What is the link between finances and freedom?
If you have concerns about inflation or government overreach or weathering the next crisis, then you need to watch this gripping interview with David McAlvany, CEO of McAlvany Financial Companies and author of The Intentional Legacy. David has appeared as a guest or panelist on CNBC, Bloomberg, Fox and other media outlets. He also hosts his own weekly podcast.
Together, he and Dr. Bussey discuss digital currencies, universal basic income, and the soul-defining importance of finding one’s purpose. Their conversation brings together the philosophical and the highly practical in a lively, informative, and thought-provoking way.
Why was it illegal to own gold in the US from 1933 to 1975? Who benefits most from low interest rates? What happens when we allow the PhD standard to replace the gold standard when it comes to our banking system?
To learn more, check out the McAlvany Weekly Commentary (unique, intelligent, thought-provoking weekly summary of the markets, geopolitics and US domestic issues) or the McAlvany Wealth Management (planning retirement, inheritance, asset management etc.). For some options for Canadian savers/investors to lessen the bite of inflation, go to McAlvany ICA. Canadians can also check out vaulted.com, which allows people to purchase gold which is then kept at the Royal Canadian Mint, and can be “cashed” out at any time.
Transcript of Interview:
“The nature of power, and what our policymakers must have to implement what they want in terms of monetary policy, we’re not moving towards decentralization, as appealing as that may be, we’re moving towards greater centralization and a loss of freedom.”
Barry Bussey: I’d like to welcome everyone to Freedom Feature, and I’m Barry Bussey. Today, our special guest is David McAlvany. And David is the host of McAlvany Weekly Commentary, which has the objective to provide investors with valuable monetary, economic, geopolitical, and financial information that cannot be found on Wall Street. And it seeks to look deeper and analyze more extensively and ask better questions. It is our pleasure to have Mr. McAlvany with us to discuss how issues of finance affect freedom. Mr. McAlvany, welcome to our program today.
David McAlvany: Barry, it’s a pleasure to be with you. Thank you for the invitation. I look forward to our conversation.
Barry: Well, this is great, I tell you, you come very highly recommended. A lot of people who are interested in freedom here in Canada say, “Hey, listen, we got to have David on here, and just discuss about the importance of finances and its relationship with freedom.” And I’m just wondering if you could just share with our listeners, who you are and what you do.
David: Yeah, I’ll share a little bit personally. But also to put that in context, with our family, I get to participate in quite a tradition, a second generation, both in a family business, but also with this idea of educating and helping people gain a context for the decisions that they make. My father started our business 50 years ago, and it looks at precious metals and asset management through a very different lens. And freedom is certainly a part of that. If you look at the tradition of gold as sound money, it’s something that enables agency and has through time, and is one of the things that has, if you look at the history of money, and in the history of government has been key towards individuals maintaining some autonomy from autocracy. And so I love the fact that, you know, starting almost 45 years ago, my father started publishing a newsletter dealing with these issues to bring into the mind, the consciousness of the investing public, the important issues of the day, and perhaps their considerations and actions that they could take.
My background, I studied philosophy at Biola University, and political philosophy at Oxford University, and my business interests really began after that, in a short stint with the Acton Institute, and the Institute for Liberty and Development in Santiago, Chile, a free market economic think tank that looked at how the free markets could bring positive change to society. And so they did a number of studies to look at how free market ideas, even in the context of public schools and public policy in general, would be fruitful.
So, I’ve participated in our family business now since 2003. We have two separate businesses: one is the metals brokerage business, we helped gold become legalized again in 1975. We found a religious exemption that allowed us to be bullion dealers, three years before gold was actually legalized. And so we had sort of a first mover advantage providing gold on a wholesale basis to Wall Street firms. So we still have the metals brokerage business, we also have the asset management business, which focuses on hard assets—infrastructure, real estate, global natural resources, precious metals, things of that nature. So this keeps us busy. You mentioned the podcast or the weekly commentary, that’s now in its 15th year, and something that we do each week as a routine discipline to look at the markets, and when we find questions that we’re unable to answer, we bring in experts from the central bank community, academics globally, or particular experts in a field where they bring insight. Many of these people are people we don’t agree with, but still bring some facet of insight that we wouldn’t have otherwise. So this is what keeps us busy. This is what we love.
Barry: That’s awesome. And I like the fact that you’re willing to talk to people you may not necessarily agree with on everything, because I think that’s important, it seems to me, when it comes to freedom. And that’s one of the things we tried to do here at First Freedoms. The note that you just said about the idea of getting a religious exemption to own gold that just sparks me. I gotta ask you on that. How did that happen?
David: Yes, so back in 1933, we [the United States] needed to devalue [the currency]. I use that word loosely. But FDR [US president Franklin D. Roosevelt] determined that the best course forward in the context of the Great Depression was to be able to print more money. You couldn’t print more money as long as there was a one-to-one relationship with the dollar and gold. So to maintain legitimacy with our foreign creditors, we maintained the gold standard, but we made it illegal to own it and trade it domestically, which allowed for him to inflate the money supply; increase the amount of money in circulation. And that was the method proposed, sort of the Keynesian [John Maynard Keynes] methodology proposed to solve our financial crisis there in the 1930s in the Great Depression. So, we devalued our currency by 65%, overnight, and it was now illegal to own gold, with a 10-year jail sentence and a $10,000 fine, which back in the day was a lot of money.
Barry: Wow.
David: And so that was law, the law of the land until January 1, 1975. My father and two other gentlemen worked with Senator Jesse Helms office here in the United States to change the legislation and allow for gold to be legalized again. But in that interim period, 1933 to 1975, you could own something that had a religious theme to it. And I think the original concept was, if you had a gold cross, or perhaps you know, the Star of David or something religious in nature, then you could own physical metals, otherwise, it didn’t work. We found someone who would make one- and two-ounce gold medallions, 24 karat gold medallions that had religious themes. So Jesus feeding the 5,000, or Noah’s Ark, or, you know, whether it was the Old Testament or New Testament, it didn’t matter, if it had a religious theme, we could now be owners of gold bullion and meet that exemption.
Barry: Well, that’s fascinating about just the whole idea of controlling the bullion market. And that’s something that we may want to just kind of have a look at as we go in our conversation. And so today, we’re wanting to just look at the concept of money. And you know, when I think of money, I think of something that I can do with it, right? I can take my money, I can go buy a car, I can sell my car, I can, you know, use cash, I can use my credit card, all the rest of it. And as long as I have lots of it, I have lots of freedom, it seems to me, to engage in commerce. And what is it? I wonder, how can we maximize our freedom when it comes to controlling our own money?
David: The basic idea of money is that there’s this thing, which is a medium of exchange, which you described, a store of value. And of course, to reach these criteria, you have to have divisibility, you know, why don’t we use diamonds? Very hard to divide, you can’t put them back together once you’ve broken them apart. So through time, we’ve come up with concepts of what works better, one thing better than the other. So trial and error: we decided that shells would not work, we decided that a variety of feathers or notched sticks, I mean, the experiments have gone on and on through time. We landed on gold and silver as something that was very valuable, hard to get, represented sort of a concentrated form of wealth, and had those basic, you know, qualities, a medium of exchange, a store of value, etc.
Today, you could say, well, we can do that in so many different forms, we can do that with paper money, we can even do that with new digital forms of money. And that’s becoming very popular to think about. Not only with cryptocurrencies, like Bitcoin and Ethereum, and, many, many others, there’s, you know, 1500, there’ll be thousands and thousands more as time goes on. And there’s this idea that a decentralized system is better than a centralized system. So cryptocurrencies have appealed to a very freedom-oriented group people. But there are some problems there as well. So benefits and problematic elements too, as it relates to digital currencies. One of the things that we will see and already have seen, the hat has been tipped by centralized monetary authorities – the Federal Reserve, the Bank of Canada, the People’s Bank of China, the Bank of Japan, the European Central Bank – is that they too, have noticed that there are some valuable aspects to digital currencies that they may want to harness as well. And one thing is very clear: they’re not interested in losing their monopoly on the creation and distribution of money, the control of the money supply, just like we talked about earlier.
[In] 1933, the illegalization or illegal, you know, holding of gold back in 1933 here in the United States, had to do with control of the monetary levers so that they could have greater influence and control, it was believed, over the economy. So what makes us think that we are going to migrate towards decentralized digital currencies, and have our monetary authorities walk away from the benefits of control, and centralization? And I think this is one of the great things, perhaps a source of naivete within the marketplace as to the nature of money, and the nature of control, and what is at stake, if you consider, you know, the benefits of, again, decentralized things like Bitcoin Ethereum, etc., etc., versus centralized digital currency, central bank digital currencies.
Barry: So, when it comes to control for the government agencies, these banks, any thought on how they would harness this decentralization with Bitcoin and all the rest? Because I thought, in theory, it was the whole idea that no government can touch this. But, and we saw a little bit of this, I think, here in Canada, and we’ll talk about this later, but government made it very clear that when you support protesters whom they didn’t like, they were going after the cryptocurrencies as well. I don’t know how they did it, but…?
David: The idea of a decentralized ledger where you’ve got multiple nodes, and if you don’t control all of the nodes, or a majority of the nodes, then you can’t actually access control, shut down, eliminate, seize, what have you. There’s, I think, a little bit of a misconception there. And I think maybe the best example of this is in 2021, we had a pipeline here in the US. And some hackers basically shut down this natural gas pipeline, and demanded payment in Bitcoin. And it was only weeks later, that the US government was seizing that Bitcoin. How does that happen, if it’s an asset that is outside of a system that can be controlled? So I mean, I understand what it is “as advertised.” But if there’s anything that we can learn from the 2021 pipeline debacle, it is that there’s greater access and perhaps backdoor access that we’re not really in tune with…
Barry: Right.
David: …but governments understand full well. And so there may not be as much freedom as is advertised through your decentralized digital currencies. What I see as somewhat dystopian, is the centralization of digital currencies, because there’s a concept amongst economists, which is, this is a very, very important policy tool for policymakers. And economists understand this well. When you’ve got a system that has lots and lots of debt, you can make the burden of that debt go away if you increase the currency in circulation. Tthis is what we know as inflation.
Barry: Right.
David: So inflate away the burden of debt. But there is another policy choice when you’re between a rock and a hard place, you can assign who is going to win and who is going to lose. This came to the surface in a conversation I had with Carmen Reinhart on our commentary many years ago. Carmen Reinhart has been an excellent academic at Harvard for years. I think she’s chief economist now at either the IMF or the World Bank, I forget, one of the two currently. And we talked about the idea of financial repression. And financial repression is this basic idea of holding interest rates artificially low, so that you benefit some financial actors at the expense of others. So for instance, if I’m the federal government, in the US, we carry about $30 trillion in debt, not a small sum, not an insignificant amount. Well, it’s very easy for me to manage $30 trillion in debt, if I can define what my rate of interest is. How much is it going to cost me to maintain that debt?
If it’s zero [or if] it’s less than zero, the benefit accrues to me, and who is that at the expense of? Well, if I’ve artificially suppressed interest rates, it means that your bank depositor, your saver – someone who’s living on a fixed income and requires some cash flow from an investment in bonds or fixed income portfolio – they’re gonna suffer from less income even while the benefit accrues to the debtor.
Barry: Right.
David: If that makes sense.
Barry: That makes sense.
David: And the reality is this is a choice. This is a policy decision. The category is financial repression. This is not some pie-in-the-sky concept. But when you combine financial repression with inflation, you begin to see that money, and interest rates, have a very critical impact in not only policy decisions, but being at the receiving end as a citizen. Your cash balance is not a neutral position; may not even be a safe position. It may be subject to multiple forms of extraction, right? So we’re used to taxation, right? We’re used to taxation in the form of, you know, our Treasury Department requiring us to pay X amount out of income or out of capital gains from investments or things like that. But what about the other forms of extraction? Inflation is another form of taxation. But so is financial repression, where again, extraction of value from savings, the net effect is the same: you have less at the end of the day, and someone else has more.
Why do I tie this into digital currencies? Because it’s much easier to affect financial repression, when you have a system that is a closed system. And that’s essentially what you end up with a central bank, digital currency system. It’s a closed system that you can’t operate outside of. So imagine that your cash deposits are at the local bank. And they’re now in an all-digital format. And as a policymaker, I want to incentivize an increase in spending. And we have the social suggestion of this after 9/11 in the United States. President Bush said, “We need you to do your patriotic duty, and we need you to spend.” What he was recognizing is that our economy in the United States is 70% based on consumption. And if we were to respond in fear to a terrorist act, and not spend, tighten our belts, we could see a collapse in the US economy. So his encouragement was “Go out there and spend some money, go buy a burger, buy a new car, buy a VHS or DVD, just spend some money to keep the gears of the US economy turning, we need consumption to continue, don’t be afraid, get out there and spend.”
But what if you could incentivize spending either with a carrot or a stick? This is where the digital currency comes in. I’m going to give you a sell-by date on every dollar deposit that you have at the local bank. If you have a full dollar’s value, and it will buy a dollar’s value, if you spend it today. If you wait a month, it’ll buy 98 cents. If you wait a year, it’ll by 90 cents. You can you can literally calibrate a new form of inflation, where your dollars in savings form will buy less and less over time. Why is this realistic, and not something that is outside of a theoretical framework that already exists? John Maynard Keynes is probably the most influential economist in the 20th century. He may be the most influential economist in the 21st century as well. His concepts have defined the way that policymakers think and act. And one of his most famous concepts was the destruction of the rentier class. He did not want to see individuals with savings outside of the economy. He thought that was useless. Now, he operated very inconsistently with that—he was an investor, he was a saver, but he didn’t think the whole system would work, if you had people with an ability to take money out of the system.
Barry: We’re only allowing certain people to have that benefit, right?
David: That’s right.
Barry: Those on top again.
David: Yeah. So this this concept of central bank digital currencies, it allows for a Keynesian concept of doing away with savings or penalizing savings—taking money out of the economy to have capital set aside for some future investment—he wants it all in, all now. It needs to be in the economy churning over and over and over, that the economy will be most robust, according to the Keynesian concept, if you have every dollar in the economy. So how do you incentivize that? Central bank digital currencies allow you to incentivize – in this case it’s with a stick more than a carrot—you’ll have more of your purchasing power available to you today than you will tomorrow. So that’s a long form answer to sort of the digital currencies. We’re interested in them primarily as speculative vehicles. I say “we” loosely, but the popularity of them today really ties to, “can we make a bunch of money as quickly as possible?” It’s really not on the bona fides of a currency system. And I think if you forget the nature of power, and what our policymakers must have to implement what they want in terms of monetary policy, we’re not moving towards decentralization, as appealing as that may be, we’re moving towards greater centralization, and a loss of freedom.
Barry: I was reading up recently about the idea that you can program the digital currency. And that’s kind of part of what you’re saying, right? So that, you know, if you have that money now, it’s worth X, but you keep it later it’s going to be worth Y. But some have suggested that perhaps there might be some particular industries that government wants you to spend the money on. So you know, so that becomes an issue. People want to, you know, push you towards buying particular vehicles, as opposed to other vehicles, you know, electric vehicles versus internal combustion. And so, you know, so government then would have greater ability to do that to you. I mean, that that strikes me as a big problem.
David: There’s some really fascinating steps forward with digital currencies: the attachment of smart contracts, sort of an embedded ability to have escrow accounts and things that today require…you know, think of a real estate transaction, you have to have a third party in the middle, making sure that money comes in, money goes out, a transaction is settled, but only after a certain number of papers have been filed, right. You can embed all of that in a smart contract within a digital currency. This is a major step forward. So [I’m] not suggesting that there’s not some benefits. But there’s also trade offs—benefits and drawbacks. I mean, seeing things from both perspectives is, I think, healthy. Imagine – we talked about the stick, that the punishment and the incentivization of spending now versus later; you could also incentivize with a carrot. And that would be an approved vendor, your money goes further, you know, if you want to buy an electric car, every dollar that you have to spend is worth $1.10. And so you could, exactly, program in both the benefits and the drawbacks. And what you’re basically doing is, and this is what Carmen Reinhart described in the program, you’re corralling investors.
Imagine a bunch of cattle corralled, and then guided. Where do we go? We want you to make choice A or B. Another guest that I had on our commentary some years ago was Richard Bookstaber. Richard managed risk for Salomon Brothers back in the day. And then he was hired by the US government to help draft Dodd-Frank. This is after the global financial crisis, we put together a massive piece of legislation to deal with financial regulation, and that was Dodd-Frank. He was involved in crafting that. His most recent book describes a “better way forward.” And it basically is this notion of corralling choice, limiting choice. If I said to you, on the basis of big data, I understand what your behavioral patterns are, and I know what your preferences are, and on that basis, I’m going to project forward. I’m going to use technology to my benefit, and say, I know what you might do. And on the basis of that, I’m going to limit your choices and give you A, B, and C, knowing that you’re most likely to choose A, given what I know of your search history, of your purchases on Amazon, of all of these things aggregated by big data. And instead of having a whole world of choices open to you, I’m going to give you A, B and C, with probabilities being that you’ll choose A. And that kind of corralling of consumer choices, that corralling of investor choices is the future. Why? Because governments want more control, not less. And you can date this back to the Epic of Gilgamesh, thousands and thousands of years ago, where people have conceived of utopias, a better world being one that is formalized and controlled. And not controlled in a bad way, but just beautified. There’s a system in a city which is more appealing than the chaos of the Wilds outside of the city. What happens outside the city gates? Oh, all kinds of things that are outside of your control. Nature is a severe beast you can’t tame. But inside the city, we can control and create a better world. What Bookstaber argues in his book, The End of Theory, which is basically, we don’t need an economic theory anymore to describe human behavior, we will dictate what human behavior looks like. Generously, of course.
Barry: [Chuckles] Right.
David: But it basically is harnessing the fallacy of false alternative—you can do A, or you can do B, and we know what you’re going to choose on the basis of all that we know about you already. So this is the sort of dystopian world where I see digital currencies playing a critical role. And it’s not a world of greater freedom. Not as you and I understand freedom.
Barry: Okay, so this really now causes us to be thinking about what we ought to be doing to protect ourselves with this new age that’s coming, that’s really upon us now. And what advice do you give people?
David: When you look at Freedom, when you look at autonomy, it’s about having a certain number of options, you know, that you’re not limited to just one choice. And so the exercise of freedom is you’re saying, “This is my preference of everything that’s out there.” So how do you how do you maintain a system of preferences? How do you maintain a system of autonomy, when choices are more and more limited?
I think the first thing that you can consider as an individual, as an investor, is the variety of vehicles that you use for the resources that you have. A part of my perspective here is limited to resources and the money aspect, because that’s the business that we’re in, that’s the way we tend to think. But keep in mind, like what happened in Canada with the instance of truckers and protests, and there was an immediate attack on money, right? Because if you don’t have resources, all of a sudden your options are very limited. Where do you go? How do you operate? What choices can you actually effect, without resources in play? Right? So a part of it is a very practical aspect, it’s not just sort of a limitation in scope, we could have a philosophical discussion of freedom and things of that nature, but when it comes to policies, when it comes to the limitations of freedom, you can see this right now with the US Treasury Department, squeezing the Russians on the Ukraine issue, and it’s a limitation of the flow of funds that all of a sudden shrinks their universe of options, right? So this is very important to think about.
So for me, the vehicles that you hold money in are important. Does that mean having some cash, literally in your possession? Yes. Does that mean you need to create a massive hoard of, you know, Canadian dollars, US dollars? No, I don’t think so. But adequate for a month’s needs, I think that’s reasonable. So the vehicles might be actual physical cash, might be gold and silver in your possession, might be gold and silver in different geographies, might be various forms of accounts, whether that’s savings account, banking account, an investment account, with multiple institutions.
I think it’s important to think about a difference of geography. So for a US person, thinking about having a financial footprint in Canada, having a financial footprint in Singapore or London, or Zurich. This is something that allows you to have resources that are beyond the reach of government. And I love our country. I love our government. Generally speaking. I recognize that it’s highly dysfunctional in many respects. But I also recognize the tendency of humans. And if I look at history, I think this is where some of my skepticism of government comes in. We don’t know who the government is tomorrow. We don’t know if they are operating in our best interest or their best interest tomorrow. And so, part of being skeptical and thinking in terms of even having different geographical sources for your resources is because you don’t know what tomorrow holds. And I see this very frequently, with families in Europe wanting a financial footprint in the United States; with US investors wanting a financial footprint in Europe or in Canada.
So having varied geographies is certainly one way of keeping your options open. And that can be very complicated or not complicated at all. We’ve tried to make it very simple for US persons, you know, with our Vaulted program, you can use an online app to have gold storage in Canada, right. So for the US person, this is great. It’s in Ottawa. And it’s in another geography. We have similar programs that tie to Switzerland and in the US, and so that’s just a different way of thinking about things. But if you’re a student of history, you can see some of the wealthiest families in the world have looked at the change in political regimes as the trigger for wealth destruction and resource compression. So it’s very common, if I were living in Europe, to have a bank account in London. I mean, that happened constantly, if you if you’re looking at Austria, Germany, in the history of World War One and Two, you can see that people kept their options open. And we’re glad to have had those options open.
I spent a week this last week with a number of thinkers in Texas at a conference and met a gal who was from Poland, and her family had to leave the country. They were able to leave with jewelry, and a small amount of gold in their possession. And that was it. That’s what they had. Freedom comes in many forms. And this is something that conceptually, we think about and talk about a lot—freedom of movement, freedom of speech, freedom to operate and choose what we consider to be our greatest good or representation of human flourishing. And so what enables freedom, many of those expressions of freedom, isn’t, in many respects, resources. So having a diversification of resources. And having a diversification of locations for those resources may be a new concept for your listeners. But I think an important one.
Barry: One of the things that happened as a result of the government seizing bank accounts in Canada is that a number of people have been withdrawing money from the banks. And they have been basically hoarding the cash. And I get a little concerned for them, because I’m like okay, but if someone breaks in, then what happens? If you if you have gold in your possession, what happens when people break into your home, that kind of thing. But what you’re saying is, look, have it in different places. When you have different bank accounts, even if you have bank accounts overseas, the government, certainly the government of Canada expects you to disclose everything. So it’s like, you know, are you much further ahead, by having those other bank accounts?
David: You’re a little further ahead. There is no perfect solution. And I think what you’re describing is trade-offs. Where you know, if you take money out of the system, now you have this new trade-off, a risk there in your home. So we described financial repression earlier…
Barry: Right.
David: Money in the system has a certain form of risk. Inflation is a certain form of risk, where we’re being robbed. Maybe it’s 2% a year. Right now in the US it’s 7.9% a year. So it’s a little bit, they’re digging a little bit deeper into our pockets. And we used to ignore it, [but] it does get to a point where you say, what options should I consider? What are the trade-offs? If I just stay in the banking system, this isn’t helping me. And frankly, if you just move out of a bank account and have cash in hand, it’s not saving you any of the pressures from inflation. So, you know, this is…there is no perfect world, no perfect solution, but you look at the variety of options that you have, consider the trade-offs. And just make sure that you have enough to work with.
I’m not much of a golfer, to be honest with you. But I do know that no one goes to the golf course with a single club. You have a variety in the bag, and they all serve a purpose, and they’re all disadvantaged. Like you would never take a driver onto the putting green, it’s just not the right tool for the job. It’s very disadvantaged. So you look at a variety of circumstances, and then make sure you’ve got as many tools as possible, as many clubs in the bag as you can possibly get.
Barry: That makes a lot of sense. And you just have to, I guess, be very disciplined in keeping track of what you have, where you have it and that kind of thing. I’ve often been amazed…you mentioned about diamonds. I’ve been amazed that, as I understand it, I remember seeing a documentary one time in New York City or about New York City and the diamond trade. And oftentimes, these people are making deals with a handshake. And sometimes it could be hundreds of thousands of dollars in the value of a diamond. And then when I got into some research on the concept of these, oftentimes, people who have been persecuted in other countries came over to New York City, but they were able to carry their wealth in their pocket, because they had converted everything they owned to diamonds and brought it over. But then they got into the diamond trade and you know, obviously was able to sell it and monetize it. I guess, as we are moving towards, in many respects, like what we saw here in Canada, it’s important for people to not overreact to the point where they don’t get some proper advice as to what they ought to be doing with their finances. Because as we talked, you know, what do you do, if you’re, you know, you got everything in the house, your house gets broken in, then you’re sunk. The idea or the concept that I’m hearing from you is okay, diversify, get your different golf clubs. And how can people who’ve never ever even thought of this, what can they do? Who…I mean, obviously, your organization is helping people do this, correct?
David: That’s right. Yeah. Fifty years of trying to solve problems. And some of those are practical problems, like, if I want to retire at time X, what kind of resources do I need to be able to do that? And those are life cycle problems. What we have is political cycle problems layered on top of life cycle problems. So some of the things that we want to solve, as individuals, perhaps wanting to leave a legacy to our children or grandchildren, you know, we have to think in terms of how these other layers get put on top. Public policy choices, monetary policy choices that can end up pressuring our own personal financial goals. And so a lot of what we do in our weekly podcast, Barry, is just to help people understand what they’re dealing with in terms of this multi-layered world, and the best decisions that they can make. So you know, making decisions in fear, I don’t think is a very good thing to do. Mainly, because the quality of decision is sort of connected to the degree of fear involved. What I like to do is, is imagine an array of scenarios, and in a dispassionate, removed setting, look at the options that I want open in each of those scenarios, and then begin to make choices as to the best course of action in those various scenarios. So scenario analysis is helpful, can even be entertaining, and it’s not based on fear. It’s based on reasonable outcomes, reasonable expectations, probabilities, and the best plans that can be put in place before a moment of crisis. This is something that we do in relation to the financial markets, you know, today, the Dow, the S&P, the NASDAQ, the Russell 2000. Look at the Toronto exchange, you know, these are indices that are within 10% of all-time highs.
Barry: Right.
David: If we went into something like the global financial crisis all over again, let’s say we were 30, 40, 50% lower in value. What was your game plan? Did you have a game plan? Did you do scenario analysis? Or are you in that position where, on the basis of compressed values, now you’ve seen a significant capital loss, are you in the mode of panic? And this is where forethought is of such great value. Where fear is not the dominant theme, it’s just practical, pragmatic. What are the best decisions if our circumstances change, and can we rehearse some of that ahead of time, such that as the circumstances change, it’s kind of business as usual. We’ve already rehearsed this, we know what we’re gonna do. And we’re operating, even though we may feel tension inside given new circumstances—whether that’s a political environment that’s, it’s not helpful, healthy, or what have you, or a financial market environment that is equally stressed and strained—your best choices are made before the moment of crisis.
Barry: Let me just bring up another issue that is getting some play recently, and that is the UBI, the universal basic income concept. Currently, right now, there is a piece of legislation in the Canadian Senate. I don’t know how far…I wonder sometimes if government is just kind of setting up these trial balloons, just to see what kind of response people will have with respect to it. But we are hearing more about this idea that the government is going to provide funding to people, you know, regardless if you work or not. Have you noticed any kind of traction with this idea in government? And why is it so attractive to government?
David: I think a part of the reason it’s so attractive is because you’re talking about creating an entirely vassal state. And if there is high dependency on the government, in theory, there’s also a greater degree of gratitude, and a greater degree of compliance with the wishes and whims of government. So who butters my bread? [Chuckles]
Barry: Hmm…yes.
David: And what happens if I don’t comply? What if I don’t obey? What if I’m not on board with policy X, Y, and Z? Oh, well, you don’t qualify for your income anymore. So dependencies are something that you think, “Oh, it’s just a gift.” Gift with strings attached is I think the better way of viewing it, what is at stake very is graver than just those aspects of control. We experience a part of our humanity in what we do, who we are, our identity. I mean, if you look at social constructs, the family is this fascinating social construct, that out of which comes an understanding of who we are.
Barry: Right.
David: Our place in history.
Barry: Right, right.
David: Who we are as a family, who we are as a people. And that’s really critical. But work is one of those things that also factors into our understanding of dignity and self-worth. I don’t know if it’s an unintended consequence or intended consequence, but theoretically, one of the consequences of UBI is that who determines identity? That shifts more to the state as opposed to “What do I do? Well, I’m a lawyer, I’m a doctor, I’m a teacher. I’m a trucker.” Do you know, I loved seeing what I saw up in Canada, because you’re talking about a class of workers, that is so underappreciated, so underappreciated. I mean, we don’t operate with the things that we consider to be normal, we…Groceries show up. The products that we need at an auto repair store, they’re always there. No, they’re not, they have to be moved from point A to point B. And this linchpin of society, which is never really considered and honored and appreciated, just raised their hand and said, “We have an opinion, and we just want you to know, we’re a subset of society. And we matter too.” And they do. But every aspect, every role in society is critical. And the way that we are designed, I’ll say this, presumptively as a Christ follower, as a Christian, we’re designed with certain skills that are unique to each one of us. We have gifts to give, and an impact which is unique, just like our fingerprint is unique. Mine is different than yours is different than anyone else’s. And the universe, in its beauty, is best manifest by individuals expressing their God-given talents and gifts. What happens when you begin to strip away the value that an individual contributes to society and say, “No, you can sit on the couch and play video games. You can do whatever you want, whatever your greatest bliss is, pursue that on your own terms. We’re just going to pay you for being you.” We lose what our contribution is, that work is valuable. And we express a part of who we are through the work of our hands. So I think there’s a lot at stake with UBI, universal basic income, where you’re basically paid to do nothing or paid to do whatever you want to do. I’m going to go to the park and take pictures. Well, that’s great. But the notion of avocation and vocation, the difference between the two…avocations are wonderful. I have many avocations. But I also derive a tremendous amount of purpose in life from my vocation.
Barry: Yep.
David: Right? So to strip that away is to undermine something very basic in our psychology, right? And I think if you’re undermining collective psychology, you’re creating a variety of psychoses, which we can’t even calculate at this point. But that you’re experimenting with some really big things. This is not purely economics. This is not purely economics, although I think the economics is atrocious. I think the social consequences of UBI are even more grave, as you look at the diminishment of humanity. I mean, maybe that’s too dramatic. But that’s the way I see it.
Barry: No, you know, I think you’re on to it exactly. Because you look at the last two years here in Canada, where they had, the government had CERB funding, I forget what that all stands for, but the idea was you stay home from work because of COVID and the government is going to pay you to stay home. And so for two years, we’ve had situations—my wife is a piano teacher, and so students are not in school, they’re not doing their regular routine, they’ve got tons of free time. And guess where they go, they go to the video games. Well, even though they have lots of time, they have less time doing their piano practice during the week. And as a result, there was a real change in the ability of the students to keep up with something as basic as piano. And so to me, in many ways, I think our COVID experience should help us think about these much bigger issues, if we’re going to go UBI.
David: Barry, I agree. You see it with a listlessness with kids, where you know, they may get exactly what they want. I’ve got kids, 15, 13, 10, 8—they love video games, I can appreciate that, you know, and I hate video games. Except that when they ask me when I grew up, “Was I playing video games?” And I say, “Yeah,” you know. In fact, if you put me in front of a Galaga game today, I could spend an hour or two playing that because I really do like it. But I hate it at the same time, because I realize that it’s like a black hole for my humanity. I can disappear into this world of brain chemical stimulation, which is artificial in nature, but highly rewarding, except it ties out to nothing in terms of like a life pursuit or something of greater purpose. I mean, these are basic beliefs, and worldview beliefs. But one of my basic beliefs and world beliefs is that we are made with and for purpose.
Barry: Right.
David: And to the degree that we are not living with purpose or something, you know, towards something of greater purpose, I think a part of our souls diminish. Whether they, you know, and I think that’s what we’re seeing. When you reference COVID, what we’re talking about is a growth in mental health issues, because there’s certain developmental things that have to happen, that only happen in the context of society, that only happen in the context of problem solving, that only happen in the context of conflict and conflict resolution—things that happen at work, at school, in an engaged world. And, again, UBI is just one of those things that says, “No, we think everyone’s going to be happier if they can do what they want to do.”
Barry: Instead of us working, we allow government to pay us just to live. And without that deeper inner sense and understanding of why we are here, and what our purpose is, and our identity. I love that. That’s so powerful. You have, you’ve hit the nail right on the head. And it’s one of the things that we, you know, we think of Kissinger, who said, you know, control food, control people. And in many ways, that’s what we got here. But, at the end of the day, it’s diabolical, it seems to me, because we are destroying who we are. And I think, I had a conversation the other night with a professor in Ottawa, and we talked about telos and techne. And the Greeks understood that it’s not just being able to do something. It’s understanding, knowing why you do something, the telos…
David: Right.
Barry: …the purpose. And we have been losing that understanding, in our society, it seems to me. That we’re just considered only about doing, we don’t even know why we’re doing it, but we’re doing it because it feels good, because it’s whatever. And it’s that greater purpose. And I think that’s what ultimately is destroyed with the UBI.
David: Just that notion of identity is I think, really important, because we’ve determined that we’re no longer bound by biology. We’ve determined that we’re no longer bound…so we’re already experimenting with what identity is, and UBI seems to be sort of this governmental approach to saying, ultimately, “We’re going to tell you who you are.” Again, because you lose the sense of who you are, in not having a greater purpose. And then I think it becomes much easier for government to say, “Let us help you understand who you are.” And so now it’s no longer sheerly a subjective expression, but it becomes something that can be determined by the state. And I’m uncomfortable with that, perhaps that’s kind of a slippery slope argument. But I’m uncomfortable with it.
Barry: Well, you know what, the slippery slope argument is often used in the practice of law where the courts make reference to that, but I’ve had the chance to go back and look at some of those cases, and I’ve seen that that actual claim for slippery slope is, in fact, what happens. You know, we’ve seen it over and over again, you know, especially when you’re dealing with the moral issues. For example, we had a situation in Canada with medical assistance in dying, it used to be MAD, medical assistance in death, or something, medical assistance in dying or death. Anyhow, it used to be MAD, now they go MAiD. But the idea here was that, “Oh, you know, we are not going to allow this to get out of hand. People who have mental issues, that won’t be the kind of people that we will allow to have a physician to assist them in death. And then lo and behold, only a couple of years after the decision, we get another court decision that does allow the very thing that the court said years before would not happen here in Canada, “Because we’re so different than Europe.” For example, the court said, you know, we’re not gonna be like Belgium, we’ve got lots of checks and balances in Canada. Then lo and behold, well, no, actually, we get that slippery slope. So it seems that to me, anyhow, the slippery slope is a very good argument.
I want to move on a little bit to the whole issue of trust with respect to government. How is it, you know, when it comes to finances, as you mentioned here in our discussion already, you outline that public policy decisions are intentional. The government is making a decision as to whether or not they’re going to actually tax us where they’ll, you know, we file our income tax returns, we pay our tax, or are they going to tax us through other policies, i.e., inflation. How do we as a people deal with this concept of trusting government when it comes to monetary policy? History would seem to me to be that we can’t trust government, and it almost seems like we must have the assumption that government is not necessarily your best friend. While there are some governments better than others, the reality is we need to be having that defensive mindset, it would appear to me, because we don’t know what’s going to happen to our own financial situation, based on government policy, and then how do we protect our families with respect to that?
And then maybe, if maybe I’m way off, maybe I’m too pessimistic when it comes to government.
David: Well, I think there’s a continuum of government tied to scale—where a small-scale government, I think there’s a greater opportunity for trust, as there’s benefits to government serving us versus us serving them. There is a certain tipping point where, on the basis of scale, sort of the description of “the Leviathan,” the size and scale and scope, all of a sudden, the system is serving itself versus serving the people. And so you see very circular and self-interested policies put in place that sort of perpetuate government as it is, and the further growth of government. Whether that’s good for the people or not is almost a secondary consideration. So, I do think that as the scale of government grows, accountability becomes more difficult. And to the degree that accountability becomes difficult, you are looking at a situation where the individual, not necessarily represented in government, has every reason to be suspicious, because your interests may not be aligned with the sort of governmental direction. This is, yeah, I think that’s the challenge is how do we then impact government? How do we… Certainly participating as a voter is important. You know, we still have the ability to speak and speak loudly, we should. That’s not a right that is necessarily going to be there forever. And so creating channels of communication that may give us a voice for a longer period of time, I think that’s also an imperative to make sure that, you know, a univocal narrative doesn’t keep us from having some sort of voice in the public sphere. I mean, you see this in China already, where if you have the wrong opinions—the difference between right opinions and wrong opinions is how closely they’re aligned with the Politburo’s direction of “what is ideal for all in China.”
Barry: Right.
David: And so now you’re measured by your compliance with and complementarity to the state’s objectives, and you get sesame credits. You’re a good boy today, you get extra sesame credits. You’re a bad boy, you said the wrong thing on Twitter or whatever, you get demarcations there. This is an issue for us to consider. How do we continue to maintain voice? How do we continue to maintain representation in government? It does mean that at some point, we have to come out of our shells. So many times people want to just kind of do their own thing, let me just enjoy the privileges and freedoms that I have, leave me alone to live my life as I see fit. Sometimes that disengagement with government and disengagement from the public sphere means that someone else is in the public sphere making all the decisions and it may not always be the case that we get to just enjoy life as it is. So there is some engagement we have to be a part of in the public sphere and in politics directly. Otherwise you can be assured you’ll have no voice, you’ll have no power. You will be in a minority in many respects.
Barry: One of the things that we talk about in First Freedoms is the idea of freedom of speech. We get our name from a case in 1953—freedom of speech, freedom of conscience, inviolability of the person—and those are the “first freedoms” that we as an organization advocate. And it seems to me that even here on the monetary policy as well, because our finances are so linked with our freedom, having the ability to be able to speak when we see our freedom being challenged by government is so important. And while we have at least the semblance of a representative democracy at this point, we need to be willing to speak out. And even if that means we are going to be challenged on social media, or challenged, you know, because not everyone’s going to agree with us, right.
David: Engaging in the public sphere and engaging in a conversation about public policy issues or monetary policy issues, it is easy to get bombastic and agitated. And I think to maintain a voice today, it needs to be a reasonable voice, it needs to be a well-thought out voice, it needs to be a well-informed voice. It doesn’t have to be polarizing to be truth-laden. And, you know, on this issue of monetary policy and freedom, we have every reason to not trust our central banks with the value of our money. Here in the United States, the creation of the Federal Reserve was 1913. From that point, till now, following their prime mandate of price stability, we’ve lost 97, 98% of the purchasing power of the dollar. Their record is abysmal, there is no reason for confidence and trust. And that’s on a long time frame. If you looked at the current monetary policy implementation, 600 PhDs at the Federal Reserve, our central bank, determined that there would be no inflation, because they were in control of the economy, and because they understood the nuances of supply chains and reopening post-COVID. The reality is a PhD does not guarantee common sense, and it does not guarantee that you’re tied into any semblance of real-world reality. Conceptually, there may be value and an expression of pure genius. But in the real world where the rubber meets the road, it can be very different. And that’s what we’re experiencing today. So trust and confidence in the central bank community is waning quickly.
And I’ll tell you one of the things that holds together, monetary stability, if you want to look at the Canadian dollar, the Bank of Japan is a classic case in point this week. You’re talking about a multi-decade low in the yen, because they just promised again to guarantee pricing in the bond market, they’re going to buy trillions in bonds, to guarantee a price and to set the interest rate. The immediate reflection of that in the currency markets is the Japanese yen takes another nose-dive and is at multi-decade lows. So the currency is an indicator of the confidence that people have in their central bank. So, you raise this issue of trust. That’s what we’ve seen chipped away at. And, frankly, I think you look at the multi-decade move higher in gold from $300 an ounce to $2,000 an ounce, from the year 2000 to present. And that actually is what is being reflected: a loss of confidence and a loss of trust in the PhD standard. As we moved from the gold standard to the PhD standard a long time ago, and now confidence in those authoritative figures is waning. My best advice in terms of that loss of trust and confidence continuing, to the point of there being a currency crisis is that you can put yourself on your own gold standard. Even from a public policy standpoint, there’s not a lot of movement towards that. So again, you may say, “Well, this is grossly self-interested. Of course, he’s got that advice. He’s been in the gold business for five decades.” I’m talking about the history of money. And the history of money is that if gold was money, I should be out of business. I should be out of business. And the day that we move back to the gold standard, I am out of business, because you don’t need me. Now you’re talking about sound money, something that has something real backing it. Today, all you have is the weight of those PhDs, their ideas, the ability of the federal government to tax. I mean, these are the only things that represent pillars supporting our currency. And I think actually, you’re gonna see a good bit of currency crisis on a global basis over the next few years. So putting yourself on your own gold standard, it’s not an expression of trust. It’s an extension of trend. And as this trend continues in terms of loss of confidence in the currency markets, your savings are at risk.
Barry: Right.
David: And to the degree that you lose your savings, through no fault of your own, you are in a position of greater dependency on the state. And that’s again, where I think whatever you can do, whether it’s owning farmland, and having the ability to create your own food, you know, chickens and a cow, I’m not a farmer, so I can’t do this. I’m going to default to a few more ounces, I’ll buy your cow. But this is the issue: the system is not going to take care of you, the system will take care of itself. And you are merely grist for the mill. If you can respect that, that the technocratic elite have more in mind, their ideas, ideals and best outcomes and not necessarily something that is representative of your interests, you need operate with greater autonomy. You need to be making decisions that again, if the ideal is a gold standard for all, but we’re not going to get that, what about the gold standard for you? If the ideal is free speech for all, you’re hoping the system takes care of that. What about your own community communication? How are you engaged at the local level such that you don’t have to worry about Facebook and Twitter and Instagram and whether or not you’re listed or delisted? Like, have you opened the dialogue such that you continue to have free speech, just on a lower level? Not through modern technology, but you’re engaged. And again, if the system is not supporting it, how do you do it on a micro level?
Barry, so many of the things that I wrote about in The Intentional Legacy, it’s a book I wrote in 2017 about family legacy, it has to do with that issue of telos, it has to do with the trajectory you’re setting yourself on, whether it’s that the intellectual life of you, the individual, or that dynamic within a home setting, it has to do with the emotional life of you or the family, what trajectory are you on? So many of these things are difficult to solve at the macro level, but are quite easy—and you are powerful and can do something—at the micro level. And by the way, when I look at Michael Greene’s book, which catalogs sort of the revolutionary nature of the Christian church in the first century, there was no “big tent” events. This was one person caring about one person, and investing in an individual’s life through love and caring and compassion and generosity. And those dynamics had such a radical impact one person to one person, that there was a multiplication effect. And all of a sudden, something changed dynamically, not by focusing on macro issues, but by focusing on micro, right. So to me, when I look at legacy, I don’t look at what you have at the end of your life, I care about the decisions that you are making today. And if we aggregate those individual decisions, now you’re talking about the stuff of legacy, the expression of values, and whether the system supports it, or is against it, doesn’t matter. Because we know that human flourishing can take place in any context, whether it’s a free society or a closed society, whether it’s a society that promotes our deepest values or undermines them, and to the degree that we lose this connection with the value of our choices, and the communities that we live in and cultivate, starting with the family, we can be very discouraged and lose sight of the fact that we can continue to flourish and may not get what we want. Not at the macro.
Barry: Right. You know what, that is fantastic. In fact, I encourage our listeners, if you just watch you’re watching us now, I encourage you to just rewind and listen to that again, that was powerful. You hit it right on the head and it just shows you the importance of looking at our own individual choices. You reminded me as you were talking, I heard loud and clear Alexandr Solzhenitsyn, “Live not by lies,” you know, “in your own sphere” he said. As he was leaving the Soviet Union because of exile, his message to his compatriots was simply this: “Make sure that you say what you hold to be true, not what someone tells you to say. And you don’t do anything, you don’t go anywhere unless you want to go there.” And I think it’s in those little decisions, those decisions that we make individually, we’re able to make a much freer society. That’s powerful. Love it.
Well, thank you so much, David for being with us, it’s been an absolute pleasure. And it’s so great to be able to meet you through this virtual apparatus. And again, another wonderful, amazing thing of our society to be able to do this, which helps us in our own pursuit of freedom.
David: Barry, thank you. Thank you for caring about the issues that you do, and giving a voice to them. Thank you for inviting others into a larger conversation, to develop a sensitivity to things that matter, and to consider their own telos, and the direction of our culture and the role that they can play in that. You’re an encouragement to many people. And I appreciate you applying some discipline to doing it on a routine basis, having this kind of conversation.
Barry: Well, thank you. Thank you so very much. Listen David, can you tell us, for our viewers, where they’re able to find more information about you?
David: So the podcast is weeklycommentary.com, and that’s a great resource if you are interested in a whole host of things. Of course, our focus is on the financial markets, but so many things factor into that—international relations and public politics and sociology and psychology and so many things are fun to engage with in that venue. So weeklycommentary.com. That savings program that I described for gold, you know, instead of dollars in the bank, perhaps subject to financial repression at some point, certainly subject to inflation even now—vaulted.com, vaulted.com. And our relationship with the Royal Canadian Mint is fantastic. I couldn’t be more proud to be tied to an organization that has history handling metals going back to 1908, 1909, 1911, when British sovereigns were minted as “coin of the realm” as gold money. We’re working with that group out of Ottawa, and I’m glad that they have that legacy. I think those are two places, vaulted.com or in the App Store or the Weekly Commentary. We have lots of other things if you go to mcalvany.com or…I don’t know, too many URLs to list… But if you want to get to know us, I think the Weekly Commentary is a great way.
Barry: Okay, excellent. Excellent. Well, thank you so much.
Folks, I want to thank you for taking the time to watch Freedom Feature here today, and as we always say, you know, you may not always agree with either what we share or what our guests share, but the whole purpose of this organization, First Freedoms, is to allow us to engage in meaningful dialogue on things that matter: freedom of speech, freedom of conscience, the inviolability of the person. These are issues that are here and now. And until next time. I’m Barry Bussey.
Please note the views expressed by the individual(s) in this video are their own, and do not necessarily reflect the views or principles of the First Freedoms Foundation.
