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"Straight Talk" features thinking from notable minds who you, the ChrisMartenson.com audience, have indicated that you want to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.
This week's Straight Talk contributor is G. Edward Griffin -- political lecturer, film producer, and author. In his best-known book, The Creature from Jekyll Island, Griffin details how money is created and exposes the anything-but-boring history of how the Federal Reserve came into being. The book provides one of the best explanations of how our monetary system works, as well as a prescient foreshadowing of the Fed's bailout of the financial system at taxpayer expense.
1. Practically everything that you outlined in your book The Creature From Jekyll Island has come to pass. Bailouts, increased centralization of power, all of it. Now what happens? We are having a hard time envisioning the current debt-based fiat money system surviving for much longer (let alone forever). If not fiat money, then what? What are the next moves for those who might wish to see the continuation of their extremely lucrative franchise?
GEG: What happens next also is portrayed in my book, and it isn't pretty. It is a total collapse of the old order replaced by a command economy and a loss of meaningful personal freedom. All collectivist systems end that way. There is no escape as long as collectivists continue to be in power and make the decisions. A change to the Republican Party majority will change nothing except party label. Most Republicans are collectivists, as are most Democrats.
2. Robert Zoellick of the World Bank recently ruminated on the possibility of resurrecting the gold standard. Some claim that there's not enough gold to serve this purpose; you've claimed otherwise. Could you explain?
GEG: First, the World Bank does not want a true gold standard because that would limit the degree to which local banks can lend money, and that would greatly reduce their ability to make money. Beyond that, there is plenty of gold in the world, most of it not yet mined and/or in personal hoards, to supply enough gold to back our currency. Scarcity of gold is what makes it valuable and why it is an ideal backing for money. The less there is, the more valuable it is. The argument that there is not enough gold is spurious. Any amount will do, but a free market will motivate miners and hoarders to produce just the right amount to balance supply against demand. The problem is not the amount of available gold, but the demise of the free market.
3. In your book, you said that the various Central Banks and other world organizations want to get all countries onto a single global currency. Then why are the governments and banks attempting to fix the current system through more money printing and stimulus? Why not just let it collapse to hasten the demand for a universal currency?
GEG: I believe that they do not want the national currencies to collapse until the global system is in place to replace it. They are working on that now, and I feel that the time to jettison national currencies is drawing near.
4. The Fed just celebrated the 100th anniversary of the “meeting that never happened,” that led to its creation, with a lavish party on Jekyll Island. Some say they’ve achieved much of their original secret goals; some say the Fed won’t survive ten more years. What are your thoughts here?
GEG: In my view, they have achieved far more that they thought was possible when the Fed was formed in 1913. They have every reason to celebrate. However, the game has changed now, and I think the bankers now are ready to allow the Fed to become merely a second-level component of a global central bank. If opponents of the Fed are successful, it will be abolished as soon as possible. If they are not successful, it will last indefinitely as part of the global system.
5. To what extent is the current economic mess the logical, expected, even mathematical conclusion to a debt-based money system, and how much is this simply due to operating it poorly? That is, are we experiencing a design flaw, or operator error?
GEG: It is a design flaw. There could be no other outcome. However, it is more than likely that the creators knew that from the beginning and proceeded anyway. We must remember that the Fed is a banking cartel. As such, its primary objective was never to stabilize the economy, but to benefit members of the cartel. In that sense, it was not even a design flaw.
6. Assume for the moment that oil drives economic expansion and that oil is a finite resource. At some point the rate of oil extraction will peak and then decline. Yet our entire financial edifice relies upon a constant (if not exponential) increase in debt. If tomorrow's growth is the collateral for today's debts, and growth depends on oil…well, how do we square that circle? What happens to (1) today's debts and (2) the money system itself (assuming it is deprived of dependable growth)?
GEG: I cannot accept the assumption that growth is dependent on expansion of oil resources, or, if it is, that the supply is soon about to peak. That aside, expanding government debt and the Fed's role in making that possible is a classic Ponzi Scheme in that it depends on an increasing demand for money greater than the expansion of goods and services. This is not really growth; it is merely postponing the day of reckoning and increasing the size of the loss.
7. How do you see the next few years playing out for the US economy?
GEG: The patient cannot be kept alive much longer by administering more of the toxic drugs that cause his illness in the first place. As long as the quack doctors (politicians and bankers) are retained to administer the therapy, there is no hope for recovery. The exact time frame is unknown, but it is near.
8. What question didn’t we ask, but should have? What’s your answer?
GEG: What to do about it?
Answer: Inform the people about the true nature of the crises, the true cause, replace all the politicians who have tolerated or supported the Fed, and then replace the Fed with an honest and responsible banking system without the ability to legally plunder the people. Really quite simple, but not easy. We have much work to do.
If you have not yet seen the other articles in this series, you can find them here:
- Straight Talk with G. Edward Griffin: What's Coming Next Isn't Pretty - 11.29.10
- Straight Talk with James Howard Kunstler: The World is Going to Get Rounder and Bigger Again - 11.17.10
- Straight Talk with Steve Keen: It's All About the Debt - 11.09.10
- Straight Talk with Mike Shedlock (aka "Mish") - 10.26.10
ChrisMartenson.com readers can submit their preferences for future Straight Talk participants, as well as questions to ask them, via the Straight Talk forum.
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What a great list of questions, succinct, and to the point. Not so much the answers. More of the same, blame debt based lending (“there could be no other outcome”) , no relationship between economic growth and oil consumption, no recognition of peak oil, no mention of corporatism or inverted totalitarianism. And of course let’s not forget, the commies are coming. Then this pithy observation:
Please.
This guy ought to read Xray Mikes’ thread and learn something.
G. Edward Griffin's response to Question 6 blows my mind.
"I cannot accept the assumption that growth is dependent on expansion of oil resources or, if it did, that the supply is soon about to peak. That aside..."
"That aside"!?!?
"That" [i.e. the fact that there are limits to growth and they are imminent] is the defining feature which keeps me, and presumably many others, coming back to Chris' work. It's almost insulting to how dismissive Griffin is of this line of thinking.
I'll be honest though - Griffin's response doesn't surprise me. Why you might ask?
Well, just as a student who gets an A+ on an exam might conclude that he/she is brilliant instead of thinking that the exam was just really easy, so too do humans collectively conclude that it has been our intelligence alone and not our environment that has accounted for our "success."
To be clear, I'm not saying that we aren't a very clever species. We are. But to think that our cleverness alone can explain our success is just hubris.
It all comes back to what philosophers would describe as necessary & sufficient conditions. Access to cheap energy (oil in particular) is a necessary condition for growth (under the current economic paradigm). That is not to say that it is sufficient, but rather, that without cheap energy, growth won't happen (unless it is redefined somehow)
Whether it's an evolutionarily ingrained propensity towards anthropocentric explanations of our "success" or willful ignorance, I'm not sure, but I'm consistently amazed by just how few people acknowledge the centrality of natural resources in accounting for economic growth.
I commend Chris for addressing what the vast majority of other analysts & commentators are either willfully or unknowingly blind to - Griffin being one of them.
I cannot accept the assumption that growth is dependent on expansion of oil resources or, if it did, that the supply is soon about to peak
Yeah, any predictive analysis of the global economy becomes a lot simpler when we just assume away issues of peak oil/resources. Especially when you also assume economic growth isn't even dependent on expansion of oil production in the first place.
Also, financial crises have occurred under gold standards in a "free market" economy, so his assertion that a return to gold standards and free markets will prevent future crises is wrong.
I hate the Fed just as much as the next person, but we shouldn't let that hatred blind us from economic reality.
I absolutely agree that an exponentially growing consumption of a finite resource simply will not last forever. Period.
However it is true as well that the Power Elite tends to fabricate global problems that demand militarization home and abroad or increased global governance to deal with such issues. So if oil scarcity is to become a powerful mover that allows to achieve those goals, then why let the facts annoy you? By facts I mean either that there is significantly more oil than we are told or that there are viable alternatives. By "significantly " I mean that there was enough for at least a hundred years of comfortable exponential growth.
Frankly I really don't have a clue, but it is how this is going to be dealt with and publicly told that may give some clues in my opinion. I just read with caution anything that on the surface looks like "another fear based promotion".
I am afraid however that if we really have reached or are about to reach peak oil, as long as the unavailability of an alternative helps to concentrate more power on Power Elite's hands (for example by making it easier to gain control of an obviously disrupted global population), such alternatives will be hindered from the top instead of promoted.
for a very thoughtful and thought provoking critique of GEG's views of the gold standard, visit Bill Still's website and forum on monetary reform, where he posted the author's response to Griffin's criticism of Still's work:
http://z6.invisionfree.com/Bill_Still_Reforum/index.php?showtopic=206
First, I appreciate this series as well as Mr. Griffin being a part. I'm a very big fan of his work as well!
But I'm rather disappointed in the lack of time he took to answer some very well worded questions. He could have expanded any number of times on the questions but didn't. In fact, some of the questions were quite a bit longer than his answers!
I know people are short on time. But this is such an important subject that more time and thought should have been put into his responses.(IMO).
User's posting privileges have been suspended.
I second that. Its almost like he texted it while driving.
"Even if we are occupied with important things and even if we attain honor or fall into misfortune, still let us remember how good it once was here, when we were all together, united by a good and kind feeling which made us perhaps better than we are." - Fyodor Dostovevsky
I really don't consider Mr. Griffin worthy of the Straight Talk series. I can't take anything he says seriously after reading his book on Vitamin B-17 and cancer (see snake-oil video here). I personally value his work as much as I value the National Enquirer.
Captain Sheeple
I think that part of the problem is that we live in an age of specialists. GEG has decided to focus on The Fed -- and apparently vitamins. I have no doubt that if he took the time to research Peak Oil etc., he would come to consider it a huge problem. In a conversation with my mother today, she recalled that one of her high school teachers (in the mid-fifties) taught Algebra, Latin, Calculus, Government, and maybe another subject or two. This teacher also had the audacity to tell the students that they were regressing. Can you imagine someone this well-rounded teaching our high school students today? She would probably tell the students what they could do with those distracting personal communication devices -- and be able to integrate it with a comment about the center of the solar system. : ) GEG is a victim of our specialist society. We are all victims of the same. To his credit, Chris M. took the initiative and incorporated more than one teeny, tiny slice of reality into his quest to define just why we should be concerned about the future.
I agree about the video and his answer on Peak Oil. He has no credibility with me.