there would be things you'd tell me and there are things other people tell me.
They're things like, try and make it clear at the beginning who you're talking to and write some better blurbs, some sexier blurbs about who they are and get better equipment and do this and do that and do that.
The problem is that, and I'm sure this was a problem with you with your early career, the thing I enjoy doing is the chat and I like the ideas.
And I love the idea that I might be able to monetize this, but the actual stuff like marketing and and the technical aspect of it just doesn't excite me as much as the actual execution.
So I think that my content is absolutely bloody brilliant.
I just think I don't think anyone does better podcast than me.
I just I listen to the other other stuff and I think yeah, you're right.
You're right.
But actually your questions are a bit shit and there's no They're not really good conversations and you're still teary.
There's a much more successful podcast than me.
And they get good guests, but they're just, the questions are really dull.
And there's no kind of danger or excitement there.
Anyway, why am I saying this?
I don't know.
I'm fascinated.
Would you like me to comment on that?
Yeah, go on.
Yeah, comment.
You do good comment.
I will tell you, because this is reasonably early on in our conversation, so I will tell you that the reason that I love your podcast is because you are one of the very few people who has taken a consistent, brave position
And I'm not quite sure whether that is because you have the skin of a rhinoceros, you genuinely don't give a toss, or you are deliberately drawing the fire, or the enemy fire, in order to test it.
But you are one of the very, very few people who has been consistently, bravely, outspokenly Okay, free market, what used to be called, what I used to think was a conservative position, but I now don't anymore.
And that is admirable.
It really is.
It's admirable the way that you have stood up and allowed you to put your head over the parapet.
A lot of people don't and won't for fear of being attacked.
And the reason that I'm delighted to come on to your podcast is because you give me encouragement to say what I think is true in my own perspective without hiding and I think that's admirable and more people need to do it.
Yes, that's really nice of you to say that and actually one thing I've learned recently in life is Never be offhand when people compliment you.
It's actually rude.
I mean, I used to get embarrassed when people said nice things to me and I used to go... And the impression you give to the person, you make them feel awkward and it's rude because it was sincerely meant and it's a nice thing and compliments are a good thing.
But I think what you say is true.
I don't understand I mean, especially this year, when I've become increasingly isolated.
from the people I used to consider my comrades.
You know, for example, the people at the IEA, the Institute of Economic Affairs.
I thought, hey, we're all kind of libertarian-ish free marketeers.
We believe in limited government and stuff.
And they've completely sold the past.
They've just, you know, I don't know, maybe we were 300 holding the hot gates at Thermopylae and suddenly we're down to about two or three of us and everyone else is just fucked off.
And I'm thinking, well, well, hang on a second.
You were my fellow Spartans.
You know, I relied on you.
Where have you gone?
You know, where is, where's Douglas?
Where's, where are they all?
People say I'm terribly brave, but I don't particularly feel like I'm trying to be brave.
It's a bit like when you go fox hunting.
There's a certain way you're expected to behave.
You may not want to jump the fence or the post and rails or whatever, It's what you do!
You know, you're a man!
Or, I mean, girls are just as brave in the hunting field.
Who do you hunt with?
I've only hunted with a sort of pick-and-mix bunch of hunts throughout my... I've never been... I suppose my hunt would be the Piteley.
That's where I go riding every week, with one of the stables of the Piteley.
That's right, and that's much smarter than my time.
Well, what was your hunt?
The pack that I hunted with when I was up at Durham was the Braids of Derwent, which was a genuinely hard-riding farmer's pack, and the smart ones were on the other side of the Tyne.
There was the Percy And a couple of other hunts in Northumberland, but my regular pack was the Braes.
I mean, we're going to alienate about sort of 70% of our listeners here by even mentioning hunting, but I just think being on a horse, going fast over rough country that you don't know very well, in pursuit of a pack of hounds, in pursuit of a fox, Is just about, I think, the most physically hazardous thing you can do outside war, isn't it?
I mean, that's what... Image of war without the danger of it.
I think it was Thompson said that.
I haven't been on a horse for hunting purposes for the best part of 30 years, but I did it fondly.
Great memories.
I tell you what it is, Stephen.
It's that you and I are pretty much of an age.
I think we're about two years, two years apart.
And I grew up in a world where, I mean, you know, I don't think I was, compared with some of my friends, I wasn't particularly privileged.
We were comfortably off.
But I grew up in a world where I just thought that politicians were there to represent our interests.
I thought that people in the city were not a bunch of crooks trying to rip you off.
I thought they were a necessary part of the system to keep their...
They provided the money to oil the wheels of commerce or whatever.
I thought that judges and barristers, they upheld the law and that presidential elections, when you had a US presidential election, and 80 million people voted for a particular candidate, that the one who ended up in the White House, in the Oval Office, wouldn't be the guy who cheated.
And everything that I've understood about the world, I think that man is made in the image of God.
That human life is important.
What else do I believe?
I mean, we are the guardians of the planet.
We have responsibilities, but we're not this kind of verminous plague on the planet, and the planet would be well rid of us.
I don't believe in overpopulation.
I think Malthus has been discredited on numerous occasions.
Lots of things I believe that really I think everyone ought to believe because they're obvious and they're true, and yet we now live in a world which has rejected all of this stuff.
Over to you.
Apparently.
There's so much, there's so much in there.
And I think at the root of all that you have just described, I think you can, you can map it on, I call it our generation is the top left bottom right generation.
Because if you take, if you take the inflation curve, or the long term interest rate as the price of money.
When we started off, sort of in the mid-80s, the points of those two curves, inflation and long-term interest rates, were in the top left hand of the graph.
Time at the bottom and interest rates, inflation on the top.
And our generation has seen this almost unique Trajectory from top left to bottom right.
Right.
The inflation has gone from, or headline inflation has gone from, I don't know, wherever it was, 16, 17% in 1982 down to nothing or 1% or 2% at the current time, 40 years later.
And interest rates have gone from wherever they were in 1982 at the top of the curve, I don't know, 17, 18% down to zero. - No.
And that... I don't think we truly understand what that means for an entire generation.
We really have no comprehension of how unique that experience is.
of effectively massive returns to capital at the same time as capital has been increased and debt has been increased because it's just got cheaper and cheaper to borrow.
And I think everything that you allude to All the effects, the societal effects that you have just described, can all be traced to our increasingly decadent relationship to money and our blasé expectation that
The experience of the last 40 years, as we went from top left to bottom right, that that somehow is going to go on forever.
And it won't, because it's over.
We're trying to force the level of interest rates below the zero line at the moment.
In some cases, it's actually happened.
But that is not sustainable.
It's not healthy.
And it's not even real.
Our experience the last 40 years, political, societal, has been built on this.
It's not an illusion because it genuinely happened.
But unless you understand why it happened, And why it cannot continue and what the effects of it happening are today, you will not understand.
I don't think you will fully understand its corrosive effects on all the institutions of society whose demise you have just described.
Brilliant.
So, number one, tell me how it happened.
When did it all go wrong?
Was it 71 or whatever when Nixon finally sort of left the gold standard?
Yeah, it is.
And I'm going to give a caveat.
One of the problems, if you go down this route that we're about to go down, you end up with the gold standards and a hard money attitude.
And the problem with hard money attitudes is that you very, very soon get put into this sort of, this dystopian box where, you know, you're decrying the end of the world because, you know, we've lost all our discipline and money's going to hell in a handcart.
And so I'm not in that corner.
I mean, I have a tendency to wander into that corner to look at it, but I'm not of that.
I'm not fully persuaded.
Nor am I, I'm not sort of of that true religion.
However, I mean, sort of put that caveat up front.
It is true, in my opinion, that decoupling money from some tangible anchor, as Nixon did in 1971 in July, marked the beginning of a as Nixon did in 1971 in July, marked the beginning of a period in which the only thing holding the value of money where it was, was a trust
it's the Trust me, you'll get it back.
Money became debt at that point.
Obviously.
And the way of the world is that once governments found themselves in a position to increase debt without any real cost.
There was a credit card that was never going to come due on their watch, and they couldn't really see it coming due any time at all.
And without that discipline, well, why would they stop?
And successive governments have have expanded their fiat and their grip on society or their land grab by promising ever more munificence and distributing or redistributing the gains of the future today for very obvious political reasons.
And that is corrosive.
It's corrosive because it devalues money And with money is devalued, it eats away at the ethical fabric of a society.
And the problem is that for the very first time in history, we seem to have managed, because of the complexity of our monetary system and our economic system, we've sort of managed to avoid, for the moment, All the perils of collapse that previous coin-clipping regimes succumbed to.
It's not the first time in history that coin-clipping has happened and the currency has been debased, but it tended to come back and bite the debasers very much faster
than this period is and the problem with all of us who are looking at this and seeing it and saying but this this is unsustainable we just don't know how long this particular phase can be can be carried on into the future we just don't know we're in completely new territory and that makes it so dangerous and it also makes it very dangerous to be a sort of a hard money
Current gold bug, because if you had looked at this at the beginning of the 1980s, and plenty of people did, you know, they said we're going to hand in a handcart, we have lost all control over monetary discipline, and we are now heading for an apocalypse in terms of money and prosperity and the way that our society is going to develop.
And if you'd have taken that position then and bought your Decades worth of baked beans and gone and lived in a cave and waited for the apocalypse to come.
You would have been a bit like Peter Cook and Dudley and Rowan Atkinson in the first Secret Policeman's Ball, you know, when they were sitting there saying, well, this wouldn't be so mighty, you know, and waiting for the end of the world.
And it's just, you know, you'd have waited 40 years and missed the single largest boom in history.
And we all look at these markets now and asset prices and the price of property and the value of money and interest rates and things.
This cannot go on forever, but it seems to be defying gravity, which means None of us really know what is going to bring this to a conclusion.
Yes, yes.
No, I was thinking as you were saying that, I was thinking all the runes.
I mean, I'm not a particular fan of Jeremy Grantham's green politics because he's one of the main funders of Well, he funds the Grantham Institute, which puts about the most pernicious climate propaganda, which is inimical to free markets, inimical to consumers.
He's very much part of the problem, but I think he's got his head screwed on financially.
I mean, he knows how to exploit a system, that's for sure.
And Jeremy Grantham was, I was listening to him being interviewed the other day, and he was saying, well, we're very much due a major correction, like, Twice as big, probably.
Much bigger than 2008.
Because, of course, 2008 was never really solved, was it?
On the contrary, it would just kick the can down the road.
We've been kicking the can down the road since 1987.
since 1987.
You know, Greenspan, who has been accredited as being the grand master of modern finance, he started all this, this saving the markets he started all this, this saving the markets from themselves.
And I just started working in the financial industry in 1987.
I'd literally been there for two months when the crash at the end of October I mean, 1987 came, and that was when we started to learn that there was an omniscient and omnipresent Federal Reserve that will always come in and save markets from their own stupidity, because the political consequence of a hard, fast crash
Was just too awful politically to stomach so they had to be saved and you know once you started on that moral hazard path, and never forget that the the size of today's financial institutions.
is a reflection of the size of sales organization needed by governments to distribute the vast amounts of debt that they have been producing.
They can't let their sales agents fail because otherwise they wouldn't have anywhere to market their paper.
The two go hand in hand.
We can't conceive, a trillion is the new billion and there are many, many, many trillions of dollars worth of indebtedness and the money supply seems to be expanding at a terrifying rate.
Somebody said to me the other day, I'm sure this is right, that if you spent a million pounds a day Every day from the birth of Christ, you still wouldn't be anywhere near to having spent a trillion dollars.
Does that make sense?
I'm not very good at maths.
Yes, of course it does.
2,000 years times 365 days isn't a trillion.
Right, okay.
So it sort of helps, doesn't it?
Puts it in one's head.
So just to recap, when you give governments pretty much unlimited power, the gold standard was a discipline that kept people honest.
The moment you give governments the ability to print their own money, You're doomed.
Always.
Because they will always take the path of least resistance.
Always.
If there's no disciplining factor.
Always.
And one of the things that frightens me is that we think, and again this is this top left bottom right curve, we think And we have been conditioned to believe that the peace and the prosperity and the ease of our existence in the Western world, which we have experienced over the last 50, possibly even 70 years, although I seem to remember the 70s.
I mean, I was a child in the 70s, but I remember it as being a period very fraught with angst about possible, you know, the war that the next war that hadn't quite been finished at the end of the Second World War.
So there was still a lot of angst around that, which sort of disappeared in the good days once the 80s kicked off.
So these last 40 years, maybe 42, 45 years, have given us the feeling that this is a permanent and deserved situation.
This very delicate balance between a free market economy And a cushioning social net in a sort of social democrat with every government we've had has been more or less social democratic and whatever the colors they've you know they whatever they've called themselves they've been social democrats in all but name.
Yeah.
Balance, if it is, or that very delicate balance that guaranteed our prosperity has been shifting towards disequilibrium, I would say for about at least 10 years.
And by disequilibrium, I mean the system has not been working for everybody the way that it was supposed to work.
And there has been an accretion of value and of money and of power.
in an increasingly or a decreasingly small group to the disadvantage of everybody else.
Yes.
And that is unsustainable.
And the tipping point, I think, has come over the last year.
As COVID, for whatever reasons, has been used as a, and I don't even think it was probably planned, but it was used anyway
as a land grab to extend the state into ever more areas of our existence in a way that I believe is inimicable to the way of life that we have become accustomed to and it is extremely dangerous and I believe we are in an extremely critical place at the moment and that this should have happened under a conservative government in the UK with a 70 seat majority is beyond parody.
Yes.
I agree.
And isn't one of the most extraordinary things that so few people are acknowledging this?
I mean, for example, I sort of, I read The Spectator occasionally.
And it doesn't seem, you know, this is a sort of conservative publication.
It doesn't seem to be very interested in holding the conservative government to account for not being conservative.
It seems to be just sort of going along with the program.
And this is across the formerly conservative media, from the Telegraph, to the Mail, to wherever.
No one seems to be acknowledging that this is an epic takeover by, well, I think it's totalitarianism, basically.
And B, that we are about to experience the most monumental economic crash as a result of this.
Yes.
Can I...
Can I take issue with two of those statements?
You do, yeah.
I would call it numpty totalitarianism, because there isn't any one person with a fiendish plan, you know, a sort of Mein Kampf in his pocket, looking to impose a philosophy of order on an errant society.
That isn't there.
There's this sort of semi-intellectual, divorce-driven papers about the future of society that would be hilarious if they weren't quite so
Up until 2020, the witterings of the World Economic Forum, which had been going on after all since I think he founded it in the early 1970s, Klaus Schwab, and every year these bastards have been flying off to Davos, making their speeches in the snow and enjoying, you know, little kind of workshops on this, you know, how ordinary people live and stuff.
And you look at this stuff and you think, well, this is pie in the sky.
It's a nonsense.
They've only become a threat this year.
They've only become weaponized this year.
So I agree.
And under normal circumstances, I don't think that I've spent 30 years of my life in Germany.
I speak fluent German.
I have business interests in Germany.
I love Germany.
I don't think there is anybody, and the Germans are excellent English speakers, almost to a man, they can hold their own in basic English with But I don't think there is anybody left in the country who still speaks with the sort of ridiculous German accent that I thought we only had in Peter Sellers films in the 1950s, as close Klaus Schwab does.
I mean, the man is, it's just ludicrous that this person has sort of emerged like some... Bond villain.
Well, it's a sort of Rowan Atkinson Bond villain.
You know, it's the Blofeld for Johnny English.
I listen to him and I think it can't be true.
It cannot be true that somebody with such an appalling command of the English language genuinely thinks that he's directing policy for us and it's just ludicrous.
And as I say, all of these things together, in my opinion, are signs that something is
We've reached a point at which the world that we knew and that we relied on has now, in all sorts of ways, through the debasement of currency and through our use of debt, and I'll come back to that point in a second if I may, we've reached this point of erosion.
at which the substance of our society is changing.
The institutions that you mentioned that are there to sort of look after our interests, they too have been substantially changed through the erosion of what I call the ethics of money creation.
And that's at the heart of it.
Gold standards are not sustainable in a democracy, but democracy is not sustainable without And over time, it just takes so much longer to become corrosive.
But we are at a point now where the corrosion is eating away at the fabric of what we thought were immutable structures of our social order.
The reason, for example, the judiciary can't do their job.
Well, let's look at the Supreme Court, for example, in the US.
The Supreme Court is no longer fit for purpose.
It got offered the chance to intervene in the election fraud.
It washed its hands of it.
You know, it did a Pontius Pilate.
Didn't want to know because the judges probably thought maybe they were a bit scared of the deep state of being executed or something, you know, being Hillary Clinton, something like that.
But also, I mean, these people are, with exceptions, I mean, I think Clarence Thomas is a decent chap, but you're suggesting that they've all been corrupted in some way?
Well, I think that our norms have changed.
to a point at which that is deemed responsible behavior.
And as I say, there has been a creeping... As the state expands its power, it also abrogates to itself the right to protect us from harm.
And people get used to that.
One of the invidious parts of the socialist mindset is that it seeks to protect people from each other.
From risk.
And the definition of what is risky gets extended as the stake gets larger and larger.
So it's encroaching on ever more areas of what previously were deemed to be entirely private matters.
And that people like you and me and presumably many of your listeners Still feel it's none of their fucking business.
We, individuals, have a very clear sense of what is our area of responsibility and where we would like To take that responsibility for ourselves.
And as it has been sort of eroded over time, because that's what the state does, it wants to protect us from all sorts of risks, even risks against which it cannot protect us.
And that's where it becomes very, very dangerous.
Because then it has to start making stuff up.
in order to tell us that it's doing such a good job of protecting us from things that it can't protect us from.
And the worst of it is, or the area that they find most distressing, is the free market.
Because the free market always produces outcomes that, by their very definition, are the result of trial and error and experimentation and innovation.
And they are unpredictable.
And of course the state, as an instrument of organization and order, cannot stand the surprises that come with dislocations from innovation.
So it seeks, without actually saying we don't want any innovation, it acts in a way that stifles it.
Which is the same way that large companies find it very, very difficult to And why, you know, for instance, the pharmaceutical industry spends most of its money buying innovative startups and biotech companies because it knows that within the confines of its own organization, it just can't have that sort of disruptive, innovative culture.
It just can't do it.
So it buys it.
It pays large amounts of money because it's To absorb them once the risk is apparent or once the risk has been taken by others.
But the state can't do that and hates it, which is why its instinct is always to regulate and to caution the stupidity of it in a centrally planned economy.
And we've had a wonderful, if wonderful is the right word, a deep insight into what life is like in a planned economy over the last 12 months, as ridiculous, nonsensical effects and consequences, not even second order, first order consequences that no central planning organization can ever conceive of, because you just can't.
It's too complex.
You know, they're dynamic systems.
You cannot order a dynamic system by By ordering it, you just can't do it.
And the great power of a free market economy is the price signals that it sends out.
And price signal, that's the genius of this invisible system.
The way that it is able to allocate resources, energy resources, intellectual resources, physical resources, through the price signal without any other form of organization necessary.
Once you grab into that and start ripping the wires out and thinking we can do this, we'll do this in a centrally planned way, the price signals just go haywire.
And the system starts to collapse, which is what we have.
And all the money that's been spent over the last 12 months, furlough schemes in the UK, PPP schemes in the US, is all deficit funding.
It's all catching the losses that have been made by fiat.
Instead of being investors.
So that's dead capital.
If you were doing this in a business environment, this would be lost financing.
It's gone.
The only thing you've secured is its survival.
The money is absolutely gone.
It's wasted and needs to be written off.
There is no way on God's green earth that one single penny of this support money is ever going to be recouped.
And what that says for for the state of our finances and for the state of the market as yet to be seen, but it's very, very dangerous territory that we're on.
Sorry, we can go take that in all sorts of directions.
Well, I know.
I'm very conscious, actually, with you, that actually really all I need to do is to just point you in a particular direction and you just talk.
And blow your bugle.
You talk gold.
Your every word is golden.
Just while I'm fumbling around for which direction to take you in, just go back to your early days.
I was fascinated to read that you studied medieval German at university.
At Durham.
At Durham.
How was that?
What are the works of medieval German literature?
Well, it's all the Minnesenger and the Nibelungenlied and the Parsifal and Walther von der Vogelweide.
The origin of, you know, of the Bardic tradition in European literature was basically the sort of Frankish The Frankish language, the bards and the, I suppose you would call them the household entertainers of the various households in that period pre-Chaucer.
Okay, because I hadn't really considered medieval German literature before.
I think of, you know, the sort of Chanson de Roland and all this, the French... It's all exactly the same type.
Is it?
Right, okay, so this is all going on... It covers that period.
Okay, right.
Right.
And well, so this is where Wagner got on.
I mean, I studied German at Durham and economics and as a second supporting study and Russian.
Thank you.
Wow.
Which college were you in?
Hatfield.
Isn't your son, or Toby's son, is it?
My son's it, yeah.
Where is he, at Castle?
Hills and Bede.
Hills and Bede?
Castle or is it?
Hildbead.
Hills and Bede?
Yeah.
No, no, I was at Hatfield, which is just below the castle.
Yeah, yeah.
I love Durham.
I think Durham is one of the few... I mean, all academia sold the past pretty much, but Durham...
More so than Oxford and Cambridge, I think, has held on by its fingertips to the old values.
For example, you can still go to Durham and do English and have a proper English degree without recourse to too much theory bollocks.
Yeah, you know, you don't have to do post-colonialism.
The only thing I do remember And I'm probably going to alienate a great swathe of your listeners, is my economics tutor was a rabid socialist, rabid socialist.
I didn't really know that at the time.
But when I was there in 1980, I'm going to say 1982 to 1985.
Maybe it was 1983 to 1986.
I'm gonna say 1982 to 1985, maybe it was 1983 to 1986, I've forgotten, but something around about that, was the miners' strike was one of the prominent features in the life of the university at the time.
It all happened sort of slightly outside the town centre, but it was But I remember having a Professor Needham, his name was, and we liked each other, you know, and sort of looked at each other in the same way that I imagine two different species look at each other when they see each other for the first time.
I mean, I'm not quite sure who was, whether I was the monkey and he was the human or the other way around, but we found each other fascinating for our For the fact that we were from completely different planets.
And I do remember then, even though I had absolutely no interest in economics and I found it deeply boring, particularly because of, you know, it just didn't seem to make any sense to me, being taught by a raving socialist, that there was absolutely no mention of business in the curriculum whatsoever.
We just didn't, you know, any of the Austrian School of Economics or Milton Friedman, they were treated with disdain.
The only economists of any note were sort of the Keynesian School and I found that then extremely distasteful because it just didn't seem to make any sense.
I thought I'd learn about business and how the world worked.
Yeah.
The economics department had already been taken over in the early 80s by proto-socialists.
Yes.
Well, given what you said about money and about, you know, even before business, money is the explanation for everything that is happening in the world right now.
Because of that moral hazard or whatever, the seeping corruption which is everywhere now.
I'll take you up on that point, and I promise I won't labor it, but it's really important to me in my attempt to understand where we are and what that means for business and for investment.
Would you say that saving and a culture of saving was one of the pillars on which our society is built?
In other words, the idea of delayed gratification.
Yes.
If you go back to the Victorians, the idea of thrift and of saving and of the Dickensian sort of The idea of if a man earns one pound and spends 90p, he's happy.
And if he earns one pound and spends 110, he's unhappy.
That was from Pickwick Papers, I think.
I'm mashing the quote.
Yeah, I know what you mean.
We can look it up.
That single idea of delayed gratification, I think, is the bedrock of the way that our society is built on.
That's what we're built on, because every single economic calculation rests on the fact that there are savings which are translated into investments, and investment then supports consumption, not the other way around.
If the time value of money is zero, in other words, if there is absolutely no reward for saving money.
In fact, if you're penalized for saving money, because with, let's say you have a paltry interest rate of 0.5% and you're at a marginal rate of tax, so let's just say for the sake of argument you're paying, you've got a quarter of a percent, and then you've got a few bank fees that you have to pay on top of that.
Effectively, your capital is producing nothing.
So the time value of money is zero.
Whether you've got it today or tomorrow, it doesn't matter.
In fact, you know as a citizen that there is inflation, irrespective of what anybody's telling you, because you can see that house prices are going up, and you can see that the prices of holidays are going up, and your medical bills are going up, and so you know that there's inflation, even though you're being told there isn't any.
If the value of your money, or the value that society imputes to your habit of saving, is zero, what does that tell you about the behaviour that society needs you to exhibit in order to build the savings pool on which investment is ZAM Finance?
And if you take that away, that simple logic of money not being worth anything, you completely destroy the entire thinking and mental model of the middle classes and their aspirations.
I'm trying really hard to come up with an idea of how this might work out well, but I just can't see it.
Because from time immemorial, and I think you heard me Come up with my ants and grasshoppers fable.
Do it again.
Well, you know, the answer to the grasshopper fable is at the heart of that is a picture that we have of behaviour that we deem right for a stable society.
And that is that there is a time to harvest and save because we know that winter's coming and the ants, the grasshopper was sitting there during the summer playing his guitar and singing and chirping and laughing at the ants who were busy storing food in their nest or in their anthill for the winter.
And then the winter comes and the grasshopper is starving because it hasn't made any provisions or taken any provisions for the winter, goes to the ants and the ant says, no, because we've got just enough for ourselves.
You should have done the work during the summer when you were sitting there chirping and playing your guitar.
What we have today is the grasshoppers are not only being subsidized and lauded, and we're laughing at the ants, but we're making a mockery of them as well.
We're taking it away from them.
So in a society that, you know, the ant and the grasshopper fable is as old as it is.
I think, I'm not sure whether it's a Fontaine fable or whether it's an Aesop fable, but anyway, it's an old one.
As all these fables are, it tells us something about the values of our society that we deem important.
And the erosion of that, that simple model of the time value of money being worth something, and therefore thrift being worth something, if that is destroyed because we have governments who do not understand that it's not consumption that drives economies, it's investment.
Consumption is driven by investment, not the other way around.
And every single economic commentator and political commentator over the last sort of years has always pointed to our Western, particularly US-influenced societies and said, we have to get people spending again.
That's nonsense.
It's just nonsense.
They are burrowing away under the foundations of what really drives an economy.
And I find that that in itself is not sustainable.
So that sort of moral erosion of making the middle class values or laughing at the ants and making the promises that you made to them worthless.
I don't see how that's sustainable.
I just can't see how it's sustainable.
And it eats away, and we go back to the beginning of our conversation, it eats away at the very fabric of exactly those institutions whose demise you have correctly pointed out and bitterly grieved over.
The judiciary and the political institutions and the banks Yeah, I'm not even quite at the bitterness stage yet.
I'm still in the... What?
The kind of gobsmacked stage, I think, because it's all happened so suddenly.
I mean, this year has just been the year that anyone who thinks their head should have exploded this year at what's going on.
So few people have had their heads explode yet.
I think that a lot of people are in for a very rude awakening.
But your point about investment, investment is a word that, again, has been misappropriated by governments to mean just spending taxpayers' money on all manner of bollocks.
But what do you, when you talk about investment and how that should be the driver of the economy, not spending, what do you mean by that?
Well, an economy's ability to invest is predicated on the savings that it has.
And the savings are The accumulation of surpluses at household level, individuals not spending everything and keeping capital and just building capital.
And that capital is then available through various securities routes, stock market, banking system, so on, for companies to then Put to productive use in a very simplified model.
And it's the creation of products that are available through investments that drives consumption, not backwards.
Because once you start forcing consumption, you are in fact destroying the ability to make longer term investments in productive equipment.
And productive facilities, you know, whatever those might be, because they require sort of, they've got a longer runway before they can start producing.
But once you start focusing on consumption, you are taking that away.
You are emphasizing the short term over the long term.
And again, the value of money or the price of money was a pretty good clearing instrument for ensuring that long term and short term interests were imbalanced.
But if the price of money is zero, more or less, it doesn't really make any difference.
You are destroying the ability of a society to accumulate capital.
And at a very simple level, if you are earning zero interest on your money, you have to start using capital to pay your expenses.
So at the point at roundabout zero, gross or net, the difference between income and capital It just vanishes.
And that is an absolutely central function of capital formation.
Capital has to be worth something if you keep it.
There has to be a price for it.
Can you give me the idiot's explanation?
Let's say you have a thousand pounds.
And you have it in your bank account, and you decide to save it.
Now, under normal circumstances, there is a general tendency towards inflation.
And particularly in today's world, there is definitely one.
But in certain things that are important to you, there is a general tendency to inflate.
So the thousand pounds that you have in your bank account today,
will ipso facto be worth only let's say 995 in a year's time and to compensate for that and to give you some incentive to save your money you will get a rate of interest that will compensate for that plus a bit more and so it's worth your while to keep your money in its place and you or you could you could take it out of your bank out and you could invest it in
in a share, or in a company doing something productive with it.
But anyway, the money is working in the system.
And it's available to all the households of all the James Delling pools with all of their thousand pounds.
The aggregate of that is the pool of savings available to the entire economy.
But if the price that you're getting is zero, If it's nothing, so you don't get any interest, so you don't have 1,050 or 1,100 at the end of a period, but you've got less than that, because you've had to pay taxes and you've had to pay bank charges, then your incentive to keep it there is zilch.
You may as well keep it under the mattress.
Which is exactly what governments do not want you to do.
And one way of keeping it under the mattress is to buy gold, for instance.
Or you could physically take it out and put it under your mattress, which is why banks or the system is now moving towards the criminalization of cash, making it more and more difficult to take out cash, because they want you to keep it in the system, in the bank.
If you are reliant on that £1,000 to pay your bills or the interest on it, either you take the 5% that you would have had previously, your £50, and you use that to pay your bills, or, if you're not getting anything, you have to take Yes.
And that £950 buys you less than the £1000 that you did have for a start, but it also buys you less because goods are more expensive.
Yes.
And that 950 buys you less than the thousand pounds that you did have for the start, for a start, but it also buys you less because goods are more expensive.
So as you have to pay your expenses out of that thousand pounds, it's eroding all the time.
So you're consuming the capital and at some stage it will be gone.
And inflation and your costs will see to that.
And as I say, if there is no incentive for you to put your money somewhere so that it earns a proper rate of return, And also, it's a bit like gangster culture, isn't it?
the whole system starts collapsing around your ears.
There is no difference between interest and capital or income and capital.
And also, it's a bit like gangster culture, isn't it?
It's like live for today because tomorrow you're going to be dead.
We're all going to have to start thinking like characters from, what's that gangster series that I rather enjoyed?
I've heard the name's gone.
The Sopranos?
No, no, no, no, no, no.
I'm thinking the one about black gangs in Hackney.
What's it called?
Top Boy.
I love it.
I really recommend it.
Basically, they don't expect to live very long and it's all about the deal and it's all about maximizing the moment because tomorrow is not an issue.
We don't work like that.
Our entire civilization is built on the idea of winter, of seasons.
There's a season for harvesting and there's a season in which the harvest that you've saved, that you're not going to plant, is for planting next year and for eating during the winter.
That's the entire rhythm of of saving.
We're not as dependent on the seasons anymore.
We're not entirely disassociated from them.
We're not as dependent on them, but the natural rhythm of the business cycle, or of saving for the future, or of saying there is a time when I'm productive, which is my working life, and there is a season when I am not productive, in which I'm going to be ant-like And take from my saving.
That's the whole point of it.
But if there is no... If the relationship between money today and money tomorrow is broken at a very fundamental level, then that destroys trust in institutions.
It destroys the framework and the mental model within which we assume The bargain with the state has been negotiated.
The state is reneging on its promise to the savers that it will at least try to maintain the value of the currency and that there is a reward for thrift.
And I find it a little sort of disgusting to read the literature from savings products And to see how they are twisting themselves into all sorts of contortions in order to try and maintain that language and that fiction of the time value of money still being part of the deal, when it obviously isn't.
We're agreed, because the historical record shows this, that every civilization, every country which has debased its currency, eventually faces a brutal reckoning.
There's going to be a brutal correction.
It just always happens that way, number one.
Number two, which makes these times, I mean, This time really is different, I think, that probably never before have we had a situation where Governments on a global scale have worked against human nature.
They've rejected all the things that make us human.
They've rejected the seasons.
They've rejected thrift.
They haven't been able to do this before because they haven't had the power at their disposal, for example, to abolish pretty much cash.
I mean, they're close to doing that.
So we are going to face an almighty reckoning.
So let's have the money shot moment of our podcast.
What do you think is going to happen next and how the hell do we protect ourselves, all those listening to this?
What's going to happen soon, do you reckon?
Well, the rational analyst in me says, if something can't go on forever, it will stop.
um Mm-hmm.
So we are at a point now where many valuations, particularly of money, bonds, the big stuff in our economies, have stretched their connection to some sort of base valuation to snapping point.
I don't know how much stretch there is left in that connection and I have been constantly surprised in the same way that I've been constantly surprised at the political will to keep the euro alive as a disastrous construction that has benefited only Germany, really, over the long term.
It's been a massive deflationary.
But I've just been surprised at the political will that has been expended and the capital that has been expended to keep that project alive much longer than I would have thought.
And I've given up trying to predict the end of the euro because, you know, I just look stupid.
In the same way, markets are no longer, stock markets are no longer really reflecting, they're no longer a price discovery mechanism, they are a prosperity happiness index that is manipulated to make sure that everybody is feeling happy clappy because share prices are going up so we're all feeling wealthy.
Why is that important?
So you all go out and spend because consumption is what drives an economy and it's all rubbish.
The answer is, and I'm going to try and avoid answering the question, the answer is I really don't know.
But what I do know is that these are not markets in which I feel in any way comfortable.
There are things that I feel comfortable with, and I happen to feel very comfortable with, gold and silver.
Those are two things that I feel very comfortable with.
Because if you look back over the last 50 years, the internal rate of return of gold has given you a yield of about 7.5% to 8%.
and a half to 8%.
And that's good enough for me.
People say gold doesn't have a yield.
Well, there is no opportunity cost of holding gold at the moment.
Zero.
Because if interest rates are zero, and you're not quite sure whether inflation is actually closer to 6% than zero, then the opportunity cost of holding gold is zilch.
It's absolutely zilch.
Gold is God's money.
It's God with an L for pound in the middle.
I like that.
So there's zero risk.
And what gold does have, gold has multiple functions.
So if you buy a Britannia or a Maple or an American Eagle, you're not only buying something that is physical and has historically, even though the economists don't like the fact that it happened for thousands of years, it's been the default currency of the world.
And the interesting thing about gold is that in certain times, particularly in coin clipping phases of our history, gold has had an additional, I'm going to call it risk premium, embedded into it, which indicates the speed at which, or the risk of devaluation.
So it's a, there's an embedded yield component in gold, which is expressed in the price, that tells you how much confidence there is in, in the other type of money and in governments.
And that yield component has been increasing rapidly over the past 10 years.
So you're actually getting, you know, an implicit long term yield on gold that is very attractive, it's probably going to be double digit.
And the gold market is the most manipulated market in the world, so you mustn't sort of look at short term swings in it.
But the general tendency over the next five years is going to be upwards.
And if there is the currency crisis that I believe we are long overdue, then it wouldn't surprise me to see gold at $10,000, because that's where it needs to be in order to absorb, you know, to have the sort of convertibility without being deflationary in our economy.
Gold is a good place to be.
The other thing that I would recommend anybody who can, is to organize some part of their lives as a business.
And there's a very simple reason for that, and that is that businesses, business operations, are privileged in our society, tax-wise.
Now, tax codes are, or have been until recently, the sort of culture of tax is changing.
Significantly.
But governments will always give tax benefits to the areas of society that they want people to be operational in.
So they give tax breaks to real estate because governments want buildings to be built.
So they want people to invest in real estate.
They just want it.
So they give you tax breaks like depreciation charges and stuff that, you know, you wouldn't have if you The depreciation charges are that they're made up, they're part of the tax code, but they privilege real estate investment if it's done for business purposes.
So if you build something to rent it, or if you build a supermarket, or you build a block of flats, then there is a net benefit to you from the tax code.
The same works for business, because governments really don't understand how business works, but they want people, they know at least that businesses create jobs, and jobs are a good thing, so we want to force them, we want to get people to invest in them.
And you and I as citizens have a very simple formula, and that is income minus taxes, Equals what's left over for costs.
Okay?
That's how the formula for an individual works.
Formula for a business is income minus costs is what's left.
And then you've got, then you sort of, then you have what's left over is taxable.
So you're taxed as a citizen on the income that you make.
And there are very few real deductions that you can put money from one pocket into another.
But in a business, the government only takes its share from the real costs generated by the business.
So it would behoove anybody to get on the right side of that equation and to have at least some aspect of their lives organized around a business.
Because you then get all the benefits of being able to deduct costs from income before you pay tax, rather than having income on which you pay tax and then have to take your costs.
There's a very, very simple mindset that differentiates, I'm going to say, the one from the 99%.
And that is, if you think in terms of organizing yourself as a business, then the world The world opens up tremendous opportunities.
So being in business is a pretty good place to be in times in which, through rising public debt, the tax burden has only got one place to go, and that's up.
There is absolutely no way that all this money that is now being accumulated in debt deficit spending is going to be wiped out in any way, or it's going to be tackled in any way other than future taxes.
Yes, which is going to lead to economic contraction, which is going to lead to a vicious circle of horror.
I think being in business, as you know, a small business, is one place, if you can, And if you have the proclivities to do it and a sort of basic understanding, and it's one of the things that I teach, is to get over this sort of phobia about finance and numbers, which has a lot to do with the way that maths is taught, and has a lot to do with the sort of arcane language that is
that has grown up around business finance, but it's not very difficult.
And one of the most beautiful inventions of the last thousand years has been double entry bookkeeping and the balance sheet, because it's literally magic.
It's a magical formula.
It's a magical tool that doesn't take very much to understand, but most people don't.
And it's at the very heart of wealth creation.
If you can understand the basic principles, you are already Miles ahead of the game and you can stop playing the game that the government wants you to play and start playing the game that actually makes you money.
Yes, actually, you mentioned in that article about yourself, that you sent me, about your economics education.
If people wanted to learn about double entry bookkeeping and about how to read a balance sheet, is there a book that you can particularly recommend that would just Well, I'm writing one.
I'm writing it at the moment.
I'd love to read it.
But I teach business owners to become, I cheekily call it cultivating confident capitalists, because I want business owners who are very often
completely befuddled by this all accounting language and don't really understand it and abdicate responsibility for the sort of finances other than immediate cash flow issues to their accountants where, you know, the very best companies, small and large, they get this stuff.
It's not magic and it's not rocket science and it's learnable and I teach it because I believe that that's one way that I can make a significant contribution is by improving the financial fluency and literacy of, I'm going to say, small and medium-sized business owners, so that they can play the game properly.
Yes.
So the answer is, if anybody can go to Good and Prosper, and I'm doing it, I'm starting a new course, I do sort of cohort-based learning three or four times a year, and I'm starting a new one on the 15th of April, and I'm sort of starting to market that through Good and Prosper in the next week.
So if people go to goodandprosper.com, they will find some information.
And if they sign up for my newsletter, which I write religiously every week, they will find lots of information coming over the next four or five weeks about that.
That was very well played there.
You slipped that in just effortlessly and also bloody right as well.
I mean, you're performing a service for the world.
I was thinking about this.
Our civilization is being stolen away from us by really evil forces, I would say.
And academe is pretty much lost.
We lamented that earlier on, that you can't go to study English literature and actually study English literature anymore, or imagine high German literature or anything else.
Without woke and just general dumbing down, just diminishing your education.
But those of us who know stuff of value and who are keepers of the flame of truth, we need to... I think that's one of our holy missions.
When you said earlier about what you liked about my podcast, and I was thinking, yeah, it's just like...
I mean, I don't want to sound like Joan of Arc here, but I feel it's my mission.
Those of us who know have got to go out into the world and save the world, frankly.
Does that sound weird?
It doesn't sound weird at all.
And it's astonishing and frightening to me how much courage It takes for people to stand up and just say no.
No, no, no.
We never signed up for this.
We never voted for it.
It's gone too far.
They tried to screw us over with Brexit, which was, in my mind, almost treasonous, the way that that was managed and handled.
It showed, at the end, how well our democracy and the parliamentary system
actually functions, that it delivered finally, despite all the machinations of those who would have prevented it, that these outcomes are possible, and that the will of the general public, whose collective intelligence I have a great deal of respect for,
I think that that is the one thing, the big dividing line.
Either you trust that people will make sensible judgments.
I'm totally with you.
And I find it insufferably arrogant to believe that that is not the case, because that way lies pure authoritarianism.
I think taking a stand on this, at least explaining it.
I love debating and I will take anyone on head on.
What I despise is the arrogance and the fury of the zealots for whom no other truth is possible other than the one that they have somehow bought into.
And the whole COVID thing, there is absolutely no doubt that this is a vicious disease.
And in a society that is rapidly aging, where there are serious questions about the level of our immune systems and how well we are feeding ourselves and how overweight we are, we are increasingly vulnerable to these sorts of viral mutations.
Of course we are.
And I think I said right at the beginning in March, when the lockdowns first reared their ugly heads, if you'd have asked a group of business people, if you'd have presented them with the conundrum, we have this unknown disease, it's a risk, it's a risk factor.
What sort of mitigation strategies or how could we combat it?
You would have come up with some pretty Good answers, and the one that was staring everybody in the face, at least from April onwards, was the one that ended up months later as the Great Barrington Declaration.
If people who are used to dealing with multivariate risk, which is basically what business people have to do, they have to make hard choices, they have to look at Costs, opportunity costs, risks, and mitigation strategies.
And then they have to come up with a way forward.
And the way forward is not, oh, let's shut the business down.
Yes.
Yes.
That's never an option.
Yeah, I know.
We'll destroy the economy in order that we save the NHS, which is financed by the economy.
How does that work?
How does that work?
It doesn't work.
I'm not quite sure how we got onto that, but I believe that standing up and making a contribution, I can't, I don't have the platform or I don't have the voice or I don't have any of the qualifications to do what you do, but I think the
The contribution that I can make is to teach people how to use the tools of a free market capitalist society.
in order to improve their chances of winning.
Yeah.
Yeah.
Listen, I think, I think I would, if I were anywhere near being a business, I would be on your, on your course, like a rat up a drain pipe.
Before we go and listen, please let's do another one.
I mean, I'd actually like to do this all over again, just covering the same ground, but, but just taking different routes because you're, you're just, I could listen to you for, for, for days.
I really could.
You're fine.
You're fantastic.
Thank you.
Just some quick ones.
Gold, you're bullish gold, I'm with you on that one.
You're talking physical gold and you're talking probably in a vault in what, Switzerland?
Well, you know, depending on the quantities, safe in your bedroom is probably stepping stone number one.
Yeah, but then you need guns for that.
So you need guns to protect yourself.
I mean, if it's going to kick off as bad as I think it's going to kick off, you know.
Well, gold is useless, is useless in the crisis.
Because you can't spend it.
No, you can't.
You can't go shaving off bits and go.
No, you can't.
So what if you're looking at catastrophe situations?
Yeah.
Gold is there to be used once order is restored.
Yes.
Once order is restored, you then sort of emerge with your treasure and then you can start buying productive assets.
Having gold forever is just, you know, you can do what was Donald Duck's rich uncle?
It was Uncle Scrooge.
Scrooge McDuck.
Scrooge McDuck.
If that's your thing, you can fill your bathtub with it and bathe in it, but it only becomes useful once the phase in which it was protecting value is over, the crisis is over, and but it only becomes useful once the phase in which it was protecting value is over, the crisis is over, and you can convert it back
So you're just making sure that when the Monopoly board is set up again, you've got a bag of stuff that you can start using productively again.
Now, if you need to get through the crisis, and money isn't isn't available or it's hyperinflating or doing something and you can go take your pick, then a bag full of silver coins, small denominations, you know, a year's worth of silver coins will get you through the worst of it.
And, you know, there are all sorts of other perishables if you don't like silver.
There are all sorts of things that maintain their value.
Well, like cigarettes?
There used to be cigarettes, I'm not sure whether they count anymore, but something that's non-perishable and that is easily stored and that is in small denomination, which is why the sale of bullets, for instance, in the United States has gone through the roof.
Ammunition.
Because ammunition has a lot of the properties of gold.
It corrodes over time.
But for a crisis period, looking at 10 years, a box of bullets is still going to be currency.
You can still use it.
You can give two away, or you can give one away, or you can give a box away.
Or baked beans, presumably, would have the same basic exchange function.
But in those times, if that's what you're planning for, and I don't think it's going to get That would be a useful thing to have.
But gold is there as a store of value through the crisis to then be redeployed in whatever currency then turns up afterwards, so that you can start buying productive assets.
On that subject, can you see any element of the gold standard being restored?
There's a book written by Benjamin Graham, which very few people know, called A Store of Value.
And that was written as Benjamin Benjamin Graham was the father of modern investment analysis and he wrote the book in 1934 called security analysis which is a great big volume that I've read a number of times and it's a beautifully written book.
He also wrote The Intelligent Investor at the beginning of the 1940s, which he then published in four subsequent editions, the last one being 1973, which was probably the best book ever written on thinking about the difference between investment and speculation.
But he was a polymath, a genius of a man, and wrote beautifully.
And he wrote a book called a store of value in which he suggested that a gold standard would not really be sensible in a modern complex economy and he suggested a system whereby a central government would would effectively create storage units for a basket of commodities you know they would include wheat and silver and
and copper and all the other sort of elements of a modern economy.
And that would be that basket of goods would be what was backing the currency.
And gold would be part of that, but only a small part of it.
Right.
And the book is magnificent because it's a beautiful treatise on the nature of money and how to tie a store of value to the issued currency Without the very clumsy instrument of gold, which has all sorts of disadvantages, as well as a number of advantages, which everybody knows.
But it's a much more flexible and intelligent approach to the system.
And I think something like that is what will be needed to restore trust.
And my second question, a quick one, is where are you on cryptos?
I don't understand them.
I think you're friends with Saif Saifuddin Amus, are you not?
Do you follow him?
I like the sound of him, whoever he is.
Saifuddin is someone who gave up his tenured professorship.
I think he's Lebanese by birth, but he lives in the United States and he had a tenured professorship for economics.
He's an Austrian economist and he wrote He wrote a book about three years ago called The Bitcoin Standard.
He does an amazing sort of economics course, Economics 101, Austrian-based economies.
And he left his tenured position because he couldn't stand working at the university anymore.
And he thought, I'm going to set myself up as a professor of economics shop.
And instead of being part of a tenured professorship, I'm going to be a professor in a university of one, and it's going to belong to me.
And you can sort of access his thinking and his courses by buying them online.
And I've done both of his courses because I wanted to support him.
And he is amazing.
Oh, OK.
And he is one of the big Bitcoin and crypto aficionados.
He really knows his stuff.
And I'm trying to learn it.
At the moment, Bitcoin looks like a wild speculation, and I understand why blockchain-enabled technology solves one or two of the problems that physical gold has.
I haven't quite got my head around how it works and why we should trust it.
So, there's an amazing book.
Do you know Ronny Stoefele from Incrementum in Zurich?
No.
In Liechtenstein.
Well, Ronny publishes a book or a guide or a publication every year in May called In Gold We Trust.
And it's probably the most comprehensive analysis of the gold market and gold and its role as a monetary instrument in the world.
I don't think there's any publication that is more detailed and has better essays.
And he, for the last two or three years, has dedicated one section to In Gold We Trust, to Bitcoin and to cryptocurrencies, because he says they just stand out as a complementary alternative to gold.
And so if you want to do some great reading, in fact, you want to guess, Ronnie is an amazing font of knowledge.
I think I will.
And a very funny... Ronnie, I'll send you his email and his contact details.
Yeah, do.
Brilliant.
And finally, I mentioned, given I mentioned at the beginning, how did you get your knighthood?
Oh, well, I was part of a delegation that was an interfaith mission that went to the island of Grenada, and there's a sort of story to it.
The island of Grenada is a crown dependency.
The Queen is head of state and there's a governor general and a parliament that I think has It's an amazing place, beautiful.
But in 2005 and 2006 it was devastated in two successive hurricanes which passed on the western border, where the hurricanes usually never go, and it destroyed the entire infrastructure.
of the country and I mean literally the whole nutmeg plantations were destroyed, the governor's mansion was destroyed, the House of Parliaments was destroyed, both cathedrals were destroyed, schools, everything was just flattened.
Two years in two following years.
I mean it was desperate and it's a quite a poor place anyway.
It doesn't have all the posh tourists and the They've been waiting, the government have been waiting for first, I think it was Gordon Brown and then Cameron to sort of make good on a promise to send them funds and to help, which they never really did.
And they had to rely on the Americans who didn't want the place destabilized to sort of pump in some much needed cash.
But anyway, the two archbishops of the Catholic and of the Anglican community
reached out to friends in London and said we need help and an interfaith mission was organized from the two churches to support and to apply some political pressure and to just help raise funds in the interim and they wanted or the organizers wanted a lay catholic and a lay
Anglican and I was involved in the order that was or I knew the chap who was running it and he asked me if I would do that and I did and we went over to Grenada a few times and helped organize that support and in recognition of that they took out their They initiated their sort of order.
There was an Order of the Nation of Grenada.
And on the second or third evening that we were there, we had an amazing time.
We were given these awards, you know, the whole delegation were given an award.
And mine was Knight Commander of the Order of the Nation of Grenada.
And I thought that was lovely.
And, you know, off I went and didn't think anything more of it.
Until a little later, there was evidently There was a huge hue and cry in London and the palace because, you know, Grenada had been giving out knighthoods and it was then, it was then, there was a royal, I think they called a royal declaration was issued that the knighthood is not valid and not recognised in the United Kingdom, which again caused great consternation amongst all the Caribbean nations to, you know, have their own knighthood and orders.
But that's the state of play.
So I don't really know whether I've got one.
I mean, I've got one, but I don't know whether it's a real one or not.
So I don't know whether to use it.
I don't know whether not to use it.
It feels somehow churlish not to because it was given in such good faith by the Grenadian government and by the Governor General and I was invested.
It was all lovely ceremony and my wife was there and it was delightful and I'm quite proud of it.
You can definitely use it when you're next in Grenada, I'd say.
It's completely kosher there.
That's completely kosher there and I can use it anywhere else but it's just not... It's got a very strange status so it's not a... But face it, it's probably worth a lot more than a lot of other people's knighthoods which would be given for services to, you know, the Labour Party or whatever.
Yeah, possibly.
And I was going to say right at the beginning when we were talking about the English aristocracy, I've always believed that the House of Lords
plays an extraordinarily good safety valve function in the United Kingdom, sort of in social order, because you can take business people who would otherwise become quite dangerous if left to accumulate untold amounts of wealth, and once you put them in an ermine robe and a pair of knickerbockers and put a wig on their heads, they become so ridiculous but at the same time so puffed up with themselves that all the air is let out of their danger.
And so shunting off wealthy capitalists to the House of Lords is a remarkably good way of making society less dangerous from two powerful industrialists, because they then spend all their time opening flower shops and kindergartens.
And talking about things which they have absolutely no idea because everybody asks them because they're now in the House of Lords rather than just concentrating on one thing, which is making money.
So I've always thought that's been a really good institution as a safety valve for the country.
I'd love to talk to you forever, but I'm dying for a pee.
And also, yeah, I've taken up far too much of your time.
But Stephen, it's been fantastic talking to you.
And please come on the pod again, will you?
And tell me more about finance.
I would love to.
And the next time I really want to talk about Genghis Khan.
Do that thing.
And I'm going to plug your business on the blurb.
And I hope I drive lots of clients your way.
Thank you.
Thank you so much.
Take care, James.
Bye-bye.
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