The Mechanics of Fiat Money Destruction

Alasdair Macleod and Quinton Hennigh return as guests on the next program.

Human beings have been capable of believing, ever since Eve ate the forbidden fruit in the Garden of Eden, that they could be like God simply by obeying, without limit, their hedonistic instincts. The big lie most relevant to this week’s show is the one told by Lord John Maynard Keynes in 1935 when he suggested that societies could become rich by consuming more than they produce. To lend credence to that lie, Keynes required honest, market-driven money, gold, to be replaced by fiat money that is manufactured by debt.

What Keynes didn’t reveal (and politicians chose not to know) was that at some point in time, as debt outgrows income, those units of currency become worthless through either the fires of hyperinflation or via national insolvency. Most vulnerable of all, during either an inflationary or deflationary outcome, are banks that have loaded up their balance sheets with the very debt from which fiat money was created. Alasdair points out the market mechanics which have brought the western world to the precipice of self-destruction. To stay in business these banks have no choice but to unwind debt from their balance sheets resulting in a national collapse of business activity. Judging the history of nations, that will likely result in a reset of our monetary system.

We can only hope any new monetary system will be based on gold and/or silver than can lead once again to honest and stable growth. Despite the decline in stocks and bonds this year, gold has held up reasonably well. There are many new gold discoveries from which investors may anticipate major gains over the coming months. World-renown exploration geologist Dr. Quinton Hennigh shares some of his favorite gold and silver exploration investment prospects.  

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Alasdair Macleod has a background as a stockbroker, banker and economist. He is a Senior Fellow at the GoldMoney Foundation and Head of Research at Goldmoney.  His experience encompasses equity and bond markets, fund management, corporate finance and investment strategy. His weekly articles written for GoldMoney are posted on his blog at www.goldmoney.com/research/goldmoney-insights Because of his deep insights into underlying market dynamics, Alasdair is one of the most frequent guests on Turning Hard Times into Good Times.

Quinton Hennigh is a member of the Crescat Capital management team and a director. He serves Crescat as the firm’s geologic and technical advisor. He is a globally renowned exploration geologist with 30+ years of precious metals mining experience. Dr. Hennigh began his career in gold exploration after obtaining his PhD in Geology/Geochemistry from the Colorado School of Mines. Early in his career he worked for major gold mining companies including Homestake Mining (now Barrick Gold Corp.), Newcrest Mining, and Newmont Corp. Later, Dr. Hennigh founded Novo Resources Corp (TSXV: NVO), acting as its CEO and currently serving as Non-Executive Co-Chairman. He has played a key role in major global discoveries such as Novo’s Pilbara assets in Western Australia, First Mining Gold’s Springpole gold deposit in Ontario, Kirkland Lake Gold’s Fostervillegold mine in Australia, the Rattlesnake Hills gold deposit in Wyoming, and Lion One’s Tuvatu gold project in Fiji, among many others.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.