Exclusive Interview
The Daily Bell is pleased to present this exclusive interview with Hugo Salinas Price.
Introduction: Hugo Salinas Price is a successful, retired businessman who lives in Mexico. He has been a follower of the Austrian School of Economics since his youth. He has written three books in Spanish on how and why silver should be instituted as money in Mexico, in parallel with paper money, and numerous related articles in English and Spanish, posted at his website. His organization, the Mexican Civic Association Pro Silver, actively lobbyied the Mexican Congress to approve legislation to institute the pure silver "Libertad" ounce as money.
Daily Bell: Hello again. Any news you want to mention?
Hugo Salinas Price: The State of Guerrero, south of Mexico City on the coast (Acapulco is its most important city, but not the capital of the State) is in something of an uproar; it is Mexico's most backward State, very mountainous and highways are rather few. Its people are known to be rambunctious and recently the Teachers' Union in Guerrero is on the warpath. The woman head of the Mexican Teachers' Union was recently jailed – supposedly for malfeasance of Union Funds but really for disloyalty to the PRI – and she got her job when the previous Union leader was sacked for the same reason, years ago. The Teachers' Union has 1.4 million members, and it is suspected that Andres Manuel Lopez Obrador, who was a presidential candidate in the recent election (and the one before that), is behind the agitation. The cause of the agitation is the new legislation reforming public education, which will affect the teachers, who have benefits that include, for instance, the right to name their successors in their positions when they retire, regardless of qualifications. I suspect that the reform is aimed at breaking the entirely too great influence that this huge union has.
The teachers in Guerrero have taken to blocking the road to Acapulco and I suspect will continue to disrupt in whatever way they can. There is a showdown coming between them and the president. To make things worse, the teachers have teamed up with the local citizen-militia of various towns and villages, which came into being due to the lawlessness which has prevailed caused by the constant criminal activity of the drug cartels in their internecine quarrels and assassinations.
So this is an ongoing struggle; it will be very interesting to see how our president handles this ruckus.
Daily Bell: How is the battle for silver going? Any chance Mexico will adopt a silver dollar?
Hugo Salinas Price: I have suspended my fight for the monetization of a silver coin, to circulate in parallel with the Mexican peso. The PRI, the old, old party which has governed Mexico since the '30s, is back in power, and looks to stay there for a long time. The President of Mexico is also Head of the Party and there is no way that the silver project can progress under those circumstances.
Daily Bell: What do you think of the new political regime? Are you hopeful?
Hugo Salinas Price: The new political regime is not new; it is the old regime, once again. I do not know what is in store for Mexico – the president has yet to show his colors. I hope he manages to keep the US at bay.
Daily Bell: What changes do you see in the world today? Are they positive?
Hugo Salinas Price: I think I see a growing consciousness that the world's monetary system is not working. Though we know that gold is the only path to peaceful, stable and just relations between nations, it does seem that TPTB do not wish to go down that path. What I see coming is a revolt against the defunct globalization and the installation of a new protectionism around the world. I see the welfare state morphing into full-blown socialism, as there is no other political alternative. Things are going to get very ugly; the preservation of capital will be a difficult task: it appears that hunting season on capital sheltered in diverse localities is in place.
Daily Bell: What's going on with South America generally? Does Hugo Chavez's death make a difference?
Hugo Salinas Price: No. I don't think it will make much difference. Maduro's statement that he got a spiritual message from Chávez, in the form of a little birdie hovering over him, is quite appropriate for the ethnic makeup of Venezuela. The operation of true intellect is essential to the creation of a civilized and prosperous nation, and nowhere in the world is intellect operative today; too many people can only be handled as children, not as thinking citizens.
Daily Bell: What do you think is going to happen in Argentina – a formal devaluation?
Hugo Salinas Price: Argentina, I am sorry to say, is a lost cause. Argentina is hopeless. They will bumble on, I suppose, going down into increasing poverty.
Daily Bell: Is Latin America turning to the left?
Hugo Salinas Price: I don't think so.
Daily Bell: Is Mexico turning to the left?
Hugo Salinas Price: No, I see no sign of that. But I am expecting our government to spend – and borrow – more and more.
Daily Bell: How is the freedom movement progressing, in your opinion?
Hugo Salinas Price: I don't see any freedom movement at all. The Mexican people – in my opinion, of course – have suffered too many disappointments with "movements" and so they have become quite passive; we let those running things do what they want to do, generally speaking, and get on with our lives – and hope they do not make too many serious mistakes.
Daily Bell: How about Austrian economics? Any more interest in Mexico?
Hugo Salinas Price: If you talk to the average educated Mexican, he has never heard of "Austrian economics." The boys and girls of the upper classes who go to the best universities are fed only the present economic garbage, and the brightest emerge from the universities quite confident that they know "economics" and with their degrees will be welcomed into the financial system and, if lucky, land a job in Government.
Daily Bell: You are following Antal Fekete and the New Austrian School of Economics. Tell us about him.
Hugo Salinas Price: I think Antal is the best living economist and what he is teaching a handful who follow him can be the only basis for recovering our civilization after the collapse which is in store for the world – if there is ever going to be a recovery, which I think is doubtful.
Daily Bell: What are the major differences between Fekete and the Rothbardian wing of Austrian economics?
Hugo Salinas Price: One important difference is that Rothbard insists (if I am correct) that the only money that should be used is gold (and perhaps silver should also be included) – in which he is correct – but he spurns the use of the so-called "Real Bills" – in other words, the credit that productive enterprises spontaneously create to finance the process of getting goods produced to the ultimate consumer; a credit that is extinguished when the final consumer pays for the merchandise with gold. Without Real Bills, and discount (which is a different phenomenon from interest), there would be insufficient gold money to lubricate the process.
But the full answer to your question would require a treatise – which Fekete has provided.
Daily Bell: What is the Real Bills doctrine and why is it important to Fekete and his theories, as it is apparently?
Hugo Salinas Price: Real Bills, as I understand them, are invoices to be paid in up to 90 days. This is credit which is created by producers and a phenomenon entirely independent of banks. I have an example of the spontaneity of their creation: In central Mexico, we had a burgeoning shoe manufacturing industry, years ago, which had no support from the banking system. So all those related to the shoe business relied on post-dated checks – quite illegal but indispensable to business. Everyone issued post-dated checks to keep their businesses going. This was because there was no "Real Bills" system operating. There were "good signatures" on checks, and also "bad or poor signatures"; there was a discrimination between these. I take it that the use of the post-dated checks was a spontaneous resource for businesses, equivalent to the Real Bills, extinguished at the end of 90 days by payment from the final consumer.
Daily Bell: Can you expand? Why doesn't current Austrian economics deal more specifically with Fekete?
Hugo Salinas Price: Academics are the most reactionary individuals in the world. They always support the power of the moment and the theory of the moment and always have, and still do, oppose anything they have not been taught. They join ranks to oppose anything new to them, for if they did not do so, they would have to accept that they have been mistaken. And when has any academic ever confessed to having been wrong? So, Fekete is not in fashion; Keynes or neo-Keynesianism is in fashion, and that is what academics will teach, to their dying day. Keynes was not a total idiot; I am quite sure he would be horrified to see the madness that is perpetrated in his name, today. However, Keynes loved power and always adapted what he taught, to please the politicians of his day. And as he himself said, economics is usually the teaching of some defunct economist – and Keynes is that "defunct economist," today.
Daily Bell: What is Fekete doing next, if you know?
Hugo Salinas Price: Fekete has founded the "New Austrian School of Economics" in Budapest, Hungary. I think he will take the position of chairman of the school, and the president is to be Dr. Juan Ramón Rallo, of Madrid, currently president of the "Juan de Mariana Institute" in Spain. I think the world will be hearing more about the New Austrian School of Economics in the near future. If there is any hope for the world, it lies in that school.
Daily Bell: What papers or books of his would you recommend?
Hugo Salinas Price: Fekete is coming out with a translation into English of his book in German, to be published soon, The Reconstruction of Money and Credit. I think the title is excellent, for that is precisely what must be done, a reconstruction of money and credit, utterly devastated in today's world. The whole foundation of our civilization must be rebuilt – if we are to have any future worth living in. I recommend that anyone interested look at www.professorfekete.com for some papers of his.
Daily Bell: Let's discuss Europe for a minute. What's going on with the euro? Is it going to be a successful currency?
Hugo Salinas Price: The euro was a mistake. It is one more fictitious (fake, or fiat) money. That is its original sin. It was born to fail. It is one more example of the faith that humanity has in "science"; the Revolutionaries of France in 1790 had the same faith in reason, and they created a very "reasonable" fake currency, the Assignat. The Assignat, contrary to their expectations, caused total devastation of the French economy, and was finally put to death by the gold coin of Napoleon Bonaparte. But not one of the guilty fools who invented the Assignat ever accepted that the whole experiment had been a disaster. Such are intellectuals, infatuated with their own brilliance. And such is the case of Europe – not one of the politicians is willing to admit that the euro was a mistake from beginning to end.
Daily Bell: Why is Europe having so much trouble with it?
Hugo Salinas Price: It is having trouble with the euro for the same reason that you will have trouble if you put water into your car's gas tank, instead of gasoline or diesel. A peaceful, prosperous Europe, with many diverse nationalities, languages, customs and histories, could get along marvelously well with GOLD, which is apolitical and neutral, and harmonizes the cultural peculiarities of the diverse nations of Europe into a coherent whole. I remember von Mises pointed out that the Austrian empire, made up of various different nations, began to break up when Austria abandoned the gold coin. The same holds for Europe, today.
Daily Bell: Is the euro going to split into two component parts?
Hugo Salinas Price: I don't know; perhaps it will. But the essential problem remains: It is a fiat currency and under fiat, you do not get stability and cooperation; you get divisive politics and a persistent fall in the value of the currency, and prosperity becomes elusive.
Economics today is considered a science, and there is the conception that all science must be unified under the same rules or methods. But science has an intractable problem, which it attempts to ignore or deny, and that is the fact that there exists FREE WILL in mankind.
This fact confounds science. Think of this: If atoms had free will, or the capacity to choose, you could not have atomic theory. So economics, as it is taught today, is confounded by the fact of FREE WILL in humans. So we find that "economists" resort to graphs and equations in all confidence, and forget that they are dealing with the lives of people who make choices.
As I say, if atoms had choices, there could be no atomic theory. Economists today are not reflecting on how humans are going to react to their programs – look at the stupidities being committed every day. For instance, the announcement of the "template" for dealing with banking crises by "Mr. Diesel-boom" of Holland. It has scared the living daylights out of all bank depositors in the world. Classic example of an economist that is not reflecting on how people may react – that is to say, what choices people may make.
Daily Bell: What about the PIGS? Are they going to leave the euro – or even the EU?
Hugo Salinas Price: The poor PIGS. A great mistake for all member countries to throw in their lot with a fiat currency manipulated centrally. I think the euro will eventually founder and collapse. There is one way, and only one way, for the various countries of Europe to get along with each other and prosper, each in its own way, and that way is through the adoption of gold currency and the re-establishment of Real Bills as the primary asset of commercial banks – which cannot be investment banks or disguised hedge-funds, as they are at present.
Now, whether this can ever happen seems rather doubtful, in which case, the future for Europe will be very dark, indeed.
Daily Bell: What about Germany? Where is Germany headed?
Hugo Salinas Price: I see Germany as turning away from a foundering Europe and looking eastward to Russia. Imagine a combination of Germany, Russia and China joining up in a block, and establishing gold as the basis of their cooperation. All I can say is, "Wow!"
Daily Bell: Is the world headed toward a further depression?... Finish reading>> The Daily Bell
Sunday, April 21, 2013
With Anthony Wile
 |
| Hugo Salinas Price |
Introduction: Hugo Salinas Price is a successful, retired businessman who lives in Mexico. He has been a follower of the Austrian School of Economics since his youth. He has written three books in Spanish on how and why silver should be instituted as money in Mexico, in parallel with paper money, and numerous related articles in English and Spanish, posted at his website. His organization, the Mexican Civic Association Pro Silver, actively lobbyied the Mexican Congress to approve legislation to institute the pure silver "Libertad" ounce as money.
Daily Bell: Hello again. Any news you want to mention?
Hugo Salinas Price: The State of Guerrero, south of Mexico City on the coast (Acapulco is its most important city, but not the capital of the State) is in something of an uproar; it is Mexico's most backward State, very mountainous and highways are rather few. Its people are known to be rambunctious and recently the Teachers' Union in Guerrero is on the warpath. The woman head of the Mexican Teachers' Union was recently jailed – supposedly for malfeasance of Union Funds but really for disloyalty to the PRI – and she got her job when the previous Union leader was sacked for the same reason, years ago. The Teachers' Union has 1.4 million members, and it is suspected that Andres Manuel Lopez Obrador, who was a presidential candidate in the recent election (and the one before that), is behind the agitation. The cause of the agitation is the new legislation reforming public education, which will affect the teachers, who have benefits that include, for instance, the right to name their successors in their positions when they retire, regardless of qualifications. I suspect that the reform is aimed at breaking the entirely too great influence that this huge union has.
The teachers in Guerrero have taken to blocking the road to Acapulco and I suspect will continue to disrupt in whatever way they can. There is a showdown coming between them and the president. To make things worse, the teachers have teamed up with the local citizen-militia of various towns and villages, which came into being due to the lawlessness which has prevailed caused by the constant criminal activity of the drug cartels in their internecine quarrels and assassinations.
So this is an ongoing struggle; it will be very interesting to see how our president handles this ruckus.
Daily Bell: How is the battle for silver going? Any chance Mexico will adopt a silver dollar?
Hugo Salinas Price: I have suspended my fight for the monetization of a silver coin, to circulate in parallel with the Mexican peso. The PRI, the old, old party which has governed Mexico since the '30s, is back in power, and looks to stay there for a long time. The President of Mexico is also Head of the Party and there is no way that the silver project can progress under those circumstances.
Daily Bell: What do you think of the new political regime? Are you hopeful?
Hugo Salinas Price: The new political regime is not new; it is the old regime, once again. I do not know what is in store for Mexico – the president has yet to show his colors. I hope he manages to keep the US at bay.
Daily Bell: What changes do you see in the world today? Are they positive?
Hugo Salinas Price: I think I see a growing consciousness that the world's monetary system is not working. Though we know that gold is the only path to peaceful, stable and just relations between nations, it does seem that TPTB do not wish to go down that path. What I see coming is a revolt against the defunct globalization and the installation of a new protectionism around the world. I see the welfare state morphing into full-blown socialism, as there is no other political alternative. Things are going to get very ugly; the preservation of capital will be a difficult task: it appears that hunting season on capital sheltered in diverse localities is in place.
Daily Bell: What's going on with South America generally? Does Hugo Chavez's death make a difference?
Hugo Salinas Price: No. I don't think it will make much difference. Maduro's statement that he got a spiritual message from Chávez, in the form of a little birdie hovering over him, is quite appropriate for the ethnic makeup of Venezuela. The operation of true intellect is essential to the creation of a civilized and prosperous nation, and nowhere in the world is intellect operative today; too many people can only be handled as children, not as thinking citizens.
Daily Bell: What do you think is going to happen in Argentina – a formal devaluation?
Hugo Salinas Price: Argentina, I am sorry to say, is a lost cause. Argentina is hopeless. They will bumble on, I suppose, going down into increasing poverty.
Daily Bell: Is Latin America turning to the left?
Hugo Salinas Price: I don't think so.
Daily Bell: Is Mexico turning to the left?
Hugo Salinas Price: No, I see no sign of that. But I am expecting our government to spend – and borrow – more and more.
Daily Bell: How is the freedom movement progressing, in your opinion?
Hugo Salinas Price: I don't see any freedom movement at all. The Mexican people – in my opinion, of course – have suffered too many disappointments with "movements" and so they have become quite passive; we let those running things do what they want to do, generally speaking, and get on with our lives – and hope they do not make too many serious mistakes.
Daily Bell: How about Austrian economics? Any more interest in Mexico?
Hugo Salinas Price: If you talk to the average educated Mexican, he has never heard of "Austrian economics." The boys and girls of the upper classes who go to the best universities are fed only the present economic garbage, and the brightest emerge from the universities quite confident that they know "economics" and with their degrees will be welcomed into the financial system and, if lucky, land a job in Government.
Daily Bell: You are following Antal Fekete and the New Austrian School of Economics. Tell us about him.
Hugo Salinas Price: I think Antal is the best living economist and what he is teaching a handful who follow him can be the only basis for recovering our civilization after the collapse which is in store for the world – if there is ever going to be a recovery, which I think is doubtful.
Daily Bell: What are the major differences between Fekete and the Rothbardian wing of Austrian economics?
Hugo Salinas Price: One important difference is that Rothbard insists (if I am correct) that the only money that should be used is gold (and perhaps silver should also be included) – in which he is correct – but he spurns the use of the so-called "Real Bills" – in other words, the credit that productive enterprises spontaneously create to finance the process of getting goods produced to the ultimate consumer; a credit that is extinguished when the final consumer pays for the merchandise with gold. Without Real Bills, and discount (which is a different phenomenon from interest), there would be insufficient gold money to lubricate the process.
But the full answer to your question would require a treatise – which Fekete has provided.
Daily Bell: What is the Real Bills doctrine and why is it important to Fekete and his theories, as it is apparently?
Hugo Salinas Price: Real Bills, as I understand them, are invoices to be paid in up to 90 days. This is credit which is created by producers and a phenomenon entirely independent of banks. I have an example of the spontaneity of their creation: In central Mexico, we had a burgeoning shoe manufacturing industry, years ago, which had no support from the banking system. So all those related to the shoe business relied on post-dated checks – quite illegal but indispensable to business. Everyone issued post-dated checks to keep their businesses going. This was because there was no "Real Bills" system operating. There were "good signatures" on checks, and also "bad or poor signatures"; there was a discrimination between these. I take it that the use of the post-dated checks was a spontaneous resource for businesses, equivalent to the Real Bills, extinguished at the end of 90 days by payment from the final consumer.
Daily Bell: Can you expand? Why doesn't current Austrian economics deal more specifically with Fekete?
Hugo Salinas Price: Academics are the most reactionary individuals in the world. They always support the power of the moment and the theory of the moment and always have, and still do, oppose anything they have not been taught. They join ranks to oppose anything new to them, for if they did not do so, they would have to accept that they have been mistaken. And when has any academic ever confessed to having been wrong? So, Fekete is not in fashion; Keynes or neo-Keynesianism is in fashion, and that is what academics will teach, to their dying day. Keynes was not a total idiot; I am quite sure he would be horrified to see the madness that is perpetrated in his name, today. However, Keynes loved power and always adapted what he taught, to please the politicians of his day. And as he himself said, economics is usually the teaching of some defunct economist – and Keynes is that "defunct economist," today.
Daily Bell: What is Fekete doing next, if you know?
Hugo Salinas Price: Fekete has founded the "New Austrian School of Economics" in Budapest, Hungary. I think he will take the position of chairman of the school, and the president is to be Dr. Juan Ramón Rallo, of Madrid, currently president of the "Juan de Mariana Institute" in Spain. I think the world will be hearing more about the New Austrian School of Economics in the near future. If there is any hope for the world, it lies in that school.
Daily Bell: What papers or books of his would you recommend?
Hugo Salinas Price: Fekete is coming out with a translation into English of his book in German, to be published soon, The Reconstruction of Money and Credit. I think the title is excellent, for that is precisely what must be done, a reconstruction of money and credit, utterly devastated in today's world. The whole foundation of our civilization must be rebuilt – if we are to have any future worth living in. I recommend that anyone interested look at www.professorfekete.com for some papers of his.
Daily Bell: Let's discuss Europe for a minute. What's going on with the euro? Is it going to be a successful currency?
Hugo Salinas Price: The euro was a mistake. It is one more fictitious (fake, or fiat) money. That is its original sin. It was born to fail. It is one more example of the faith that humanity has in "science"; the Revolutionaries of France in 1790 had the same faith in reason, and they created a very "reasonable" fake currency, the Assignat. The Assignat, contrary to their expectations, caused total devastation of the French economy, and was finally put to death by the gold coin of Napoleon Bonaparte. But not one of the guilty fools who invented the Assignat ever accepted that the whole experiment had been a disaster. Such are intellectuals, infatuated with their own brilliance. And such is the case of Europe – not one of the politicians is willing to admit that the euro was a mistake from beginning to end.
Daily Bell: Why is Europe having so much trouble with it?
Hugo Salinas Price: It is having trouble with the euro for the same reason that you will have trouble if you put water into your car's gas tank, instead of gasoline or diesel. A peaceful, prosperous Europe, with many diverse nationalities, languages, customs and histories, could get along marvelously well with GOLD, which is apolitical and neutral, and harmonizes the cultural peculiarities of the diverse nations of Europe into a coherent whole. I remember von Mises pointed out that the Austrian empire, made up of various different nations, began to break up when Austria abandoned the gold coin. The same holds for Europe, today.
Daily Bell: Is the euro going to split into two component parts?
Hugo Salinas Price: I don't know; perhaps it will. But the essential problem remains: It is a fiat currency and under fiat, you do not get stability and cooperation; you get divisive politics and a persistent fall in the value of the currency, and prosperity becomes elusive.
Economics today is considered a science, and there is the conception that all science must be unified under the same rules or methods. But science has an intractable problem, which it attempts to ignore or deny, and that is the fact that there exists FREE WILL in mankind.
This fact confounds science. Think of this: If atoms had free will, or the capacity to choose, you could not have atomic theory. So economics, as it is taught today, is confounded by the fact of FREE WILL in humans. So we find that "economists" resort to graphs and equations in all confidence, and forget that they are dealing with the lives of people who make choices.
As I say, if atoms had choices, there could be no atomic theory. Economists today are not reflecting on how humans are going to react to their programs – look at the stupidities being committed every day. For instance, the announcement of the "template" for dealing with banking crises by "Mr. Diesel-boom" of Holland. It has scared the living daylights out of all bank depositors in the world. Classic example of an economist that is not reflecting on how people may react – that is to say, what choices people may make.
Daily Bell: What about the PIGS? Are they going to leave the euro – or even the EU?
Hugo Salinas Price: The poor PIGS. A great mistake for all member countries to throw in their lot with a fiat currency manipulated centrally. I think the euro will eventually founder and collapse. There is one way, and only one way, for the various countries of Europe to get along with each other and prosper, each in its own way, and that way is through the adoption of gold currency and the re-establishment of Real Bills as the primary asset of commercial banks – which cannot be investment banks or disguised hedge-funds, as they are at present.
Now, whether this can ever happen seems rather doubtful, in which case, the future for Europe will be very dark, indeed.
Daily Bell: What about Germany? Where is Germany headed?
Hugo Salinas Price: I see Germany as turning away from a foundering Europe and looking eastward to Russia. Imagine a combination of Germany, Russia and China joining up in a block, and establishing gold as the basis of their cooperation. All I can say is, "Wow!"
Daily Bell: Is the world headed toward a further depression?... Finish reading>> The Daily Bell
