The American Empire is
Disintegrating Around the Periphery
On July
4, 1776, at the Second Continental Congress, delegates from the 13 United
States unanimously declared their Independence from England. These Founding Fathers declared the
following:
“WHEN in the
Course of human Events, it becomes necessary for one People to dissolve the
Political Bands which have connected them with another, and to assume among the
Powers of the Earth, the separate and equal Station to which the Laws of Nature
and of Nature's God entitle them, a decent Respect to the Opinions of Mankind
requires that they should declare the causes which impel them to the Separation.
“WE hold these
Truths to be self-evident, that all Men are created equal, that they are
endowed by their Creator with certain unalienable Rights, that among these are
Life, Liberty and the Pursuit of Happiness -- That to secure these Rights, Governments
are instituted among Men, deriving their just Powers from the Consent of the
Governed, that whenever any Form of Government becomes destructive of these
Ends, it is the Right of the People to alter or to abolish it, and to institute
new Government, laying its Foundation on such Principles, and organizing its
Powers in such Form, as to them shall seem most likely to effect their Safety
and Happiness. Prudence, indeed, will dictate that Governments long established
should not be changed for light and transient Causes; and accordingly all
Experience hath shewn, that Mankind are more disposed to suffer, while Evils
are sufferable, than to right themselves by abolishing the Forms to which they
are accustomed. But when a long Train of Abuses and Usurpations, pursuing
invariably the same Object, evinces a Design to reduce them under absolute
Despotism, it is their Right, it is their Duty, to throw off such Government,
and to provide new Guards for their future Security. Such has been the patient
Sufferance of these Colonies; and such is now the Necessity which constrains
them to alter their former Systems of Government. The History of the present
King of Great-Britain is a History of repeated Injuries and Usurpations, all
having in direct Object the Establishment of an absolute Tyranny over these
States. To prove this, let Facts be submitted to a candid World.”
Now,
nearly 226 years after those words
were written by our Founding Fathers, it is becoming increasingly clear that
the same kinds of tyranny spoken of by the authors of the Declaration of
Independence are rearing their ugly heads once again in America. Recognizing
the dangers the Federal Reserve poses to our freedom, Dr. Larry Parks, has
committed his life to alerting people to the growing threat of tyranny and
economic catastrophe imposed on the American people by the creation of a
limitless amount of fiat money by the Federal Reserve Bank. Indeed, Larry believes the time left for
Americans to right this wrong may be short. As he says toward the end of our
May 1, 2002 interview, “The system is literally hurtling to destruction, and
there are not enough voices being raised to stop this out-of-control
locomotive. It is driven by greed and a lust for power without regard to
peoples’ sensibilities or safety. If you think of America as the center of an
Empire, then the Empire is disintegrating around the periphery, and the
periphery is coming closer.”
G. Edwin
Griffin noted in a speech before an investment crowd last month in Acapulco
Mexico, that there are really only two differing philosophies of government, no
matter what political party you may identify with. Those two philosophies are collectivism and individualism. Communism and Fascism were of course
despicable collectivist ideologies that in the final analysis are similar in
every practical aspect. On the other
hand, the Declaration of Independence reflected the greatest philosophy of individualism
ever written into any Constitution. Indeed our Founding Fathers believed the
right to be who you were created to be was granted by our Creator, God. In the following interview, a hopeful Dr.
Parks explains why he is very concerned that the system of theft instituted via
the Federal Reserve Bank is ruining America. But he offers some advice as to
how you can protect yourself financially and also help reverse the spread of
our carcinogenic fiat monetary system.
Taylor: - Larry,
could you tell our subscribers something about the Foundation for the
Advancement of Monetary Education, (FAME ); about its history; how long has it
existed; its purpose; why have you dedicated so much of your time to it; and,
who are some of the people associated with it?
Parks: I formed FAME in 1995
to address what I see as perhaps the most important problem facing our country
and the world, the ongoing destruction of the “dollar.” I put the word “dollar”
in quotation marks because, as FAME Foundation Scholar Edwin Vieira [the author
of the forthcoming Pieces of Eight, which is the definitive
book dealing with the legal aspects of our fraudulent monetary system] points
out, the “dollar” no longer has a statutory definition.
These days, economists describe our money as being an
“illusion,” without fully disclosing that it is intrinsically worthless,
created without any work, and that it can be created in unlimited quantities by
the banking system. Since the year 800 in China, there have been hundreds of
experiments with fiat money, (arbitrary money), the kind that we have now, and
they have all come to a bad end. Why anyone thinks that it will be different
this time makes no sense whatsoever. Even Mr. Greenspan now says that the
Federal Reserve is “learning” how to manage fiat money.
Given the fact that our entire economic and political
system, maybe even our very lives, are at stake, why not have the kind of
monetary system that Mr. Greenspan confirms would virtually eliminate the
possibility of a complete collapse? Why should we be saddled with a monetary
system that, in Mr. Greenspan’s words, the Federal Reserve can thwart from completely
collapsing with a “high probability?”
From the
outset, FAME attracted participation from some of the world’s most outstanding
personalities: the late Jim Blanchard; Congressman Ron Paul, former Rockefeller
University President and former President of the National Academy of Sciences
Dr. Frederick Seitz; President of the Hudson Institute Dr. Herbert London; and
many others, for a total of about 35 persons on its boards. Your subscribers
can see who they are in the “about FAME” section of our website at
www.FAME.org.
Taylor: A visit to
FAME’s home page reveals some very interesting quotes and articles. I want to
mention a few of them and ask you to provide a brief overview for our
subscribers. Then, if they like, they can visit www.FAME.org to learn more.
First, I see you have
recently written a book titled,
What does Mr. Greenspan Really Think? This is of great interest to our
readers who are aware that Mr. Greenspan essentially revealed to Congressman
Paul in February of 2001 that he still believes what he wrote in 1966 in an
article titled “Gold & Economic Freedom,” namely that if a society is to
remain free, it must have gold at the heart of its monetary system. Does your
book touch on that theme? Can you tell our readers what it is that Mr. Greenspan
really thinks?
Parks: Mr.
Greenspan has done the world an enormous service in a lecture he gave about
four years ago in which he, unlike all Federal Reserve Chairmen before him,
raised some of the key issues dealing with our monetary system, such as the
likelihood of a complete collapse, and the subsidy that we give to the banks
and other financial players. Why he has opened the door to discuss these issues
is something only he can tell us, but he has gone much further than any of the
monetary authorities have ever gone in warning us about the instability of our
current system. However, there were four shortcomings with this lecture.
First, he
gave it in Belgium, and, as far as I can tell, while the full text was posted
on the Federal Reserve Board of Governors website, there is no one on this side
of the Atlantic in the media or the academy who picked up on it. Second, almost
the entire lecture is in the FedSpeak jargon he so often uses. Those who are
not steeped in central bank terminology will no doubt fail the grasp the
significance of what he is talking about.
Third,
while he raises many important issues, he does not explain their antecedents or
give any rationale as to why they are relevant. Fourth, and perhaps most
important, he does not raise any of the moral issues. One cannot help but get
the impression that Mr. Greenspan is completely amoral. He has no sense of
right or wrong. For him, whatever exists is ok because it is. This, of course,
is not acceptable to most people.
In my
What Does
Mr. Greenspan Really Think?, I parse and translate Mr.
Greenspan’s jargon into plain English, so everyone can understand what he is
saying. At the same time, I have added commentary to explain the monetary
issues, in some cases giving their background, so folks can understand how they
developed.
Finally,
and most important, I ask the moral question about our current system: is it
fair? The answer is that our system is not fair. It works to transfer the real
wealth of society from the people who earn it, mostly ordinary working people,
to those who create the fiat money (the banking system) and to those who get
transaction fees for moving it around (the Wall Street community).
In
effect, our monetary system constitutes institutional stealing. And, just as
the Nazis passed laws to make their actions legal, the financial sector has, in
a similar, but in a much more sophisticated way, perverted our political
system. Ironically, in the nineteenth century, folks were well aware of the
danger from what Abraham Lincoln, and many others, called the “money power.”
Today, the financial sector, through financing and through advertising,
dominates the so-called Establishment Media, and, most essential, the financial
sector has captured the Academy. So, if people don’t get the truth from their
newspapers and television programs, and their professors and textbooks mislead
them, how are they supposed to find out what is going on?
While
there is overwhelming anecdotal evidence that there is something seriously
wrong, without basic monetary concepts and vocabulary, misinformation and
disinformation are difficult to counter.
Taylor: Larry, it may be, for
some folks, that the notion that the financial sector has, in your words,
“captured” our institutions of higher learning is fantastic. Can you back this
up?
Parks: Sure. Perhaps
the most telling evidence about this is a line from John Kenneth Galbraith, the
Elder Statesman of the economic profession. In 1975, he penned a book
appropriately titled Money: Whence it came, where it went, in
which he wrote: “The study of money, above all other fields in economics, is
one in which complexity is used to disguise truth or to evade truth, not to reveal it.”
[Emphasis added.] In the English language, we have a word for “disguising and
evading truth”: it’s called lying.
So what Professor Galbraith
is saying is that, when it comes to money, economists lie! What an amazing
thing for him to say, because he is not some third-rate-passed-over junior
economist sowing sour grapes. He is The Man. At one point, after President
Kennedy was murdered, the Democrats wanted to run Galbraith for President.
Fortunately for the country, he was born in Canada, and so he wasn’t eligible.
The question that this
statement brings to mind is: why should academic economists lie about money?
Why not tell the truth? After all, they have tenure and can say what they want.
The answer is that they have been bought off.
Buying what
public relations people call “academic cover” has a long and notorious history.
In the 1830s, for example, slavers went to Yale University with a bag of money,
endowed some chairs and built some buildings — which still stand with the names
of the slavers — and got Yale to endorse slavery and to lobby against what was
then called a “Negro college.” This was brought to light a few months ago by
two PhD candidates at Yale who referred to the original source documents. In
our day, it is well known that pharmaceutical companies routinely solicit
medical schools with endowments, research grants, prizes, etc. to get doctors
to endorse and write about how wonderful certain drugs are.
But no one has bought academic cover for
a longer period and with greater efficiency than the financial sector. Not only
have the financial folks sponsored numerous prizes in economics, but they have
also endowed chairs, conferences, honorariums, consulting assignments, and who
knows what else. Just recently, for example, I found out that the so-called
“Nobel Prize” in Economics is not one of those prizes endowed by Alfred Nobel
in 1901. No. This prize came in 1968, and it is a bank prize. The prize money,
now $1 million, is underwritten by the Central Bank of Sweden, and the real
name of the prize is “The Bank of Sweden Prize in Economic Sciences in Memory
of Alfred Nobel.” Naturally, they are not going to give one of these prizes to
someone like Murray Rothbard or anyone who is too critical of the fiat money
fraud.
While the slavers and the
pharmaceutical companies, and others, have been buying off academics for almost
170 years, at least they were doing it with their own money. In the case of the
financial sector today, they are using public money, conveniently created out of
nothing by the Federal Reserve Board of Governors and by almost all of the
twelve regional Federal Reserve banks, to compromise the Academy. They do this
with what are euphemistically called “consulting fees” and awards to “visiting
scholars.” There’s a whole story about this in my Fight for Honest Monetary
Weights and Measures paper on the FAME website, but, briefly, when Henry
Gonzalez was Chairman of the House Banking Committee, he collected about a
thousand of the agreements that the Federal Reserve proffered to prospective
“scholars.” Gonzalez said:
“The Federal Reserve employs
hundreds of researchers in their research departments, but inexplicably also
spends millions to pay hundreds of outside economic consultants. . . The Fed is
simply buying off potential critics by holding out contracts that offer
academics extra money and use of the Fed’s facilities. No agency
that has to justify its spending would dream of this kind of extravagance and
waste.” [Emphasis added.]
Obviously,
there’s a lot more to this than I can include in this interview. The bottom
line is that neither the Establishment Media nor, with the exception of the
Austrian School of Economics, the academy can be relied upon for honest
information about money.
Taylor: You’ve told me about this before, but every
time I hear it, I am just blown away by the mendacity and the corruption of the
system. New topic. Another book featured on the Home page at www.fame.org is
titled
Special
Privilege: How the Monetary Elite Benefit at your Expense. Could you tell us who the author of this
book is and what is its general thesis?
Also could you tell your readers if you agree with it and if so why?
Parks: Special Privilege is a sensational book by a very charismatic scholar of the monetary
system, Vincent LoCascio. Special Privilege alleges that government
grants special privileges to the financial sector of the economy that violate
the fundamental principles of free enterprise that most of us cherish. In
addition to the injustice of these special privileges, they pervert the free
market, thereby guaranteeing a mammoth future crash. In other words, like a needle
in the arm to a drug addict, special privileges not only guarantee a future
collapse but also push it off further into the future. The solution can take
one of several forms, all of which boil down to: remove the special privileges.
In fact,
the notion of special privilege has always been repugnant to the American
sense. That’s why, in the Constitution, the government is prohibited
from granting titles of nobility. The Founders did not even want the appearance
of special privilege. This was a big issue in the nineteenth century that has
somehow been lost in our era.
Taylor: Also, I
notice that FAME has just published a third book:
The Gold Wars: The Battle Against Sound
Money As Seen From A Swiss Perspective. Can you tell us something
about The
Gold Wars?
Parks: TheGold Wars was written by a Swiss patriot, Ferdinand Lips, a FAME Trustee and a
long-time sound money scholar. Mr. Lips has been involved with money and
banking his whole life, first as a founder and managing director of the
Rothschild Bank in Switzerland, and then as the proprietor of Bank Lips, which
he recently sold.
The Gold Wars deals with gold’s history, the gold rushes and the abandonment of
gold-as-money under the modern welfare/warfare state. It shows how governments,
fearing the affinity of free people for gold, fight it, thereby helping to
destroy whole countries along with the gold mining industry. The book
highlights the betrayal of gold-rich Switzerland. Mr. Lips condemns gold
“hedging,” gold market manipulation by governments and bullion banks, fiat
money and debt. He concludes that only a gold standard can return an ailing
world economy to its full potential, reduce unemployment, help restore law and
order, and help to secure peace and freedom for mankind.
Taylor: You are quoted as having said, “With the
monetary system we have now, the careful saving of a lifetime can be wiped out
in an eyeblink.” I think there are
quite a few people who can no longer deny that is true, given what has happened
recently with Enron, but would you care to expand on that theme for our
readers? I have listened to some of the
Enron hearings and I have not heard any comment – except perhaps from
Congressman Ron Paul – that our monetary system shares blame. Quite the
contrary, our politicians are primarily scolding Enron executives, telling them
in so many words that they are evil and that they selfishly abused small
investors and employees at Enron. How is it that our monetary system shares
blame for the Enron debacle and God knows how many more tragedies to come?
Parks: Jay,
let’s first deal with the notion that the savings and pensions of ordinary
people could evaporate over a weekend. This is something I discuss in my What Does
Mr. Greenspan Really Think? book in response to a statement
by Mr. Greenspan that the Federal Reserve can, in his exact words, thwart a
complete collapse of our financial system “with a high probability.” In my
view, this is the most important comment he has ever made, and should be
considered with another statement that he repeated five times: that the Federal
Reserve stands ready to create money, in his exact words, “without limit,”
should it, in its sole discretion, and without recourse from the president,
from the Congress or from the Supreme Court, deem it necessary.
This is
not something one is going to read about in the New York Times or the Wall Street
Journal. Martin Mayer, the famous and brilliant financial writer,
says that news stories about this suffer from what he calls MEGO, which is an
acronym for “my eyes glaze over.” In essence, Mr. Greenspan is saying that our
system is vulnerable. Suppose the pilot of a Boeing 757 was discussing the
possibility of crashing and that he can prevent a crash with a “high
probability.” If passengers were to hear this kind of talk coming out of a
cockpit, I believe there would a great deal of apprehension.
I credit
Mr. Greenspan for having the courage to raise this issue. By the way, he also
said that if we had a commodity-based monetary system, and everyone reading
this knows what commodity that would be, the possibility of such a collapse
would be virtually eliminated. That is what I want, and that is what most of
the world wants: a monetary system that is virtually immune from collapse.
Tellingly, Mr. Greenspan does not say how high is “high,” and he doesn’t give a
clue as to how to calculate the “probability” he speaks of, as if it can be
calculated at all. And, perhaps most important, he doesn’t say for how long the
Federal Reserve can keep this house of cards in the air.
Also, and
very disturbingly, Mr. Greenspan says that the long term is two
years! For most of us, the long term is twenty years or more. But Mr. Greenspan
is in a different situation: he is 75 years old, and he has no family, i.e., no
children or grandchildren. So, for him, perhaps the long term is two years.
This observation by Mr. Greenspan has significant implications for investment
portfolios and anything denominated in “dollars,” such as savings, pensions,
rents, insurance, or any other promises of future payment. Should the Federal
Reserve find it necessary to create money “without limit,” virtually everything
denominated in “dollars” could become worthless overnight.
Taylor: Larry,
this is pretty scary. How can folks protect themselves?
Parks: Well,
some years ago, Mr. Greenspan taught that the one commodity that would protect
against the perils of fiat money is gold. He discussed this in his now famous
essay “Gold and Economic Freedom,” which appears in Ayn Rand’s Capitalism
the Unknown Ideal. When I asked him about nine years ago whether he
still agreed with the reasoning and conclusions in this article, he said
“Absolutely!” And, as you have reported, when Congressman Ron Paul recently
asked Mr. Greenspan to autograph a copy of the essay, Dr. Paul asked Mr. Greenspan
whether he would change anything, and Mr. Greenspan said, “not a word.” I think
Mr. Greenspan has this exactly right.
Taylor: The other
day when you and I were having lunch at your local Japanese restaurant in
Manhattan, you referred to Enron as “the Canary in the Mine.” Could you tell our readers what you had in
mind when you made that comment?
Parks: As is
being reported in the media almost daily, virtually all publicly-traded
companies have used Generally Accepted Accounting Principles, GAAP, to phony up
their results. The only difference with Enron is that Enron pushed the
envelope, and Enron got caught. Folks should know that GAAP is not one of those
things that came down from Mount Sinai on the Tablets. GAAP is an invention of
the U.S. accounting profession, and its purpose is to make profit & loss
statements and balance sheets look better than they are in order to help hype
stock prices and concomitant option awards for company executives. Sadly, the
immorality of what is truly fraudulent behavior on the part of corporate
America is not a concern of its leadership.
Recently
Dr. Herb London and I penned an Op-Ed in which we took the position that GAAP
should be thrown in the garbage, where it belongs. In the interim, publicly
traded companies should make public their tax returns, because the IRS has a
much tighter set of rules than does GAAP. Also, because it would mean paying
more money to the Government, companies would tend not to inflate their
earnings.
Longer
term, accounting standards should be set not by companies, not by the
accountants, and certainly not by the government, but by large investors, e.g.,
CALPERS, Warren Buffett, etc. These folks have a proprietary interest in the
well being of companies, they are sophisticated, and they understand better
than anyone what kinds of disclosure should be forthcoming. The role of
government should be to just make sure, with felony penalties, that disclosure
is uniform and that everyone gets the same information, perhaps distributed on
the Internet, at the same time.
At the
Bond Market Association Conference on April 25, 2002, I asked former Federal
Reserve Chairman Paul Volcker what he thought of this proposal, mindful that he
was heavily involved with an attempt to make Arthur Andersen an “audit only”
accounting firm. Distressingly, he said that the investment community had shown
virtually no interest in reforming the system. When he inquired why, some very
high up folks told him that they thought their analysts understood the present
system and that they had an edge that they didn’t want to give up. I thought
this was kind of depressing. It is just symptomatic of how much corruption
there is in our system.
Another
proposal that Herb London and I put forth is that the government should
eliminate any laws that limit liability for anyone; no more financial elites
hiding behind “corporate veils” or “limited liability companies.” Why shouldn’t
everyone be responsible for his actions or lack of actions that he is required
to take when he has a fiduciary responsibility to take them? When I put this
question to Harvey Pitt, the head of our Securities and Exchange Commission, he
said that we need to limit liability for accountants and lawyers because
otherwise they are subject to too much “frivolous” litigation. It seems to me
there must be better ways to deal with frivolous litigation, but that’s what he
told me.
As you
can surmise, this leaves us in a more than perilous predicament. The accounting
is no good, the responsible parties have been largely exempted from
accountability, and there doesn’t seem to be anyone in the Establishment who
wants to fix this in any fundamental way. As with almost all structural
deficiencies, when the stuff hits the fan, the call goes out “who can we
blame?” In the case of the Great Depression, Franklin Roosevelt blamed a “few
bad apples” in the banking sector. There were Congressional hearings, and a few
scapegoats went to jail. But the system, which was demonstrably corrupt in the
1930s, was reincarnated into something even more egregious: a fiat money
monetary regime. For that, there will be an enormous price, maybe one that is
unbearable, and that speaks to FAME’s purpose. We want to prevent a
discontinuity in the monetary system.
Taylor: Is
there some reason why you are more fearful of a monetary discontinuity, mindful
of the awful consequences, given the fact that they have been occurring in most
countries and, even though there is unspeakable hardship for some, life goes
on.
Parks: The
U.S. is qualitatively different from places like South Korea, Russia, Malaysia,
Peru, Mexico, the Philippines, and myriad other countries where the currency
has collapsed. Almost alone, the U.S. is an armed country. Here, we have about
250 million guns in the hands of the public. If there is a monetary collapse
and large numbers of people lose their pensions, savings, and jobs, there is
potential for serious turmoil.
This is
something every sane person should seek to avoid. The problem is that folks
have no idea of the real cause. In Southeast Asia, for example, when currencies
collapsed a few years ago, the scapegoats were “crony capitalism” and “weakness
in the banking sector,” i.e., lax regulation. Mahathir Mohammad, the Prime
Minister of Malaysia pulled out that old chestnut and said right out that the
Jews were responsible. There was not a single mention of fiat money and the
fact that fiat money always depreciates to near zero. Clearly, to prevent a
monetary discontinuity, folks need to understand the connection to fiat money.
Taylor: Another quote you
have on your web site comes from Nobel Laureate Dr. Robert A. Mundell. Dr.
Mundell says, “I believe that exchange rate volatility is a major threat to
prosperity in the world today.” Could you tell our readers why you posted that
quote and what Dr. Mundell meant by that? Is Dr. Mundell in favor of a return
to a fixed rate regime? Would he base it on gold?
Parks: This has
to do with the desire of almost the entire world for monetary stability. That’s
what ordinary people want, and that’s what multinational industrial firms want.
I say “almost the entire world” because there is one sector that does not want
stability: the financial sector. Because the financial sector makes a great
deal of its profits from “trading,” as in currency and interest rate trading,
the financial sector wants monetary volatility, not stability. To put this
another way, large multinational industrial firms want to minimize the
transaction costs of cross-border business. However, the transaction costs that
they want to minimize are revenues to the financial sector. Thus,
the financial sector has a conflict of interest with large
multinational firms and with ordinary people all over the world.
Unfortunately
for the world, the financial sector has been in de facto control of the
structure of the monetary system, and financial players have rigged the system
to their own benefit to the detriment of everyone else. Professor Mundell
recognizes that this is a problem, and that it will eventually lead to a
collapse. While at times he speaks nostalgically about gold, I have never heard
him make a clear call for gold-as-money. Also, in the “what’s new” section of
the FAME website, there is a transcript of a
transcript of a
conversation I had with Professor Mundell re legal tender laws conversation I had with Professor
Mundell re legal tender laws.
At no
point was I able to elicit a statement from him that legal tender laws are
unfair. Today, almost all economists, save the Austrian School, are amoral, and
Professor Mundell fits right in. He did say, however, that we need legal tender
laws because our “dollar” is very “overvalued.” One should realize that this
results in winners and losers. The winners are buying $15,000 bottles of wine
at lunch (no typo, as reported by the New York Times), 300-foot boats, and
30,000-foot houses. The losers are the 2 billion people who live on less than
$1 per day. Can one imagine a more dysfunctional system than this?
Taylor: Paul Volker is
quoted as saying “There’s a sensible realization that small open economies,
heavily dependent on trade and foreign capital, simply cannot live with the
volatility that is inherent in freely floating exchange rates.” Does Mr. Volcker offer an alternative to the
existing floating rate currency exchange regime?
Parks: Not yet,
but I am hopeful that he will endorse gold.
Taylor: You also
quoted Mr. Volcker as saying that “A global economy requires a global
currency.” I’m sure Mr. Volcker was not taking about a gold-as-money, was he?
Most certainly he was in favor of the dollar as the global currency when he
made that remark.
Parks: Mr. Volcker
may yet turn out to be an ally. I don’t know what currency he has in mind, but
there are compelling reasons why it cannot be the dollar. As Hugo Salinas Price
has made clear in his essays, the structure of the world’s monetary system
means that foreign nations, especially those who use the “dollar” as their
reserve currency, must continue to acquire “dollars.” There is only one way to
do that: export more than they import. This means that the U.S. trade imbalance
is structural and will not disappear no matter how high the “dollar” goes.
In my “To Revive U.S.
Manufacturing, Reform Our Monetary System,” I point out that as foreign
currencies depreciate against the dollar, and that depreciation has been
ongoing for years, for trading purposes, that is the equivalent of increasing
tariffs for foreign countries, and reducing them for the U.S. Unless something
happens, e.g., a collapse of the “dollar,” manufacturing in the U.S. is doomed.
Hopefully, at some point, someone in the Establishment will wake up and realize
that there is something wrong with the monetary system that needs to be
addressed.
Manufacturers
are recognizing more and more that they have a problem with the so-called
“strong dollar.” Last September, for example, the steel industry, the textile
industry, and others, together with the National Association of Manufacturers,
formed a something called the “Sound Dollar Coalition,” which is much less than
it sounds. They went to the U.S. Treasury and asked one of their own, Secretary
of the Treasury Paul O’Neill, to lower the “dollar.” Almost in unison,
Treasury, the Federal Reserve, and especially Wall Street, said “No.” Not being
mindful of the monetary implications, the Sound Dollar Coalition folks wandered
off with their tail between their legs muttering that all they really wanted
was for the Treasury to stop denying that there was such a thing as a “strong
dollar.” Clearly, they had no program, and they got no result. FAME is working
hard with some of these same folks to change that.
Back to Mr. Volcker. The
reason I have hope for him has two parts. First, I regard him as having great
integrity, and I am hopeful that he will call it the way he sees it. Second, in
the book The
Central Banks by Robert Pringle and Marjorie Deane, Mr. Volcker
wrote that if it is stability we want, we did better with gold! I regard this
as a very significant statement. As an aside, once when I asked him about this
statement, he said to me: “Did I write that?” And I said, “yes you did.” He
gave me a kind of wry smile.
For the rest of us, if it is
true that a global economy requires a global currency, and it is true, then
what will that global currency be? Will it be a paper-ticket fiat currency
imposed on us by a financial elite that sucks up our substance and impoverishes
us, or will it be the free market solution: gold-as-money?
Taylor: Most folks in
the U.S., and perhaps around the world, are under the impression that we have
free markets now. In any event, that’s what we hear all the time from
Washington and from the Establishment Media. What is your evidence that
financial markets are not free?
Parks: The evidence
is incontrovertible and overwhelming. The Federal Reserve per se is not a free market
institution. In totalitarian style, it brazenly manipulates interest rates and,
for all we know, in Mr. Greenspan’s words, other market events. With regard to
gold, if our fiat money is good money and would be preferred by the people,
then why are legal tender laws necessary? And if our money is not good, then
why in a democracy should people be forced to use it, especially for their
savings and their pensions?
Parenthetically, when I put
this question to Dr. Alice Rivlin, former Vice Chairman of the Federal Reserve,
she claimed “not to be an expert in legal tender laws,” and evaded the
question. It’s incredible that someone at her level can, with a straight face,
claim not to understand the foundation of our fiat money monetary regime.
In addition, our system
guarantees the banking system’s entire balance sheet. Its assets are protected
by the so-called “lender of last resort” bailout facility, and its liabilities
are protected by “Federal Deposit Insurance.” It’s these guarantees, which Mr.
Greenspan correctly describes as a subsidy to the banking system, that enables
the banking system to leverage up, and that’s what makes the system unstable.
No one can justify these subsidies to the banking system as consistent with
free market principles.
Also, internationally, the
International Monetary Fund, (the “IMF”), which is under the de facto
control of the U.S. Treasury, in its Articles of Agreement, Article 4 section
2b, prohibits member countries from linking their currencies to gold, and only
to gold. Now, what possible public policy justifies this prohibition? Last
week, when I put this question to Jean-Claude Trichet, the Governor of the Bank
de France and a governor of the IMF, he talked around the issue. To someone who
is alert, there are huge fissures in the current system that cannot be
addressed in a rational way. These fissures are getting larger, and eventually
the whole structure will collapse. This is something everyone should work to
avoid.
Taylor: Larry, despite
the fact that you live in a prestigious address on the Eastside of Manhattan,
ever since I have known you, you have had a heart for the poor and middle
class. So in fact, you have worked with labor unions to try to get them to
understand how our existing monetary system is hurting them the most. You
frequently talk about a Biblical concept, namely that of “honest weights and
measures.” And you have noted that,
when given the choice, common folks always prefer gold-as-money to fiat money.
Can you explain how fiat money hurts
common folk? The concept I was taught in my economics courses was that gold
keeps poor people poor. But if paper or fiat money were allowed to exist,
loving, caring politicians could put into place social programs and fund them
with printing-press or “electronic” money. In other words, the Establishment
claims that paper money helps bring about social justice, with wealth being
re-allocated from the rich to the poor. But if I understand correctly, you
maintain exactly the opposite is true. Do I understand you properly? If so,
could you expound on the notion that gold would bring about a more egalitarian
society than paper or fiat money?
Parks: Jay, in
my heart I identify with ordinary people because that is my background.
Everyone in my family, including me, worked their way up from very humble
origins. During the Great Depression, for example, my parents and their
immediate families were on the brink of starvation. I have heard all the
stories, and I don’t want to see them repeated. As to gold-as-money and
ordinary people, in the last century, and even before that, there was always an
understanding that there was a problem with “bank money,” i.e., bank promissory
notes or “Bank Notes,” as paper money was referred to.
In the
1830s, when the Labor Movement was beginning in the U.S., there were three
issues that drove men to join unions: the ten-hour work day, education for
workers, and sound money. Sound money was specie, not bank money. One who
helped form one of the very first unions, Eli Moore, who was the President of
the Typographer’s Union in 1832, was a staunch sound money man and a supporter
of President Jackson. So, this is a history that goes way back. Even William
Jennings Bryan, who made the famous “Cross of Gold” speech in 1896, would have
been aghast at the notion of fiat money. He did not want to do away with gold,
by the way. He just wanted a role for silver. Also, at that time, the American
Federation of Labor promoted gold.
The
reason gold-as-money is important for ordinary people is that there is no other
way, as Mr. Greenspan has taught, to protect savings and pensions. This is
something that is being overlooked in the U.S. today, even though ordinary
people all over the world are being victimized by fiat money. An example that
is in the press almost daily is what has occurred in Argentina. If ordinary
Argentines had gold-as-money, they wouldn’t be wiped out, as they have been.
Taylor: I know you are aware of the Gold Anti-Trust
Action Committee and their allegations. Do you believe GATA is correct in their
allegations? If so, do you believe
exposing the gold manipulation by our authorities will be helpful to FAME in
carrying out its goals?
Parks: To
suggest that there is a free market and no manipulation for gold is absurd on
its face. Aren’t legal tender laws and the prohibition that the IMF has to
prevent member countries from linking their currencies to gold prima facie
evidence that we do not have a free market in gold? How can one explain the
tremendous worldwide publicity given the Henderson Report, which was sponsored
by the Federal Reserve, urging central banks to sell all of their gold now?
What about the preannouncements from the Bank of England that they plan to sell
gold? What about the derision one meets from financial establishment types
whenever one talks about gold-as-money? The list of anecdotal and other
evidence is almost endless. To deny that the gold market is being manipulated
one has to be living in a cave.
Taylor: In your
speeches and writings, you have been very critical of our current economic
system as being corrupt and not serving the needs of ordinary people. Can you
provide some evidence of this?
Parks: There is so much evidence, it’s like the fly in a nudist camp: so much
opportunity, but where to start? By now, everyone knows about Enron, a fraud
which could not have occurred without the complicity of the licensed
professionals: the lawyers and the accountants, two groups, by the way, who
have achieved the special privilege of limited liability for their actions.
It’s just an accident of fate that Arthur Andersen destroyed documents and gave
the Justice Department a rope to hang them.
Maybe, as
some have pointed out, it is unfair to prosecute and destroy a firm of 85,000
people for the transgressions of a few. Fair enough. But, just as the
Government sent Al Capone to the slammer for income tax fraud, not for
racketeering and murder, Andersen could not be prosecuted for its real crime:
helping to cheat ordinary people out of tens of billions.
Think for
a moment about Gary Winick, the founder and CEO of Global Crossing. Here’s a
situation where he raised something on the order of $15 billion from many
thousands and everyone got completely wiped out — but not Winick. He managed to
score $735 million including the most expensive house in America: a $100
million mansion in Beverly Hills. His accountants and lawyers tell us that
everything he did was proper. How can that be? When you and I were kids, if
someone came into the neighborhood and wiped everyone out in a game of chance,
we would not have to figure out how he was cheating. Games of chance and
markets may not be totally efficient, but they are not that inefficient. Something
is seriously wrong.
Did you
see the front-page article in the New York Times a few weeks ago about four
bankers who spent $62,000 (no typo) for lunch including four bottles of wine at about
$15 thousand per bottle? How is it that restaurants are stocking such expensive
wine? Most important, exactly what is it that these folks do that improves the
quality of life for anyone except themselves? Do they produce some product,
cure some dread disease, invent something? Why does the system grant them such
outsized rewards when ordinary people are having trouble making ends meet? Jay,
the system is broken, and those who have benefited from it better take the time
to fix it, or, when it finally collapses, the backlash is going to be off the
scale.
Taylor: Larry, the total amount of debt in the U.S. economy
has been growing exponentially since 1957. At the end of 2001, total U.S. debt
was $32 trillion! Meanwhile GDP is growing at a much slower pace. From a
practical point of view, this trend seems not to bode well for the U.S economy
and, with the dollar being the world’s reserve currency, it would seem not to
bode well for the global economy. Can you give our readers your thoughts about
the future of the U.S. and global economies and also could you provide some
advice to them as to how you think they should invest their money?
Parks: The
system is literally hurtling to destruction, and there are not enough voices
being raised to stop this out-of-control locomotive. It is driven by greed and
a lust for power without regard to people’s sensibilities or safety. If you
think of America as the center of Empire, then the Empire is disintegrating
around the periphery, and the periphery is coming closer. For decades, our
government has, in our name, been backing thugs and thieves all over the world.
What recourse do ordinary people in the affected countries have? In Rick
Maybury’s words, “We cannot possibly kill ‘terrorists’ as quickly as the State
Department is creating them.”
On an
individual basis, folks should certainly own some gold. To help fix the system,
the first thing folks need to do is to understand the current system. That has
been the mission of FAME: education. We have assembled a great deal of truthful
and easy-to-understand material on the FAME website. After one has gained
enough knowledge to articulate what is happening, we must have allies. One
avenue which FAME has been working on is to enlist the help of the clergy, and
I implore everyone to take these issues to their religious leaders: Muslim,
Christian, Jewish, Protestant, etc. Folks may send me an e-mail, and I will let
them know more about this.
It would
be most helpful if men of God would make a clear statement that our fiat money
monetary system violates Scripture, particularly the Eighth Commandment, “Thou
Shall Not Steal,” and the admonitions in Deuteronomy not to tamper with weights and
measures. In the Jewish faith, the misrepresentations and nondisclosures
violate the Commandment Gnivas Das, not to steal someone’s
perception, i.e., not to misrepresent. It is significant to note that it was
the churches in the 1870s that carried the ball to get rid of the Civil War era
Greenbacks, so there is precedent.
Jay,
before closing, I want to thank you again for all you have done and continue to
do to help restore an honest monetary system to our country and for the world.
Your efforts have been stellar, and they are very much appreciated.
Taylor: Thanks so
much, Larry, for sharing your time and insights with our subscribers.
Larry
Parks is the Executive Director of FAME (www.FAME.org), email
Lparks@Fame.org,
and the author of
What Does Mr.
Greenspan Really Think? Larry is a very good personal friend whom I
admire because of his dedication to the ideals of freedom. As our Founding
Fathers noted, freedom has been granted by the Creator of the Universe. Thus,
in my view, there are not many “higher” callings in life than to work to ensure
the God given right to “Life, Liberty & the Pursuit of Happiness” is
retained. Larry has devoted himself to this higher calling. For that we are all
deeply indebted.