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July 14, 2019 - Freedomain Radio - Stefan Molyneux
46:04
The Future of Gold - and the Libertarian Vision! Peter Schiff and Stefan Molyneux
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Hi, everybody. Stefan Molyneux from Freedom Aid Radio.
I'm here with Peter Schiff, I think, for the third time.
Welcome back, Peter. It's nice to have you on the show.
Well, thanks for having me on again.
All right. So, let's focus on some economic stuff because I certainly know that those of my listeners with assets are always quite excited to hear your viewpoint on the current state of the economy.
Now, Doug Casey and other people have been talking for a while about how we're in sort of the eye of the hurricane and that things are going to get worse.
But there's a lot of skepticism, particularly coming from the Keynesians and the Krugman camp about how well or how badly the predictions of the Austrian-style economists have come true regarding where we are in the economy.
Some people say that there's a recovery.
I know you've recently done an analysis of some Fed documents that seem to say the opposite.
What do you say to the critics who say, well, where is this hyperinflation?
Where is this big economic black hole that is supposed to be coming according to the Austrian theory?
Yeah, well, it's interesting that people who want to criticize the Austrians, you know, they don't look back at all the things that we got right in the past.
They always want to narrow it down to the last couple of years.
They don't look back and say, hey, what were the Austrians saying during the 1990s about the tech bubble?
Or what were they saying about the real estate bubble?
Or even going back further as to what they were saying, you know, And they were wrong because we haven't had one.
But, you know, you could have made the same arguments about my critique of the housing bubble and the Fed policy, and many people did back in 2004 and 2005.
People were saying the same thing.
Peter Schiff's been talking about a housing bubble, but there is no housing bubble.
Look, there's no evidence of a bubble.
It's just strong fundamentals.
The economy is growing.
You know, the market proves that Peter Schiff is wrong.
So I think anybody that is claiming victory now is premature.
And I think the evidence is out there that the recovery that people like Paul Krugman point to as proof that they're right isn't even real.
It's a phony recovery.
It's an illusion that has simply been created or perpetrated by the cheap money, and it just hasn't worn off yet.
That's the only thing that's happened.
We drunk all the alcohol, but we haven't sobered up yet.
We're not having the hangover.
Now, maybe we're going to get more of it than some people might have thought, and maybe it's taking longer for it to wear off.
But I think if you objectively look at what's actually happening in the economy, None of the big benefits that the Paul Krugmans claimed were coming, they haven't arrived.
We haven't created a lot of jobs.
A lot of people have left the labor force, but that's not the same thing.
The stock market's going up.
The property market is going up, but They're not going up for the right reasons.
They're going up for the same reasons they went up in 2004, 2005.
But that ended very poorly.
And I think this asset bubble is going to end even worse.
And it's not even a new bubble.
They're simply trying to blow more air into a deflating bubble.
And it's going to work for a while, but the air is not going to stay in there.
Now, I would characterize the economy, the U.S. economy at the moment as really being in a phase of eating its own seed capital, right?
As you pointed out, there's massive contractions in people's spendings, discretionary income is down, but housing prices are up and consumer confidence is at an all-time high because people are once again, like, it's incredible how this repetition goes round and round in human nature.
People are once again mistaking Fiat-fueled inflation in their asset values as wealth, which is the same thing that happened a couple of years ago, and it's the same thing that's going to be happening now.
And the only way that you can translate a higher home price to greater consumption is if you borrow against your house.
You have to take on debt.
So it's debt finance consumption.
The problem is when the asset prices go back down, the debt's still there.
So maybe you felt richer for a while, but once your asset prices fall, you are poorer because now you have all the debt that you have to repay.
So now you have to reduce your consumption even more to pay back the money you borrowed plus the interest on the loans.
Right. And, of course, it seems to me that the economy is being fundamentally mutated by this continuous $85 billion a month that the Fed is pumping into largely the housing market by ending up not just the guarantor of loans as in the past housing crisis, but the actual outright purchaser of the mortgages now.
The degree to which that's distorting everybody's economic decision making seems to me that we're getting addicted to something incredibly dangerous.
Yes, instead of learning from the mistakes of the bubble and realizing the government was too involved in the housing market and it distorted the free market, they have become even more involved.
So the government is now even more integral to the housing market than it was in the past, and so I think it's now doing even more damage than it did before.
It doesn't mean it's not going to end in misery.
I think, you know, the Austrians are going to be proven correct once again And, you know, people that are taking these premature victory laps are going to, again, you know, have egg on their face.
The question is, are they going to ever acknowledge that they were wrong or are they simply going to come back and say, we just didn't have enough stimulus, we just need to print even more money?
I will not hold my breath to wait for a massive bureaucracy to admit fault and take responsibility for the catastrophes they engineer.
You've also talked about, of course, there was this scare for people in Cyprus and I guess all throughout the European Union a couple of months ago when the Cyprus Bank deposits seemed to be a threat because of rising interest rates and other things.
You've talked about that as being a conceivable scenario here and you have some, I think, backing from the Fed that this may be an issue.
Break that down a little bit for people so they can understand that what has been considered solid ever since government's been guaranteeing bank deposits is bank deposits.
But you feel that more than you feel, you have some arguments as to how they could end up at risk.
Well, the deposits are already at risk.
Ever since the government decided to make banking safer by guaranteeing the deposits, the result has been the banks are far riskier than they were before the government tried to solve that problem.
And so if you have your money in a bank, the deposit is already at risk because one of two things is going to happen.
Either your bank fails and there is not enough money in the FDIC to make you whole, and there's a real loss because you don't get your money back, or the government bails out the FDIC, the Fed prints enough money to enable the FDIC to bail you out, in which case you get your money back, but it's not worth very much because you can't buy very much with it.
So it's either purchasing power or principle that Bank depositors are going to end up losing, which is why they shouldn't have a lot of money.
You shouldn't have a lot of money deposited in a bank.
Any excess money beyond your immediate, you need your rent check to clear, but beyond that, It should be someplace else, whether it's in gold or silver, whether it's in an asset, whether you buy stocks, real estate, a bond. But it's unfortunate that you can't save because savings, that's how economies grow.
That's where capital formation comes from.
That's what powered the increase in our living standard because we used to save our money.
It was gold. It didn't lose value over time.
In fact, it gained value as prices declined.
And so savers were rewarded for depositing their savings in a bank, and the country was rewarded because entrepreneurs got to use that savings to grow the economy.
The government destroyed that process.
And now all we do is try to borrow what everybody else saves.
And so we have this huge bubble economy that, you know, the Fed continues to inflate, hoping it won't burst, but of course we know inevitably it will.
And the problem is the more air that they blow into it, the bigger the burst.
Right, right. Now, in the past, of course, you've advised Americans to try and invest as much in foreign stocks to hedge against any kind of significant correction, I guess we could say, in the U.S. economy.
Looking around the world, I mean, it seems like there's not a lot of firm places to put your feet in this stormy sea.
Do you have any changes in recommendations where people can look for?
Of course, China's faltering. India has some faltering going on.
The Eurozone just seems to me like a complete statist...
Sinkhole. Yeah. Where do you think people should be looking to put their money if they want to get it out of the U.S. quagmire?
Yeah. Well, you know, you've got to understand that, you know, all countries have their share of problems and governments are too big all around the world.
But the problem is that the dollar acts as the reserve currency, or the principal reserve currency, and so we've been exporting our bad monetary policy all around the world.
Foreign governments are obsessed with trying to keep their currencies low relative to the dollar.
So we create inflation and other countries are willing to import that inflation by debasing their own currencies so that they can somehow preserve their share of exports to the United States, even though Americans can't afford to pay for those imports.
But this is really screwing up the economies all around the world.
I mean, I think America is the epicenter of all of these macro global economic imbalances.
So in the short run, it's affecting everybody.
But I think that what many countries really suffer from is having to prop us up.
I mean, America is an expensive habit.
It's a habit that nations need to kick, but it's very expensive to subsidize American consumers.
We buy a lot of stuff and we can't pay for it.
And so it's costing other economies, particularly the Asian economies, the emerging market economies, where people are working so hard to make the stuff that we consume.
And that are saving their money, it's a huge toll on those economies.
And so I think that's temporarily, you know, minimizing some of the investment returns that you might otherwise achieve in those markets because of those actions.
But you have to understand that nothing that cannot go on forever will go on forever.
So I think that you need to have money invested in the countries that are, in general, making a lot fewer mistakes, where they do have all the manufacturing infrastructure.
They do have the production.
You don't have the giant welfare state.
You don't have people living off of Social Security and Medicare and disability and unemployment and food stamps.
You have people working and saving and producing.
Yes, their central banks are creating too much money.
They have too much in the way of US dollar reserves.
But all that is going to change.
They'll come to their collective senses, and I think there's going to be kind of like a renaissance outside of the United States as a lot of these countries reclaim their purchasing power, their savings, their productive output.
And they start enjoying the fruit of making the fruits of their labor available to Americans basically for free.
And then our ride on the global gravy train comes to an end.
So you have to recognize how this is going to change and just own your assets in countries that are going to see an increase in their currency value, in their relative standard of living.
In the meantime, a lot of these emerging market and other developed but Asian economies, there's good dividend yields.
And, you know, we also invest in developed markets in Scandinavia, Australia, New Zealand, up in Canada, where they're making mistakes, but not nearly as many as we are.
And so the underlying, you know, the footings of their economy, the foundations are far sounder.
And so I think, you know, you have much better opportunities with less actual risk.
Yeah, and I think that countries that are responding to short-term economic incentives, like trying to match U.S. crazy economic policies, have a much better chance to reorganize themselves relative to what's happened in the U.S. where you've got generations of people who've grown up on state dependence and it's much, much harder And they have much worse education and, you know, the whole culture has changed.
Once the culture changed, it's really hard to change it back.
Those other cultures seem to be a lot more nimble.
And when the demand from the U.S. begins to diminish and they reorient themselves back, then it seems almost like the economic torch of freedom has passed away from the West in some weird Tolkien kind of way.
You know, now the economic freedom seems to be overseas.
And our knowledge of economics is so screwed up, at least among the people who have any authority.
We are going to respond to any economic downturn with more government, more printing of money, more QE. Even though that is in fact the source of our problems, they're never going to recognize that.
And the fact that we can print money We don't have the discipline that some of the European countries have.
We're just going to print.
And many people see that as our salvation, but it's actually the opposite, maybe our damnation.
I mean, you live by the printing press, you die by the printing press.
And I think we're going to end up overdosing.
On that stimulus.
Krugman's going to get his way.
We're going to do it bigger. Because what they've already done is not going to work.
In fact, people keep confusing.
They think, oh, everything is working.
It's not working. The whole recovery that the Fed has concocted is 100% dependent on not only the stimulus increasing, but getting bigger and bigger and bigger.
The Fed can't even taper, which is what they're talking about.
They actually need to increase the QE because eventually $85 billion a month Ain't gonna be enough.
And it's interesting that they used to talk about an exit strategy.
And I always said they had no exit strategy.
And the fact they're talking about tapering now proves that because tapering isn't an exit.
That's still the Fed growing the balance sheet.
It's just growing the balance sheet a little bit more slowly than they're growing it now.
But pretty soon they're not even gonna talk about slowing the growth of the balance sheet.
They're gonna talk about why they have to increase the rate at which the balance sheet is growing.
But they can't come right out and say that now.
They have to pretend that there's been a change of plans due to the changing circumstances that they didn't foresee, because the Fed can never come out and come clean with the world and say that it's a phony recovery that is only a function of the cheap money, because they have to maintain the illusion that the cheap money can one day be withdrawn, but it can't.
Well, on what conceivable statistical or rational grounds could they withdraw the expansion of this money supply?
I mean, inflation is, I think, far higher than it's ever been predicted.
It's ever talked about. CPI is nonsense.
I mean, they exclude all the highest priced items.
And if they actually calculated it the way that it was back in the Clintons, it'd be well into the double digits by now.
You've got higher unemployment.
You've got more people leaving the workforce.
Eight to nine thousand manufacturing jobs a month are vanishing, being replaced by these crappy low rent service jobs that only add to our trade deficit.
How could you conceivably have an exit strategy for quantitative easing at this point?
I just read this article that was, the article or the headline, the writer of the article was kind of confused because the headline said that inflation is now at a 54-year low.
And he was wondering, you know, maybe that means that the economy really isn't growing, like they said, because if it was growing, inflation would be higher.
Higher, which of course is wrong.
As soon as a growing economy produces inflation, it doesn't.
But what really made me sit up and take notice is the idea that inflation is the lowest it's been in 54 years.
That's longer than I've been on this planet.
And I have a hard time believing Given all the price increases that I experience in my everyday life, all the price increases that people tell me about, I have a hard time believing that this is the lowest inflation in my lifetime.
You know, the fact that the government wants us to believe that inflation is at a 54-year low should be enough proof that the government isn't being honest about what the inflation rate is.
I mean, after all, they're telling us that inflation is lower now than it was in 2008, 2009, At the depths of the financial crisis, how can that be?
It's not possible, but I mean, given that Americans are currently, in a sense, eating their own intestines for lunch and calling it a meal, I think it's just indicative of how far from any kind of reality we've come to.
This is all like morphine for a toothache.
Hey, I feel better. I guess my tooth is better.
It's like, no, no, no. You're not going to the dentist.
You're just getting addicted to painkillers, and that's just going to have such a terrible, terrible outcome.
So I wanted to ask a little bit about...
Of course, you know, gold has taken a crash, and I know that the Austrians have taken some hits, or the gold bugs have taken some hits for that.
And I wanted to put that in perspective.
Of course, you started talking about gold when it was $700 an ounce.
So people are still doing well if they listen to you in the past.
I was talking about it when it was in the $200s, $260, $270.
I wasn't just talking about it.
I was helping people buy it.
I was buying it myself.
But I wouldn't use the word crash.
That's how the media is describing it.
I mean, gold is down better than 25%, 25%, 30%.
You know, I don't know that I would call that a crash.
I would say it's certainly a decline.
It's a significant correction.
But it's not, you know, it's not like the Nasdaq when it was down 90% or 80%.
So they throw the word crash out there to scare people.
Now, you can say that gold stocks, I don't know that they've crashed, but they're certainly down, many of them, 70%, 80%, 90% over the past couple of years.
So that's more likely a crash, even though it didn't happen all at once.
Those are some huge declines that we've seen in the gold mining sector.
But a lot of that has to do with the sentiment.
It's the idea that gold is going to crash.
Even though it hasn't crashed yet, The expectation is out there that it will crash.
And with everybody talking about gold crashing, gold crashing, it does a lot of damage to the psychology of investors.
And remember, when people are buying gold stocks, they're buying future income streams of gold mining companies.
So the present price of gold isn't as important when it comes to valuing a gold mining company as your long-term forecast for the price of gold.
And so really what's happened, there's been a crash in confidence.
There's been a crash in investor expectations when it comes to the price of gold.
There hasn't actually been a crash in the price.
And I think that the sentiment is wrong, that the public is wrong, that the professional investors are wrong.
And remember, the guys that are ultra bearish on gold right now are the same guys that were extremely bullish when it was at the highs at 1900.
So, you know, the consensus doesn't have a very good track record when it comes to gold.
Because none of the people who are buying it in 2011 and 12, who are selling it now, none of those people really were buying it In 2001, 2002, 2003, 2004.
So they watched gold go up for years and years before they bought any of it.
And they rushed in at the highs, and now they're going.
And the reason that a lot of people bought gold at the highs is because they were afraid of a global economic meltdown, and they were told that gold Gold is an insurance economic meltdown.
And now that they're convinced that the economies are recovering, that the central banks have saved the day, they now think there's no reason to buy gold because it isn't the end of the world.
Well, that wasn't why people were buying gold.
You know, people in 1999 and 2000 and 2001 too, they weren't buying gold for that reason.
They were buying gold because they thought central banks would print too much money.
And the only reason we haven't had the end-of-the-world scenario is because they printed even more money.
So from my perspective, the case for buying gold and owning gold has never been stronger than it is right now.
It only doesn't make sense to the people who never understood it in the first place and only came on after a huge move because they misunderstood why gold was rising.
It wasn't rising because people thought that the markets were going to crash.
It was because they think currencies are gonna crash.
And that's what's happening.
If the governments were gonna do the right thing, if the governments were gonna stop the presses, start to sell their bonds and their mortgages, if the Fed really was gonna exit QE, then I think that would be bearish for gold.
But the fact that they're not gonna do that, the fact that they're gonna keep interest rates low, they're gonna keep on monetizing debt, the fact that Japan is doing it, The fact that Europe is doing it, the fact that no governments are going to admit the problem and they're all going to try to paper it over, that's why you want to buy gold.
Because they basically, you know, the politicians have picked their poison.
They don't want to die by deflation.
They'd rather die by inflation.
And that's what's going to happen.
Although, you know, right now they're trying to convince us that there's no inflation or that inflation is a good thing.
They're never going to acknowledge that it's bad because from their perspective, it's not bad because it's not as bad as the alternative, which is all they care about.
Right. I think those are very good points.
There's the old adage that says real estate is hope and gold is fear.
I think there's more reason to fear than there is to hope these days.
But do you think there's a possibility that governments around the world, when they start to really run up against the fiscal crunch, that they can't just monetize away, that they might end up dumping their own gold onto the markets and driving the price down?
Well, I mean, I certainly, that would be one of the most foolish things they could do, is to sell their gold at the point where they need it the most.
But it would be a way to buy some time, but it would be very expensive.
Then what do you do when you don't have any gold?
So I think the smart central banks should be buying as much gold as they can get their hands on right now, knowing that at the end, you're going to need your gold because we have a currency crisis.
We have a dollar crisis. Then if you're in another country, how do you back your currency?
What are your reserves? Because your dollar reserves are worthless.
So you need real reserves.
You need real money behind your currency.
So I think that any country that sells their gold would be making a big mistake.
I think, you know, governments need to be—central banks should be buying, and I think they will be buying their gold.
And ultimately, I do expect some of the countries that have enormous foreign exchange reserves but very small gold reserves to be dramatically increasing their gold reserves.
And some of the other countries, the wealthier countries that have mostly gold reserves are probably going to end up having to sell them.
We're still connected.
We're still connected.
Yeah, sorry, we just had a hiccup there.
Okay, so I just wanted to end up with two questions, and one of them, of course, is designed to go fishing for the sunnier side of the Peter Schiff experience, because Lord knows you can bring a little bit of rain and clouds to what people think of as an otherwise sun-drenched picnic.
Now, the first is, you go into a lot of detail in your presentations, which I, as an economics junkie, really, really appreciate.
Would there be – if you could distill a couple of principles that you'd really like the general population, the general reasonably intelligent, reasonably well-read population, some general principles that you'd like to get them to understand about the economy and where it is and where it could go.
If you could distill that down to a couple of principles, what do you think are the most important?
I'd like people to really understand the difference between consumption goods and investment goods.
That's, you know, again, it's one of these technical things that's really quite important for people to understand.
So they don't think that their house is a factory, you know, just little things like that.
But what are some principles that you'd really like people to understand?
Yeah, well, you know, a lot of people are very confused about, you know, what drives an economy.
They generally have the cart before the horse.
Everybody thinks that the key is the consumer because that's all most people experience.
They go to the store and they spend their money and they think that's what drives the economy because, oh, I spend my money and so there are jobs and there's products.
And so people tend to think that it flows from the consumer up or down or wherever you look at it.
And I try to educate people to understand that no, I mean consumption doesn't grow the economy.
It's a growing economy that makes it possible for people to consume.
That first we have to produce things.
And it doesn't matter how much people want something.
It has to be produced before it can be consumed.
And so if you want a higher standard of living, you have to focus on production.
The economy needs to produce more goods and services.
And the more goods and services we produce, the more we can consume.
And the way the market will, you know, distribute all that will be also a function of price.
Meaning that the more we produce, the less things cost.
So that falling prices are the result of abundance.
And so the more abundant we can make things, the less the cost, and the lower the cost, the more people can afford to buy them.
And so all of our macroeconomic policy needs to be designed around that, which basically means the government stays out of the way and doesn't inhibit entrepreneurs from producing things.
The consumption is just going to come.
You don't have to worry about consumption because if it's produced, it's going to be consumed.
People aren't going to produce things, at least not intentionally, that nobody wants.
They're going to try to figure out what people want and produce that.
And of course, people have to understand that our resources are limited.
The labor, the capital, the land is limited, and so we have to make the most efficient use of the limited resources that we have.
We have to try to satisfy as many human desires as possible With the limited resources we had.
If resources were unlimited, then it really wouldn't matter.
But since resources are limited, we're constrained by the resources, then you have to prioritize our needs and our wants, and nothing does that better than a free market.
And so if we want to maximize our standard of living, we do it in a free market.
We do it with minimal government regulation and taxation.
But very few economists or people in government seem to grasp these simple concepts, and all they want to do is stimulate demand, stimulate demand, as if that's going to do anything to produce the products that everybody wants.
Well, I think that's because consumers feel richer when they're spending money, and that's what buys votes.
So, I mean, I think it's to their economic interest to pursue those policies, however detrimental it is to society as a whole in the long run.
But the key is that they have things to buy.
I mean, people could have millions or billions of dollars, but if there's nothing to buy, the money doesn't have any value.
It's the stuff on the shelves that gives the money value.
But how does this stuff get there?
You know, somebody had to produce it, which means we needed a machine, we needed a factory, we needed skilled workers.
Something had to be done in order to produce that good.
Now, unfortunately, more of the goods that we're producing now or consuming now are being produced in other countries and just shipped over here.
So it's the rest of the world that's making it possible for us to consume.
It's not all the money printing.
It's the fact that, you know, someone in China is working in a factory to produce something.
That's what enables us to buy it, not the fact that Ben Bernanke ran the money off a press.
Yeah, I mean, I remember I was an entrepreneur for about 15 years in the business-to-business market, and I remember it being an incredible education, like mind-blowing, like literally stepping into another dimension once you realize how big the business-to-business market is and how not tiny but relatively smaller the consumer market is.
And once you step through that curtain and you see all of the stuff that goes on to produce, demand means nothing.
I mean, in the Middle Ages, they wanted clean water and houses.
They didn't have them because there was no capital investment to produce them.
And even on an individual basis, people don't necessarily connect the dots between production and consumption, but to the extent that you have a job, what you can consume is a direct function of your own productivity, how much you are helping to produce.
Back in a simple world, in a barter economy, let's say you're a farmer, You grow food, and whatever you buy is a function of how much food you have to trade.
If it's wheat, if it's corn, whatever you're producing, you can only consume what you can pay for with the food that you produced.
But everybody, if you have a job, right, your paycheck is made possible because you are helping your boss to produce some product or provide some service, and you're being paid in relation to your ability to make that enterprise more productive.
And so therefore, what enables you to buy something with your paycheck is the fact that you were productive first.
You contributed to growing the economic pie, and now you get to have your slice of it.
You know, you don't have to produce the same thing that you consume, but you had to produce something.
So all of it is a function.
Our ability to consume is all about our ability to produce.
Now, there are some people that produce nothing.
They get a welfare check, right?
But somebody had to produce something in order for that welfare check to buy something.
So if you're just getting money from the government, the government is stealing the productivity of some other individual and giving it to the welfare recipient.
But if no one produced anything, the welfare checks would be worthless because there would be nothing to buy.
Right. Now, what would you like people to understand most about money?
Because people don't, I mean, the degree of confusion about money is horrendous.
People forget that money is another government program about as successful as every other government program has ever been throughout history.
So what is it that you'd like people to really understand, to really grasp about money?
Because that seems so elusive for people to comprehend.
Well, I mean, fiat money would fit the description, right, what you just talked about.
Money, though, was not invented by government.
Money was invented in the free market, and it was a giant leap forward from the barter economy.
But money was a commodity.
See, initially everybody bartered, but one commodity became acceptable in exchange for all others.
So if you were a butcher and you wanted a chair, you needed a carpenter who wanted some meat.
But that was hard to do.
But if both the butcher and the carpenter would accept gold as a commodity that they both value, then you don't need to find somebody who has what you want, because everybody needs gold, everybody has gold.
And so the free market...
It came up with money.
And of course, money didn't have to be gold.
I mean, the Indians used wampum, seashells.
Salt, honey, other things, yeah.
Yeah, I mean, there are a lot of things.
That's where the salary comes from, salt that the Romans paid the soldiers.
So a lot of commodities can function as money, but no commodity historically has functioned as well as gold.
But what happened is the government didn't like that because governments want power and they wanted power over the people.
And so in order to take more power, governments began to, you know, take over money.
And initially, it was more legitimate where governments would buy up the gold and silver and then make coins of the realm.
They would take the gold and silver and make an official coin, which actually was It was good because it was a standard weight and measure and you could recognize the coin and you know it was pure.
And so in that respect, government might have provided a good function by making money more readily acceptable because people were more convinced of its purity and its legitimacy.
And then, of course, the governments would then collect taxes.
Governments that wanted more power, because they didn't want to be limited or constrained in how much gold they had when they developed fiat money, that's when we really started to have a problem, because now they can just create money out of thin air.
Before that, they couldn't do that.
Government had to get money. They had to earn it.
They had to tax it. But once they had fiat, they could just create it.
And that was really theft.
Because instead of the government having to tax you, they can just rob you of your purchasing power by just creating money out of thin air and spending it to buy real goods and services.
And ever since that happened, we've had these enormous governments that have gotten bigger and bigger and bigger because of the power that they have to make money out of thin air, which we need to take away.
I mean, this is a very dangerous power that the government has.
And if you believe in limited government and freedom, you have to believe in a gold standard.
It's inconsistent or it's incompatible to have freedom and limited government and have fiat money.
If you want a small government, then the only way to keep government small is to have honest money.
Yeah, and so it's one of the ways to keep you out of empire as well.
You can't have an empire without a fiat currency, at least it's rare.
Okay, so the last question I'd like to ask you and this is – I sometimes feel that libertarians and the people who are in the freedom movement, we're like those pictures on cigarette packages.
Like here's a diseased lung.
This is terrible.
We should stop smoking and it's all scare.
And I think the scare is good because there's a lot that's out there that's genuinely terrifying about what's happening in the world particularly.
In the economy. But I think sometimes we undersell the vision of what's beyond the transition because, I mean, boy, you know, people in the 19th century, they had a whole century of declining prices.
Like, everything was like computers.
Everything was getting cheaper and things were stable and even with the, you know, the Civil War in America and all this terrible stuff that was going on, there was a kind of stability in the economy that we really can't conceive of now.
So let's say that we win the battle, the good fight that we're all engaged in to bring some sense and reason and, in a sense, rule of justice to the economy.
What are we looking at on the other side?
What do you think people could look forward to on the other side of this kind of transition?
I think that's not something that we talk about enough as change agents.
I think it would be phenomenal.
I mean, of course we have to get over this hump first, right?
We have to swallow the bitter-tasting medicine in order to cure the disease.
And that's where the other side, that's the problem they have with us.
When we talk about how we need to allow the recession to finish, we need to rebalance the economy, we need to weed out all the malinvestments, that's where they say, you see, we just want pain, you know, We don't want pain because we enjoy it.
We're masochists.
We just recognize that sometimes the pain is necessary if it's constructive, if it's in conjunction with doing the right thing.
Maybe no pain, no gain.
You don't want the pain, but you recognize that it's part of a process that leads to a desired outcome.
If you break your ankle, you've got to go through some rehab so that you can start running again.
I mean, it's not like you want the pain at the rehab.
If you just shoot it up with morphine and keep on running on it, maybe you'll run a little bit further, but maybe you'll screw it up so badly that you'll never run again.
Maybe you won't be able to walk.
So I want to deal with the problem.
Even if dealing with it is more painful than denying it exists, In the long run, it's much more beneficial.
And so that's why they want to criticize us.
But of course, you know, had we done the right thing in 2001, then we never would have had a housing bubble.
Had we had a deeper recession then and people were saying, oh, no, no, no, we have to stimulate.
We can't have this recession.
9-11 happened. The Nasdaq bubble burst.
We need stimulus.
If we didn't have stimulus then, yes, it would have been worse, but we wouldn't have had a housing bubble.
Had we done the right thing in 2008, yes, it would have been more painful than what we got, but now we wouldn't be staring at an even bigger collapse.
My way, we would have taken the pain a long time ago.
In fact, my way, there would have been no need for the pain because we never would have made the mistakes that made the pain necessary.
But once you've made one mistake, you don't make another mistake by denying your first mistake and repeating it.
But to answer your question, what would the world be like if we actually had free markets?
I mean, think about how much the world changed, really.
If you think about... The freest period of America was probably after the Civil War, And before the Fed and the income tax, 1913.
So 1865, 1870-ish to 1913.
That period of time. And think about what this nation accomplished during that time period.
Think about how lives for the average person were completely transformed.
I mean, people went from riding on horses To automobiles.
They went from, you know, outhouses to indoor plumbing, from candles to electricity, to air travel, to the telephone.
I mean, people in 1870 didn't live too much differently than people lived a thousand years earlier.
There wasn't that much difference.
But the difference between that 50-year period, that was incredible, that transformation in American society.
Now, of course, we accomplished all this without any computers, without any of today's technology.
None of that existed.
But we were able to manufacture and produce.
We got the assembly line.
We produced all this stuff without any technology.
And it just, it would boggle the mind to try to imagine what human beings, free from government interference, the way we were back then, given the new technologies that we have today that have nothing to do with government, that were developed by people despite the fact that government was in their way.
But with all the technology at our disposal, we could have an even more miraculous revolution than the Industrial Revolution.
I mean, we can grow our living standards even faster.
I mean, if government started to get out of the way, I mean, not only could we probably end poverty or famine or whatever it is, but I can imagine, you know, I think about, like, you know, the Jetsons and, you know, when George Jefferson used to complain about those two-hour workweek, two-day workweeks and three-hour workdays.
I mean, you know, Capitalism, it wasn't the government that ended child labor.
It was capitalism. It wasn't the government that liberated women from having to work to having a lot more free time.
It was capitalism that did that.
I mean, capitalism is what enabled people to have weekends off and not have to work later.
It wasn't government mandates.
It was the extra productivity that allowed Americans not to have to work as hard.
And so if the government really got out of the way, who knows what we can achieve?
Because I know what we achieved in the past when we had limited government, and I know that the tools that we have now far exceed anything that we had available in the 1880s or 1890s.
But what they had that we didn't have is they had more freedom.
They had a lot less government, and so they were able to do a lot with what little they had.
And the reason we can't do a lot more with what we have is because we have all this government in our way.
Yeah. Yeah, I was talking to my daughter about space and explaining the solar system, and she said, I'd really like to go to the moon, Daddy.
Do you think we'll ever get a chance to go to the moon?
I'm like, well, that depends on whether they end up privatizing the space industry.
If they do, we're on our way.
If they don't, then we'll just have to watch it from a TV screen.
If there is a viable economic reason to go, then we'll go.
I mean, that's the difference. And if private enterprise decides that we're going to go to the moon or we're going to mine space for metals or whatever we're going to do, if there's a viable reason to do it, it'll be done, and it'll be done in the most efficient way possible because the people who do it will be mindful of the cost because they're looking for a return.
They don't want to squander our scarce resources.
But politicians, they'll just go for the hell of it.
And they don't care what it costs, and they don't care what it accomplishes.
And then they'll try to convince us that, well, you know, we got Tang out of it.
You know, as if somehow, you know, all these moon missions were worth it because, you know, they came up with some ancillary, you know, invention.
But who knows what we would have accomplished had we had that money?
If we didn't spend it on the Mercury program and the Apollo program and all this, what else might we have done with those resources?
Not to mention the resources we squandered on the wars and, you know, the real wars in Vietnam or the war on poverty.
I mean, all the things that we wasted our money on back then Who knows where it would be today if we had done something more productive with that money?
Yeah. Well, listen, I don't want to take any of your time, but I really want to thank you for this, and I want to give you the opportunity.
People, tune in to Peter's radio show every weekday, 10 a.m.
to noon, Eastern Standard.
Where can they find you on the web?
How can they tune in, and how can they get in contact with you?
Yeah, well, I'm doing that show every weekday now, live from 10 a.m.
to noon. I would encourage everybody to listen to the show.
That's why I'm doing it, you know, to get the word out there.
I talk about all the issues every day, and I, you know, kind of unspin them because you get a lot of...
Nonsense from the conventional media, not necessarily from your show, but from the conventional media.
And I want my platform to be as big as possible to make as great an impact.
So you can listen at shiftradio.com.
If you can't listen live, which I would encourage you to do because it's a call-in show and you can call in.
But if you can't listen live, if you just go to shiftradio.com at any time throughout the day, we just repeat the most recent show continuously in a loop.
So you can always listen to it.
It doesn't cost anything.
You can subscribe and be a paid member, in which case you have other benefits, you get archives, but you don't have to pay anything to listen to the show.
And we are on maybe 60 or so radio stations, so if you go to SchiffRadio.com, you can look at the affiliates and see which stations are carrying the show.
And if you notice that it's not on in your area, and if there's a conservative talk format show, call them up.
Say, "Hey, why don't you get the Peter Schiff Show?" We don't charge anybody to put our show on.
We make it available for free.
We just have to convince more programming directors that there's an audience.
The people want to listen to my show as opposed to a lot of the other shows because, to be honest, most of them, there's really no difference.
I think my show, relative to Hannity or Levin or Limbaugh or Beck, they're all kind of the same.
And I think I have a different free market libertarian perspective that needs to be out there.
And so, you know, to the extent that your listeners can help get my show on the air, that'd be great.
Encourage them to do that.
And are you speaking anywhere that people can come and see you soon?
Well, no, you know, I normally would be going to Freedom Fest in July, but I have a son being born.
The due date is July 11th.
Congratulations! I didn't know.
Thank you. How exciting for you.
I'm not going to be traveling. Yeah, so I'm not really sure.
I am going to take a swing up by the Porcupine Fest.
I'm taking my RV up there next weekend, so we'll go camping for a couple of days.
I don't know that I'm actually speaking, but I will be up there.
I know I'm going to be going to the New Orleans conference.
That's not until October, so I'm not really sure, but what people should do to check my speaking schedule is go to my brokerage firm website, europac.net, e-u-r-o-p-a-c.net, and just look at upcoming appearances, and there's a calendar, and I have everything, including, look, you know, I mean, when I'm on CNBC, I'm on, you know, later today, but I put up, hey, I'm on CNBC, I'm on Fox, you can hear me on, you know, or I'm going to be speaking.
So you can always keep up to date with my calendar.
And if you're on my mailing list, too, if you sign up, if I'm going to be speaking in your area or anywhere, or, you know, you're going to get an email letting you know, hey, Peter Schiff is coming to New York or I'm coming to Florida, and then you'll know I'm going to be there and you can make a point of showing up.
Yeah, and on YouTube, Shift Radio is a great place to get your latest stuff as well.
So thanks again, Peter.
Always a great pleasure. I'm sorry we won't get a chance to see you face-to-face this summer, but I'll be back speaking around in October.
So thanks again, and have fun on the TV this afternoon.
Oh, great. And anytime, Stefan.
And thanks for everything you do as well.
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