Jim Rickards Explains How A Gold Standard Would Be Beneficial

By Herman James, Market Sanity / GoldSeek.com

The following video is a bonus feature on the Hidden Secrets of Money episode 4 (public version can be seen at the end of this post). The video can only be watched by subscribing to Hidden Secrets of Money. However, a full transcript of the interview has been written by Market Sanity for your convenience:

Mike Maloney: Is there a better way? You know, the banks have inserted themselves between us and every transaction more and more and more. With credit card transactions for instance, you’ve got an average of probably 2.5% merchant fees. You’ve got some people at 3.5% some people down at 1.5%, but typically, as we go more and more to credit cards, the banks have now gotten their cut of every single transaction that’s going on in our society. And even if you use cash, you’ve still got a checking account, and you pay fees for the checking account. Is there a better way than this?

Jim Rickards: Well I think there is a better way, and you’re right Mike. Central banking is 300 years old and it does go back to the creating of the Bank of England and now it’s a worldwide phenomenon. Ya, bankers have always stood in the middle and taken a little bit out of every transaction, but for most of that time we were on a gold standard. So yes, bankers stood in the middle and they extracted a little profit, but the system as a whole had a governor – which was the gold standard – that came in various forms. Today we have no governor at all. We have the same system, with banks in the middle extracting profits, except there’s absolutely no limitation on the expansion of the balance sheet, the expansion of money, or currency as you call it. The word credit broadly defines. So, it is out of control; it will collapse, it’s just a matter of time. I don’t think there’s any question about that.

As for a better way, sure. You could go back to real money, which in my view is gold. You know, people always say – Warren Buffet criticizes gold – he says it has no yield. Well, it’s not supposed to have a yield, it’s money. Money doesn’t have a yield. You take a dollar bill out of your wallet: it has no yield. To get yield, you have to take risks. You can make a bank deposit. They call that money, but it’s really a credit transaction between you and the bank. You can buy stocks, you can buy bonds, you can do a lot of things. But to get the yield, you’re always taking risk. Money doesn’t have a yield because it doesn’t have risk, and that’s why gold has no yield. It goes up and down in dollars —

MM: You’re right. Money doesn’t have risk, but currency though does now because it isn’t backed by money.

JR: That’s correct. You’re right, but now you’re into the definition what is money, what is currency, etc.? The central banks rely on the difficulty of everyday citizens around the world understanding that to pull of the scam that you described.

continue article at GoldSeek.com:

http://news.goldseek.com/GoldSeek/1382910603.php