OCR Text |
Show The Paper That Dares To Take A March 13, 1975 The Utah Independent Page 9 Stand John NEWS RELEASE JAMES A. McCLURE United States Senate. ho Continued from Page 7 Washington D.C. U. S. Son. James A. McClure told a House Judiciary Subcommittee hist week that if this Congress were to work one tenth as hard providing the kind of laws needed to deal harshly w ith criminals as it does in working to pass radical and purely unconstitutional gun controls, our national crime problem could be diminished." The Idaho on Republican. two commenting days of on issue the of gun general hearings control which were held last week. said there is no doubt left that the intentions of many of the new. radical elements the they will settle for Congress registration, this time, but they are aiming for outright confiscation of all firearms. They make no bones about the fact that if they had their wav thev would disarm cvcrv American. They would abolish the Second amendment entirely. Many Americans may have been fooled by the soft peddling liberals who have called for registration in the past. But this new crowd is making no bones about what they want". McClure said. McClure has authored and introduced a series of bills designed to stave off further controls of firearms and to repeal the entire 1968 Gun Control Act. In a related effort McClure said he is pressing for hearings by the Senate Commerce Committee on his measure that would prohibit the Consumer Product Safety Commission from considering a ban on handgun ammunition. The Federal District Court in Washington. D.C. has ordered the commission to consider a ban. even though those in the Congress who created the Commission and the commission itself says it has no authority to deal with firearms or ammunition". Jim McClure said. My bill sets the record straight." In the meantime. McClure said, the Commission has asked for public comment on the proposed I ban. urge Idahoans to make their views known on this issue by writing the commission." The address: The Consumer Product Safety Commission. Office of the Secretary. 1750 K Street N.W.. Washington. D.C. 20207. ' BE THE MIDDLE MAN llavv your own wholesale lender S50 business. investment required and we will help you man or woman. Husband and wife team will move the fastest. No obligation to learn how. For appointment call (801) 486-674.- 1. REYNOLDS ENTERPRISES For Information Call Dale V. Jones A. Sherman Gowans Robert R. Scarles Account Representatives 136 East South Temple Suite 2210 Salt Lake City. Utah 841 II Dial (801) 363-27Call Collect 15 GOLD & SILVER COINS & BULLION Exeters Report well. Then Id simply let the private banking system take care of the rest which, of course, means eliminating I expect we will have a severe depression more severe than the v30s.H MONEX: Whats your outlook for the U.S. economy? EXTEU: A deflationary depression. I should say we may well have hyperinflation in some other currencies, hut I dont see that for the dollar now. Of course. Congress, the Administration, and the Federal Reserve will try their best to prevent any depression by continuing to expend government and other paper debt of one kind or another. But the problem is that if failures start to snowball, the authorities wont be able to avoid the deflation by continued debt expansion. Private debt will contract faster than government debt expands. This is what I mean by net debt liquidation. Confidence will be shaken in the system so that many borrowers will not be credit worthy. Others will not want to borrow, but will want to be getting liquid. Well have a scramble for liquidity, and lenders will become reluctant lenders because having taken losses, they will not want to compound their losses by taking more. I expect we will have a severe depression more severe than the 30s. MOiNEX: Do you believe these failures will include - banks? EXTER : Im worried about the banks. I do anticipate more bank failures. The newspapers are reporting almost daily the problems of illiquid debtors, and these would include banks, as well. What is your opinion of the Federal Deposit Insurance Corporations ability to protect deposits? EXTER: The insurance premiums that the FDIC charges the banks each year are adequate to take care of a failure here and a failure there. But theyre hopelessly inadequate to take care of a situation like the present one in which illiquidity is widespread throughout the banking system. In our banking system it is not the FDIC that makes it possible for banks to pay every day it is the Federal Reserve, as the lender of last resort. This was illustrated by the Franklin National Bank experience, when the Federal Reserve had to go even to the aid of the FDIC. MONEX: The FDIC says that it can have unlimited funds available to it through a carte blanche arrangement with the Treasury. What effect would such an arrangement have in case of a major bank emergency? MONEX : EXTER: It would mean simply running the printing presses all the more. The Treasury would have to get the money from Federal Reserve expansionism, which would only accelerate inflation and eventually make the squeeze on illiquid debtors worse. MONEX: In your view, what will it take to restore a sound monetary system? FXTER : In an expanding world of paper there will be an expansion of illiquid debtors. These illiquid debtors must be eliminated' before a sound system can be restored. It is the central banks in the world that underwrite the enormous growth of paper debt. If we didnt have central banks underwriting that growth of debt, the volume of debt in the world be much less, and w'ould not get overextended, so our world economy would not be subject to the kind of sharp contraction that we are experiencing today. In other words, economic growth would be perhaps slower at times but steadier and more sustainable. You know, our Founding Fathers who wrote the U.S. Constitution had a real appreciation of the danger of paper money, and they warned against those dangers by refusing to give Congress the specific power to create paper money. They gave it only the power to coin money, and that meant gold and silver coins. They specifically prohibited the states from making anything legal tender but gold and silver coin. I think its unfortunate that we have drifted away from that early advice, and I think in the years ahead all Americans are going to have to reconsider the role of government in money just what should government be able to do, and this means in particular the role of the Federal Reserve System, which in James Madisons view would be quite clearly unconstitutional. He argued that the first Bank of the United States was unconstitutional. 3IONEX: What do you believe the role of government should be in money? EXTER: If I had a clean slate, I would go back to the Constitution and simply have Congress com money and that would he gold coins, and some silver coinage, as the Federal Reserve System. Like Madison and others I would argue it is unconstitutional. If I didnt have a clean slate and the Federal Reserve is retained, I would prohibit the Federal Reserve from acquiring any more paper assets. It cannot get rid of the paper assets it has its loaded with government securities. But with a big increase in the price of gold, those government securities would be greatly reduced as a percentage of the total assets of the Federal Reserve, and then I would simply prohibit the Federal Reserve from acquiring any more. Furthermore, I would make all Federal Reserve notes redeemable in gold by anybody. If we did this in this country, I think many other major countries would follow' our example and, of course, it would be a real gold standard solution and gold would become the international money. Ideally, this should be worked out through some kind of international monetary conference, but I have no realistic hopes that this could be achieved. All this could not happen until the illiquid debtors were liquidated and the depression had run its course. Gold never defaults. MONEX: If economic conditions develop along the lines you have suggested, how will most investments fare, in your view? EXTER: Many investments in paper will do poorly the bond market, long-tergovernment securities, the stock market and the like. But also I believe real estate wont be a good investment, nor do I foresee much opportunity in most other investments such as paintings, antiques, stamp collections and the like. The most worthwhile hedge investment in my opinion is gold, for the reasons Ive given. The only risk in holding gold is theft. It is good even in a deflationary depression because, although paper then rises in value as prices fall, many paper assets are reduced in value or even wiped out altogether through defaults and failures. Gold never defaults. MONEX: Some people note that gold prices are volatile and suggest that investors could be hurt by price swings. Do you share that view? EXTER: Not over the long-terBasically the gold market is a thin market. Very little gold is traded in the world day by day. Although theres a vast amount of gold existing in the hands of people and central banks, only a tiny bit of it is traded daily. So a thin market like that is bound to be subject to price swings from speculation, especially when people in that market do not realize that it is gold that is stable and paper that is falling in value. The price of gold, as measured in paper, has fluctuated widely in the last two years. Two years ago, for instance, the price was just over $60 an ounce. But in July of 1973, it had gone to $127 an ounce. By November 1973 it had gone back to $90; then by early April last year it had gone to $180. But by July 4 it had gone back to $129, and then by the end of 1974 it was up again to $197. So, while there will certainly be shortterm price swings, over the long term I clearly see a continuation of the rising price patterns of the recent m m. past. MONEX will go? : Just how' high do you believe the price of gold EXTER: I have no idea how high the price of gold will go. But let me say that as more and more people begin to realize that the best way to preserve their capital is to go for the best store of value money there is which is gold it w'ill certainly go very much higher than it is today. That may mean twice as high, three times as high, four times as high, or even more. I cannot forecast exactly how high it will go in the years ahead. But I do believe that it will be very much higher than today. Economists and investment advisors hold widely varying views as to the economic outlook, continuance and degree of future inflation, possibility of recession or depression, price trends of precious metals, and the methods by which investors can protect themselves. This interview presents one viewpoint; some economists and investment advisors agree and others disagree. As is the case with many of our Newsletter interviewees, Mr. Exter was paid an honorarium fee for his time. |