Interview with Richard Werner

On central banking, money creation, why high economic growth is possible, and why it is being suppressed

Host: Richard, good to meet you.

Richard Werner: Great to meet you.

Host: We’ve got limited time, so let’s hit the big points. Help me understand something. I’m not the smartest guy in the world, but I know enough. We seem to have the best technology we’ve ever had and the smartest people we’ve ever had. Yet our economy appears unable to grow. We’re in a cost-of-living crisis. None of our public services seem to work anymore. Are we getting something fundamentally wrong, or is there a group of people who know how to play this game of money better than everyone else?

Richard Werner: Absolutely. You’ve put it quite well — it is a contradiction. We have more knowledge available than ever before and amazing technology. Progress in recent decades has clearly been significant. So why is our economy performing so badly, and why are ordinary people and the middle class not doing very well?

The short answer is: this is what the controllers — I call them the central planners — want to achieve. What you get is what they want us to get. All the control levers are in the hands of a small number of people, and they could switch to quite a different scenario.

In mainstream economics, one of the key protagonists of the 20th century was Paul Samuelson. He obscured the power of banks and money creation. Individual banks can create money, but he promoted the fractional-reserve theory, which is at best a half-truth. It recognises money creation in the system but makes it very diffuse — each bank is just an intermediary. His textbook, first published in 1947 and still going strong, has been promoting this story for decades. He’s a classic case of mainstream economics leading people to the wrong information.

But in his early years he wrote a paper they don’t like to quote anymore, called “Revealed Preference.” I agree with him on this one point. He argued that since we assume people are rational actors who know what they’re doing most of the time, we should expect that their intentions are revealed in their actions. Don’t listen to what they say — they can tell you all sorts of stories. Just watch what they’re doing. That is what they really want.

That’s the principle I’ve been using to analyse central bankers and the central planners in general. They spin quite a yarn and have all sorts of misleading stories that can send you down the wrong path. Just watch what they’re doing. That is the intention.

It is absolutely possible — and I really think it is criminal that we’re not getting it — to have sustainable, high, double-digit economic growth without inflation, without crises, and even arranged so that it is fairly equitable. Everyone, or most people who want to work hard, gets a chance to do really well. An economy of abundance. High growth. Young people get responsibility early, they get opportunities, they can start companies. Companies expand, the economy grows, there’s constant need for new goods and services. That is possible.

Every country can deliver 10% economic growth every year, year after year. We don’t need cycles. We don’t need crises. We don’t need 1–2% growth or zero growth, or countries like Germany shrinking for years. All of that is totally unnecessary. So why aren’t we getting it?

Host: When you say “they” — the controllers, the central planners — are we talking about the central banks? Are we talking about the government? Because they seem too incompetent. I believe they’re incompetent. Or is it higher up? Is it the asset managers around the world? The people who move the money around the world?

Richard Werner: I’ve focused in my work quite a lot on the central bankers because they have the most impact on the monetary mechanism, the financial system, the banking system, and the whole flow of finance. For much of the analysis that’s almost sufficient. But you do hit the point where you wonder why on earth they are doing this.

Take Japan. They created a 20-year recession. And they actually revealed why they were doing it. That’s in my book Princes of the Yen. I quote them — the governor, the deputy governor of the central bank, and these people before they got into leading positions — on the record in the Nikkei and other publications. They said things like: “We think it’s better for the economy to have a structural change… structural transformation… because we want to change the economy.”

As the World Bank once put it in a report: banking crises are a window of opportunity. An opportunity to change the ownership structure. That’s what they did with the Asian crisis. Asian countries were doing really well, and foreigners had no share in that — whether Japan for decades, or Korea, or Southeast Asian economies like Thailand. Foreigners didn’t really own much, and the banks were locally owned. The Asian crisis changed that. The Japanese crisis changed that. That’s how you crack open these countries.

They were saying: we want to change the structure, change the ownership structure. In the Japanese case it was because the post-war Japanese success was due to a fairly straightforward implementation of what is possible. The Japanese had researched quite well what can be achieved. They realised: we can have high growth — 15% growth for decades. It’s actually possible. Let’s do it.

In 1960 a new prime minister announced they were going to double national income in the next ten years. There was a storm of opposition: “That’s nonsense, impossible, cannot be done.” All the economists were outraged. Well, they did it in four and a half years — way ahead of schedule. Of course it can be done. And they kept doing it.

Then it turned out that Japan was considered too successful by very powerful players. That’s where we have to push a little bit behind the central bankers. The central bankers in most countries turn out to be, essentially, traitors to their countries. When push comes to shove, they work for other interests that operate on a bigger, international, globalist scale.

Host: So there is a globalist network with an agenda?

Richard Werner: Yes. There is a globalist network that has an agenda. And this agenda is not actually good for most people — for ordinary people and for most countries. That’s why they need traitors who help them.

Host: Who are these people and what do they want? Are they just enriching themselves? Are they just stealing everything?

Richard Werner: I think it’s about control. And in a way it is embedded in the history of banking and central banking. We don’t really have to leave that path very much to find answers.

Throughout history, those who first understood the tricks used by banks — and it was kept a secret for centuries how banking works — could take advantage. And they did take massive advantage. That made them very powerful, to the extent that kings and princes and monarchs became indebted to them. And that always means you can extract more than just money. Money is best lent to the sovereign because they can tax the people to pay.

The introduction of central banks always goes hand-in-glove with the introduction of new taxes — income tax and so on. When the Fed was created, they created the federal income tax, which didn’t exist before. Somebody’s got to pay the interest on that national debt, which is going to pile up the moment you tell the government: “We’re going to create money for you, and you’ve got to borrow the money at interest.”

So you have people who understand the system, and essentially a small number of dynasties that did really well over the centuries, while for centuries the mechanics remained very little known.

There’s proof of this in the very fact that it took until 2014 for the first empirical test to be done — I did this — on how banks actually work. It was still controversial. The claim that banks create money when they lend was considered a conspiracy theory. Many textbooks wouldn’t even consider it. Famous economists said, “That’s just some monetary nutcases, cranks.” Even Keynes said things along those lines.

The currently still dominant theory is the financial intermediation theory: that banks just gather deposits and those very deposits are then lent out. That is not what happens. But that’s what the textbooks assume. And that false narrative has been around until the 21st century.

One very important building block in fooling people about this, going back something like 800 years, was the invention of double-entry accounting. It was created by and for the bankers. It’s a very clever way to hide money creation and always point out: “Hang on, there’s nothing happening here. Look, the accounts always balance — assets and liabilities.” And this worked so well that mainstream economists, until the 21st century, believed there was nothing to see — banks don’t create money.

Of course, those who knew this and took advantage became very powerful, asking for privileges, legal changes, more rights from the monarchs and from governments. You can see how they moved into a position of very strong power. First it’s about money, but once you have all the money in the world, the next step is power.

On a global scale we see this principle: they want power. The ultimate power is to concentrate power over the whole world in a small number of hands. That seems to be the game they’re playing — some kind of world centralised government. The globalists have essentially been saying that. It’s not a secret. They say we need a globalised world so there should be no national obstacles to our global power. That’s really what it means when you have all the globalist demands implemented.

And of course they need people motivated to work with them and for them. Mainstream economics is one way to train people who don’t really see the full picture.

Host: Is that Keynesian nonsense?

Richard Werner: For example, yes — Keynesian, and all these schools of thought. They love to argue and quibble with each other, but they’re all very similar. They’re all equilibrium economics.

Whether you start with classical economics — David Ricardo was one of the great propagandists. He basically created modern economics by saying: let’s not look at the facts when we can have great theories that come to the conclusions we want. He introduced the so-called deductive methodology: start with axioms and assumptions, build a theoretical mathematical model, and the whole thing is very logically consistent. Logic appeals. Men love logic. So we’re easily influenced: “Oh, that’s pretty logical — got to be true.”

That’s a big misunderstanding, because logic is not truth. Just because something is logical doesn’t mean it’s true. It could be a description of reality — but whether it is, is a simple empirical question. You still need to check the data and the facts. But they never do.

The main trick in this Ricardo approach, which has dominated the last 200 years of economics, is that you present the whole thing in reverse order. You start with your preferred conclusion. You work backwards: what sort of model gives you that conclusion? Then what assumptions do we need to present that model? Then you present it in reverse order: “Let’s just for the sake of argument have these assumptions… oh, we get this mathematical model… oh, that’s quite logically consistent… and here’s the conclusion. Who would have thought?” Of course that’s what the whole thing was aimed at. That’s charlatanism.

Since Ricardo we’ve been on that track. Within this equilibrium approach, equilibrium is the foundational basis that was chosen because there’s no dominant market player and equilibrium is always the markets. You assume demand equals supply. Then you have some quibbles — classical, Keynesian, neoclassical, post-Keynesian, monetarist, Wicksellian — all sorts. But they’re all equilibrium thinkers. And there’s never been any evidence of any equilibrium whatsoever. The whole thing is a bunch of baloney. They get away with it because it’s very logical and because people don’t realise that just because something is logical does not mean it’s true. Truth is empirical and fact-based.

We just need the approach that’s very successful in the natural sciences: look at the facts, observation, data — usually from the past, because we don’t have data on the future. History. Then build explanations based on that data. That’s not how economics does it. But if you did that — and I’ve been doing it my entire career — it works very well. Then you can actually see what’s going on, and you can have predictions about what’s going to happen.

There is a global network of powerful people, families, dynasties who have the ability to control large parts of the world — who’s in power, who isn’t — to maintain their position as the wealthy people in the background. The big grand conspiracy is not really a conspiracy. It’s true.

In my analysis I focus on central banks. You can even say what you just said just by going to the level of central banks, because they already have so much power, and it’s visible and not disputed. You can prove it and show it.

Host: But are they just useful idiots? Are they pawns of these people?

Richard Werner: In the Japanese case I was wondering: why on earth are they doing this? They could just be convinced by the argument that the Japanese economic system is not good for Japan. Well, it delivered 15% growth for decades. It made you double national income every four and a half years at 15% growth. And it can be done. They’ve proven it can be done.

Then Korea, Taiwan, Singapore copied it. And in 1978 China copied it. Deng Xiaoping came to power. The first thing he did was go to Japan with 300 of his top people. He told the Japanese: “Okay guys, we’ve done a lot of ideology — the deductive approach, the Ricardo approach, the Mao red book. We’re all tired of that. We’re throwing out ideology. We just want to do pragmatic stuff that works. I’ve come here as a student. Teach me how I can have double-digit growth.” And they told him. And that’s what China did.

Of course the key was the monetary system. They asked him: “How many banks do you have?” “One bank — central planning.” Well, the central planners love it — power maximisation, control — but it doesn’t really work well. It works for the controllers, but everyone else is unhappy. And they get unhappier.

Host: And we end up where we are now, where it feels like we’re on the fringe of civil war. Populism’s on the rise. There’s a massive amount of discontent. Crime is up. Trust is down. Nothing works in the country anymore. Inflation is rampant. Everything feels like it’s breaking around us.

Richard Werner: Exactly. And of course the UK is a great example, because in the UK we are close to central planning. There aren’t many banks — proper banks that do traditional banking. We’re talking about five big banks, and they don’t even do traditional banking anymore. Once you get so big and your balance sheet is more than £2,000 billion, and you’ve got five banks of that size basically controlling the financial system — accounting for more than 80% of deposits — then the problem is the following.

We confirmed this in research on the US, where there are banks of all sizes and there’s still, fortunately, a large number of banks (although it’s going down there as well — they consolidated quite a bit). What we found analysing those 5,000 banks of different sizes is a very simple principle. It makes common sense, but the finance literature had sort of disputed it. Namely: it’s a rule in banking that we confirmed — big banks want to do big deals with big customers. They need to. Who lends to small firms? It’s small banks. And that’s it.

When you consolidate the banking system like in the UK, nobody lends to small firms. Now, why does it matter? “Oh, they’re just small firms.” Well, no. It’s the middle class. There’s more to it.

In the UK we’ve had for a century now this “productivity puzzle.” Every few years it comes up again — some commission or parliamentary committee discussing why productivity is so low. UK productivity has been low compared to Germany for a century. Why is that?

It’s very simple. Productivity is simply: we look at the whole country, the output produced — GDP is a measure — per person working. You mustn’t use the total workforce but those people who actually work. So if you’ve got unemployment, you can’t count those, because you want the productivity of the people who are actually working. They produce the GDP. You calculate that ratio. That’s your productivity. It’s been quite low in the UK.

To find out why that is, you only have to look at who is the main employer of those people — where do they work? That’s true for the UK, for Germany, for Japan, for the US: the vast majority of people work for small firms. Small and medium-sized companies employ two-thirds usually of employment. In the UK roughly 65%. In Germany and Japan it used to be actually higher — between 70 and 80%. Anyway, the majority works for small firms.

Now, how can their productivity be higher? German small-firm productivity in the past (I’m talking about before the current disaster of intentional destruction and de-industrialisation in Germany) was quite high, because whenever new technology came up, small firms would realise it. They go to the fairs in their industry and so on. They realise: these are new trends, there’s a new technology that affects our industry, our section, our market niche. We’ve got to get it. It means we’ve got to spend some money. We’ve got to master that technology and apply it. Where do we get the money from? We go to our local bank.

That’s the system in Germany. The numbers have also been declining, but there are still around 1,200 small local banks — cooperative banks mostly, some savings banks. You go to your local bank and you explain. They know you already, because they only lend locally. They will not lend outside the local area. So they know all the firms there. “Oh yeah, so you guys want this new technology. Okay, let’s look at the plans.” And within maybe two days they would have the money and they can buy the technology and implement it.

In the UK, forget it. They find out: okay, there’s this new technology, we’ve got to get it. Ah, it’s too expensive. We can’t do it. Let’s find a workaround. But they can’t really get the funding. That’s the problem. And so productivity stays low. Why is that? Because the banks are large, and large banks only do large customers, large business. They don’t want to deal with small firms. That’s all it is.

The consolidation of the UK banking system took place before the First World War, and the problem has therefore been known. Every few years we have these studies — not just on productivity, but also on the banking sector. They always come to the same conclusion: wow, it’s such a concentrated banking sector. The big five dominate banking. They don’t lend to small firms, and they give only short-term loans — one-year, two-year loans. And so that’s the problem.

There’s a great report, the Colwyn Report, which says that the problem is the concentrated banking system. The big five dominate. They don’t lend to small firms. That report was published in 1918 — more than a century ago. The problem had been identified. But what has been done about it? Nothing, of course, until this day. Because really the goal is concentration, and they don’t care about the middle class. The fact that most people work for small firms, and if you want a healthy, wealthy economy where people are doing well, you need many small banks.

But in this country there are strong interests in the City of London against this. If you want to set up a new bank for the super-rich and you make your business case that the super-rich need a special bank, oh, you get the banking licence in record time. But try to set up a local community bank — that’s definitely not going to be easy, to put it mildly.

Host: So when you look at the political layer — Germany or wherever — you make the assumption a politician wants to be successful. They want to be respected. They want to be seen as somebody who was good for the country. A lot of our problems are down to the economy. Not everything — there’s the immigration question at the moment — but a lot of things come down to the economy. And you say it’s easy to fix. How can they be unable to fix it? Are they also just incompetent, or are they also useful idiots? We talk about people being captured. Does the tap on the shoulder happen? “No, this is how it really works.”

Trump was meant to be this anti-establishment, drain-the-swamp, no-foreign-wars guy. Something’s happened over the last year. He’s got involved in a foreign war in Iran, which to everybody on the outside looks like a dumb move. To those who look at this stuff: “Oh no, this is a required war because we require this war to be able to keep funding the military-industrial complex,” and so on. Are we basically just being shown: this is how it is now?

Richard Werner: In many ways, yes. Because in the UK, of course, it’s a bit more entrenched even than in the US, just historically.

Look at the formal legal structure of the UK. It’s a very strange one. There’s no constitution. Oh, there is a constitution — it’s just not written down. Well, okay. And it’s not all relevant anymore. But why is it not written down? There’s a good reason. This is why it will never be written down. Because when you then actually look at who has power, you see that there is a very strange entity called the City of London Corporation. Which is a sovereign state that the King is not allowed to enter without permission. Therefore it’s not directly part of his sovereign territory. But the sovereign state has representation in Parliament — unelected. Unelected representation is the Remembrancer, who is allowed to participate in any debate and be there in any proceedings in order to make sure that nothing happens against the interest of the City of London. So it’s a privileged entity that has clear powers that are above ordinary people and the rest of the entire nation.

What happens in the City of London? That’s where the banks have been, and that’s where for most of its history the privately owned Bank of England was established, and the banking powers got established. And of course their voting in the City of London is not democratic either, because it’s not people who vote — it’s companies who vote by the number of employees. But it doesn’t mean the employees get to vote. No, it’s the bosses. That’s how the City of London does its voting, which is not democratic. So actually at the heart of the UK there is a non-democracy.

These are just some examples of institutional features. And then it shouldn’t be surprising that, unfortunately, yes, it’s the wrong incentive structure, and we don’t seem to get results. But also at the same time, of course, media is very important. And that’s where your role comes in. You’re doing a great job with the independent guys.

Host: I’d like my favourite kind of person listening to this show to be just a normal person trying to get by in life, figure it out, who is kind of waking up to the idea that the government isn’t working for them. One thing I keep tweeting regularly at the moment is: stop voting for poor. Stop getting involved in these bitter fights where you keep this machine running that’s making you poor. For a lot of people out there — hardworking people getting up in the morning, going to work, driving a lorry, running their small business, doing everything they can — yet life is getting harder. They can afford less. They get to the end of the month with no money left. How are they meant to understand how this is happening around them? What is actually being done to them?

Richard Werner: Basically, I think they sense that it could be better. And they’re absolutely right. Everyone who thinks, “Hang on, this is not really the best — it could be much better,” is correct. And I can easily demonstrate that we can have in the UK 10% growth. Give me the job at the Bank of England. The Bank of England could engineer 10–12% growth for two decades. But to do that you need to implement policies that some very influential people don’t like.

The most important thing is to establish many small local banks. Because it immediately takes some of their centralised power — the central-planning power — and decentralises it and spreads out the decision-making power.

That’s what Deng Xiaoping was told by the Japanese when he asked them: “Tell me the secret of high growth.” And they said: “What? You’ve only got one bank for a billion people. How about you create 5,000 banks, and each bank has 30 branches, and each branch has 35 loan officers. Then you will have more than 5 million loan officers that each year will receive hundreds of millions of loan applications from small firms — because these are small banks, they need to lend to small firms — and they will lend to small firms. Of course you select the best. That makes sense. There has to be selection. But the decision will be local. And now you’ve totally decentralised.”

So you’ve moved from a centralised system — essentially the Soviet central-planning system that the UK is very close to, really, with five banks and the Bank of England — that’s pretty centralised — and China with one bank. Then they switched from the Soviet system to the highly successful decentralised system, which is what all the high-growth economies have done.

When Britain was successful, it had thousands of banks — cooperatives, savings banks, local banks, credit unions that were proper banks (not what they are now — they’re not allowed to lend properly to small firms). Many types of provincial banks and so on. We’re talking now about the 19th century, when growth was double digits and there were literally thousands of banks.

Host: But hold on — why would they not want small businesses to be successful?

Richard Werner: It’s the power. It’s the power dimension. As we said earlier: first these guys are about the money, but once they have all the money, what do they want next? Human nature being what it is, never satisfied — they want power next. And that’s what it’s about.

If you have this decentralised system, you are giving local people power and you are empowering families and local small businesses, family businesses. And that’s what they don’t like. They want to centralise everything, which is ultimately evil. And human nature being what it is, once you get so powerful — as Lord Acton quite astutely stated, and he wasn’t trying to be dramatic or overstating it — power corrupts. Because power gives people the ability to do stuff and get away with it. And unfortunately it’s just an empirical observation: not many people can handle power. So they will start to abuse the power. And that’s the reality everywhere — not just in developing countries — everywhere in Europe, in the UK, Germany. It’s everywhere. Once you have absolute power, the corruption will be absolute. And the idea will be: you get these temporary dictators, whether you see them or not, and very often you don’t see them because they want to stay in the background.

This is really what it’s about. But if people are informed about this, they can demand more. And we should demand from our politicians — local politicians, national politicians — we should demand high growth and prosperity, because it’s possible. And it’s actually a whole bunch of BS when they tell us: “Oh, austerity, scarcity, belt-tightening.” It’s complete nonsense. We don’t need any of that.

Even the story they told us since the early 1970s — “limits to growth” — even that was BS. Because they mixed up the concepts on purpose. They say: “Oh, well, there’s physical limits to growth, surely.” Hang on — so you’re talking about physics, right? Physical limits, physical finite things in physics. Okay. Well, if you want to talk physics, you will find out there is no growth in physics, because energy can be transformed but you can’t create energy. There’s no growth.

So when we talk about growth, you are always talking about economic growth. Now, when you talk about economic growth, what is economic growth? What is GDP, national income? What is it? It’s a statistical concept that is made up. It had a purpose originally — the guys who were about to set up the Bank of England wanted to know how much they could extract in interest and taxes from this country, and that’s what national-income accounting was supposed to do. A broader use is that it’s a measure of economic strength and prosperity. It has flaws, but it’s a rough-and-ready measure of economic strength and prosperity. That’s what GDP, national income, is. But it’s a statistical fiction. And that’s why the statistical fiction can’t hurt the environment. So growth is not the enemy of the environment. That’s the first point. That’s why we don’t have to limit growth because that will save the planet. That’s nonsense. There’s no link. These are different dimensions. One is a statistical fiction we’ve made up, and the other is the environment — physical reality.

And secondly: what about limits to growth? Well, there aren’t any limits, because growth is driven by productivity. Productivity is driven by technology. Technology is invented by humans. And the ultimate limit is human ingenuity. And nobody’s found a limit to that one.

Host: Well, I think they’re finding ways to limit it.

Richard Werner: Well, of course — artificially they’re suppressing the economic growth that’s delivered. And they’re the central planners. It’s very simple. What drives growth in very concrete terms? Economic growth is simply a direct proportional function of bank credit creation for productive business investment. In other words: bank loans — the quantity of bank loans to productive businesses. And when you lend to small firms, that’s mostly productive. That’s a simple way of doing it.

Therefore, if you set up 5,000 small local banks, as Deng Xiaoping did, then you will get a lot of investment in productive things and you will get implementation of technology on a large scale. But decentralised. You get high growth — 15% growth for decades, four decades as it happened — lifting more people out of poverty than anywhere else before. That can be done in any country. Other countries have demonstrated it. Britain can do this. We can have this high economic growth.

Host: But how do we get from where we are now to that? Because I look at them — Starmer was a disaster. The Conservatives before them were a disaster. You look at Andy Burnham now even today saying national defence will not come at the expense of social security. It appears that Reeves will be raising taxes in the next budget — maybe capital gains or exit taxes. It feels like they’re just tightening and tightening around us. And I look at them and I’m like: are these useful idiots? Are they incompetent? Do they know what can be done, but they get near power and power doesn’t allow them to do it? Do we just need a revolution on the streets? Do we need the public to really understand that it is this machinery that is destroying the prosperity and the future of our children, our country? What do we do?

Richard Werner: First, people need to understand that we can have high growth. We just need many small banks lending to small businesses. When you’ve got a lot of bank credit for productive business investment, you get high growth. If we had 10% growth in this bank credit, we would rev up economic growth — 5, 6, 7%, pushing it towards 10% is possible.

Why is this not happening? Because often, yes, when politicians say, “Hang on, actually it’s a good idea — let’s set up a local bank in this regional area, this local area,” basically it’s a no-brainer, because the costs are very limited. You just need £20 million in capital, and then after three or four years this £20 million will have injected a multiple — you get maybe £400–500 million, and with a bit of growth and expansion of the bank you soon have a billion in loans from this £20 million in capital. And it becomes a flywheel. And of course it’s profitable if you do it well.

There’s never been a banking crisis because people say, “Oh, you set up banks — that’s risky.” Hang on. When banks lend for productive business investment, you get growth, no inflation, and no crisis. It’s when banks lend for consumption that you get consumer-price inflation. And when banks lend for asset purchases — including real estate, financial assets — and nowadays these five big banks mostly lend to private-equity funds and hedge funds because they want to do such big deals and that’s the only thing they found because they’re so big — then you get asset inflation and banking crises. And that’s why we’ve had this boom-bust cycle in the UK the whole time for the last century.

It is very simple. People don’t understand that we can have high growth by having many small banks lending to small firms, pushing out productive business investment. But next: politicians — some politicians — do understand this. And I’ve had quite a few politicians actually support me in the past when I worked on setting up the Hampshire Community Bank. We had a lot of opposition. In the end the biggest shareholder, when we were just ready — everything was ready, we’d gone through the applicant journey with the Bank of England (they moved the goalposts many times, but we managed to get through) and we were about to hand in the application — our main shareholder decided to pull out. Because ultimately at that stage there was small money. They hadn’t even put in their full £5 million they’d pledged, and they pulled out. But of course once the bank would have launched it would have been quite a different story.

People need to understand that it can be done. And then we need to support those politicians who are gaining understanding. There’s one politician who was on my radar quite early on because she criticised the Bank of England when she was just a member of Parliament.

Host: Liz Truss.

Richard Werner: Indeed. And she’s been there three times. And she got it. I thought: oh, here’s a lady who seems to know a bit, because she understands the important role of the central bank, and she understood that, hang on, the central bank is not really accountable for what it’s doing, and we’re not really asking the central bank to do very much, and we need to have higher standards, and we can’t be bullied by the central bank.

Then she became prime minister, which wasn’t really planned — I think Rishi Sunak was supposed to be the prime minister immediately. So then she was there as prime minister, and immediately it looked like the Bank of England staged a coup. And that proved her entire point. Entirely. And she’s been vindicated now.

You also see of course how the media are essentially complicit — not just complicit, actively colluding in this — because they gave her such a bad write-up, calling her names, “oh she’s stupid.” Come on — she’s been at Oxford. She’s a smart lady. In fact, to me she was one of the smartest politicians because she understood this power mechanism. I think she’s the greatest prime minister we basically didn’t have. What was it — 50, 56 days or something? So I consider we didn’t really get to have her as a prime minister, because she saw the problem. She understood the problem of debt. She understood productivity. She understood the Bank of England. She understood it all. She understood incentives. And she wanted to move quick and get things done. And they screwed it up.

What the Bank of England did was very simple. They just sold government bonds. You create a mini-crisis in the bond market. Yields go up. And the media then, very importantly, write these stories. And of course the central banks love to essentially nurture and have their journalists over the years that get invited and get special treatment. The Bank of England doesn’t ever get a critical write-up, even when they jointly caused the 2008 crisis, or the inflation of 2021–22 from central-bank money creation out of control. No negative write-up on the Bank of England at all. So the control over the journalists is quite good, quite subtle, and works very well. And that’s the other problem. That’s where independent journalism comes in.

Host: Yeah, they haven’t got me yet. I haven’t had that tap on the shoulder. But oh man — this is so sad, but actually what an opportunity we have in a country if we can just get everybody to understand that we can have a different way. As you said, we can have growth. We can really have prosperity, abundance. We can literally have abundance. We can reduce the welfare state. We could shore up our defences. We could protect our border. We could do all of this. But we just have to rein in — or get rid of — the central bank.

I asked that question of Liz when she was sat here for the first time. I said: should we just get rid of the Bank of England? She said: “That’s an interesting question.”

Richard Werner: We don’t need central banks. The UK — Scotland in particular — but also the US: these are examples of very strong economies over decades without a central bank. The Federal Reserve is quite a young central bank. And so it’s absolutely possible. Mostly what they do is they suppress growth.

What they talk about and what they show us as their main policy tool is interest rates. And that’s basically a decoy. I’ve analysed this. If you look up my work — “Reconsidering Monetary Policy,” for example, is the name of a paper which is open access — interest rates, short rates, are pretty much influenced by central banks, but they follow economic growth. In the long run they just always follow growth.

As Dame Kate Barker, who used to be on the MPC at the Bank of England, said at a conference on stage: “When I think about my time at the Monetary Policy Committee, it’s really been a bit of a waste of time.” Why? And of course if you look at the data that’s obvious, because rates actually follow growth and they’re positively correlated — which is the opposite of what economic theory tells you, the mainstream propaganda. They say lower rates lead to higher growth, higher rates lead to lower growth. The truth is the opposite: higher growth leads to higher rates; lower growth leads to lower rates. And that’s it.

So interest rates aren’t really the tool — the main tool they use. They use the quantity of credit, and its disaggregation. But they don’t want to talk about it, because they don’t want people to catch up on how important this is and then start setting up small local banks.

Host: Were the Austrians correct?

Richard Werner: The Austrians are correct in their point that they recognise bank credit creation quite explicitly, and that’s great. And also quite a lot of Austrians are very critical of central banks because they’re generally critical of central planning. And so I have the same views on those points. They do have some other points where I diverge. For example, they say we shouldn’t do statistical econometric analysis on data. Why not? Obviously we should look at data and the facts. They were saying it can be easily manipulated. But it doesn’t mean that you shouldn’t do any data analysis — just make it transparent.

There’s some very good approaches, like Professor David Hendry’s approach at Oxford — the Hendry approach — where you can’t manipulate the data. You first run a regression with all the possible explanatory variables, and your enemies’ variables, you put them also in — all sorts, whatever. Put them all in. Call it a big general model. And then you run it. And then you simplify with a very transparent procedure by dropping the most insignificant variable only one, because in statistics if you drop one everything else will start to change. But you drop the one that’s totally insignificant. Then run it again, and then again drop the one that’s most insignificant, and run it again, and keep doing that until you get the significant data. And that is letting the data speak. And that’s how I’ve done it in my work. And it’s bank credit, inevitably, always. And that explains economic growth. It explains all these things — banking crises, inflation. Credit creation explains it. But we’re not supposed to talk about it. Textbook economics doesn’t even acknowledge that banks create money.

But if people want to look it up, there’s the paper: “Can Banks Individually Create Money Out of Nothing?” That’s one. And the other one is “Lost Century in Economics.” These are two papers of mine, also open source, that can be accessed and read.

Host: It’s quite interesting because we are at this time now where people are just, I think, despairing about what is going on in this country and in other countries as well. Canada, Australia, America. Germany is pretty bad. Your one great market — your car market — is collapsing, it feels like, under attack.

Richard Werner: Yeah. The government has essentially killed the golden goose — the goose laying the golden eggs. Shooting down the automobile industry with all the subcontractors and all the small firms. This is a huge supply chain.

Host: Will AfD fix this? What have AfD said about central banks or banking?

Richard Werner: They’ve sensibly said that they want to exit the euro, which would make perfect sense, because that means you’re not in charge of your monetary policy — they have no monetary policy. And of course it was complete nonsense to abolish the European currency, the Deutsche Mark, and introduce a foreign currency called the euro and sell it as the European currency. That’s been a big failure. So that’s sensible if they do it.

Also they said they would like to exit the EU, which will also be sensible. The EU is a dictatorship. It’s modelled on the Soviet Union. They have a parliament — that’s their claim: “Oh, we’re a democracy, there’s a European Parliament.” Nobody votes. Nobody knows. I couldn’t name one European politician right now.

But whether you vote for them or not, these MEPs are highly paid, overpaid, and they have no power. Normally a politician is supposed to be a lawmaker. In the British Parliament in Westminster, yes, they’re lawmakers. They can make laws. But not in the European Parliament. You see, the Soviet Union claimed to be a democracy, and their claim was: we have a parliament. But it was a rubber-stamp parliament where the members of parliament had no power to write laws. Where did the laws come from? From the unelected Politburo — the centre of power. The Communist Party had the power.

Now that’s exactly what they modelled the European Union on, because the members of parliament have no power to propose any laws. All the laws come from the unelected political body called the European Commission. That’s the dictatorship. And so formally it is the Soviet Union revived, sadly. So getting out of that one will also definitely help, because they keep turning out these ridiculous laws which supersede national law at the moment. This is crazy. And that’s just what these commissars at the Commission decide.

I’ve just written a new report on my Substack (rwer.substack.com) on the latest centralisation plans. They’re literally moving towards capital controls.

Host: Is this the Christine Lagarde plan?

Richard Werner: Yes. It’s a combination, of course. The ECB is involved, but it’s also the commissars in Brussels. You have to understand: they want our deposits. Exactly. And they’ve said it. They want our savings. And of course the UK is going to — it almost feels like the UK never left the EU, because all the crazy EU rules somehow the UK also wants to adopt.

One restriction coming into place in January next year is that banks from outside — this also affects British banks — banks from outside the EU will not be able to offer deposit accounts if they don’t have an EU licence, a local licence, and they have to be authorised. So that’s quite shocking, because it’s the first step towards capital controls.

Host: Is this why they’re so scared of Marine Le Pen, the AfD, Rupert Lowe, the guy with the crazy hair in Holland? Are they scared of all the Romanian parties? They’re basically scared of all the right-wing parties because they tend to be more conservative and conservatives tend to have a focus on more sovereign ideas, sovereign rules, but pro-business. It’s much easier to have your left-wing Marxists in power to maintain this, and that’s why they call everybody who disagrees with them a communist. Is this why they’ve been flooding Europe with immigrants — to maintain this?

Richard Werner: Yes. And I would even say we shouldn’t use the concept “right-wing” here. Of course AfD — we call it normal. Exactly. Because if you literally just take all the policies, the proposed policies of the German AfD, which everyone calls right-wing, extreme right-wing, neo-Nazi or whatever — it’s almost a Nazi party, they will use the Nazi word — what they said here when it was announced, when they did well in the region: Saxony-Anhalt. In the British press, the BBC, the propagandists at the BBC said “the far-right party, the first far-right party since the Nazis.” That was the headline. Mother of God. No. So one has to correct that. That is nonsense.

All their policies actually 20–25 years ago were supported in Germany — were the main policies of almost all the parties, including the left SPD, the socialist party. So really they’re just centrist. It’s a centrist party. But what happened 20–25 years ago is the CIA, which is very much in control of Germany since 1945 — they never gave up their occupation powers and they’ve always used them, and they claim legally they’re allowed to do all the things they do in Germany because of occupation status. Germany is still not sovereign, which is a whole other can of worms, but it’s a fundamental problem in Europe that Germany is not actually a sovereign country, and the parties and politicians essentially have to do what the CIA tells them. And the CIA will show them: here’s the law, occupation statutes — you have to do what we tell you. And of course there’s other ways to make them do what they want.

So the CIA gets what it wants from the politicians, and the politicians are not delivering what could be delivered to the country, such as high growth.

The points that the AfD is making are literally what was mainstream — parties even the left parties would consider centrist. So it clearly was not right-wing. SPD had the same views on immigration 20–25 years ago as AfD now. And you can demonstrate this. So what happened? The CIA 20–25 years ago shifted the entire political spectrum in Germany to the extreme Marxist left. The entire spectrum. So CDU/CSU, which is supposed to be right-conservative, is right out there with the Greens, with the lefty parties, and you just don’t notice any difference. And so AfD is just people who have decided: well, we’re not going for this propaganda. A man is a man, and whatever cultural revolution they’ve been trying to implement. We don’t want immigration. We don’t want large amounts. We don’t want to have mosques everywhere. We want people to get married, have children, and have a sovereign conservative life.

It doesn’t mean one has to be against people who have different views. I think that the most centrist people with these views are actually very tolerant of other people — like liberals. Exactly. Very tolerant. It just means that, hang on, you can’t force this on everyone to have these very different views, where most people just want to be normal.

Host: This right-wing / centrist position I think is going to sweep across Europe now. It looks to me — correct me if I’m wrong — but AfD didn’t get enough. They have to do a coalition with one party. And you know why? Because the mail-in vote was surprisingly extremely different only for AfD, and for the other parties they had lots of mail-in ballots. Sounds a bit like what happened with that mayor in Los Angeles.

Richard Werner: Yes. Yes. Well, many places in the US. And it’s very strange. In fact there were incidents they found in recent German elections where these ballots were sent out — ballot forms to care homes and elderly homes — that’s where a lot of funny business is going on. Or they accidentally sent five times as many ballots. One thing there was: basically they were caught. And so on. So it’s very…

Host: When’s the general election? When’s the next national general?

Richard Werner: I think it’s next year, isn’t it? Or is it 2028?

Host: AfD have a good chance of winning it, right? How will they try to stop them?

Richard Werner: You do see that the AfD is quite popular in the former so-called East Germany — it’s really central, middle Germany. And the AfD, you know, the former GDR, German Democratic Republic under communism — that’s where they’re doing really well. Whereas in Western Germany, essentially, we see that this post-1945 American programme of re-education, which is an official programme still running under the occupation statutes, has been very successful in brainwashing people. And it’s a sort of cultural Marxism programme which has been stepped up a lot in the last 25 years. And there you see the difference. Whereas in East Germany they didn’t have it until so-called reunification in 1990 — they didn’t have it — and therefore you don’t have that history, that prehistory of brainwashing people. And you see the voting results quite clearly.

Host: Oh man. Well, I think we’re going to see a wave of it. We need to get organised better in this country because our right-wing parties are splitting all over the place. But like I say, they’ve tried to stop Le Pen. They tried to throw her in jail, I think. Yeah, there was a criminal case. But Spain I think is going to have a right-wing revolution with everything that’s happened with Ceuta.

Sadly we’ve hit our one hour. People are listening. We’ve tried to make this happen three times and power cuts and air-traffic controls got in the way, and I feel like we’ve barely started. But this is a good start. We will have to do this again, Richard, and carry this on. I am going to spend some time understanding more about central banks and local banks and try and make that a lot more about what I talk about so people can understand what we need to fix our country.

Richard Werner: Excellent. It was too short, but I thank you and we will definitely do this again.

Host: Thanks very much. It will be a pleasure. And check out Richard’s books and Substack. We’ll put it in the show notes. Love you all. See you soon.

Richard Werner: Thank you.

Pricing Assets in Dollars is Destroying Your Wealth: An Interview with Takoa D Silva

Mike: So now I guess it's finally the West's turn—or in this case specifically the United States—that they have their turn, so to speak, of rapid currency devaluation and asset prices of all kinds just going up at different speeds and confusing people who haven't personally experienced that before.

Tobacco same thing, it is out or near a 60-year low in price. Gold, coconut oil same thing, very low historically speaking. Gold very low in price from the standpoint of an American and many other people around the world. It may not feel that way because wages and salaries have not kept pace with the speed of this devaluation that's occurred in the US dollar over time. They've not increased in the same proportion. So the labor that people have on offer is not tied to inflation unless they have a job that's tied to inflation some way.

They're using this type of perspective in their day-to-day lives in terms of storing purchasing power and things like jewelry, other physical commodities such as food, processed foods to store purchasing power, certainly real estate, as opposed to keeping money in the bank. So it's another testament to the fact that deficit spending is occurring year after year, currency values decline, and it just magnifies moves causing a person to think that the bull markets are actually much larger than they really are when measured against gold.

Mike: Welcome to another RTD interview. Today I'm excited to have first-time guest Mr. Takoa D Silva, an emerging market analyst, commentator, as well as a private investor. Takoa has spent over 10 years as a licensed and registered financial professional, managing roles as an analyst, high net worth services, as well as a portfolio manager. Today he joins us to share his thoughts on the recent market activity, the commodity cycle, as well as the role of gold and pricing commodities from a historical standpoint.

So Takoa, welcome to our RTD interviews.

Takoa D Silva: Hey Mike, pleasure to be with you. Thank you for having me on.

Mike: Yes sir, I appreciate you taking time to join us and as always looking forward to getting more of your thoughts and analysis. And you've done a great job of actually sharing some PowerPoint presentation with us here we're going to get to in a moment. But before I do that I want to definitely make sure that the audience is able to connect with you to find out more of your work that you do. So here we have your Twitter account or your X account, forgive me, and it's @TakoaDSilva and then also you do a great job on YouTube and so I see a recent interview with Rick Rule here and so they can also check you out on YouTube as well for more analysis. And so I'm looking forward to getting your thoughts.

So based upon all the things happening in the world, you know the whole idea of rethinking the dollar, I think more people as well as nations are doing that. And so from where you're seated now as an analyst as well as an investor yourself, what are some things that concern you as well as maybe one or two things that excite you as well about what you're seeing?

Takoa D Silva: Great question. And I think that you know the branding of your business Rethinking the Dollar is really pertinent and I think it really explains the things that have been on my mind in recent days because that's something that I've had to rethink. And we'll find out about that here in just a few minutes with some of these slides that we'll go over. But I've had to rethink how I look at the measuring stick of everything that I look at—goods, services, asset prices—how can you know the real price or the value of anything if the measuring stick or the ruler that you're using is constantly changing, in this case shrinking in size. It can distort the way something looks.

And so I know that your viewers as well as yourself keep a close eye on gold and so I've in recent days begun using gold quite a bit more often in terms of the measuring stick, comparing it against other things in order to get an idea of whether or not something is cheap or expensive. It's not the only metric to be used of course, there are others. Just like the idea of could a sports player be picked out of a lineup just by looking at the person's height and body weight—a lot of other metrics are required to be used in terms of assessing anything. But as one replacement in terms of using it instead of just US dollars I found to be very useful.

And then there are some other things that I find really exciting and interesting and I know that you do as well and probably the viewers do as well and that is the shifts that are occurring. The BRICS nations now today as well as the emerging and other markets as a whole—there are some really big changes going on. And the most exciting thing about it I think is the pricing differences between what things cost in the West and in particular in the US and then what things may cost in some of these other countries and in particular their asset markets. So that's what I've been thinking about and looking at most of these days.

Mike: Appreciate you for sharing that. So the measuring stick is crucial and I think here in the Western World especially all we've known is the privilege of having the world reserve currency, a.k.a. the dollar or Federal Reserve Note as I also like to make sure I distinguish. And so now that things are changing I think it's also a great time for people to begin measuring and reassessing I guess their entire financial outlook and in different metrics. And so we're going to definitely dive into gold and so the whole idea of gold over the last centuries has always been a constant anchor and a store of value and a measurement tool in of itself.

And so with the fiat I guess decoupling now gold has reached all-time highs in all currencies. And so I remember throughout the last couple years focusing on how gold was doing. Gold was performing well in other currencies based upon the activity within their nations and all the debt deficits and stuff that other nations are experiencing. So here we are in the US and it's happening to us now.

So real quick I guess based upon the recent all-time high of gold what is that a signal of in your estimates? Like what are some things that it has exposed that the people should definitely pay attention to if they haven't already?

Takoa D Silva: Something's happening with the currency and it's happening pretty quickly. It's happening at a faster speed. I'm a fairly young guy still, you know both are you know I'm fairly young but during my lifetime as sure as it has been the speed of the inflation now, the price inflation that I'm seeing around and the asset price inflation in the US—it's happening at a faster speed than I've ever seen before. And I'm just speaking specifically in reference to the mid-2020 period up until today which is about mid-2024.

Maybe this is on the low side but my estimate is that my personal cost of living and a lot of things that I look at on average like let's say 100 different goods, product, services, commodity prices—I think on average these things are up by about 50% from 2020 to 2024. And so I just did some napkin math and that translates in my mind into something like sort of a stealthy 35% devaluation in the dollar without it being formally announced, without anybody being given forewarning.

And I'm reminded of looking at some of these foreign markets, other countries like Africa. A recent example that I looked at was Kazakhstan. When you're looking at stocks in some of these other countries the price may have gone sideways or up 50% or it may have doubled over a five or eight year period but when looking at it the person thinks to themselves well wait a second what has the currency done during that same time frame? Because sometimes the currency relative to the dollar or relative to gold priced in that foreign currency may have gone up four, five or six times. But if the price of a particular stock or let's say a piece of real estate as an example only went up 50% or only doubled it actually means it's declining in price in real terms when you measure it against gold.

So now I guess it's finally the West's turn or specifically in this case the United States to have their turn so to speak of rapid currency devaluation and asset prices of all kinds just going up at different speeds and kind of confusing people who haven't personally experienced that before.

Mike: Now if the measuring stick or the barometer, the determining factor for the value of an item and of itself is transitioned out of USD terms internationally speaking at some point and gold comes back into the equation whether done by the BRICS or any other unions that are forming out there. I guess I try to wrap my mind around the concept of like how do we then begin placing value on things? Do we use metric or do we use ounces or ounce as a measuring barometer on a broader landscape or perhaps grams? And I'm also referring to how I think it was in 2022 when the whole Russia Ukraine conflict kicked off and the Russian Central Bank opened up I guess the acquisition of gold and somehow linking it to the barrel of oil so one gram was one barrel. So we talked about that forever but in your estimates how could people begin measuring value in ounces, grams or what are just some hypothetical ways that people can look at this?

Takoa D Silva: Well I guess it's up to each person to decide for themselves. If you used a full gold ounce as opposed to a single gram the numbers might be skewed a little bit. If you like let's say as an example took the price of a 5 pound bag of organic flour because the price for that has probably gone up more than non-organic over time and you put together the prices over let's say a 20-year period and you plotted it on a chart, if you used an ounce of gold or if you used a gram of gold the display, the characteristic of the chart would probably look identical but the numbers, the ratio numbers would look different.

As an example if the 5lb bag of flour costs about $6.50 US and you divide that into let's say the gold price of about 2351 an ounce your fractional numbers are going to be sort of they might look a little bit confusing whereas if you took a full gold ounce at 2351 divided it into grams believe it's 31.1 per troy ounce and then use that as your figure to compare let's say the price of flour or the price of a car wash or something like that just to make a random example your numbers from a fractional standpoint would appear much smaller so it might be a little bit more digestible for your eyes or easy on your eyes in terms of looking at.

Mike: Great analysis there, great assessment there. And so moving forward gold is back into the equation clearly and so I remember doing some interviews in the past where a lot of mining experts as well as exploration companies were hinting at commodity super cycle and they were saying any minute when gold is going to break and it's going to really reveal to the world what's real and what's not.

And so I guess at this current moment with gold at all-time highs priced in fiats we're officially in a commodity cycle or a gold cycle with the commodities referring to other metals and assets soon to follow or what are you thinking?

Takoa D Silva: Gosh what a good question and it's tough to say. How do you define a super cycle? I know there's a technical definition for it that's available on Google but one way to achieve I guess a quote unquote super cycle could be a single round or a multiple round devaluation of currencies possibly led by the US dollar and that could produce enormous moves nominally speaking in many commodities, precious metals included, that could appear to most people as what they would describe as a super cycle. But would that actually translate into more consumption of various commodities and more actual economic activity in terms of construction and building and trade and so forth? That it might not necessarily translate into that but certainly nominally speaking it could turn into some serious fireworks for sure.

Mike: Alright now I'm curious now I'm ready to dive into the presentation. So for those who are tuned in part of what excites me to have you on is the work that you've done and work you've presented for us where this is my first type of master class type of I guess discussion where you're going to walk us through some things that really paints a very unique case that I haven't seen on the internet as of yet. So thank you for putting together for us and as I transition over I'll let you get behind the driving wheel and kind of lead us into your investigative work in this deep dive here that you have for us. So I guess have at it.

Takoa D Silva: Sure thanks Mike. So I'm not holding myself out to be an expert or claiming to be an expert or knowing anything more than anybody else. I just reached a point where I thought as we discussed with regard to not having a reliable ruler to measure things against I wanted something reliable durable to measure asset prices and commodity prices specifically against just to get a firm view of what I was seeing around me in terms of the increasing commodity prices. So I put together this information really just for myself. And so I've got the slides here and we'll get into them now.

But I should point out the second item here is just an important disclaimer that this information is just for educational informational purposes. Nobody should make an investment decision based on this information. You should always consult with a qualified financial advisor before making any financial decisions.

But the first slide here is just the very interesting chart that your viewers are already familiar with likely which is just the gold price priced in US dollars from about 1960 to today in 2024 or until May 2024. This shows the price of gold moving up from $35.20 an ounce based on the World Bank figures to today's price of $2,351 an ounce roughly. This is dated as of an earlier day in May but this translates into a 67 fold move for the price of gold or 6,700% increase.

So any asset price like let's just say a commodity that doesn't keep pace with the price of gold technically speaking becomes cheaper over time or any commodity that outpaces the price of gold in terms of its US dollar price increase could be said as becoming more expensive relative to gold over time.

And so this gold chart of course is interesting but what I did for I guess for my own entertainment purposes is I flipped the chart over and I priced US dollars priced in gold. And when you flip it over I just found it to be very interesting. It reminds me of those silver content charts of the Roman denarius. As the silver content of the coinage plunged over time the purchasing power plunged as well. And while their charts were charted over like a 200 year period this still is from about 1960 to 2024 but it basically shows that from around 1960 you could buy a single full ounce of gold for $35.20 and today roughly you can buy 0.015 ounce of gold for that same $35.20. So roughly speaking that implies loss of purchasing power of US dollars priced in gold, the loss of purchasing power of about 98.5%.

And each of those major plunges down that you see on this chart is basically the nominal all-time high price for those three periods which was in 1980 about $850 an ounce, 2011 was about $1,920 an ounce and 2024 so far I believe it's $2,449 an ounce that we've seen as the price. So this just basically showing how the dollar the purchasing power is just becoming smaller and smaller over time.

And so what I found to be very interesting was plotting with these World Bank figures the prices of various commodities against gold, pricing them in gold in other words and just using a gold ounce as opposed to a gold gram. And I went down this big list and I'll just flip through these very quickly Mike and please stop me at any time.

But the first one here is Australian coal. When I look at this 60-year price chart this is priced in gold. It doesn't look like it's at the upper right hand corner of the chart like a lot of other asset price US dollar denominated asset price charts are showing. This is in the bottom right hand corner. It's near its bottom trend that it's displayed over the last let's see about 30 years. And so what I did for a number of these charts was I took their peak, the peak pricing that was demonstrated compared to gold over the last 60 years and in this case the peak was in 1981. It was a ratio of 1.1448 a metric ton of Australian coal compared to an ounce of gold. And this chart tells me that priced in gold Australian coal along with many other commodities as these other charts will show is pretty cheap. And it would have to move up at about two or threefold in order to reach that same peak that was demonstrated in 1981.

So going through this list: Brent crude it's also not anywhere near its all-time high over the last 60 years as demonstrated against gold which was in 2008. It's toward the lower end of its range. Uranium same thing priced in gold it is nowhere near its 2007 peak.

If we go to the price of uranium on the right hand side of the chart this is just denominated in US dollars at $136.22 a pound that was the nominal price shown in 2007 but right now it's priced at about $91.75 cents a pound. It looks a bit more dramatic than if we flip back one page and we look at it from the perspective of gold. It looks sort of subtle this recent move that we've seen. And if you were to price it again using a peak price as demonstrated against gold in 2007 it would require a move greater than fivefold from here priced in gold in order for it to reach or exceed that prior peak in 2007.

And uranium as our uranium buffs or history students watching this will know demonstrated higher peak pricing in earlier years measured against gold. But going right down this list natural gas same thing it is very cheap historically speaking relative to gold. It would take an enormous move priced in gold to revisit its 2000 the year 2000 peak.

Platinum same thing. Our platinum viewers our students of platinum will and probably yourself too Mike I think will recall that priced against gold platinum is at something near a 100-year extreme. It doesn't mean that it has to be reversed but it's just it's very interesting to look at in gold terms.

Silver it is in the lower portion of its trading range as well and our precious metal students will certainly be familiar with the silver to gold ratio history as well.

Zinc bottom range of its history priced in gold same thing with lead same thing with tin despite the recent move in tin it's at the bottom of that range same thing with nickel copper as well despite recent copper's recent move the ratio peak that demonstrated in 1966 was far higher about 54.2 to 1 as a ratio against an ounce of gold. That would require from here to revisit or exceed that 1966 peak measured against gold it would require a move in copper greater than 12 times. Will that happen? I've got no clue I'm not calling for that or suggesting but it's just an observation.

Aluminum same thing as the other base metals. The industrial commodities are quite low measured in gold. Iron ore same thing. Potash is at the bottom of its range as well. Corn as along with the other agricultural commodities are very cheap when measured in gold looked at at a historical basis over the last 60 years. Same thing with soybeans wheat cotton oats rapeseed oil. Cocoa as well despite cocoa's recent move that has garnered the attention of the corporate mainstream press they've been circulating articles about cocoa being in a bull market but when we look at it priced in gold the recent move as seen in this nominal chart of cocoa priced in nominal US dollars this recent move looks really impressive it looks to be far larger than the move that was shown in 1977 I believe the prior peak about $4.25 a kilogram but once again when we flip back and we look at it from the perspective of gold the recent move is a tiny blip on the right hand side of the chart. When measured against gold you would need to probably move up more than about ninefold from here to reach or exceed its 1977 peak as measured in gold. So it's very interesting to think about how the currency devaluation or the loss of the purchasing power of the currency is really distorting the way things look and how things are described certainly by the popular mainstream press.

Coffee same thing bottom of its range it looks very cheap very available pricewise when priced in gold. Tea pulling pricing from three auctions in Colombo Kolkata and Mombasa shows just a wonderfully cheap and abundant tea market in terms of its price when priced in gold. Thai rice same thing absolutely cheap abundant commodity when priced in gold. Here it's just probably near its cheapest point that it's been in 60 years. Sugar same thing bananas same thing oranges have had a recent nominal US dollar increase in price as shown on another chart which I did include in this presentation but the recent move in the bottom right hand corner of this slide shows sort of a mild move when priced in gold the prices of oranges in terms of a kilogram priced against gold to reach or exceed its 1970 peak measured against gold we need to move up more than eightfold from here not saying that it will or that it could or that it should but it's just an observation.

Beef same thing at the bottom of its 60-year trend for chicken same thing very cheap very available historically speaking when looked at the price of gold. Milk same thing as well it is near or at a record low as far as this data that I was able to pull from the USDA World Bank. Palm oil a commodity produced in Southeast Asia wonderful commodity used for food and lots of other things wonderfully cheap as well when priced in gold. Tobacco same thing it is out or near a 60-year low in price when measured in gold. Coconut oil same thing very low historically speaking measured in gold. Rubber near historic lows as well when priced in gold. Malaysian logs at or near a 60-year record low when priced in gold measuring a cubic meter. When looking back at the 1993 peak when measured against gold would require if Malaysian logs were to revisit or exceed that peak would require a move over 17 fold from here in order to revisit that peak.

So as those charts described Mike commodity prices when compared against gold are historically still very cheap from the standpoint of an American and many other people around the world it may not feel that way because wages and salaries have not kept pace with the speed of this devaluation that's occurred in the US dollar over time. They've not increased in the same proportion so the labor that people have on offer is not tied to inflation unless they have a job that has that's tied to inflation some way. They're using this type of perspective in their day-to-day lives in terms of storing purchasing power and things like jewelry other physical commodities such as food processed foods to store purchasing power certainly real estate as opposed to keeping money in the bank. So it's another testament to the fact that deficit spending is occurring year after year currency values decline and it just magnifies moves causing a person to think that the bull markets are actually much larger than they really are when measured against gold. So those things have been I think shocking and I don't know if exciting is the right word to use but certainly concerning.

Mike: Wow. Just three or four items three or four angles there that you presented to us that really should get anybody to think because we're all on the same boat ultimately speaking. The remainder of this decade here we're going to probably witness some things that we couldn't have ever imagined whether it be geopolitical events we have the presidential season coming up and all the things to do with that we didn't really dive into but that definitely plays a major role in how things are how our financial affairs are conducted in this country and then the practical sound investment strategy now need to be restructured just because the 60/40 model that has been preached forever no longer carries the same value. And so that's something I'm sure you have some thoughts on as well but we're approaching an hour and I know you still have some slides to share with us but I figure we'll give a tease or a sample or a taste to the viewers to digest this because definitely you have to go back and rewatch this and really understand the magnitude of what you shared with us.

But hopefully I have you back on in the future and dive even deeper because I of course I nerd out over things like these as well just because I mean how could you not be concerned with things being done around you that impact your life and when you see the manipulation of assets and different categories occur because of the currency it just really should make people rethink some things. So let me just share with the people once again where they can find you at. Here you are on x.com go take a look and subscribe as well as on YouTube. Yeah that'd be a great way to follow you or what not. Any other places you want to point them or give the viewers a sample as to what they can expect when they connect with you?

Takoa D Silva: Well yeah they can chat to me on those social media channels. I don't really have anything for sale but they can friend me on there or send me a message or something like that. Be happy to befriend anybody.

And so for those who are plugged in and enjoyed the demonstration here I'll actually put the link down to the PDF format so they can grab a hold of all those charts you put together so they can plug in. So once again thanks for putting that together and of course thanks for joining us on RTD interviews.

Takoa D Silva: Hey Mike it was a pleasure to be with you and I have to quickly just mention that Rethinking the Dollar is on my daily read list. So for anybody watching make sure to subscribe to Mike's channels he puts out just spectacular work and sign up for his email list. I think as you mentioned the slides are going to be available underneath this video. But hey thank you very much for having me on it was very nice to speak with you and your audience.

https://mises.org/wire/how-bad-were-recessions-fed-not-bad-they-are-now]https://mises.org/wire/how-bad-were-recessions-fed-not-bad-they-are-now

Here we learn the flaws of Modern Monetary Theory. This is, IMO, a radical version of the Keynesian economics that we already have.

Modern Monetary Theory isn't modern at all and has been around a long time. It simply does not work. Here we will see why:

Interview with Emanuel Majori

On his book If You Can Just Print Money, Why Do I Pay Taxes? — Modern Monetary Theory Distilled and Debunked in Plain English

Hosted by Dr. Bob Murphy on the Human Action Podcast

Bob Murphy: Emanuel, welcome to the Human Action Podcast.

Emanuel Majori: Thank you for having me.

Bob Murphy: Folks, the reason we have Emanuel here is that he has a new book titled If You Can Just Print Money, Why Do I Pay Taxes? with the subtitle Modern Monetary Theory Distilled and Debunked in Plain English, published by W.Y.

I had seen Emanuel give an interview talking about the book. We’re going to get into the substance where he goes through how MMT, when Stephanie Kelton and others describe what happens right now when the U.S. government buys a fighter jet, is simply wrong. It’s not that you disagree ideologically — it’s that what they say happens is not true, and that matters. They put a lot of weight on the claim that “we’re just telling you how the world works.”

I’ve debated Warren Mosler and have been going at loggerheads from an Austrian perspective against the MMTers for a while. That always stunned me — their trump card is always “this isn’t ideological; we’re just saying how the world works” — and yet when it comes to something as basic as walking through government purchases, it’s wrong.

Given the title of your book, I saw some MMTers treat it as if that was your mic-drop: “If we can just print money, then why do we pay taxes, idiots?” I want to assure people that your treatment is extremely fair. You cite them, you don’t set up straw men. This is not some bomb-throwing polemic or low-IQ criticism of MMT. Do you want to respond to those general points before we dig into the meat?

Emanuel Majori: Yes. First, I wanted to write a book that was well-researched and fair to MMT, because I did not approach it trying to debunk it. I actually wanted to learn MMT. I only discovered that it didn’t make much sense as I learned it.

My book even gives MMT the benefit of the doubt. I tried to be generous at the beginning — let’s imagine a world in which things work the way MMT says, and let’s walk through the arguments. The criticisms I describe are usually not just me; they come from academics who have gone through MMT and criticized it. Many of those critics are themselves big-government people. They want bigger government, like the MMTers, but they don’t think this theory is a good foundation for that.

I researched thoroughly. I read the whole MMT textbook Macroeconomics. I read their papers defending MMT from criticism, then the responses to those defenses, and the back-and-forth. I printed it all, went through it with a highlighter, and wanted to write a well-informed critique. You can think of it as an antidote to Stephanie Kelton’s book in a way.

The book has been accused of straw-man arguments, but those people have not read it. The moment it was published — about three weeks ago — something astonishing happened. I was attacked by the MMT mob. I’ve been called names; someone said I was a friend of Jeffrey Epstein’s; I’ve been called a dumbass. People are trying to boycott the book, leaving one-star reviews on Amazon that just copy-paste a tweet written by somebody else.

But I do justice to MMT. I explain it by quoting the people who developed it. When I criticize it, I also quote their responses so you can see the ping-pong. Ultimately the book ends up critical of MMT because MMT is not good — that’s not merely my opinion. I also wanted to write a fun book to read. Stephanie Kelton’s book is quite a lot of fun, and I wanted to include anecdotes and make it palatable, because otherwise economics is very dull. You can’t respond to her book by just saying “this is all BS — ignore it,” because that fuels the conspiratorial sentiment that MMTers have: that they’ve found some holy grail of prosperity that people refuse to see for ideological reasons. I wanted to acknowledge MMT properly.

Bob Murphy: Just a few things before we start going through the substance. It’s not the case that every interventionist economist likes MMT as Keynesianism on steroids. Paul Krugman had a public clash with Stephanie Kelton and walked away from it. He was arguing from a New Keynesian framework, making standard points — the central bank can buy bonds and “control” interest rates, but then inflation becomes a free variable. Kelton kept responding on one particular thing and ignoring what she had said earlier. Krugman said she was playing “Calvinball” — from the Calvin and Hobbes comic, where the kid keeps changing the rules so he always wins. I actually sympathized with him.

I’ve noticed this: they have a playbook with answers to everything, but when you prove them wrong they come back with something that is technically true — even obvious — but they’ve often changed a definition, so it’s a different conversation. They jump from “this is how things are” to, once proven wrong, “this is how things could be.” It’s very difficult to have a constructive conversation.

Emanuel Majori: Exactly. They don’t know how to reason properly in that sense. It’s almost impossible to have a constructive conversation with them.

Bob Murphy: Even though you’re trying to make the book accessible and fun, this is not a lowbrow breezy read. You mention Kelton, Bill Mitchell, and Randall Wray as the leading scholarly figures, and you even get into people like Eric Tymoigne and others that the standard person wouldn’t know. Your book is a lot more thorough than I expected, and it’s very fair. You don’t just speculate about what an MMTer might say — you quote what they say and then quote the counter-response.

Someone might ask: if this is such a goofy theory, and even people like Paul Krugman don’t take them seriously, why spend so much time on it? In your introduction you mention at least three major events that propelled interest in MMT: economists failed to predict the 2008 financial crisis; central banks responded with unprecedented unconventional policies including QE; and the response to the COVID-19 pandemic reminded a lot of people of MMT. In your own words, why write the book?

Emanuel Majori: It’s a very seductive theory, and public opinion matters. MMTers have done a very good job of convincing people. I’ve noticed a change in the language people use. On LinkedIn, someone in my professional network who doesn’t work in economics commented on the DOGE program in a pure MMT way: if you believe the government can run out of money, you’re a sadist — you like suffering. They often use the word “self-imposed,” which sounds a lot like self-flagellation. They’ve explicitly said politicians know MMT policies could be used but don’t want to admit it because they’re mean and don’t want to help people.

I live in the UK, and here Zach Polanski, leader of the Green Party, has been learning MMT and answering questions from an MMT lens. The ideas are seeping into public opinion, and that is potentially dangerous.

I grew up in Argentina, where we have experience with MMT-like policies. MMTers will say it has nothing to do with MMT, but the rhetoric they use has been used a lot in South America. It sounded familiar. The idea that there is enormous idleness in the economy — so many resources lying around that we can just mobilize them with money creation, like a free lunch — I’ve heard that before. I found quotes from the 1970s in Chile where ministers, before a big bout of inflation, were saying the economy was running at 30% below capacity, so money creation would just reactivate it. A presidential candidate in Argentina a few years ago said something very similar: the machines and factories are off; we need to reignite the country. Then came a disastrous bout of inflation.

More recently, a newer generation of MMTers — Eric Tymoigne and Yeva Nersisyan — are promoting price controls and currency exchange controls. I’ve seen that in Argentina. The shelves were empty; we didn’t get cheaper products. The government used the controlled prices to calculate the CPI, but nobody could actually buy those products. When I left Argentina in 2014 there were capital controls. You couldn’t freely buy foreign currency. There was a gigantic black market — the “blue” market — with people on the street yelling “cambio, cambio.” You go into an alley and buy U.S. dollars, which is how people save.

That perpetual inflation hurt the country badly. People who defended the money-printing regime always used those sound bites — “greed inflation,” “we just need price controls because of greedy supermarkets.” It doesn’t end well. I moved to the UK where institutions are solid, and I don’t want those institutions to erode in advanced economies. I’ve seen the process; it pushed me and a lot of people I know out as economic migrants.

Bob Murphy: I agree. That’s why I went after it too. It wasn’t just like standard Keynesianism. Stephanie Kelton has a great anecdote early in her book: she’s in a room of serious people and asks, “If you could press a button and magically get rid of all the government bonds, would you do that?” Most people raise their hands. Then she asks, “If you could press a button and get rid of all the assets in pension funds that are treasury securities, would you do it?” No one raises a hand. She says, “But those are the same thing.” That’s a true statement, and for people who never thought of it that way it seems powerful. A lot of their accounting statements — “the government’s red ink is the private sector’s black ink” — are technically true but extremely misleading when deployed in policy discussion. That’s why this is a different animal and why I’ve spent so much time on it.

Emanuel Majori: It’s very sly. They say something that is technically true but economically untrue — which is possible in economics. The idea that you can wipe out the debt by creating money and replacing outstanding government bonds with newly created money is technically possible. Everybody knows that. MMT essentially boils down to the idea that if the government can create money, it cannot run out of money — a truism. Every economist knows the problem is not whether it’s technically possible; they just think it’s a bad idea for a number of reasons, and there’s nothing to be gained economically from it.

They use those truisms. One is the sectoral balances: when one sector is in deficit the other is in surplus. That’s a truism. They try to imply that if the government runs a deficit then the non-government has a surplus, and that this is good for someone — “every deficit is good for somebody else.” Some MMTers have been even less subtle and said the public becomes wealthier. That is categorically untrue from an economic point of view.

Look at Argentina. The government ran very high deficits by printing money and made the public financially richer. An average Argentine might have a million pesos in savings — they’ve all become millionaires on paper. But that doesn’t mean they’re rich, because you’re ignoring the value of money. It’s paper wealth, not real wealth. Stephanie Kelton always uses the qualifier “financial” — people become “financially better off.” She never explains what that means. The reader gets the impression that a government deficit makes other people richer. Technically true in nominal terms; economically false in real terms. That’s dangerous.

Bob Murphy: Let’s jump to the title of your book. Why do we pay taxes? I’ve even seen this MMT framework spill over into critics of big government in a cynical way: “Since we left the gold standard they can pay for whatever they want; the reason they tax us is just to keep us down.” The notion that with a printing press the sky is the limit has bled all over the place. So, head-on: in MMT land, given that the government can’t run out of money, why bother taxing people?

Emanuel Majori: If we give MMT the benefit of the doubt and accept their framework, taxes still serve several purposes in their own theory. They create demand for the currency — people need the government’s money to pay the tax, so they accept it. Taxes also help control inflation by removing money from circulation. And they can be used for social or distributional goals.

But the deeper point is that the slogan “taxes don’t fund spending” is highly misleading once you look at how the system actually operates. The U.S. Treasury cannot simply spend without having a positive balance in its account at the Fed. It is illegal for the Treasury to run an overdraft on the Treasury General Account. When the government spends, money moves from the Treasury’s account to the recipient’s account. That is a transfer, not pure money creation in the way Kelton describes it.

Bob Murphy: Let’s dig into that specific claim, because it’s central. Kelton has been saying since at least 1998, and still in her 2020 book, that every time the federal government spends it creates new money — it tells the central bank to create new money to pay for that. She states it as a fact. People believe it because she’s an economist writing authoritatively. A lot of people have told me, “But this is how it works — why would Stephanie Kelton say that otherwise?”

Emanuel Majori: What she wrote is categorically wrong, and she’s been told it’s wrong. She keeps saying the same thing. When the Treasury spends, new money appears in the recipient’s bank account, yes — but she forgets to say that the Treasury needs a sufficient balance in its own account, and that balance goes down by the amount of the payment. It’s the same as if I send you money from my HSBC account to your Bank of America account: I instruct my bank to credit your account, but I need to have the money and it is debited from mine. Any money transfer can be described as “creation” in one place and “destruction” in another.

In the U.S. it is illegal for the Treasury to have an overdraft. It must replenish its account with enough money to cover its spending. What MMTers have done for decades is look only at the credit side and ignore the debit. I think they were originally misled by how statisticians calculate money aggregates — M1, M2, and so on. Those aggregates only count private-sector bank accounts. Government accounts are excluded. So when money moves from the public sector to the private sector, measured M1 goes up even though the total amount of money in existence has not changed.

Critics pointed this out clearly. The MMT response was a series of new arguments claiming that even though the government must have a funded account, it somehow doesn’t matter — temporary loans from the central bank to bond dealers, the trillion-dollar coin, “the Fed would never let a government check bounce,” and so on. None of those arguments change the fact that under current law and procedure the Treasury does not simply create money every time it spends. Money moves from account to account.

Steve Keen, in The New Economics, says the government does not need taxes or bonds to fund itself. Later he acknowledges that yes, the government does have a bank account that needs to be replenished, but then points to the Bank of England allowing an overdraft during COVID as if that proves the original claim. It’s the same pattern: proven wrong on the description of current reality, then shift to “but it doesn’t matter” or “the rules could change.”

Bob Murphy: Exactly. The Treasury is not allowed to spend one dime more than it already has in the account. I sometimes joke that I’m more of a monetary sovereign than the Treasury, because my bank will cover a small overdraft; the U.S. government literally cannot. MMTers respond, “Those rules are self-imposed.” Yes — everybody knows they’re self-imposed. Congress could change them tomorrow. That does not mean the current system already works the way they describe.

I think their political goal is to pretend things are easier than they are — that we’re already halfway to full MMT, so we can start budgeting the MMT way with no friction. Randall Wray or Bill Mitchell has said that if the U.S. hits the debt ceiling it can continue to spend the way it does now, by just creating new money. That is categorically wrong and dangerous.

Emanuel Majori: Yes. They want to say the procedures don’t need to change. That’s why they insist so hard on this part of the theory.

Bob Murphy: There’s also a serious empirical problem for MMT. They say the economy has been running well below capacity for decades, and they have a theory of inflation that says inflation can’t really happen unless you try to spend beyond that capacity. Yet we have had positive 2–3% inflation for decades after the big inflation of the 1970s–80s. How is that possible under their own framework?

Emanuel Majori: It’s a big problem for them. Randall Wray has pages dedicated to it. One answer is that there hasn’t really been inflation — it’s just an error in calculating the CPI because of quality improvements. Another is Baumol’s cost disease (services become relatively more expensive). But relative-price shifts don’t explain a persistent rise in the overall price level. If the economy is so underutilized, why has there been steady positive inflation? At the end of the day they do want more spending. If we already have positive inflation, doesn’t that imply, on their own terms, that we are closer to capacity than they claim?

Bob Murphy: Last question. Can you speak to the job guarantee? A lot of the leading MMTers propose it. The pitch is attractive: the government has a printing press, it can’t run out of dollars, so it can offer a standing job at a living wage (minimum wage plus benefits) to anyone who wants one. They argue it would maintain the productive capacity of the workforce during downturns so skills don’t atrophy.

Emanuel Majori: There are several angles of critique.

First, inflation. If you give everyone a job that pays minimum wage plus benefits, it competes with the private sector. Private employers may have to raise wages to pull people out of the program, which can feed a wage-price spiral. MMT denies this, but the risk has not been adequately addressed.

Second, the claim that people become more productive and more employable. Employers are supposedly more willing to hire someone who has been in the job-guarantee program than someone who has been unemployed. But what kind of work does the program actually offer? Reading books to the elderly in care homes is one example they give. It’s not particularly challenging. Who is going to believe that holding the cushiest job in America signals high productivity?

Third, practical implementation. The program is supposed to be a flexible buffer that expands and contracts with private-sector unemployment. You therefore cannot give people serious work that requires long-term commitment or specialized skills. Critics (many of them on the left who actually want bigger government) point out that only unimportant work can be assigned.

I was surprised when MMTers cited a program in Argentina after the 2001 crisis as an example of success. I was alive then and did not remember it as a success or as a genuine job guarantee. It was restricted (only one person per certain types of household), paid very little (you couldn’t live on it), and a huge number of people never actually did any work — they were just paid not to work. It was eventually replaced by a pure subsidy without a work requirement because that was easier. It was nothing like the ambitious program MMTers propose, yet they present it as supporting evidence.

Bob Murphy: Exactly. If it becomes well known that the federal job guarantee is light work (or often no real work) and you still get paid, then “I spent three years on the federal job guarantee after the crisis” is not a strong signal to a private employer. It may not even solve the very problem they claim it solves.

We’ve reached the end of our time. My guest has been Emanuel Majori. The book is If You Can Just Print Money, Why Do I Pay Taxes? It’s well-researched, fair, and useful for both scholars and lay readers. Emanuel, thanks for writing it and for taking the time to talk.

Emanuel Majori: Thank you for having me. And please leave an honest review — the MMTers are leaving one-star reviews without reading the book.

Bob Murphy: Thanks everybody for tuning in. Check back next week for a new episode of the Human Action Podcast. In the meantime, more content like this is available at mises.org.