Opposing Views on the Role of Government and the Essence of Money (w/Michael Green & Peter Schiff)

Bitcoin is being misrepresented to the public as a store of value and alternative to government money; unregulated crypto platforms offer APY claims that are actually short volatility positions (option selling), not interest, misrepresenting risk to investors.

“My problem is very specifically as it relates to Bitcoin in the speculation in the asset class that it is some form of a store of value that will preserve itself for an extended period of time. I think it's being misrepresented to the public...Volatility is something I tend to know a little bit about, so these are not yields in the classic sense. They're not a central entity that is paying you a fixed rate of interest as people tend to think it is. It is a true risk position in a speculative asset that, in my opinion, is being misrepresented to you.”

Peter Schiff was an early short of subprime mortgages; the Fed dismissed concerns as 'contained' (similar to 'transitory' inflation narrative) showing repeated Fed messaging failures.

“This reminds me of the mortgage crisis in the early days when I was short subprime and we saw these subprime problems and Ben Bernanke said don't worry about subprime, it's contained. Well, yeah. Like it was contained to the planet. All the mortgages were infected, but the Fed pretended that we had nothing to worry about because it was contained.”

The world is no longer willing to loan the US money like they were in 2000; now they want to get paid back on existing loans, creating an additional fiscal constraint.

“In 2000, we had the Chinese lending us a lot of money. We had the Russians, we had the Japanese, we had the whole world willing to loan us money. The world doesn't want to loan us any money anymore, they actually want to get paid back on the loans they've already made.”

When government prevents prices from falling due to excess capacity, it distorts price structure by keeping prices higher than they otherwise would be, which is inflation damage.

“If the government prints more money, creates inflation, and the result of that is that prices are higher than they otherwise would have been absent that inflation, then it's the same effect. The government is distorting the price structure.”

Government even tried to break up General Motors over monopoly concerns despite extraordinary global competition, showing antitrust absurdity.

“At one time, the government tried to break up General Motors. Oh, GM, you're going to have a monopoly on cars. Think about all the automobile companies in the world, and they wanted to break up General Motors? General Motors barely survived all this competition, competition from Japan.”

Gold historically served as money because it is easily divisible, portable, stores value reliably, is homogeneous (all ounces identical), and is universally desired either for use (jewelry, adornment) or as a store of value.

“gold is a very good commodity that we can trade in because it's easily divisible, it's portable, it's value is stored, all gold is the same. You don't have to worry about your chair being different or your shoes being different. Every ounce of gold is exactly the same, and even if you yourself don't need the gold because you're not a jeweler, you're not making anything with gold, somebody will. Of course, gold was a luxury good. Most people like to have things made out of gold, whether it was jewelry, or other ways they were adorning their houses with it, or whatever they had, gold was inlaid in a lot of goods. Everybody would want gold, whether you needed or not.”

Upton Sinclair's work revealed that the 1870-1920 period was actually characterized by difficult conditions for average Americans who were stuck in emerging factories as wage slaves, not the prosperous utopia of limited government that Schiff describes.

“That time period is the same time period that's described so eloquently in Upton Sinclair's work highlighting how challenging that was for the average American that they were stuck in the emerging factories and slaving away as compared to having the idea of independent freedom.”

Gold faces risks of demonetization and loss of traditional protection, which may prevent it from providing the value preservation Schiff expects.

“There's risks to gold itself that it faces demonetization and loss of that traditional protection that may prevent it from providing the protection that Peter thinks it does.”

Money is fundamentally defined as that which cancels debt obligations—whether those are taxes or private liabilities—and is governed and administered by the state and legal system.

“we have a social good in the form of money that is primarily designed for one purpose and one purpose only, to cancel obligations, whether those are taxes, or private liabilities between two counterparties, where that's governed and administered by the state and the legal system, that's what money is, is that which cancels debt.”

Companies like Google have high stock prices due to artificially low interest rates set by the Fed; if interest rates were allowed to rise to 8% instead of 25 basis points, Google's stock price would be dramatically lower, enabling more competition.

“One of the reasons to that a company like Google can be so powerful is because its stock price is so high. Why is its stock price so high? Because interest rates are so low...When you have a company like Google that can buy up its competitors with its inflated stock prices, that's one of the reasons it gets bigger and bigger. You introduce sound money, you let interest rates go up, and then you see those stock prices come crashing down then you're going to have more competition in the market.”

The economic imbalances created by artificial interest rates and bubble growth will eventually need correction with a major economic collapse, which represents the free market trying to fix problems created during artificial booms.

“underlying economic imbalances that ultimately are going to need to be corrected with a major economic collapse. Part of the Austrian School is understanding that a lot of these economic booms are the problem. They are created by government. When they bust, that is the free market trying to fix the problems that were created during the artificial booms.”

Following the 2008 financial crisis, the government probably mitigated what would have been a healthy decline in prices; trade deficits and dollar strength actually offset inflationary forces from printing.

“I think that last time, the government probably mitigated a healthy decline in prices. Following the 2008 financial crisis, prices may have declined, but for all the inflation that the government created, but part of the inflationary forces were held at bay by our trade deficits, and because the dollar actually rose.”

Printing fiat currency does not increase the supply of goods and services; it only increases the amount of money chasing the same supply, resulting in inflation and higher prices.

“when you print money, you don't increase the supply of goods and services to buy with that money. All that really you have is inflation, you just have more money chasing whatever supply of goods and services exists and so prices go up.”

When money stores value reliably (like gold), savings increase in an economy, which finances more capital investment and drives economic growth.

“since Austrians look at economic growth as a function of capital investment, which is only financed out of savings, you want to have money that you can save, and it will store its value. When you're using gold as money, it's an ideal mechanism for saving and so if you have more savings in an economy, you have more capital investment, and then you have more economic growth.”

College tuition became expensive because of government aid to education through subsidized and guaranteed student loans and direct student loans—the government subsidies drove up prices rather than making education more affordable.

“College tuition would not be so expensive, but for government aid to education both subsidized guaranteed student loans and direct student loans, that's why the prices have gone up.”

The United States attracted enormous amounts of human capital in the form of immigrants in the 19th century, and raising that human capital component through education and opportunity is what's needed now, not returning to minimal government.

“The critical input was that the United States attracted extraordinary amounts of human capital in the form of Peter's grandparents, or half of my grandparents, individuals who chose to be here and chose to work and put their resources to use. Raising that human capital component is what we need to do.”

If interest rates are allowed to rise, asset prices will have to fall and many highly-leveraged entities will default; however, this painful correction is necessary and preferable to continuing to delay through more money printing, which only makes the eventual crisis worse.

“But when interest rates rise, asset prices are going to have to fall and we're going to have to deal with the consequences of falling asset prices and a lot of the bankruptcies that that's going to entail because a lot of people have levered up to the hilt, thanks to artificially low interest rates...There are free market solutions, but we can't get to where we want to be from where we are now without going through some problems.”

MMT advocates believe deficits don't matter and the government can print money indefinitely as long as it borrows in its own currency and can always print to avoid default; however, this overlooks that printing money cannot give that money purchasing power—if you print too much, nobody will accept it.

“you've got all these people now, who believe that, hey, it doesn't matter, deficits don't matter, we can have whatever we want, all we have to do is print money. As long as we borrow in our own currency, we never have to default because we can always print...a central bank can print all the money it wants, but it can't give that money purchasing power. At the end of the day, it's not how much money you have, but what you can buy with it.”

Excessive risk-taking in banking is possible only because the Fed backstops the market; without Fed support, banks would face competitive pressure not to speculate, since uninsured deposits would flee banks that take excessive risks.

“A lot of that is impossible, but for the Fed backstopping the market, there's a lot more reckless risk taking. Why do you think-- look, all the banks now, the deposits are guaranteed, so nobody gives a damn what the bank does with their money because the government has guaranteed all the deposits. If we didn't have government guaranteed bank deposits, then people would be more cautious about which financial institution they deposit their money in.”

The Hyman Minsky model shows that debt deflation occurs when debts rise faster than earning power, making debtors unable to service their obligations; the Fed suppresses rates precisely because it recognizes the enormous debt burden, but this keeps insolvent actors from defaulting, allowing them to go deeper into debt.

“if the reason that-- or one of the reasons that the Federal Reserve is artificially depressing interest rates is because it recognizes the enormity of the debt that everybody is carrying...The only reason a lot of debtors can continue to service the debt is because the payments are so low...What the Fed is trying to do is keep us from insolvency by artificially suppressing rates, but by artificially suppressing rates, they allow the insolvent to go even deeper into debt.”

The free market allocates capital and labor efficiently without government; the government cannot allocate efficiently because it has no profit motive to guide it and no pricing structure to tell it if it's adding value or destroying value.

“The free market allocates capital. It allocates labor. The government can't do it because there is no profit motive to guide it. There is no pricing structure. The government has no way of knowing if what it's doing is adding value or subtracting value, but the free market does.”

The Sherman and Clayton Antitrust Acts should be repealed; trust-busting was a mistake that was part of the populist movement that set America on the wrong path and we lost freedom as a result.

“I think both acts should be repealed. The trust busting all that stuff, Teddy Roosevelt, I think it was all a mistake, it was part of that whole populace movement that was a step backwards for the United States. We lost freedom and it set us on the wrong path.”

In the brokerage industry regulated by FINRA, regulatory barriers to entry are so high that small brokerage firms cannot survive because they can't afford the annual regulatory bill; this drives consolidation and killed competition in the industry.

“Look, I'm in the brokerage industry, where we're regulated by FINRA, and there's so much barriers to entry. In fact, many brokerage firms were driven out of business, small ones, because they couldn't afford to stay in business. I ultimately had to sell my broker dealer in part because I wasn't big enough to cover the much higher economies of scale needed to cover my regulatory bill on an annual basis.”

From creditor nation status in 1865 to debtor nation status today, combined with destruction of middle-class purchasing power requiring two incomes instead of one, proves the fiat system has failed ordinary Americans.

“Under this fiat system, we've gotten from the world's biggest creditor to the world's biggest debtor. The standard of living of average Americans has been destroyed by government. Now, a middle class family, you have two people barely making a living. Whereas prior to that, one person could have a job and support an entire family and have savings.”

Factory workers in the 1870-1920 period were not 'stuck' but took jobs voluntarily because they were better than farm work alternatives, and people came from Europe specifically to take those jobs.

“Remember, they weren't stuck in those factories, they took those jobs voluntarily, because they were better than the alternatives, which was working on the farm. A lot of people came here from Europe to take those jobs.”

The US was once a manufacturing powerhouse that invented and made consumer electronics (cameras, televisions), but now imports everything from Japan, Korea—showing decline attributable to antitrust and labor regulation.

“Everything we used to make, we now import. Entire industries that we invented, consumer electronics, all that stuff, we used to make all the cameras, we used to make all the television sets in America. No, they didn't make them in Japan, they didn't make them in Korea. We made everything here. Now, we don't make anything anymore.”

Following Schiff's prescriptions (shrink government) would lead to totalitarian systems faster than current structure; democracy is worth protecting.

“Unfortunately, I think if Peter's prescriptions were followed, that you would ultimately end up with totalitarian systems far faster than the current structure we have.”

Living standards cannot be compared directly between 1973 and today because the basket of goods is radically different; in terms of health, longevity, child mortality, people today live longer and healthier lives, making modern standards of living objectively higher.

“If I compare living standards today to living standards in 1973, one, I can't do an accurate comparison, in part because the goods, the purchasing good basket is very different today than it was in 1973...When I'm actually saying that the standard of living is "lower" today versus sometime in the past, we live longer, in general, we're healthier, our children survived to maturity in a way they never did before.”

The biggest problem with the U.S. economy is malinvestment resulting from artificial suppression of interest rates by the Federal Reserve, which has screwed up capital structure so badly that the U.S. doesn't really manufacture anymore due to lack of savings and investment.

“The biggest problem with the US economy is all of the malinvestment, which is a Keynesian term, but it's the result of the artificial suppression of interest rates that has screwed up our capital structure to the point where the US is not really manufacturing, because we don't have the savings and investment to sustain that.”

Governments with good governance (Singapore) can positively influence economic outcomes, while poor governance (Zimbabwe) leads to failure; the problem is not the monetary system itself but how governments choose to spend and allocate resources.

“I do think that governments can actually positively influence outcomes. We've seen this in areas that have good governance, like Singapore. We've seen this in areas that have bad governance, many emerging markets that have failed to emerge, point to Zimbabwe for example. Those poor decisions in terms of how to spend the resources of the state or how to allocate the resources of the state in support of the private sector are really what the complaints are on.”

During periods of disruption where developed nations come under pressure, emerging markets historically have not done well; Argentina, Venezuela, and currently Myanmar show that disruption tends to produce worse governance in EMs, not prosperity.

“As I look at the emerging markets, emerging markets, we go back to the to the tail end of the time period that Peter highlighted, the period right before World War I, among the wealthiest countries in the world were those in the emerging markets, the Argentinas and Venezuelas, etc. Periods of disruption in which the developed world comes under pressure are not good for emerging markets. They tend to give rise to even worse forms of government...We're seeing fleeing from Venezuela. We're seeing fleeing from Argentina, etc. These are not stable regimes.”

Peak oil was $140/barrel in 2008 at start of financial crisis; when crisis happened, commodities fell and dollar rose, contradicting claims of commodity shortage.

“In 2008, remember, when the Financial Crisis started, commodity prices were at record highs. Remember, oil was $140 a barrel of oil back in 2008. When the crisis happened, commodities went down, the dollar went up.”

The only proper role of government is to protect life, liberty, and property; government is not supposed to try to improve our lives or interfere in the economy beyond these protections.

“What the government is supposed to do is simply protect our lives, liberty and property. That's what it's supposed to do. It's not supposed to interfere to try to improve our lives. It's simply supposed to protect our rights.”

Modern sanitization, antibiotics, and bacterial identification (1870-1920) occurred during the same period Schiff credits gold standard with prosperity, suggesting medical progress, not gold standard, drove living standard improvements.

“the same time period that you were referring from roughly 1870 until 1920, it was also the invention of modern sanitization. We decided that we were going to start boiling instruments the doctors used to facilitate giving birth, we decided to introduce antibiotic, not antibiotics, the antiviral components under Louis Pasteur and so bacteria was identified.”

Digital currency and cryptography development is inevitable and has value; there are legitimate innovations in tokenization of securities and blockchain applications, separate from Bitcoin.

“I'm not particularly negative on cryptography and the development of digital forms of currency, I think it's inevitable. I tend to lean towards the dynamic that we will see CBDCs emerge as compared to private sector solutions, but we will see some of the innovation that's occurring in the crypto space, for example, tokenization of securities is, in my opinion, ultimately inevitable.”

With government debt of $1 trillion vs. now $30 trillion, and the greater credit risk that comes with more debt, markets should demand higher interest rates, but instead rates are lowest in world history.

“when the government had a $1 trillion debt versus now that it's 30 trillion, as you have more debt, you are a greater credit risk. If you have more debt, there is a greater likelihood that you won't repay or in the case of the government, that you will inflate instead of repaying but in either case, as governments have more debt, the market demands a higher rate of interest to loan that government money. Given all of the debt that we have, and the dearth of savings, we should have very high interest rates. We should have historically high interest rates. Instead, we have the lowest interest rates in the history of the world.”

Commodity prices are best analyzed relative to gold, not in nominal terms; over the next five years, oil and most goods will be lower in gold terms, though nominal prices are unpredictable.

“Again, I've brought up the point that in the past to Real Vision viewers that the right way to think about commodity prices as relative to gold, I would anticipate that if I'm looking out five years from now, that oil prices are lower in gold terms, that the price of the vast majority of goods are lower in gold terms. Do I know what's going to happen to their nominal price? Do I know what's going to happen to the gold price? That's a harder one to know.”

Purchasing power will transfer from Americans to emerging markets; Americans will consume less and EMs will consume more, creating demand for different goods, particularly resource-intensive goods for rising EM consumption of cars and goods they don't have yet.

“I think the purchasing power is going to be transferred. I think Americans in the future are going to consume a lot less, and a lot of the emerging market consumers are going to be consuming a lot more. Now, if you look at the basket of goods that they're likely to consume, I think there's going to be more resource intensive consumption going on in those markets...There's a lot of raw materials that are going to be used that now a lot of Chinese are going to are going to have cars that don't have cars today.”

Google and tech monopolies are not threats because they are free services, don't force users, have competitors, and their power stems from being the best product at the cheapest price—which is beneficial to consumers.

“Google can't force you to use their search engine. How's Google going to hurt you? ... Now, of course, there are other ones, you don't have to search with Google. There are other ones that you can use. Maybe you think Google is the best one, and so that's why you use it, but Google doesn't even charge you. It's free. How are you complaining about something you're getting for free?”

America's great historical success was not due to abundant land (Russia had plenty of land but didn't prosper equally) but due to limited government and the freedom it afforded, which attracted immigrants seeking escape from larger governments.

“Why did America succeed so much more than the rest of the world? It was because we succeeded in limiting government, we had more economic freedom in the United States. That's why people came here. It was to escape bigger governments in their own countries to enjoy the freedom and the prosperity that went along with it here in the United States.”

Healthcare costs rose due to government involvement in the market; a free market would bring healthcare costs down, not subsidies and regulations.

“The same thing with health care. The free market would bring healthcare costs down. It's government involvement. That is the reason health care so expensive.”

The problem with immigration today is not that immigrants want to work but that they're coming to access welfare benefits; removing government benefits would ensure only people who want to work come, and we should welcome those workers.

“The problem today with immigration isn't that immigrants are coming, it's why they're coming. A lot of them are coming to be on welfare, to get government benefits, take away those benefits, let people come here to work and have opportunity and we want all the people we can.”

The Great Depression occurred not because capitalism failed, but because the Federal Reserve inflated the stock market bubble in the late 1920s, and Hoover's interventionist policies prevented natural recovery—had the free market been allowed to work, recovery would have been quick like the 1920 Depression.

“You see what happened during the 1930s is we didn't allow capitalism to work. What happened was when the Federal Reserve inflated the stock market bubble in the latter part of the 1920s...Hoover did not want to liquidate the farmer, liquidate the banker...Hoover became a very interventionist president...That was a sharp departure from what had happened in the Depression that started in 1920. Nobody knows about that Depression, because it was over very quickly...the government in that case, did nothing to stimulate the economy...it was over very quickly.”

Roosevelt ran against Hoover's interventionist policies on the platform of balancing the budget but then expanded those interventionist policies into the New Deal once elected; the Great Depression persisted until World War II finally reduced government spending.

“Interestingly enough, when Roosevelt ran, he pointed out those problems. He actually ran to say, hey, I'm going to balance the budget. Look at these big deficits that Hoover is running, we're going to balance the budget. He actually ran against the intervention as policies of Hoover and then all he did when he got elected was expand those policies into the New Deal...We didn't actually get out of the Great Depression until we ended the Second World War and we finally started to reduce government spending.”

In the 1920s-1930s, the primary driver of the boom was financial innovation in the form of unit investment trusts that deployed leverage to equity purchases, not Fed rate cuts; there was also a housing collapse in 1925-1927 that initiated a rotation from real assets to financial assets.

“It was not a story of the Federal Reserve cutting interest rates and causing a bubble. It was exactly as we're seeing today, we had financial innovation in the form of unit investment trusts that deployed leverage to the purchase of equity prices and drove prices dramatically higher...It was not a time period where the Federal Reserve created a boom by trying to defend the...the farming community had already begun to collapse in the 1920s.”

Greenspan was an Austrian economist and Ayn Rand free-market advocate; in private conversation, his views on the Great Depression and financial crisis likely align closely with Austrian analysis, though as Fed chairman he departed from these principles.

“He was an Austrian. He was an Ayn Rand free market guy and so, I think that if you had a private conversation with Greenspan about the Great Depression and even about the Financial Crisis, there would be very little where his opinion would differ from mine.”

During the Great Depression without FDIC insurance, less than 2% of bank deposits were lost; yet Americans lose more than 2% of purchasing power annually through inflation today, meaning the modern system is worse for savers than the uninsured system of the 1930s.

“If you look at all of the money that was lost in all of the banks that failed during the Great Depression, without any FDIC insurance, I think the total amount of bank deposits that was lost throughout the Great Depression was less than 2%. Americans are going to lose more than 2% of their bank deposits this year through inflation.”

A major tech company like Google cannot be effectively regulated by government because the world we inhabit requires using these essential services (electricity, internet, search); government is a bigger threat to liberty than Google itself.

“to worry about Google and say, hey, we need this big, strong, powerful government to protect me from Google, the big threat to your liberty and freedom is the government, not Google. If we had less government, we probably have more search engines.”

Schiff made similar inflation predictions after the Global Financial Crisis that did not materialize; he was premature in his timing but believes those forecasts were correct in principle, just delayed.

“The same forecasts were made in the aftermath of the Global Financial Crisis, we certainly did not see that...I know, I made them, I made them, and I agree that I was premature. Some events transpired that I didn't forecast but I don't think I was wrong.”

Inflation is currently visible and experiential: supply is constrained (goods shortages, long delays), and prices are rising (confirmed by Schiff's personal purchases and emails); labor supply is also constrained because government benefits made work less attractive than welfare.

“I'm already experiencing that just in my personal life, and I get emails all the time about prices just going ballistic, and you can't get stuff. There's so many things that I've ordered that I'm waiting for, waiting months and months and months, and I can't get stuff because there's nothing there. Because the supply isn't there...With all these unemployed workers, businesses can't even hire people because they don't want the jobs, because the government made them a better deal. Stay home, and we're going to give you more money than you'll get if you return to work.”

A dollar collapse is coming, which will exacerbate inflation problems; inflation that was exported (through trade deficits and overseas dollar holdings) will flow back to the U.S. as trading partners cash in Treasuries for real goods and services.

“I think we're headed for a dollar collapse, and that's going to exacerbate the problem. Then ultimately, a lot of the inflation that we exported is going to come back to us as a lot of our trading partners try to cash in their US Treasurys to buy real goods and services in the United States. Not only are we going to be dealing with all the money the Fed is printing, but we're going to be dealing with all the money that we exported that's now going to come back to America bidding up the same goods and services.”

The market environment today resembles the dot-com bubble peak of 2000 more than the housing bubble of 2008; this ushered in a period of dollar decline, rising commodity prices, and emerging market outperformance over developed markets.

“To me, the markets heading into the current environment look a lot more like they did in 2000 at the peak of the dot-com bubble than they did at the peak of the housing bubble. That ushered in a period the declining dollar, rising commodity prices, and an outperformance of emerging markets over developed, foreign markets over domestic.”

The U.S. economy today is in far worse shape than in 2000; imbalances are bigger and debt is bigger, so the dollar decline will be much larger (to 70 on the index or lower vs. 2008's minimum) and won't be saved by a financial crisis distraction.

“I think that the US economy today is in far worse shape than it was in the year 2000. The imbalances are much bigger, the deaths are much bigger, and so I think the dollar decline that we had from 2000 to 2008, which took the dollar index down to about 70 to an all-time record low. I think this is going to be a much bigger decline, and we're not going to be saved by another financial crisis.”

Bitcoin is like a religion that has indoctrinated believers, including Schiff's own 18-year-old son; many older Bitcoin promoters are pumping and dumping to cash out, essentially selling digital snake oil.

“It's like a religion. My son's been indoctrinated into the cult. He's completely delusional. Now, he's only 18, but you've got a lot of older people that don't really have an excuse. Although some of the people that are out there to me, they're just pumping and dumping. This has been a huge marketing success for the people who got in early and who continue to pump this thing so that they can get out and cash out and make a bunch of money selling what amounts to digital snake oil.”

Alan Greenspan, the longest-serving Fed chairman, blamed the stock market bubble of the 1920s on Fed policy and said their policies spilled over into asset bubbles in stocks and real estate; Greenspan believed the mistake was cutting rates too much initially, and ironically made the same mistake when he was Fed chairman.

“Remember, even Alan Greenspan and in fact, a lot of my original understanding of the Depression came from reading Alan Greenspan and Alan Greenspan was the longest serving chairman of the Federal Reserve and he blamed the stock market bubble of the 1920s on the Fed policy, it specifically blames the Fed and says that their policies spilled over into asset bubbles in stocks and real estate...Greenspan didn't think the mistake that the Fed made was raising interest rates, it was cutting them too much in the first place. Then of course, ironically, he made the same mistakes when he was Fed Chairman.”

Standard Oil's breakup wasn't demanded by customers complaining about prices, but by competitors who couldn't compete with Standard Oil's efficiency; the antitrust action benefited competitors, not consumers.

“If you go back to the breakup of Standard Oil, it wasn't Standard Oil's customers that were complaining, it was the competitors that couldn't do as good a job. They were the ones that were complaining so we busted up Standard Oil not to benefit the consumers, but to benefit their less efficient competitors.”

Government antitrust actions have repeatedly failed or been counterproductive, like the blocked Blockbuster-Hollywood Video merger that prevented economies of scale they needed, allowing Netflix to disrupt the industry a decade later—showing government can't predict which mergers are harmful.

“You think about all these businesses like an example, I remember when Hollywood video I think in Blockbuster or something like that, these two video stores...The US government blocked this merger, because they said, well, you're going to have a monopoly in VCR rental. We can't allow you guys to monopolize, and both companies, they ended up going bankrupt, because they were so struggling to survive but they were trying to merge to get some economies of scale, but the government is worried that somebody is going to monopolize an industry that a decade later didn't even exist, because it got put out of business by Netflix.”

Gold mining stocks offer exceptional value because gold prices will rise faster than mining costs; many gold mining resources currently valued at zero will become valuable, allowing investors to buy resources essentially for free.

“I think that the cost of the gold that they're mining is going to-- or the gold rather that they're mining is going to go up in price faster than the cost of mining it. The raw materials, the labor, the energy costs that go into bringing gold out of the ground. I think a lot of these gold companies where you have a lot of resources in the ground that the market currently values at zero because they think it's too expensive to extract them, I think relatively soon, all of those resources are going to have tremendous value. When you buy these gold mining stocks right now, you're getting those resources for free.”

Less government barrier and fewer regulations would create more competition and more search engines; the problem is not Google's success but the regulatory barriers to creating competitors.

“If we had less government, we probably have more search engines. If we had fewer barriers to entry, if we had no corporate income tax at all, if we got rid of a lot of these rules or regulations, we'd have a much more competitive free market and you would probably have more search engines.”

Bitcoin is not money, not a currency, and not an investment asset because it doesn't generate cash flows like stocks (dividends) or bonds (interest) or real estate (rent), and is not useful like commodities; it is only a collectible token traded on speculation.

“Bitcoin is not a currency it's not used as a medium of exchange really or a unit of account. It's just used for speculation, but it's not an investment asset like real estate, doesn't pay rent, it's not a stock, it doesn't pay dividends, it's not a bond, it doesn't pay interest. It's not even a commodity, because you can't use it for anything. What it really is, is a collectible token.”

Licensing requirements for occupations are designed to limit the supply of professionals in that field, thereby raising prices; removing licensing requirements would increase competition and lower prices for consumers.

“All this licensing for occupations, it's all designed to limit the supply of a particular profession, thereby driving up its price. If we didn't have governments requiring people to join particular organizations or to possess particular licenses, we'd have far more competition and consumers would have a lot more choice. You'd have lower prices.”

The gold standard imposes discipline on government because the government must collect gold (or raise taxes) to spend money; once you move to fiat, the government can print whatever it wants and interfere much more in the economy, with inflation (rising money supply) being the cost hidden from public view.

“the gold standard imposes discipline on the government, because in order for the government to spend money, it must first collect the gold, it has to have gold. If the people have it, it has to raise taxes, but once you go to this fiat based system, and the government could just print whatever it wants and spend that, now the government is free to interfere to a much greater degree in the economy. Now, it's not that we get all that government for free, because they print money. No, they're stealing our purchasing power. It's called inflation.”

The solution is not to abandon the system but to reform it; government needs to move toward normalizing tax rates so corporations cannot shop jurisdictions globally.

“the answer to that is not to abandon the system. It's interesting to see the Biden administration begin to move in the direction of saying we need to normalize tax rates so that corporations are not able to shop their tax rates all over the world.”

Monopolies generally arise because government grants them; government is good at selling monopolies and punishing competitors of the monopoly; without government protection, even achieving a monopoly through superior products is beneficial.

“History shows that generally when there's a monopoly, it's because the government grants it. The same thing for cartels. Governments are great at selling monopolies and then punishing people who compete with the entity to which they granted that privileged position. To the extent that somebody achieves a monopoly without any government protection, if somebody achieves a monopoly, maybe go back to John D. Rockefeller, Standard Oil, to the extent that somebody achieves a monopoly by just providing the best product at such a cheap price that nobody can compete, there's nothing wrong with that.”

Both Schiff and Green are skeptical of Bitcoin; for inflation hedging, Schiff recommends gold (real money) instead of reinventing the wheel with crypto.

“If you are somebody who is worried about fiat currencies, like a lot of people in the crypto community are, that is part of the motivation of getting into them is escaping inflation, having an inflation hedge and a store of value. To the extent that you really want that, you don't have to reinvent the wheel. You can actually buy real money if you don't like government fiat, and that is gold.”

During the 19th century gold standard period with rapid economic growth and massive immigration, consumer prices actually declined due to improvements in productivity, allowing people's savings to increase in value alongside rising living standards.

“More people coming, more goods and services being produced, and consumer prices declined during that period. With all that economic growth, we didn't see consumer prices going up, we saw consumer prices going down, we saw the value of savings going up.”

Many Asian 'flourishing' markets are unstable; Myanmar recent coup exemplifies institutional fragility; Africa faces extraordinary challenges; Green sees US as relatively well-positioned in crisis scenarios.

“I would extend that into many of the areas in Asia that have "flourished". We've just seen a coup in Myanmar, etc. Africa is facing extraordinary challenges for a variety of reasons as well. Can that change? Could we have fundamental innovation that changes these characteristics? Possibly. I don't see the world that Peter see is I actually see a world in which, yes, things could get bad for a variety of reasons but the US is relatively well positioned in that scenario.”

Antitrust enforcement raises costs and prevents mergers that would increase efficiency; removing antitrust department entirely is optimal policy because freedom leads to highest living standards.

“This is all a farce, and it simply runs up the cost. We should get rid of all this antitrust department, we don't even need it. Companies want to merge, let them merge. Freedom is the best thing that we have, and it leads to the highest living standards. If two companies want to combine because they're going to be more efficient, let them combine.”

Bitcoin wealth transfer motivation: older generation doesn't own it, younger generation does, so it's perceived as vehicle for intergenerational wealth transfer, though it's unlikely to be successful.

“One of them is what Peter just referred to, that the older generation doesn't have it and the younger generation does, and so it is perceived that this is one of the ways to effectuate a wealth transfer that needs to occur. I think it's unlikely to be successful.”

The solution requires both returning the private sector and cushioning the transition while encouraging investment in human capital and infrastructure that increases the labor-to-capital ratio.

“The underlying characteristic is to allow the return of the private sector, but to cushion that process and to encourage the fundamental investment and innovation of the human capital and more importantly, actually, I would argue at the energy level, that increases the resources that are available. That's what you need to do. It's a labor capital ratio, you can do one of two things, you can increase the quantity of capital that is ultimately available, and that can be in the form of better health, better human capital in the form of education, it can be in the form of improved infrastructure”

Government should stop subsidizing retirement and protecting financial assets, and instead devote resources to educating children and encouraging household formation so people can participate in the economy creating value.

“We can choose to stop subsidizing retirement and protecting the financial assets, as we have done and instead choose to devote those resources to educating our children and encouraging household formation so that people can get busy in the economy creating value.”

The US dollar will cease to be the world's reserve currency as a result of the crisis.

“I think the US dollar is going to cease to be the world's reserve currency.”

American standard of living will move down appreciably and look very different; worst case is hyperinflation destroying dollar value, but this path depends on political decisions.

“I think the American standard of living is going to move down appreciably, it's going to look very different here in the United States. There are a lot of wildcards politically on how much worse we may make it. By how much further down the Road to Serfdom we travel with this big move left. Certainly, a worst case scenario is hyperinflation and where we completely destroy the value of the dollar.”

Bitcoin buyers assume a 'greater fool' will pay more in the future; the dynamic is speculation on price appreciation, not utility.

“Why is a fool willing to buy Bitcoin? Because he assumes there's a greater fool who's going to pay even more money in the future, whether he understands that dynamic or not, that is exactly what's going on.”

Policymakers were lulled into false complacency by the lack of inflation after 2008; they believed they could print even more money now with the same benign results, when actually this new round will produce much worse inflation than before.

“I think we're going to experience that inflation in a much worse way now that we're going to have to include this new round. I think that did lull policymakers into a false sense of complacency that, hey, we got away with it before, we printed all this money, and we didn't have massive price inflation. That means we can print even more money now, and we're going to have the same benign result. I think they're completely wrong.”

Returning to a gold-standard monetary system would require moving backward to an extraordinary degree in a manner that is unproductive, because it unnecessarily constrains our policy tools.

“the idea that somehow or another, we need to go back to a system that derives the value of money as a commodity or a barter or that the limitation needs to be the physical dynamics, in my opinion, actually hurts our process. It requires us to move backwards to an extraordinary degree in a manner that is unproductive.”

During the period 1870-1920, the success of America was due to limited government, not other factors, as evidenced by the fact that phenomenal economic growth and rising living standards coincided with the purest gold standard in U.S. history.

“the most prosperous period in US history where living standards for the average American rose the most was probably the period between the end of the Civil War, and let's say, the beginning of the First World War...That was also the purest gold standard up until the beginning of the Federal Reserve. That was the purest gold standard the US ever enjoyed and that was the most prosperous period in US history.”

Individuals pursuing self-interest in a free market will receive the education they need through entrepreneurial provision and competition; government barriers preventing entry are what keep people from getting affordable education.

“individuals will pursue their own self-interest in a free market and people will get the education that they need. Entrepreneurs will find ways of providing it for a fee in competition with other entrepreneurs, but right now, we have the government erecting all sorts of barriers to the things that you want. What we just need is to take down those barriers so that the free market could do what the free market does best.”

Limited government is the success factor in prosperous countries like Singapore and Hong Kong; the less government involvement in economy, the more prosperity results.

“the government that governs best governs least. That's pretty much the success of Singapore, or any country that has limited government is the less involvement the government has in the economy, the more prosperity the economy enjoys. That is the secret of places like Singapore, or like Hong Kong in that government was small.”

If Schiff's thesis is correct, rising long-term rates + falling dollar + rising gold prices are the signals to watch; this breaks the normal correlation that rising bond yields are good for the dollar.

“When you start to see long term interest rates rising, at the same time, you see the dollar falling and gold going up. When we break from this idea that rising bond yields are good for the dollar and bad for gold, when you start to see bonds falling as a reflection of a need to get rid of dollars, and to get out of US dollar assets because of the inflation that is now a building and being recognized by the markets, I think that's the beginning of the end.”

Democracy (as in majority rule) has been a threat to the Republic; the founding fathers built constitutional safeguards against tyranny of the majority, but these protections have been torn down over time and need to be resurrected through constitutional enforcement.

“I hope not, or I don't think so, but I'm not really concerned about protecting democracy. I want to restore the Republic. It's democracy that's been a big threat to the Republic. It's the constant need to buy votes that is what's driving and motivating politicians to screw up the economy. If we had less democracy, we have more freedom...They built in a lot of constitutional safeguards against what they regarded as the tyranny of the majority, of mobacracy. The problem is, over time, those safeguards have been torn down and so the protections that the founding fathers put in place are no longer there, and we need to resurrect them. We need to have a court that's willing to enforce the constitution rather than ignore it.”

The problem with the current system is not that it describes how the monetary system works, but that the system itself is not working—it is working for government but not for the economy or the people.

“the way the system is currently operating is what is making MMT popular. The problem is the system is not working. It's working for the government, but it's not working for the economy. It's not working for the people.”

Investing in understanding economic dynamics by consuming thoughtful analysis helps position oneself to navigate forward, more important than any particular prediction or position.

“What does that translate to in terms of your immediate investment opportunities? Look, I've talked endlessly about the dynamics of the influence of financial innovation...I would just encourage people to think for yourself, take the opportunity to digest the information that we've shared, and position yourself appropriately.”

Schiff's vision is to restore 19th century economic freedom (no income tax, no Social Security tax, no Federal Reserve, no minimum wage laws) while maintaining 21st century technology and innovation.

“What I want to go back, let's say to the 19th century, I don't want to give up 21st century technology or innovation, I just want to go back to the 19th century freedom. I want to shrink government back down to the size it was back then. It's not a big interference in the economy. I want to unchain people from government. I don't want people that have to pay income taxes. I don't want people to keep books and records. I don't want people have to pay Social Security taxes. I want to free people up to save for their own retirement, not rely on a government Ponzi scheme.”

Humanity will continue to flourish and innovate; we should invest in human capital and believe in continued innovation, rather than assuming decline.

“I think that humanity is going to continue to flourish, I think that we're going to continue to have innovation, and that we should make the investments in human capital.”

The current system is infected with socialism; the solution is to reembrace capitalism by abandoning the current system and freeing private sector resources from government constraint.

“Again, this system I want to abandon is the one we have now. I want to reembrace capitalism, which is a system that we're supposed to have, but we've infected it with socialism. I agree, we need to make these investments. Capital investments, investments in human capital, but the government is incapable of making them.”

If we could reimpose monetary and fiscal discipline on the US government, the government would stay smaller and the economy could grow larger, solving most current problems.

“If we could reimpose monetary and fiscal discipline on the US government, then the government would stay smaller, and the economy could grow larger.”

Things will unravel very quickly once the dollar crisis begins; best strategy is personal positioning in foreign assets, emerging market equities, currencies, resource stocks, and metals.

“The problem is things are going to unravel very quickly, and so that's my advice to people. What I've already done is that, look, this is going to be a huge collapse of the value of the dollar. A lot of people are going to lose a tremendous amount of wealth as a result of this. There's going to be people that are going to be enriched by this. Since we have no ability to stop this from happening, we just want to position ourselves as best we can personally, individually to be on the receiving end of the transfer, rather than the losing it.”

When Schiff's grandparents came to America, nobody educated them, provided welfare, or helped them—they educated themselves and were self-reliant, which is why we prospered; we were a nation of rugged individuals and need to recreate that environment.

“When my parents' grandparents came here, they didn't speak English, but nobody educated them. They educated themselves. There was no welfare. There were no caseworkers. Nobody helped them. They had to help themselves...Yes, you had that, but everybody was self-reliant. We were a nation of rugged individuals, and that's why we succeeded and prospered.”