The Inteligencia Financiera Global blog (Global Financial Intelligence Blog) is honored to present an exclusive interview with billionaire entrepreneur Hugo Salinas Price. We are sure our readers from around the world will enjoy it.
Mr. Salinas, thank you for accepting this interview.
-As many people know, you have been an advocate for liberty, free markets and honest money among other topics. You are started the project-proposal of monetizing the pure silver coin in Mexico but, can your proposal be implemented in any country? What does it take to do that? Could gold be monetized the same way?
My proposal was, and is, to give a monetary value in local currency, to a silver coin which has no engraved value upon its face. The monetary value – higher than the value of the silver in the coin itself – could be quote, ideally from the Treasury. If the price of silver rises, this quote could be increased to give the silver coin a higher monetary value. (It could rise either because the price of silver in dollars has risen, or because the local currency has devalued.) But under no circumstances should the monetary value, once quoted, ever be reduced. If the value of the silver in the coin falls, the monetary value remains the same.
This is an entirely “doable” project. Actually, it only replicates what used to happen with silver coins up until the middle of the 20th Century. You see, silver coins, all over the world, always had monetary value superior to the value of the silver which they contained. (Same as we propose). When the value of silver fell in the 1930’s, the silver coins retained their monetary value unchanged. (Same as we propose). But silver coins disappeared when the price of silver rose after WW II. What we propose retains the silver coins as money, because if the price of silver rises, the monetary value of the coin also rises. (This was impossible in the 20th century, because the monetary value was engraved upon the coins. We eliminate that problem, by having no engraved value upon the coins.)
This project can only become a reality if a leader with enough political power a) understands our project b) wishes to do something to benefit the people whose leader he is.
At the present time, the prospects for our project are poor, because the world “leaders” are really not independent men or women; they are under the control of their respective Central Bankers, who form an international fraternity whose leaders are the Fed, the IMF, and the BIS. Whenever anything “monetary” is presented to these supposedly top world leaders, they all refer the question to their Central Bankers. These, of course, are completely against anything that will devolve real power to the population, real protection for individuals and their families. They are against all forms of SAVINGS; their whole interest lies in promoting more DEBT, and NOT more savings. They one and all consider that savings are simply a drag on GROWTH, and they want people to spend, not to save. And the silver coin promotes savings, which in fact are the fountainhead of all prosperity.
Gold cannot be monetized in this way, only silver. Gold is in fact money, so it cannot be “monetized” or “demonetized”. All that governments can do is either a) to allow it to be used as money, or b) to put up obstacles to its use as money. Currently, governments put up obstacles to use of gold as money.
Today, the peso value of a one-ounce coin of gold is $16,925 Mexican pesos (kitco.com Jan 23, 2014). Now if the Mexican government were to say that the one-ounce coin of gold has a monetary value of say, $20,000 Mexican pesos that would not put a higher monetary value upon gold; it would simply be a declaration that the peso has a lower monetary value. Such a move would not “monetize” gold – it is already money – but it would devalue the Mexican peso: to one twenty-thousandth of an ounce of gold.
-Mr. Salinas, why is it important to go back to sound money (gold and silver)? You know, “modern” economist like Nouriel Roubini call gold a “barbarous relic” and others name silver the “poor-man´s gold”.
Mr. Barba, everything in our modern world is a lie. Look wherever you will, and you will find lies. Our civilization is living on borrowed time, because you cannot deal with Reality and the problem of finding sustenance for life in Fiction or Lies; you have to deal with Reality by means of Truth, and not by Lies. If we go on pretending that we can avoid Reality by means of Lies, we are going to end up in a barbarous state.
The world is attempting to live by means of the great lie of fiat money. It will not work. You deal with Reality by means of Truth; Truth is thinking that checks with Reality. Gold is money, and if we refuse to face that fact, we are lying.
-How and why did we get to this current global economic crisis, where debts in the world (over all in the “first world” economies) are growing up exponentially? Is there any relationship between this, public deficits and the abandonment of the gold standard?
We got to this state because our leaders – in Universities and in Politics – have wished to forget Reality and have thought that by using our brains we can get around Reality. Thus our thinkers and political leaders have been attempting to put Reality to one side and in its place, use fictitious money which can be manipulated to keep people happy.
The problem is fundamentally a moral problem. Is political power to be based on Reality, or on systematic deceit of the populations of the world? Our leaders have chosen mass deceit as their instrument of power. What they will obtain will be utter chaos and disorder, and mass impoverishment.
One of the problems is that the population of the world is now headed for 7.5 billion humans, and the fact of life is that poverty never has been eliminated and never will be eliminated. There will always be people who live in misery. Now, that fact is politically unacceptable! And so, politicians lie to their populations and print up funny-money to distribute and thus appease the people. But such a policy cannot eliminate the fundamental condition of life in this world, which is that some people will always be poor. Efforts to alter this condition only lead to far more terrible conditions of utter despotism by governments such as the Bolshevik Communism of the USSR under Lenin and Stalin.
We have an educational example in the French Revolution of 1789. In 1790, the Revolution had begun and frightened businessmen contracted their operations. The complaint was “There is insufficient money!” And so the most brilliant Frenchmen thought that if there was a scarcity of gold, they had the brains to overcome this problem. How? By printing money! So they began to print money, at first in moderate amounts. But, all they got was a rising price of gold in terms of their printed money. So they began to fight gold, to disparage it and to persecute holders of gold, and they printed up endless amounts of money. It all ended very badly, after sending gold-holders to the guillotine or the galleys.
The people of Paris were reduced to starvation. Napoleon ended it all, saying: “I shall pay gold, or not pay at all.” You cannot get around the realities of life successfully, no matter how brilliant you are. The graduates of the great universities of the world, do not agree; they think they are qualified to run the world according to their brilliant ideas.
-Who benefits from this policy of permanent monetary and credit expansion? What can the average person do to protect himself from this attack against his private property and purchasing power?
The clear beneficiaries of monetary and credit expansion are those who get the money and the credit first, before the rest of the people. They become wealthier, at least for a time, while the rest of the people sink into diminished well-being. But eventually, all goes up in smoke and heads begin to roll: those of the guilty as well as those of the innocent.
The only thing that the average person can do is a) to understand the situation, first of all. And b) to save up some silver and gold, which may perhaps, if he is lucky, allow him to survive the collapse that invariably comes after money and credit have been expanded beyond any limit.
-Do you think that the gold (and silver) markets could be manipulated? If so, what would be the purpose of such manipulation and could that last forever?
Of course the gold and silver markets are manipulated. You have to be either blind or a Harvard Graduate with doctorate in Economics to ignore the fact.
The purpose of the manipulation is the same as the purpose of the French Revolutionaries in attacking gold when they were printing their “Assignats” paper money like crazy; to try to suppress the indicator which showed the destruction they were carrying out with unlimited printing of fiat money. Gold tells the Truth and so it is an enemy of those who wish to deceive their populations. Paul Adolph Volcker, famous former head of the Federal Reserve of the US, once stated: “Gold is my enemy”.
Gold will triumph over paper. It always has, ever since the Chinese invented paper money many centuries ago. But in the meantime, paper money is twisting the economic facts to such a degree, that enormous distortions are taking place in the markets. Enormous investment mistakes are being made. All this will become evident in due course; a gigantic collapse is going to take place and many who think they are very wealthy will find they have next to nothing.
-Would it be possible to return to a gold standard? Would it be beneficial for creating jobs for younger generations?
A return to a gold standard will not be possible until thinkers and leaders begin to think differently from how they think today. We know for a fact that people in Asia have not forgotten about gold. They are buying gold frantically. They can see what we cannot, that the dollar is doomed. Perhaps a new monetary order may be imposed by China and Russia acting together. At least, that is a hope.
There is only one way to deal with Reality and the problem of human survival: through a clear recognition of the facts. Gold allows us to recognize the facts, however much we may dislike them. We do a disservice to the young when we continue to turn away from Reality and think that amassing paper wealth is anything that can endure. The young deserve the chance to build their lives according to their ability in dealing with Reality, and this is the chance that gold gives them.
-Do you think that the world is ruled by a certain group or groups of people, who “control” the history of this planet? Is this possible or are they just conspiracy theories?
Certainly, the world – in the current mess – is run by perhaps one thousand individuals, who use the false economic theories that prevail to further their hold on power. There may be an even smaller very influential group, within these thousand individuals. But the main problem is not these power groups: the main problem is that false economic theories are supported by billions of humans who blindly accept those theories. So actually, it is the people themselves who enslave themselves.
-Mr. Salinas, we know China has been accumulating gold at a very high rate. China is now the #1 consumer of this metal, over India. Why is gold so important to Beijing? Is the Chinese government hiding something? What do you think?
Evidently, the Chinese are not so silly as to think that gold is no longer of vital interest and importance to humans. China is thousands of years old. The US is not even 250 years old. They know that the rule of the US dollar is coming to an end, and are preparing for that moment. They are not talking about this, because they know that those who think understand China’s motives, while it is useless to explain their motives to those who will not think.
-Last year the Bundesbank reported that it would repatriate all of its gold reserves from Paris and part of them supposedly located in New York, in the 2013 – 2020 period. Nevertheless, last year they repatriated merely 37 tons and only five tons from the NY Fed. In your opinion, what would be the reason for this delay?
The reason is crystal clear: the US does not have the gold is says it has. The US was the custodian of a gold cookie-jar, and the US government simply ate up the cookies. They have no gold left-
-In one of your recent articles (the one entitled “The siren song of the Welfare State”), you write that in our world the national management of an economy means “making millions of individuals do what they wouldn’t do if left to themselves.” Could you please explain this, and why the outcome of this lack of freedom is “World Socialism”?
It is very simple. When governments attempt to “manage” an economy, they have to make people do what they would not do if left to themselves. This is obvious. If government allows people do what they wish, without interference, then the government will not be “managing” anything. If government is to “manage” the economy, it MUST interfere with what individuals would do if left to themselves. “Government Management” MEANS that you are interfering in the decisions of individuals.
When government prints up money, it is twisting the economic facts and leading individuals to make decisions they would not make, if the money was gold. So here you see, people unconsciously do what they would not do if they were dealing with real money. Printing money is one of the main ways of “managing” a modern economy by mass-disinformation, because money is a transmitter of economic information through prices. If the money is false, the information it provides (prices) is false.
Now as “government management” means interfering with the decisions of individuals, the result will be impoverishment, because people always try to maximize their own benefit by their decisions, and if they are not free to take their own decisions, they are fighting a losing battle to achieve their own benefit and progress: they have to take second-best or third-best or fourth-best decisions, all to their detriment.
So this condition leads to less prosperity. As prosperity fades, governments claim they need more power, stricter management, more management to make things go better. And that process of more and more “management” finally ends up in: Socialism. Quite logical.
-In another of your articles (“When Reality overthrows imagination”), you state that at no time in history has the human kind lived in this real, physically tangible world, relying so much on the human brain’s capacity for imagination. Is this a problem that affects lives of human beings? Do they rely too much on technology and erroneous economy theories? Why?
Imagination is a wonderful and beneficent ability of the human brain, no doubt. But imagination must find an anchor in Reality. If we have no anchor, we are adrift in a world of dreams. That is our world today, a Dream World, based on fictitious money which is now being created without any limit. See Japan’s fantastic plans to create vast, astronomical sums of fiat money to get out of an economic funk. We must have imagination, yes, but anchored in Reality, not in fantastic dreams. We are dreaming ourselves into a very real Hell, thanks to imaginary money, which is what we are forced to use – all money in banks is only imaginary money.
The world is enamored of Technology and thinks that the great triumphs of technology are sufficient for us to affirm in all confidence that technology can solve human problems. But the problem is that technology deals with the physical universe, which is subject to predictable responses. The sphere of human action is not amenable to technology, because humans have free will, which atoms do not have. It appears that our so-called “Economists” today forget this fact. They want to “manage” us to prosperity, forgetting that we have free-will and will inevitably frustrate their plans for us. But, they will go on attempting to “manage” us until we collapse into a new Dark Age. That is what lies ahead for humanity, unless….. you fill in the dots.
Thanks for your time and answers Mr. Salinas.
This was the first in a series of exclusive interviews with several pundits on gold and silver. Stay tuned!