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
-Our forefathers were very aware of checks and balances necessary in a monetary system. In 1694 William Patterson was granted a charter for the First Bank of England. Gave him monopoly power to issue British bank notes.
-The colonies had created a Land Bank and state-issued money. 1n 1620, Massachusetts Bay Colony issued its own paper notes, which were tax-anticipation notes. We had no mint and relied on British money and coins, which the British did not supply enough of. So we issued our own paper money, colonial script, which represented hard money.
-In Land Banks, individuals could also issue notes, and use them to buy supplies. Also had a limited number of Spanish coins. An entire system developed without hard money. Money-changers arbitrated the value of coin and money.
-By 1750, England found itself in a depression due to issuance of too many notes without silver and gold backing. Benjamin Franklin went to England and was asked how the colonies are so prosperous when we’re in the middle of a depression? He told them we issue our own paper money in quantities sufficient to sustain the needs of our economy.
-The 13 colonies in Continental US were all appendages of England and legislated to by the British Parliament. In 1750 the Townsend Acts were passed by Parliament prohibiting the Land Banks.
-Peter Cooper said it wasn’t a tax on tea that caused the revolution, it was the bad influence of the British banks influencing Parliament that caused them to pass a series of laws messing with our monetary system. We had to deal with British bankers for the privilege of having money to circulate. Expensive and a hardship for colonists. Spanish milled dollar was cut into bits.
-Needed a charter from British parliament to establish a mint. William Wood, a coiner from Ireland, and also others, wanted to establish a mint in the Colonies.
-Gold and silver were in use as money for thousands of years before the US colonies were founded.
-Constitution stipulates gold and silver backing our money. We’ve only debased our money since 1971. Was gold-backed up until the closing of the gold window.
-The fall of Roman Empire started with the debasement of their money.
-Now we’ve progressed into digits representing money. Initial Coin Offerings -ICOs – are substance-less.
-Christopher Columbus was on a mission to find gold for Queen Isabella of Spain. He wiped out the island of Hispanola because they couldn’t produce enough gold for him. She is the only foreign monarch or female to appear on a US coin. Makes it highly collectible.
-Colonists sent as indentured servants. Interesting reading about the 1587 Lost Colony of Roanoke Island.
-Virginia Dare, first “white” baby born in America, and Sir Walter Raleigh were on a commerative coin struck in 1937 called the Roanoke Half-Dollar. A celebratory coin that is hard to find but not terribly expensive.
-The Townsend Acts imposed on colonies by English Parliment were what incited the American Revolution.
-Declaration of Independence in 1776. Articles of Confederation in 1777 gave the Continental Congress, the combined 13 states, a new authority to emit bills of credit, which were IOUs called Continental Dollars. Did not give the power of tax to pay off the IOUs. Instead they issued more Continentals to pay off debt.
-Operated under the Articles of Confederation during the Revolution. Continentals were becoming worth less and less. “Not worth a Continental.” The Constitution enacted a sound dollar.
-Wages haven’t kept up with price increases. Mispricing of labor since 1971 because we’re getting paid in dollars worth less, not backed by gold and silver. Consequent erosion of purchasing power. We’re paid more in money worth less.
-Once you can affect the supply of money, you can affect everything else in the economy in ways that are not discernable. All the old capitalist money rules have been turned on their head. Precept that you can’t do guns and butter has been turned on its head by false money.
-Quantitative easing is scientific. They’re not printing money out of thin air, they monetize debt. Increasing demand or shrinking the available supply affects value.
-$600 billion budget deficit even with all of Trump’s proposed cuts.
-Andy was part of the campaign for US citizens to be able to own gold. Gold standard was $35 to an ounce. We were deprived of a sound means of exchange. Now we have to guess how much gold backs our money. As a nation of investors, we do not own gold.
-The government can take away the ability to own gold with the stroke of an executive pen. But gold coins are lawful money and exempt from gold regulations. Future for gold and silver coins is very bright. Are the only things that can protect you against inflation.
-Need higher rates of pay to make ends meet. Households have tightened their belts already.
-Rules for buying numismatic coins intelligently are explained in Andy’s free 30 minute CD “Protecting Your Wealth”. Third party NGC or PCGS certified coins gives protection when you buy. “An educated consumer is our best customer.” Buy a Red Book.
-Andy’s firm offers 30 day free return for any coin purchased from him.
-Before a profit can be made on a coin, need to cover the spread between what Andy pays to buy the coin and what the customer pays Andy. Figure a 3 year minimum to cover the spread.
-Andy keeps his costs low. No TV advertising. Low overhead.
-Anthony asks if Andy would sell gold coins to buy a depressed home or land?
-Numismatic coins are a long term savings plan and passive income generator. Coins are not taxed until they’re sold for a profit. Keep a record of your investment basis.
-A lot of the boys own collectible coins. May be why coins were exempted in 1933. A $20 gold coin and a $20 dollar bill are interchangeable.
-Don’t advise selling gold coins at “We Got Gold” places.
-In 2008, had 1.04 trillion dollars in derivatives. Now it’s 4 thousand trillion, 4 times as much.
-“Too Big To Fail”, “The Big Short”, and “Rollover” are good financial movies.
-Advice for people in their 40s to 70s: Hedge. If you think money will be worth half as much over next 10 years, put in a hedge with 10-85% in gold or silver coins or tangibles. If you have bonds, annuities, debt of other people or nations or corporations, need towards the higher percentage. If have a mix of assets that benefit from inflation, e.g. stocks and real estate, smaller hedge of 10-15% is okay. Diversification is the key to success.
-Will gold get up to $5,000? Pre-1990, gold was $280. Today it’s $1200, has been $1900. No question it will get significantly higher in the next 2 decades. Everything is in cycles. Now coming off a bull market in bonds that lasted 30 years.
-Interest rates are rising now. 2 doublings of interest rate in 2017. Creates a bear market in bonds, in which people will sell and sell short. Janet Yellin claims she will start selling bonds that the Fed Reserve owns, but unlikely she can do that in a bear market. All she can do is raise rates to try to forestall inflation.
-Case-Shiller Index tracks real estate prices. Real estate is the most sensitive to inflation. Down to a 4 month inventory. Prices are rising, people are buying hand over fist. Janet Yellin is forced into raising interest rates to make it more expensive to buy homes so things will cool off, also to discourage margin buying in stock market.
-Almost 15 trillion dollars in FRED’s money in zero maturity (MZM), waiting for an investment opportunity. In 2008, it was half of that. As the MZM works it way into the market, that will fuel inflation even more.
-The components of inflation are a increase in broad supply of money, capacity slack at factories, wages and prices in form of unemployment, and monetary velocity. Need all 4 factors to get inflation; don’t get inflation just because Fed increases money supply. Monetary velocity keeps going down and has never been lower. Gold is poised for strongest increase in 30 years. No better buying opportunity to buy gold and silver coins in the 40 years Andy has been selling them.
-H41 release shows whether Fed is withdrawing money from circulation. If withdrawing, dollar will be strengthening. If adding, dollar will weakening.
-People are pent up. Have been putting money away for a rainy day. If they feel there is no danger now, they will pull money out. Plus baby boomer demographic will retire and start spending. A dangerous point in the charts.
-Do the boys want things under Trump to look like a mess so they won’t tank the dollar? Porous borders keep labor costs down; boys don’t want the border sealed. The boys don’t want the engine running full steam – inflation will reveal itself. Corporate rate of 15% will fuel job creation. 4 or 5% GDP growth might save us and counter the effects of inflation.
-Need to restore checks so Congress has to chose between guns and butter instead of allowing them to create newly minted money. Need a gold or silver backed currency so Congress operates within constraints. Raise taxes to $.77 of every dollar of revenue now goes to service the debt.
-Andrew Jackson’s “Hard Times”. From 1828-1835, all money not needed for critical operations of government went to pay down debt. Economy contracted. No one had jobs. Merchants went begging. But the debt was paid off in 1835.
-Laurie asks, Andy predicted a perfect storm this fall. How can we be prepared for it? If you have a small business, get a credit line now, while lenders are still willing to lend. Don’t hold someone else’s debt. Get your receivables in order, even if you have to take a discount for early payment.
Should someone end the relationship with the boys? Philosophically, yes, Andy agrees with that. But the too-big- to-fail banks are less likely to fail.
-Allowance kids versus kids who work for their money.
-Merits of giving a guaranteed basic income.
-Stigmas have kept this country straight.
-Being in the military is a privilege, not a right.
“Protecting Your Wealth” Free CD – 800-878-2646
Andrew Gause and The Real World of Money – Monetary History that is great fun to learn, July 26, 2017 Part One
Andrew Gause and The Real World of Money – Monetary History that is great fun to learn, July 26, 2017 Part Two