Sunday, February 20, 2011

Jay Taylor at The Daily Bell

Altogether, a very good interview and I thank DB for bringing Mr. Taylor to my attention. Also, I thank DB for the after-thoughts. This idea of measuring money is terribly complex, and that is reason enough to admit that “money” cannot be controlled or centrally planned. Kind of like having some central committee trying to figure out the “right” amount of oxygen. How silly would THAT be? (Oh wait, they were actually trying to DO that, too.)

Anyway, some thoughts on the interview:

JT: Basically what you have is a statist propaganda machine through the schools and universities, which are state owned and controlled.

Some argue (and I tend to agree) that this is THE root of all the problems, even more so than the FED, for example.

JT: I think the reserve system lasts for the moment, or as long as the United States military can finance itself.

This is the relationship that matters. The dollar reserve system lasts as long as US military hegemony lasts which lasts as long as the dollar reserve system is in place.

JT: There are embedded cultural expectations for freedom that have given rise to the Tea Party and to people like Congressman Ron Paul.

This is why it seems to me if there is any hope anywhere for some “re-birth” of freedom, it will be in the US. There is a culture that (naively) believes they are free today. One day (when all the promises are broken) the scales will be removed from the eyes, and then (hopefully) the people will demand what they believed they had all along.

JT: [regarding inflation] …when will people finally decide and have enough confidence to stop sitting on their savings or start spending it in the United States?

It isn’t a question of people sitting on their savings. It is solely a question of the excess reserves held by the banks.

JT: But longer term, there is no question the dollar will disappear.

If he believes this, he should stop talking about deflation. By definition, with deflation, the dollar isn’t disappearing. It is getting stronger.

JT: The answer [to the depression] eventually came in the form of World War II.

No, it came with the end of WWII. WWII only masked the unemployment, by “employing” millions in military servitude, along with price controls to hide the destruction in the economy.

JT: So, whether you are on the inflation side or whether you lean on the deflation side, as I do, the one answer is go to money that does not lose its value: gold.

If you believe deflation (a stronger purchasing power of the dollar) why would you buy gold? Hold the dollar: the relative gains of the dollar to everything else will come to you tax free, with no risk of confiscation or any other type of loss or theft.

JT: You need to have small denominations for small purchases. You are going to need this to go to the store to buy bread when the financial system breaks down, and I think it will.

If the system collapses to this extent, the worst thing for your safety will be to walk around town as one of the few with a commodity (gold or silver) available to trade. Plus, if supplies are so dear, shopkeepers won’t easily give up good consumable goods for items that cannot provide food, shelter, or safety. Anyway, the thugs would already have stolen all the goods from the store anyway.

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