Economics

Swiss Parliament to discuss gold franc

16 Franken, Helvetic republic, 1800, Gold

16 Franken, Helvetic republic, 1800, Gold

Following our Cobden Centre Radio interview last week with Thomas Jacob, and his plans to use a democratic Swiss plebiscite to re-introduce a Swiss gold franc, it is great to see that this story is beginning to grow, with an article in Marketwatch.

Here’s a quote:

Switzerland, which in 2000 became one of the last countries to decouple its currency from gold, is not the only place to contemplate a change in the precious metal’s role amid controversy over government involvement in the economy. In March, Utah became the first state in the U.S. to legalize gold and silver coins as currency, while similar legislation was considered in Montana, Missouri, Colorado, Idaho and Indiana.

“I want Swiss people to have the freedom to choose a completely different currency,” said Thomas Jacob, the man behind the gold franc concept. ”Today’s monetary system is all backed by debt — all backed by nothing — and I want people to realize this.”

To read the full article, click here.

UPDATE: The Swiss gold franc is also discussed by Eric King and Jim Rickards at 20 minutes into this interview, broadcast on Saturday.

Economics

Mark Thornton: Austrian economics versus mainstream economics

The excellent Mark Thornton discusses how Austrian economics – the oldest continuous school of economics – both differs from the more recent mathematical mainstream schools, and why it is the fastest growing school of economics, in this distilled 21 minute presentation, first broadcast on the 28th of June, 2011.

Avoid watching this video if you consider yourself a mainstream free market economist, as your head may fall off or even explode.

For instance, what does Professor Thornton think the Federal Reserve should do with U.S. interest rates? Answer: Absolutely nothing. It should let interest rates find their own natural level in a free market uninterfered with by government bureaucrats appointed by politicians.

It’s dangerous heady stuff:

Economics

Rob Arnott: QE, Fed, inflation, Weimar Germany, investor confidence & more

One Million Mark notes, used as notepaper

Many of us in the mad-eyed gold bug community subscribe to King World News, to seek out affirmation for our crazy lopsided view of the world, in which we believe that virtually all of the world’s major governments – and related supranational bodies – are directing the global paper fiat system into a total paper money collapse.

However, occasionally, Eric King also interviews those whose net worth is concerned with much more than the price of gold or silver. One of those regular interviewees is Rob Arnott, who sub advises the Pimco All Asset Fund, and who manages around $80 billion dollars of other people’s money.

If you’d like to listen to some of the interesting things Mr Arnott had to say, today, to Eric King, click below:

Cobden Centre Radio

Cobden Centre Radio: The Swiss gold franc

Last night I spoke to Herr Thomas Jacob, of the Property and Freedom Society, from Zurich Canton, in Switzerland. We spoke about his plans — along with Doctor Ulrich Schlüer and their action plan committee — to employ the radical democracy avenues of Switzerland to achieve a Swiss gold franc currency, parallel to the Swiss government’s current paper franc.

In this twelve minute interview we cover the background of the story, in which the action committee plans to implement constitutional change via the mechanism of a national plebiscite — this will be triggered via the collection of 100,000 signatures — and the precise framework of what the action committee proposes:

In the show we also mention a recent Jim Rickards interview on Kingworld News. You can find that interview via this link.

The campaign for a Swiss gold franc has largely been an internal Swiss affair. However, in the interview Thomas Jacob stated that his committee will shortly provide an international contact point for anyone interested in his action committee’s plans. That contact point will appear within an updated version of this Cobden Centre Radio article, when it becomes available.

In the meantime, you can find a recent article on this issue by Herr Jacob, here (in German) and an English Google tranlation of that, here.

UPDATE: There is a better English version, translated by Theodore Deden, here.

Subscribe to our podcast via the icon below:

Subscribe to Podcast

Economics

Ben Davies: Gold, silver, miners, riots, QE3, EU, default, bank crisis & more

As hardcore Kingworld News listeners will already know, the prescient Ben Davies gave Eric King a remarkable interview a few days ago, which encompassed virtually every topic of recent interest to Cobden Centre readers. I was enthralled by this interview, and only wished it could go on longer, but, alas, after nineteen minutes, the brilliant Mr Davies had other souvlaki to fry.

If you’d like to listen to the interview too, just click on the link below:

Economics

Philipp Bagus: Euro Dead On Arrival?

The splendidly tenacious Professor Philipp Bagus, placed into the lions’ den, educates the world, and a couple of other rather blinkered commentators, on the oncoming future demise of the Euro.

Telling it like it is is never popular, even, it seems, on Russia Today:

Economics

Outside the Asylum: Property and Freedom Society, Bodrum, Turkey, 2011

(All photos of the PFS conference by Paul Vahur)

Hitchhiker’s Guide to the Galaxy fans may remember a splendid character called Wonko the Sane, who lived upon the Earth outside of the asylum, a man whom we first met in So Long, and Thanks for all the Fish, by Douglas Adams; I now know how Wonko felt.

Being a man who claims to be the hardest hard-core Rothbardian in England (and it’s pistols at dawn in the mist, at Henley Regatta’s Temple Island, for anyone who wishes to argue the point), I feel I was last inside the bubble of civilisation two years ago, when I was lucky enough to be invited to Professor Hans-Hermann Hoppe’s Property and Freedom Society conference, held in 2009. The two years since, inside the asylum, have passed in a hilarious blur as various pin-headed identikit Labservatives or Conliberals, jaw-boned at each other, at my expense, about how different they are from each other, because some like pink dots on their blue ties while others prefer yellow dots on their pink ties.

Oh, how Jonathan Swift so beautifully captured the futility of anyone believing in the usefulness of politicians with his immortal book, Gulliver’s Travels, and his description of the rope dancers:

“I was diverted with none so much as that of the rope-dancers, performed upon a slender white thread, extended about two feet, and twelve inches from the ground. Upon which I shall desire liberty, with the reader’s patience, to enlarge a little. This diversion is only practised by those persons who are candidates for great [government] employments, and high favour at court. They are trained in this art from their youth, and are not always of noble birth, or liberal education. When a great office is vacant, either by death or disgrace (which often happens,) five or six of those candidates petition the emperor to entertain his majesty and the court with a dance on the rope; and whoever jumps the highest, without falling, succeeds in the office.”

All this rope-dancing then, as performed by all government politicians and bureaucrats — as recently exampled within the higher echelons of the IMF — while the global economy, such as it is, has staggered under enormous taxes, wasteful government spending, regulatory democracy burdens upon all levels of entrepreneurship, and the strains of dealing with legally-imposed fiat currencies, which are having their values deliberately sucked out of them in a continuous manner, to deflate real government debts; all of these debts, of course, necessitated in the last few decades to foist upon us really useful government products such as endless Middle-East wars and legions of tax eaters, such as our own diversity outreach awareness officers and childhood clothing chocolate orange inspectors here in Britain, to help persuade us to keep voting Libservative or Conlabour and to continue to believe in democracy, the God that failed, as we seek to impose this frightful governmental system upon the rest of the world, at the end of a depleted-uranium gun barrel.

The welfare/warfare state has sucked us dry and still they want to eviscerate us even more, to prop up their sordid rancid empires.

If only they would leave us alone and let us get on with it, within a decade we would achieve unbelievable progress and wealth, and yet they would rather hack their cut into us now, for their short-term parasitic lifestyles, and natures of envy, to be fed via our unwilling and increasingly demotivated slave labour.

And so, being unable to stand any more after two years of this insanity, I decided to try to return to Bodrum and the 2011 Property and Freedom Society conference, even if this meant crawling over broken glass to do so. And what a joy it was, even after I picked the flecks of crystalline silicate out of my bloody knees and hands, as I crossed the threshold of the Hotel Karia Princess; it was as if I had never been away.

Before I even had possession of my room key, I was sat down to a glass of red wine in the lobby with Professor Tom DiLorenzo and Professor Yuri Maltsev and several other assorted Australians, Germans, and Swedes; the two years of previous government-induced insanity had melted away before the end of the first glass.

Simply magical.

And then it just kept getting better.  With many more glasses of wine to wash it all down.

The pinot noir and gewurztraminer flavour of the conference is perhaps best summed up in the society’s motto:

“Uncompromising Intellectual Radicalism”

After spending two years locked inside the asylum with people who think that the BBC is ‘impartial’; that the British government is here ‘to help’; and that it is a mortal sin — tantamount to urinating into a plant-pot midway through a church service — to ask for a new plastic carrier bag at a supermarket, it is the one place on Earth (with perhaps the exception of Auburn, Alabama), where you can speak your mind without worrying about the reactions of the petty thought police, the underwear stasi, and all of the other bottom feeding apparatchiks of the state’s byzantine cornucopia of short-term greed units, tax consumption directorates, points scoring rebuttal departments, malinvested corruption troughs, and generally mendacious imbecile farms.

Although I’ll stick mainly to the actual conference, below, please do be assured that this personal report is only the tip of the ice-berg. The main thing about this conference is to be physically in Bodrum itself when the conference is taking place, to soak up all of that Hayekian knowledge that is impossible to acquire through words alone, and to secure one of its precious invites from Professor Hoppe.

Acquiring one of these is an S.A.S. style initiative test, and I will provide you with no further clues as to how to get one.  However, if you are tempted to try, because you  regard yourself as some form of Rothbardian, or even anything close, then good luck in the attempt.

Do remember however, that it will once again be pistols at dawn in Henley if you try to take mine.

And so to the actual conference.

The first morning concentrated upon the state of world banking, with an opening address by Professor Hoppe and lectures by rising star Mateuz Machaj, on how not to criticise a central bank, and our very own Philipp Bagus.  The lecture by Bagus (The FED and the ECB: Banksterism Compared) will be of particular interest to Cobden Centre readers, and I urge you to watch the video, particularly the second half, which contains a remarkably clear exposition as to what drives the government money machines of the world.

Professor Hoppe opens the conference (image: Paul Vahur)

The afternoon included the indefatigable Doug French on the ethics of mortgage default, the combative Tom DiLorenzo on the fallacies of happiness research, and entertaining Nikolay Gertchev on why psychology isn’t economics (which will be available on Vimeo soon).

During the question and answer session, at the end of the day, Doug French came under a lot of pressure from several non-Auburn libertarians in the audience who disputed his observation that people can or should walk away from bad debts, if it becomes financially nonsensical to keep making the payments. Surely contract law should hold, in a future ‘libertania’, and if you take on a debt, surely you should pay it until your dying day, even if you can walk away unscathed and save a fortune in the process?

Although I will let Mr French defend himself online, as he did so well on the day, one point that never materialised is that banks are lending people money printed out of thin air, based upon central bank reserves printed out of thin air. If banks were lending gold coins, honestly acquired from lenders putting off consumption, then I would have much more sympathy with the arguments of Mr French’s critics, although in those circumstances there would never be the wild swings in housing prices that we have enjoyed over the last few years, with paper debt bubbles piled upon paper debt bubbles piled upon paper debt bubbles. And so perhaps the point is moot.

In any case, catch the video if this topic interests you.

The day was followed by an excellent evening at a local fish restaurant on the Mediterranean shoreline, where I learnt several German words for some very interesting things (because you should learn something new every day).

With very civilised starting times for the lectures, which enabled late night discussions beyond 3am or 4am most mornings, in which much that is important to the world was discussed, with increasing relevance to the future of humanity as the evenings progressed deep into the late hours, the second day resumed with the diamond-hard Stephan Kinsella fending off all contenders, in his discussion of libertarian legal misconceptions.

Although I only had time to say hello and shake his hand for one second, because he had to leave the conference early, it was a privilege to meet Mr Kinsella and to watch him in action; I hope to meet him again soon. What was really interesting was to hear someone with the confidence to quote Hoppe, in Hoppe’s physical presence, and to state what Hoppe thought about something (with nods from the great man himself, in confirmation), in stream-of-consciousness answers to questions from the floor.

Remarkable.

And I thought I was doing well just to light the Professor’s cigarettes!

What followed was one of my favourite personal speeches of the entire conference, by John Derbyshire, about understanding China and the Chinese, with perhaps one of the most memorable ideas of the week, when he described his father-in-law, the Communist Army General and friend of Mao, who he described as a small-c ‘conservative’, though no Rothbardian.

(You had to be there.)

John Derbyshire on Maoist non-Rothbardians (image: Paul Vahur)

This was followed by two entertaining former Margaret Thatcher speech-writers, John O’Sullivan and Norman Stone — on understanding Europe’s bureaucrats and understanding Turkey, respectively. This second speech on Turkey was then complemented by a real Turk, Mustafa Akyol, who delivered a history of the Ottoman Empire and a workable strategy for how the borders of the Middle-East may be redrawn in the near future.

And so we entered a kind of nirvana, halfway through the conference, when we felt we had been there forever, and felt we would continue to be there forever, outside the asylum.

After another late evening, in which the problems of the world became easier to solve as the night progressed, especially at the Marina night club, our third and final day materialised, into which much was improbably packed.

Sean Gabb kicked off the day with a pugilistic case against the American War of Independence, which was interesting to witness, as it was delivered in a packed room of sixty people, with about twenty Americans present. Fortunately, Dr Gabb is blessed with a teflon outer coat and managed to pull it off, whereas other thinner-skinned people may have quailed under the spotlight.

Roman Skaskiw speaks about Iraq and Afghanistan (image: Paul Vahur)

The best lecture of the conference then followed, delivered by Roman Skaskiw, a former captain in the U.S. Airborne forces, who has served four tours in both Afghanistan and Iraq (and who will be played by Matt Damon, if they ever make the movie). In a wonderfully understated way he detailed how he had actually been living out several of Hoppe’s predictions in ‘winning the peace’ in Afghanistan, for instance in the building of roads to ostensibly aid the economy of Afghanistan (bombed into the stone age by B-52s), which were really being built to help aid imperial troop movements around this vast inhospitable country, to quell local resistance to imperial might, in the manner of the finest Roman Roads of Monty Python.

“It doesn’t take evil people to do evil acts, but evil ideology”

Delivered with power and emotion, I felt physically stunned by this lecture, and will remember it for a very long time indeed.

In a packed day, in which many late nights of tired emotionality and mid-life crisis were beginning to take their toll — obviously, as an iron-hard Rothbardian, with nerves of carbon fibre, I was still on top form — the superbly irascible Paul Gottfried explained how the left had conquered the right in the last few decades, in the U.S., and Theodore Dalrymple (a.k.a. Anthony Daniels) delivered the quote of the conference in his mirage of equal opportunity, in which he described welfare state recipients as living in a “minestrone of self-pity”.

Joyous.

Theodore Dalrymple resenting a lack of resentment (image: Paul Vahur)

Obviously, I’m going to have to steal that line about the minestrone and use it again in a couple of years, when everyone else has forgotten where it came from. But then, Stephan Kinsella would say that it’s not stealing, but simply the reproduction of infinitely reproducible ideas, so I can sleep easy in my bed at night with a clear conscience.

Oh, those IP ways of thinking are really tough to abandon!

Nicola Iannello followed, with producers and parasites, and then we had the big one, Yuri Maltsev, and his tale of defection from the economic advisory department of Gorbachev, involving two large bags of condoms and lipstick; this is one you really need to watch, especially if you’re really missing George Carlin.

Suffice it to say, anyone who can mix up Salma Hayek with F.A.Hayek, is a man worth listening to.

The Yuri Maltsev Show (image: Paul Vahur)

The next day was the traditional boat day, in which various Englishmen and Swedish men went very pink, as we swam about in the Mediterranean.  Fortunately, on our boat, we possessed several hardy red-blooded Vikings, one of whom raided surrounding ships armed with nothing but a lilo and a pair of sunglasses, to recover beer from various weak-willed Germans and Americans; God bless him.

Indeed, at one point he swam about half a mile just to recover one can of beer (which I duly drank, merely to celebrate his achievement, au naturellement).  All I can say, is that the spirit of the Vikings is alive and well, and when the welfare state of Sweden finally dies, the rest of us better look out.

Beware of Vikings! (image: Paul Vahur)

Fortunately, we all managed to repair back to the hotel for the semi-surprise wedding of Doug and Deanna French, which was the last major spectacular occasion of the week.

Mr and Mrs Douglas French (image: Paul Vahur)

And so, the next day, it all ended, and we all had to re-enter the asylum for another year, before we can escape again, for a few blessed days, in the late May of 2012, the year of the Mayans.

Property and Freedom Society, Bodrum, Turkey, 2011 (image: Paul Vahur)

Such is life.

Thank goodness God (if she exists) gave us all a sense of humour.

Economics

Toby Baxendale: Honest Banking in the UK

Jeffrey Tucker, of the Ludwig von Mises Institute, interviews Toby Baxendale about honest banking in the UK, the Cobden Centre, and the spread of the Austrian School in the UK and Europe.

Economics

Hugo Salinas Price: Silver to be monetised this year in Mexico?

Multi-Billionaire Hugo Salinas Price and the Mexican Civic Association Pro Silver, A.C., have pushed the Mexican government for over a decade to provide silver as real money. Señor Salinas Price believes that they may be close to helping Mexico return to the silver standard, and discusses this in an interesting interview with Eric King (at about 0:40 on the clock).

What is particularly interesting in the interview is the idea that if Mexico does return to a silver peso, then it could become the unintended lever to compel the United States towards a silver dollar again, as the population of the United States clamours to get its hands on real money from south of the border, and perhaps particularly those large Spanish-speaking populations in areas such as Texas, Southern California, and Florida.

Shades of The Alamo in reverse?

This is, perhaps, why the U.S. government will do all in its power to prevent Mexico returning to a silver standard, but stranger things have happened at sea. After all, the United States did borrow the actual ‘dollar’ symbol, $, directly from the original Spanish peso, with its symbol of a long pennant flying from the Spanish Pillars of Hercules, when the early American colonists were faced with a British-imposed shortage of coin in pre-republic days (though you can pick your own origin myth for the dollar symbol, from amongst many).

If the silver Mexican peso does back into a silver American dollar for the second time in its history, monetary fate could be rhyming with itself again in a rather interesting manner.

I would like to wish Hugo Salinas Price the very best of luck in his endeavour to drive Mexico towards honest money.

Economics

Cobden Partners Launched

One of our regular Cobden Centre contributors, Gordon Kerr, is a structured finance banker who recently co-drafted a Bill put before the UK Parliament by Steve Baker MP designed to expose the extent of artificial UK bank profits claimed under mark-to-market accounting. The Bill’s second reading is scheduled for June the 10th, 2011.

Gordon is delighted to announce the formal launch of Cobden Partners. This business, a collection of people that he has met through the Cobden Centre, has been established to help small countries reform their failed banking and, in some cases, monetary systems.

Gordon is keen to hear from anyone with an interest in helping to develop this business. They can contact him via the Cobden Partners website.

He is also indebted to the Cobden Centre for permission to use the Cobden brand and hopes that one benefit to the Cobden Centre will be to promote international awareness of the important work of the Cobden Centre.

The first official press release document of Cobden Partners can be downloaded via the link below, which discusses the Financial Services (Regulation of Derivatives) Bill – published May 13th 2011:

The text of this press release reads as follows:

Cobden Partners: Press Release – May 17th 2011

Financial Services (Regulation of Derivatives) Bill – published May 13th 2011

A group of MPs, led by Steve Baker, seek to expose and address fundamental problems of the British banking system by presenting this Bill to Parliament. Cobden Partners is delighted to have helped by researching and producing the Bill.

Banks are producing rule compliant but false accounts which grossly inflate their reported profits and capital bases. Three specific examples:
 
a) Banks record unrealised gains in investments as profits, justified under mark to market and mark to model accounting rules;

b) Banks are unable to take prudent provisions for expected loan losses under the EU’s IFRS accounting standards, rules which they have chosen to adopt;

c) Banks fail to deduct from reported profits expenses such as staff compensation. This has led to Barclays being reported to accounting regulators by investors this week.
 
All three, and many similar accounting misrepresentations are rule compliant. Therefore the rules should be changed. The attached Bill will cure these abuses by requiring parallel accounts to be prepared under UK Companies Act law. The Bill will not breach any of our EU obligations.

Steve Baker MP says:

“I am convinced that the present institutional design of the banking system is the greatest source of injustice in society, the root cause of our boom and bust cycles, and a potent force leading to widening wealth inequality.  The present banking system’s gross expansion of credit is also a key enabler of the mass wastage of natural resources.

I am convinced that this Bill will reveal the true health of our banking system, and help our Government deliver the far reaching promised banking reforms.

I am extremely grateful to Cobden Partners for their invaluable support in preparing this Bill.  Without them it would not have been possible.”

Lord Flight, member of the House of Lords Select Committee on Economic Affairs says:

“I very much hope that Steve Baker’s Private Member’s Bill which has its next reading on 10th June will serve to raise the profile of the campaign and correct the serious problems which IFRS has caused.  The Bill, effectively, neuters IFRS by requiring Financial Services companies to prepare parallel accounts under UK GAAP.  Clause 2 of the Bill would also allow companies to switch back to UK GAAP.
 
It is important to note that IFRS is not an “international obligation” – at a limited company level it has been an option.  France and Germany have outlawed IFRS and Italy, having required IFRS is now requiring its Ministry of Justice to vet IFRS accounting.
 
It is now clear that IFRS accounting was a significant contributor to the banking crisis as it positively incentivised mis-pricing risk and the omission of the cost of credit default.  At its simplest bank profits were overstated in good times and losses exaggerated in bad times. IFRS 17 has also contributed to the demise of defined benefit pension schemes and the decline in pension saving by requiring pension liabilities to be discounted to present value at prevailing prime bond yields, rather than at the higher, blended, expected rate of return on investment portfolios.  Also the IFRS requirement to charge the notional cost of options to the Profit & Loss account, rather than requiring a full analysis of the resulting equity dilution, serves to distort reported profit’s figures in relation to actual trading and to obscure to shareholders the real dilution cost of option issues”.
 
Gordon Kerr, Founder of Cobden Partners says:

“Without the exposure of the true state of banks’ accounts as set out in the Bill, taxpayers, regulators and scrutineers will remain unable to assess or properly regulate our banks.

Steve Baker is one of the most economically literate MPs that we have. His Bill should be given Government and cross party support.”

Notes to Editors:

- 5 days after the Bill’s First Reading the House of Lords’ Select Committee on Economic Affairs produced a detailed report summarising 10 months’ investigations into broadly the same concerns. This Bill should attract this Committee’s support and will address their accounting concerns.
 

- The Bill is unlikely to be allocated time for its second reading on June 10th without Government support. Your promotion and coverage of Steve Baker’s efforts would therefore be most welcome.