Jun
28
2010
Professor Antal Fekete, a gold standard advocate and critic of the existing monetary system, recently delivered a keynote address titled “Architecture for a New World Financial System” at the European Bankers Symposium in Tirol, Austria. Below is an excerpt:
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The tragedy is that the captains of the world economy refuse to realize that runaway debt is the logical consequence of their having exiled gold from the international monetary system in 1971. They try to cure the bad effects of too much debt, or the presence of toxic debt in the system by introducing more of it. They have no idea how total debt could be decisively reduced and toxic debt safely eliminated.
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They are playing a very dangerous game with the welfare of the people. When credit collapse finally comes, production disappears, employment shrinks, law and order break down. We are running into an unprecedented crisis with our eyes blindfolded. Wishful thinking will not coax out “green shoots.”
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The economic disaster staring us in the face will force the recognition that we have to change course. The present leadership will have to admit that its theories and practices have utterly failed. They will have give up their position in disgrace, and the new leadership will have to see reality as it is. They must see that gold has a place in the body politic as well as in the body economic. They must return the world to the gold standard which is the only monetary arrangement that provides for an orderly retirement of debt, and is capable of doing justice between consumption and saving. The world needs a new financial system with stable exchange rates, stable interest rates, and stable bond prices..
Read the full adaptation of Professor Fekete’s keynote here.
Via Dana Webb
May
06
2010
From Roland: With all the scary news on the debt crisis of Greece and others, I hope this will help you better understand the real issues versus the media hype.
First Trust – Problems in Europe right now are serious, especially if you live there and even more so if you work for the government. Greece has basically defaulted, and there are riots in the streets. Spain and Portugal could be next. Global equities markets are selling off. Is this the “W” all those pessimists have been waiting for? No one knows for sure.
But one thing we do know is that the world has experienced many defaults before. The Asian financial crisis in 1998 was serious of course, but we believe a better comparison is the Latin American debt crisis of the early 1980s.
Look at the table above.
Just about every major country in the hemisphere (other than the U.S. and Canada) defaulted on its debt. What is interesting to note is that the market was up significantly in almost every year of defaults. Most importantly, the US had significant exposure to these loans, in fact, the 8 largest banks had 263% of their capital lent to Latin American countries.
Today the situation is different. As far as we know, no US financial institution has any kind of significant exposure to Greece or any other European country and the US is in a V-shaped recovery. If the Latin American debt crisis can be our guide, current fears are overblown and the market has (or will) create a great new entry point.
There will probably be some more bad news in the weeks ahead, but these problems will likely blow over as the US economy continues to strengthen. We remain convinced that another leg down for the economy is unlikely at this juncture.
Visit us at Manarin.com.
Sep
25
2009
Economist Art Laffer offers up this outstanding editorial about the topic of tariffs, increasing taxation, how the dollar’s devaluation was crushing during the depression era, and why we could experience something similar today.
Link: WSJ
