September 27, 2017
THE REAL WORLD OF MONEY
Andrew Gause may just be the top man anywhere for the highest quality analysis into the world of money we all live in. Andrew is a currency historian, an internationally recognized expert on the United States monetary system. He’s written two books, “The Secret World of Money” and “Uncle Sam Cooks the Books”. You can order these books as well as speak to Andrew personally. As a One Radio Network listener, you’ll have highest priority in his phone time. His # is 800.468.2646
-Work hard, pay your debts off early, live debt free, and save your money used to be the maxim for a decent future. After 1964, we had a sea change in the monetary system where the value was taken away. Financial sophistication is required now.
-In 1965, silver was taken out of coins, they became tokens. Took more money to make coins than they were worth. Government made money on seigniorage after the change.
-America dominance in Asia in 1945. Japan seen as our ally and leader in the area. Koreans wanted no part of Japan and their protest was ostensibly financed by the Chinese. US backed the rebels, situation evolved into what was really a Chinese-American war.
-US Constitution of 1787 said in Article I, Section 10, “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts. When did that idea start failing? First Bank of the United States was chartered in 1792, partially owned by the British and by Congress and their families and friends. All the gold and silver the US took in was struck into coins, and as soon as we did that, the Bank of the US exchanged bank notes for coins. Bank notes were fully redeemable and Alexander Hamilton explained why that was okay.
-Hamilton was an agent of foreign banks. Bank of New York was chartered in 1794 by Alexander Hamilton, the only bank other than The Bank of the United States. Aaron Burr, Hamilton’s nemesis, chartered the Manhattan Water Company, which became Chase Manhattan bank.
-Bank of the US counted on no one coming back to redeem notes for gold. It was the fiscal agent for the government.
-Treasury owed a fortune because of the Revolutionary War. Our national debt wasn’t paid off until January 1835 under President Andrew Jackson.
-Tax payments were made in lawful money, gold and silver coin. They got deposited at The Bank of the US, who then issued bonds for the government. In 1808, after lobbying by Hamilton and the boys associated with The Bank of the US, Congress sold the bank stock back to the bank, who then issued bank notes. Profits of the bank soared. By 1811, Madison and other people realized they had been hoodwinked and said they wouldn’t renew the bank’s 20 year charter that came up in 1812. Could be what the War of 1812 was about.
-The ostensible reason we gave for going to war was that the British were harassing our merchant ships and impressing our sailors in to the British navy. So why were the British harassing our ships?
-Francis Scott Key was inspired to write the Star Spangled Banner after seeing the British bomb a US fort during the War of 1812. Is the whole thing of the national anthem built on a lie?
-Andy doesn’t support the football player protests. Entertainment venues are not the place for political protest. Kudos to Morgan Freeman for calling B.S. on black victimhood.
-Seems to be a liberal agenda to separate us based on our colors, ages, and incomes. Divide and conquer.
-Janet Yellen said the economic outlook is highly uncertain. Suggesting they will proceed with slowly raising interest rates and scaling back easy money policies. Said they will start to dismantle the balance sheet.
-The only thing happy is the stock market. If it gets into trouble, they can’t dismantle the balance sheet and it will end ugly.
-The Fed’s contemplated action of unwinding the balance sheet and also cutting back on the amount of money we’re creating – the two don’t go together.
-The $317 billion dollars the government created in bonds for hurricane relief caused temporary strength for the dollar. We’re stalled at 93. The only thing going up is inflation; $317 billion will turn into 2 trillion. It’s a great buying opportunity for bullion or dollar index buyers.
-Charles Nenner said gold continues to be a sell signal. Andy buys a coin he likes no matter what the gold price is.
-Henry wants to know where Andy got the over 80% statistic of black fathers being absent or having broken or out-of-wedlock families. 7/1/12 Census Bureau report said 20.7% of white children are living absent their biological fathers, 57.6% of black children, 31% of Hispanic. Andy got the statistic wrong, but it is a breakdown of the family. 25 million children living without a father. It’s an epidemic.
-President Trump’s tax plan proposes to raise the lowest individual tax rate from 10 to 12%, paired with a higher standard deduction. Andy doesn’t like it. Lobbyists will try to soften it.
-Is a 30% federal tax rate reasonable for a single person? Andy thinks 10% is reasonable.
–Andy doesn’t look for tax reform by the end of the year. Repeal and replace – no. Thwarting the agenda of the president – every day.
-Mario Draghi said central banks don’t have the power to prohibit crypto currencies. Andy agrees and said Draghi is calling on the governments to take strong action.
-High volatility in crypto currencies. 4 levels of bitcoin coming? Will it end hard and ugly?
-Benito asks how can the US demand other countries respect its borders when it doesn’t respect other countries’ borders? The boys’ ultimate goal is global citizenship – single world government, single world currency, single world authority, single world rules. Anything that divides nations isn’t good. Letting in illegals keeps wages down and creates an exploitable class of people.
-Ron Paul says we don’t need to be in North Korea. Why are we provoking them? We’ve been there way too long. Andy says it’s a bankers’ war. The real enemy is China. Kim Jong-Un doesn’t look crazy to Andy – he wants sovereignty. The US is being a bully.
-Angela Merkel was reelected to a 4th term as German chancellor, but she’s lost strength to nationalists. European countries have lost their national identity and want it back.
-Hartford, CT threat of bankruptcy. Insurance agencies insuring against bankruptcy don’t have the money to pay for bond defaults and will go bankrupt themselves.
-Puerto Rico was granted favorable tax status for $10 billion in bonds for improvements to electric infrastructure. But they used the money for underwriting and to pay down their debt instead. They’re buried in debt and they don’t have the money to fix the electric grid.
-Andrew is confused about Andy’s advice to buy a home and take out a mortgage, given that we’re headed for a fall. Andy explains why it’s still a win-win.
-Bob has observed the parabolic moves the silver market has made in the past and sees the same parabolic moves in bitcoin charts this year. A person should probably assume that the price will move sideways and most likely collapse into a price point of $3000 or 16% lower from the current price. He wouldn’t speculate with real money. Andy agrees.
-Andy says what we should be worried about is a cyclical bear market. We’ve had 9 straight years of growth in a cyclical bull market. A bear market is usually a 20% correction. If there is anything better to put money in besides numismatics, let Andy know. Saving in federal reserve notes guarantees you’re going to lose. CDs-certificates of depreciation. 10% of the value of the dollar has disappeared in the last 9 months.
-Cyclical bear markets are a function of an economic cycle being impacted by factors like lower interest rates, rises in unemployment, declining profit.
-Second type of bear market is structural and are imbalances in financial bubbles. Dotcom bubble in 2000, real estate bubble in 2008 – these were structural imbalances. That’s what we have now. Debt vs. income ratio. US is borrowing ever increasing amounts.
-Third kind of bear market is event-driven. Like a war with North Korea, or a major debt default.
-Allen said Canadians can’t deduct mortgage interest from their income taxes. Is it still advised to mortgage? Yes, you still get the value of the asset that’s appreciating in value while you’re paying back with depreciating assets.
-Henry asks Andy if he’s ever charted the grey sheets over years to see trends in the numismatic market? The marketplace looks at auction records now.
-Call Andy for his report Rare Coins vs. Bullion. The truly numismatic rare coins selected for that report outperformed bullion by a 3-1 margin.
-NCG is for serious numismatists, but anyone can join. Is a Y2K surthrival bucket still a good idea? Yes, if you’re worried about a financial collapse, a collapse in the dollar, an implosion in the world financial system. Andy sold a Y2K survival bucket of semi-numismatic coins for $7500 in 1999; it’s worth $20,000 now.
-John wants to buy a house in Texas. How to protect himself against what happened in 2008? A big fat mortgage.
-Those that paid their house off and don’t have a mortgage probably won’t get major debt relief if they were wiped out in Harvey or Irma. Those with a mortgage probably will benefit from a government aid program.
-Bob asks Andy about Franklin Sanders’ negative attitude on numismatics.
-People can’t properly value the future value of money. The national debt is one place where hot money is issued. It’s guaranteed that a treasury bond will lead to the expansion of the money supply. They’re raising prices now by perverting the product or making the product smaller.
-The Consumer Price Index leaves out food and energy, or they substitute products. Uncle Sam cooks the books.
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Andy Gause and The Real World of Money, September 27, 2017 ONE
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