Moriarty: “Gold stocks are about to go into a wonderful period.”
Kevin Michael Grace spoke with Bob Moriarty, founder and President of 321Gold.com November 14.
RW: What do you think of the prospects for the US economy after the re-election of Obama?
BM: I don’t think the election has anything to do with anything. I think the 800-pound gorilla in the room is the debt situation, and certainly the US is one of the worst. We’re an economy powered by debt, and it’s a fractional reserve system, so there’s always more debt than money. Sooner or later you have to pay the piper. This concept that you can somehow spend your way to prosperity is like trying to drink yourself sober.
RW: But that’s the course the US has been on at least since 2007, and there seems to be no end in sight.
BM: Absolutely correct. How can we have a recovery with a real debt of $7 trillion dollars? I mean it’s going to blow sky high. I’m not saying this as doom and gloom or anything else. The real deficit of the US is $7 trillion a year in an economy of $14 trillion. That’s not sustainable.
RW: The Keynesians, who dominate economics, say that debt isn’t a problem because sovereign governments such as the United States can simply print as much money and buy as much of their own money as they choose. And then one day, for reasons that have never been explained to me properly, the economy is going to come roaring back.
BM: That’s one of those theories. It’s like the theory of Communism. It really sounds wonderful, but I think that everybody would agree by now that Communism failed, and it’s a bad philosophy. I don’t think there are that many serious people who believe that Keynesian economics works. I know the people in government do, but these guys are out of touch with reality. You can look at what is going on in Europe; they just came out with a report in Greece of 58% unemployment among the young people. That is an accident waiting to happen.
RW: Since the dot.com bust and the decision by the Fed then not to allow what should have been a recession, we have had over a decade of this kind of economics, and the portents become darker and darker. Yet there seems to be no alternative on the horizon. Doesn’t this surprise you?
BM: It surprises me only in its duration. I believe to this day—and I’ll never change my mind on this—that we should have let the economy go into a depression in September/October of 2008. We should have let the banks collapse.
Let me give you an analogy. I just came back from Albania a week ago. I thought of Albania as some Third World shithole, that I’m going to be in a $20-a-room hotel, and they’ll be driving around in rickshaws. I was really amazed that it’s a booming economy. Those guys are absolutely going gangbusters. Now, in 1997, their economy literally was a lottery, a Ponzi scheme, and it blew up. So every bad thing that could happen to an economy since 1945 happened to the Albanians, and they’re growing like crazy now.
Two months ago I was in Turkey, and they’re not in the Euro. Greece is going under financially, and Turkey is booming. We need to let the economy reset and let all these financial pressures blow up and let the debt default, as we know it’s going to. Who in their right mind would buy a 30-year bond now?
i wish Bob would drop that absurd notion that the Viet Cong and NVA had nothing but a rifle and rice. I was DOWN THERE..and i will tell you that they had every weapon the chinese and russians made except for an air force. machine guns, RPGs, mortars, B40 rockets, recoilless rifles, landmines sniper rifles.. you name it. could we just stop this crap about how poorly armed they were?!!
I think the point is they are weapons more of the same. The US had a huge highly advanced military with total air superiority ( which usually rules). USA lost for the same reason you can’t fight terrorism. When mothers fathers kids and everyday working people pack guns you cant find them. You have to nuke the whole deal including the kids so they don’t carry the resentment. That may work!
Moriarity’s sense of humor is reflected in an analogy with Vietnam. QUESTION: Why the higher volume and downward pressure on NVO’s stock? Are any of those 58 cent options being exercised or … ? Anyone know? 78 cents is an absurd price, IMO.
[...] The Piper Must Be Paid! by Kevin Michael Grace, http://resourceswire.com/ Bob Moriarty on Derivatives, Depression and Gold Kevin Michael Grace spoke with Bob Moriarty, founder and President of 321Gold.com November 14. – RW: What do you think of the prospects for the US economy after the re-election of Obama? BM: I don’t think the election has anything to do with anything. I think the 800-pound gorilla in the room is the debt situation, and certainly the US is one of the worst. We’re an economy powered by debt, and it’s a fractional reserve system, so there’s always more debt than money. Sooner or later you have to pay the piper. This concept that you can somehow spend your way to prosperity is like trying to drink yourself sober. – RW: But that’s the course the US has been on at least since 2007, and there seems to be no end in sight. BM: Absolutely correct. How can we have a recovery with a real debt of $7 trillion dollars? I mean it’s going to blow sky high. I’m not saying this as doom and gloom or anything else. The real deficit of the US is $7 trillion a year in an economy of $14 trillion. That’s not sustainable. – RW: The Keynesians, who dominate economics, say that debt isn’t a problem because sovereign governments such as the United States can simply print as much money and buy as much of their own money as they choose. And then one day, for reasons that have never been explained to me properly, the economy is going to come roaring back. BM: That’s one of those theories. It’s like the theory of Communism. It really sounds wonderful, but I think that everybody would agree by now that Communism failed, and it’s a bad philosophy. I don’t think there are that many serious people who believe that Keynesian economics works. I know the people in government do, but these guys are out of touch with reality. You can look at what is going on in Europe; they just came out with a report in Greece of 58% unemployment among the young people. That is an accident waiting to happen. – RW: Since the dot.com bust and the decision by the Fed then not to allow what should have been a recession, we have had over a decade of this kind of economics, and the portents become darker and darker. Yet there seems to be no alternative on the horizon. Doesn’t this surprise you? BM: It surprises me only in its duration. I believe to this day—and I’ll never change my mind on this—that we should have let the economy go into a depression in September/October of 2008. We should have let the banks collapse. – Let me give you an analogy. I just came back from Albania a week ago. I thought of Albania as some Third World shithole, that I’m going to be in a $20-a-room hotel, and they’ll be driving around in rickshaws. I was really amazed that it’s a booming economy. Those guys are absolutely going gangbusters. Now, in 1997, their economy literally was a lottery, a Ponzi scheme, and it blew up. So every bad thing that could happen to an economy since 1945 happened to the Albanians, and they’re growing like crazy now. – Two months ago I was in Turkey, and they’re not in the Euro. Greece is going under financially, and Turkey is booming. We need to let the economy reset and let all these financial pressures blow up and let the debt default, as we know it’s going to. Who in their right mind would buy a 30-year bond now? – read more! [...]
I don’t disagree with your conclusion. Familiarizing myself with the history of economics leads me to a simple conclusion: no one understands economics, well, almost no-one; the few who do are marginalized. Events have to approach GD levels before change is entertained; ideas have to be politicized before change can occur — at least that’s what history suggests. I’d like to see one … one simple trade policy enforced: fair trade that is balanced, enforced without exception, by every nation. Either spend the imbalance in the nation where it occurred … or lose it within 2 years. Such an idea is likely too idealistic, still possible. Enforcing this would likely hurt the feelings of other nations; stuff happens. Trade can still be free, as long as it remains fair; and fair trade is balanced trade. Still, there are always exceptions, especially with the import of raw materials and energy. I can still dream! And I’d love to see how the transfer price games would change if balanced trade became the rule; not the exception. Foreign companies would probably rush to build mfg facilities in, of all places, the USA. Well, that’s my dream.
You state that anyone that has taken Economics 101 should know that the current situation is not sustainable. The fact is that most politicians have not taken any economics course. Most of them cannot even balance the family cheque book.
What is the big confusion over the terms “debt” and “deficit”? I can kind of understand the average dolt on the street not knowing the difference, but the so-called experts here used the terms interchangeably in the first few paragraphs. I stopped reading at that point — they lost all credibility. I could give someone a pass for screwing it up verbally, but this is a transcript and it should have been corrected. But if they don’t know the difference to begin with, what is there to correct?
Either way, the $7 trillion number is wrong. The national debt is over $16 trillion, and if memory serves the latest budget deficit was around $1.5-1.8 trillion.