Speaker 1: I think it is very suspicious that they seem reluctant
to allow an audit. They even seem reluctant to allow
sitting US Senators to go into Ford Knox to see
what's in there. So, I mean, it could be that
all the gold is there and this is much ado
about nothing, or it could be that they've been doing
some sneaky things with the gold that we don't know about.
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Speaker 3: And welcome you are listening to and watching the Financial
Survival Network. I'm your host, Carrie Lutz. Well, we got
a couple of things to talk about.
Speaker 1: Here.
Speaker 3: Is the goal really in Fort Knox? And what about
DOGE Is it going to make a difference. Well, Jonathan
Newman is with us now from the Mesis Institute, and
I highly urge everybody out there to go there. I've
been going to that site since it went up probably
twenty five clus to thirty years ago, and it's must
reading if you're a libertarian or if you want to
understand more about how the economy and how money really works.
Jonathan Newman, research fellow at the Mesis Institute.
Speaker 1: Great to have you on. And so, first thing is
the golden Fort Knox? Yes or no? Your opinion? I'm
not sure. I think it is very suspicious that they
seem reluctant to allow an audit. They even seem reluctant
to allow sitting US senators to go into Fort Knox
to see what's in there. So I mean, it could
be the all the gold is there and this is
you know, much ado about nothing. Or it could be
that they've been doing some sneaky things with the gold
that we don't know about, possibly loans or sales to
other countries, who knows, And they might be worried about
the pr fallout that would occur if the Treasury and
the US government had had this gold on their books
for so long, and so they've been saying the gold
is there, and if it turns out that it's not there,
or at least a good proportion of it isn't there,
then that would sort of make the US government look
a whire. People wouldn't trust the US government and there'd be,
you know, some bad pr fallout there. So I think
it's I don't know for sure if the gold is
there or not, but it would be very interesting to know.
I'm all in favor of an audit. Yeah.
Speaker 3: Well, the fact that they if it isn't there, and
they've been lying about it for fifty years, is a
big deal that anybody believes anything the government says anyway,
But if they lied about the goal that's on the
books and it has a market value many times, you know,
almost seventy times what it's on the books for, and
then for it to not be there, that would be
the ultimate confidence killer in anything the government says or does.
So my feeling is somehow they're going to find it there.
Maybe they all those bars they're shipping from London, maybe
they'll have window dressing, they'll have gold bars stacked up
in front. But US and Trump are promising an audit,
So I just don't believe that it can come up
negative because I don't think they would they would go
there if the gold wasn't there.
Speaker 1: Yeah, I think obviously there's all sorts of things that
they could do in this between times. So they've talked
about an audit, they talked about going into Fort Knox
to look at it, and so you're absolutely right. It
could be that they're, you know, replacing gold that had
already left Fort Knox. Who knows when? So I mean,
I mean, that's another point on this is how true
would the audit be if we if we're not even
sure if the amount of gold has been stable across time.
Of course we would only just see a one particular
moment if the gold is there. One thing that people
often talk about when they talk about the US's gold
holdings is they talk about how it's a backing for
the US dollar. I don't think that that's right. The
dollar is this free floating piece of paper. It's not
redeemable in gold. Not even US commercial banks can bring
dollars to the Treasury or to the Federal Reserve and
redeem it in gold. Four and central banks can't do that.
Foreign governments can't do that. Of course, all of that
ended or technically was suspended in nineteen seventy one by
Richard Nixon. So we talked about this a little bit
before we started recording, there's this question of like, what
would happen in financial markets, what would happen to the
demand for the US dollar if if it came to
light that there's not as much gold as the government
had been saying. And I think it really just depends
on the circumstances. It depends on how much gold might
be missing. If it's if it's huge, then there might
be some serious concerns. We might see some change in
people's demand, international demand for the US dollar. But if
it's if it's something smaller, or if the US government
is able to you know, handwave it away. This this
transaction happened on this date and here's why. Then, I
don't really see how this would severely diminish demand from
the US dollar simply because the dollar isn't redeemable in
gold anymore. Yeah, Christ, you might have it. You might
have a different opinion.
Speaker 3: Just the idea that that they they could be lying
about it all this time. It's going to look really bad,
you know, Yes, yes, so we will see I guess
the proof of the pudding, right yeah? Yeah, so could
you imagine the it'll be a big stink if if
it isn't there is. It's just saying something that they
know isn't true for all these years and then being
exposed that could be that could be a real problem.
Speaker 1: Yes, and that's why I think that the biggest risk
from the government's perspective is sort of a pr nightmare,
you know, being exposed for for the for a lie. Basically,
a lot of this came up into into public conversation
because the new Treasury secretary was talking about monetizing US assets,
and so some people talked about, well, does that mean
that the US is considering selling off its its gold
assets are monetizing them in some other way, And so
that's why people have taking a particular interest in the
US's gold holdings, which are a big chunk of them
are held in Fort Knox. You mentioned earlier that the
value of the gold on the books is a lot
lower than the actual market value, and that's because of
this archaic rule that they set in place. The Treasury
took the gold from the Central Bank from the Federal Reserve.
In exchange, they gave the FED gold certificates, and those
gold certificates are the ratio of the gold certificates to
the amounts of gold It was based on I think
forty two dollars and twenty two cents per ounce, and
that was a further deterioration from the previous exchange ratio
of thirty five dollars an ounce. And even before that,
the dollar price dollar exchange ratio was even lower. So
there were over the twentieth century there was this repeated
devaluation of the US dollar uh in reference to gold.
And of course that was that was because the US
had been spending so much, they had been printing so
much money, and in order for them to not have
all of the gold flee under the breg Woods Agreement,
they had to, you know, do these reevaluations. They and eventually,
as I mentioned before, Nixon finally closed the gold window.
And so now, like I said, we have just this
piece of paper that's not redealable for anything. And so
I think one thing that's you know, good about this
story being in the news people are thinking about it
is hopefully people will realize that the US government has
co opted or taken over money. They've really monopolized money
in banking in the United States. Uh So, here at
the Mesa's Institute, we may teach and promote Austrian economics,
and one of the main principles is that, you know,
money is a creature of the market that people decide
to you know, back in barter times, people were exchanging
goods for direct use for goods for direct use, and
then they eventually happened upon this great way to facilitate
their exchanges actually get what they wanted out of the
market by switching to a medium of exchange. And so
the emergence of money came from the market. And so
throughout really human history, not just us history, what we
see is that governments they really covet the ability to
manipulate money. They want the ability to inflate, They want
the ability to print up as much money as they
want to because it allows them to expropriate resources from
the private market economy. And so if people are talking
about this because this is in the news, I think
it's a good thing.
Speaker 3: You know, they say, the greatest power that a sovereign
has is the ability to print money, because that controls everything.
It gives them the ability to control everything through printing money.
Rothbard often discussed competing currencies the ability to get the
government out of it, and in effect that's what we had,
like you always think back to the Wild West where
they got all the gold in the vault, but nobody
wants to carry it around, so they pass out warehouse
receipts effectively, which becomes a negotiable currency.
Speaker 1: All of that. So what do you think the idea.
Speaker 3: Of letting cryptocurrencies battle it out against the US dollar.
Speaker 1: I think that would be good. I mean, really, anything
that removes government involvement in money in banking or anything
that poses a threat to that is a good thing.
If I had my way and I just deleted the
Federal Reserve and deleted government involvement in money in banking overnight,
I have no idea what would happen in terms of
like what money people would settle on. Would they go
back to gold, would they go to silver, would they
go to cryptocurrencies. That's my answer to all of those
sorts of questions is just let the market decide. Let
the market decide what they think is the best medium
of exchange for them to conduct their business. I'm glad
you mentioned Rothbard. There's a great book, and the Mesa's
Institute is running a promotion right now, and so your
viewers might be interested in going to mesis dot org
Slash my Money. And if you go there then you
can get a free copy of Rothbard's book What Has
Government Done to Our Money? And in that book, it's
very accessible, very easy to read, and you can get
a free copy and it explains explains how money originated
on the market and how governments have taken it over
and all of the horrible consequences of that, not just
in the twentieth century, but like I said, throughout human history.
So once again that link is mesas dot org, ses
dot org slash my Money.
Speaker 3: All right, excellent and okay, So the idea of letting
the crypto is back out against the US dollar, getting
the government out of the money printing business. It's going
to take a disaster for that to happen. Let's face it,
They're not just going to willingly relinquish their power over it,
because then I would, you know, how would the Senate
and the Congress be able to set up NGOs and
get all this money they had no power to actually
do things that were outside the constitution.
Speaker 1: Yeah, I think if that sort of thing started happening,
where there was some sort of crisis event and people
started switching to crypto instead of the US dollar. I
think what we would see is that the Federal Reserve
would would finally roll out there their coup de gras
US dollar, which is the central bank digital currency, and
they would throw that out there is like this is
this you know, government authorized, government backed. It's the same
thing as the US dollar, but it's also crypto. But
I think you we should reject that, We should oppose
that with every biber of or being, because you know,
that would that would truly be the death of sound money.
That that because even in our current system, we have
you know, a tiny little check on the banking system
through the use of cash, physical cash. So if if
everybody decided to run out and get you know, cash
out of their checking accounts, then you know, that would
bring the banking system to its knees obviously. And so
that's just you know, one way that the population has
this sort of check. But if we go to a
cashless system with cbd c's where you can't you can't
even withdraw it, you can't pull it out of the
banking system. Uh, then you know, the we we've lost
all semblance of of monetary's freedom. Yeah, I have a
good point.
Speaker 3: You know, basically the way things are now, though, bank
runs are pretty much impossible because, uh, you know, basically
you could go pull your money out of one bank
that you think is in trouble, but all they're going
to do is give you a check, not going to
get currency, right because if you want to get more
than like ten thousand dollars, you've got to make a
reservation months in advance for it. I'm exaggerating a little bit,
but you can't really get rid of this stuff. And
this is a real problem. So because bank runs are
always according to mesis, and historically we're a check on
bank's recklessness of lending and of embezzling gold. Part of
the problem why we got into this central banking is
all these banks would get gold and they print their
own money and then find out that you'd have an
emperor has no close moment, right, So that was problematical.
So government to the rescue.
Speaker 1: Right Yeah, yeah, I mean that's the story that they
like to tell, which is that really what happened with
fractional reserve banking, which is this topic that we're discussing.
People didn't like it, people didn't like the instability, the
inherent instability of it, and so one way that the
government realized that they can get a win win situation.
Of course it's win for the government and win for
the banking system is by cartializing the banking system. And
of course that cartel is just the central bank. So
now the central bank is in charge of regulating the
banking system. They're the ones who set minimum reserve requirements, which,
by the way, they've been pushed down to zero these days.
They've replaced it with other monetary manipulation measures like paying
interest on reserves, and so really the evolution of the
banking system, it's the problems with it aren't because it's
like this free market. The problem with the fractional reserve
banking is not like, you know, there's all these you know,
greedy bankers who who are you know, fleecing the American public.
What happened was that the government monopolized it. And so
now we've just institutionalized all of those inherent problems with
fractional reserve banking. And the win for the government obviously
is now they're the sole issuer of the money unit.
So now that the US government can print up as
much money as they want to finance all their spending
which by the way, allows them to impose this subtle
secret tax on everyone through price inflation. So, I mean,
everybody knows that if you print up too much money,
you cause price inflation. Well the people. What many people
don't really realize is that's actually a tax. That that's
a way for the government to spend money that they
haven't collected, collected in taxes U and then you know,
they sell the debt to primary dealers. Those primary dealers
still to the Fed, and the Fed purchases the debt
with newly printed money. That's just an expropriate and it's
just removing real resources from the private economy and giving
it to the government. So everybody, everybody understands that taxes
are bad. You don't like taxes. Taxes are unpopular. Even
politicians understand this, and that's why they really cove it,
and they really love the ability to print money. It's
because they're allowed to increase the size and scope of
government without the necessary prerequisite of raising taxes. Exactly, it's
this stealth tax.
Speaker 3: Yes, we all feel it, but some of us feel
it differently because the banks get the newly freshly printed
money before it's filtered its way into the system, so
they get the old the purchasing power, and then the
money circulates and the rest of us get the inflation.
But on the flip side of that, we get to
pay back the banks in depreciated dollars.
Speaker 1: Right, Well, that's true. Yeah, So, as you're pointing out,
there are winners and losers, and of course one winner
is the government and another winner is the banking system itself.
But this is something that the Austrian school in particular
is very good at explaining and emphasize when we talk
about monetary theory. When we talk about the effects of inflation.
It's not like there's just this level rise in all prices.
What happens is that the new money enters into one
person's cash balance first, and they're able to acquire goods
from the market at the same prices, or maybe just
they slightly outbid other people. And then the people who
sold the goods to that person they now have higher
incomes than they otherwise would have without the money printing,
and so you get this like rippling out effect where
the money sort of spreads through as people are exchanging it,
and they're bidding up prices as a result because they
have more money in their pockets than they did without
the money printing. And so that's the actual process by
which prices rise. One thing that we talk about a lot,
especially when we're contrasting the Austrian theory with the likes
of the monitors theory from Milton Friedman, we talk about
that very fact that there's not just this level rise
and prices, and in fact, what happens is there's a
total redistribution of resources towards the source of the new money,
which explains why we have winners and losers, and it
also explains why the government loves doing that sort of
thing because they benefit obviously as a result totally.
Speaker 3: And so finally, and one other thing I wanted to
mention is Trump says I'm going to bring down prices
by bringing down the cost of energy. And it's putting
the cart before the horse, because the cost of energy
is higher, its high because of inflation. Inflation isn't caused
by the high price of energy. The high price of
energy is caused by inflation by increase in the money supply.
Speaker 1: Right, Yeah, you're exactly right. And this is something that
it's been a really terrible phenomenon, especially over the course
of the twentieth century, there was this change in the
definition of inflation where people started to define or talk
about inflation just like it's a level rise in prices,
and in fact, even more recently people use the term
inflation to describe any sort of rise in price. But
of course the original definition and the one that accords
with economic theory and monetary theory, is the one that
says inflation is an increase in the money supply. And
so because of the change and the definition of inflation,
you get people making errors like the one you just describe,
where they say that the cause of price inflation is
an increase in the price of some other good like energy.
But that doesn't make any sense because then you're saying
the cause of a rise in prices is rise in prices,
but that doesn't make any sense at all. And in fact,
there's nothing that could cause a general rise in prices
except for an increase in the money supply.
Speaker 3: Yeah, totally, totally, So it's a misconception and people don't
really get it. Hey, finally, Doge, what's your take on, Doge?
Is this like a noble effort or is it doomed
to failure?
Speaker 1: Oh? I don't know if it's a if it's a
noble effort or not. I'd have to, you know, look
inside the minds of the people who are who are
running in But I'm cheering it on. I think it's
it's wonderful, it's a it's a sorely needed restructuring, sorely needed,
you know, a bit of chaos in Washington, d C.
It's nice that they're finally getting a taste of the
Roman medicine in terms of, you know, the destruction and
chaos that they've been leashed on the rest of the economy.
But like, if you think about it, we've had this,
you know, steady rise in government spending, tons and tons
of increases in waste, and all of that was through
falling the political process. Status quo just keep going on
as normal. And of course there's a big spike up
during crisis periods, but the overarching trend is for government
spending to keep increasing, and of course you get all
these new agencies, you get all these new programs, grants
for all sorts of things. And so the fact that
you know, dog is it in there calling out all
of these obviously wasteful programs, all of these obviously wasteful
and nonsensical uses of taxpayer money. I think it is great.
I think it's great for, like, in a pr sense,
people are actually questioning the allocation of spending by the
US government. I think it's great in a in a
practical sort of sense because like we would not have
been able to achieve these decreases in spending without you know,
sort of like the hammer that Elon Musk represents. And
so it's great. Like, my only criticism of it is
that it's not going far enough. I would like to
see whole departments, whole agencies, you know, totally eliminated, and
hopefully that's on the horizon. But you know, I'm true,
I'm on.
Speaker 3: I think it's coming usaid, you know, all the money
going out to everybody one organization. I was disappointed that
I didn't see on the list, and that was messas
dot org and Messa's University. How come you guys didn't
get any money. We don't accept any government money.
Speaker 1: And of course, uh, the government wouldn't even want to
give us any money because you know, we the message
and our mission is totally contrary to the missions and
the goals of the US government. But also you know,
we don't we don't want the government's money because it
comes with strings attached. You know, that would that would
cause us to be able to uh that would cause
people to think that, you know, we're somehow compromised. But
one thing that the Mesa's Institute is great at is
we have this uh you know, uncompromising stance on on
on being anti government, you know, in favor of free markets,
in favor of sound money. And so yeah, you're you're
absolutely right. The Mesa's Institute was nowhere to be found
in the USA documents and.
Speaker 3: Yeah, yeah, obviously you don't just talk the talk, you
walk the walk, and that's really important in this day
and age.
Speaker 1: Well, hey, appreciate you coming on.
Speaker 3: And uh everyone from the thesis is always welcome on
this show because, uh, these ideas like have just kind
of been locked away. I found them. I went to
Pace University in New York City, and I have this
in my bio on my website that I kind of
stumbled into this dark back alley of the library and
there was like every single Austrian economics book from Human
Action and all of Rothbard's books, and Percy Greaves.
Speaker 1: And Hyek and you know, it was like an i
op an herd to me.
Speaker 3: And interestingly enough, the person that really got me into
it all was Milton Friedman from his epic, uh epic
work Free to Choose book and the the series on PBS.
Interestingly enough, I wonder if PBS would ever broadcast that
show in this day and age.
Speaker 1: Yeah, it's a good question, of course. You know, I
mentioned some some difference it is between Freedman night monetarism
in the Austrian school earlier. But of course there's there's
no denying that he was a great, uh, very articulate
defender of free markets. There's there's a lot of agreement, uh,
just you know broadly within you know, free the free
market camp. So yeah, that's great that you were able
to find that, you know, treasure trove of books from
Thesis and Rothbard in Percy Greeves. Yeah, yep.
Speaker 3: And I read Human Action and the you know, it
would probably be easier to read it in this day
and age because you have an online dictionary. You can
just pop up all these words that you will not understand,
and I have pretty good vocabulary, but things like praxeology,
I had no idea what the heck that meant, but
highly recommended, as is the site mesas dot org where you, Jonathan,
and so many of your colleagues really work tirelessly to
educate the public on what's really going on, and you
to be applauded and appreciate everything you guys have done.
If you got any questions, Jonathan myself, shoot me an email,
Klatkerrie lets dot com sign up, free free newsletter, Financial
Survival Network dot com sign up, and mesas dot org
they send out daily missus. You can get a multiple
mailing list, podcasts, et cetera. Highly highly recommended if you
care about figuring out what's really going on here, not
what the politicians are saying.
Speaker 1: Jonathan, be well, thanks for coming on, Thanks for having me.
Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival Network now more than ever,