3 Minute Gold News
A Quick Read for Busy People
A 3 minute synopsis of an interview with Jim Rickards, Chief Global Strategist at West Shore Funds, and New York Times bestselling author of The Death of Money and Currency Wars, by WHO Radio.
Topics:
Trans Pacific Partnership
Currency Manipulation
Gold Standard
Jim Rickards
TRANS PACIFIC PARTNERSHIP
Free trade between countries on a gold standard is a win-win but we no longer have a gold standard.
Economic schools teach that if we specialize and trade with others based on comparative advantage, instead of producing everything ourselves, then we’ll be better off.
For example, Michael Jordon could probably mow his own lawn faster than his landscaper, but his time is better spent doing something else.
There’s something to the theory of comparative advantage but there are so many exceptions.
For example, there’s so much cheating and so much currency manipulation that comparative advantage needs to be looked at again.
Another issue is that capital is more mobile in a globalized economy.
In the 18th century it was thought that capital and hard assets (like land and people) were fixed in a place.
So if one place had a comparative advantage making wine and another had a comparative advantage making textiles, then they were better off trading with each other rather than spending time making both.
The wine guy shouldn’t be spending his time setting up a loom and the textile guy shouldn’t be trying to grow grapes. By specializing and trading everyone comes out ahead.
That was fine then but it was based on assumptions that are no longer true.
Both capital and hard assets no longer stay in one place in a globalized world.
If one party has a comparative advantage in labour and another has a comparative advantage in capital, but now the capital can pick up and move to, for example, China, then China now has an advantage in both labour and capital.
How is that a good system?
The whole Free Trade / Fair Trade debate needs to be rethought.
Sky high tariffs and protectionism isn’t what Jim is saying, but smart tariffs and restrictions make sense.
There are winners from Free Trade but the winners aren’t every day people. The winners are global corporations.
CURRENCY MANIPULATION
The Free Trade advocates who want to sign the deal, and to eliminate tariffs and get it done without looking at other issues, base it on the theory of comparative advantage.
But how do you measure comparative advantage?
You do it with price.
What’s the price of wine in Portugal? What’s the price of cotton in London? If they both have comparative advantage then they trade and both come out ahead.
That makes sense.
But if the price itself is manipulated then how do you really know if it’s a comparative advantage?
There’s a new theory called the Created or Manufactured Comparative Advantage. In other words, I don’t start out with a comparative advantage but I end up with one, because I stole the shirt off your back through currency manipulation and other means.
That’s what you have to watch out for.
You can subsidize an industry, pour capital into it, and start out with no comparative advantage but end up with a comparative advantage once you’ve played all the games.
The Free Traders seem a little bit naive on this.
GOLD STANDARD
The issue of comparative advantage and manufactured comparative advantage is a problem surrounding the lack of a gold standard.
When you have a gold standard everyone pegs to gold. If you cheapen your currency then it’s like a red light goes off. You know it. You know when a guy just de-pegged to gold.
If you have a gold standard then you actually can compare prices across countries.
Comparative advantage is more meaningful in a world where there’s a gold standard.
Once you go off the gold standard and everything is manipulated, which it is, then you don’t have good comparisons.
How can you use comparative advantage in trade when you don’t have good comparisons?
Jim Rickards can be found on Twitter and at James Rickards Project.
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I had a very fun and inspiring dinner with Jim Rickards last week in Vancouver. Lots of interesting and inspiring conversation of gold and many things. Thank you, Jim. :)
I’m back along the Canadian Gold Rush Trail now. The trip in yesterday along the High Line just north of Whistler greeted me with deer and a bear. No time to pull the camera out this time but bodes well for my aim of photographing bears this summer.
The apple and cherry blossoms have turned to tiny hard green fruit. I’ll be hiking back into the abandoned orchard as they ripen over time. I haven’t been back to see the wild strawberries yet. Maybe tomorrow.
I’m also designing glass and gold jewelry and writing while I’m away. The sun is here. It’s time to watch cycles repeating. There’s security in seeing nature do as it does. The economic cycles are longer than one season but they’re part of nature’s cycles all the same.
My office today is by a rushing creek. Yesterday it was overlooking a site of the remains of a pit house.
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Preparing for the Fall is a boutique live solo album available on iTunes — including the singles Wag the Dog, Black Swan Dive, Miss American Pie and Gods of the Copybook Headings. Definitely not a studio recording — this one is a mic in the livingroom and all that wonderful live sound.
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Wag the Dog (Drums of War and Backroom Banker Passes)
words and music Elaine Diane Taylor
© 2014 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes
Beating Beating
I can hear drums beating, beating
I can see there’s blood on the street
There’s marching fiat soldier feet
waving flags / false / friends / hands / shaking / earth / harps (HAARPs) / singing
God God God
There’s opium for masses
Mideast oil and gas and backroom banker passes
Tongues and tails (tales) wag the dog if all else fails
While they beg and borrow and steal
They want steel
So they’re beating, beating
I can hear their drums
Beating Beating
Currencies and empires all fall down
Beating Beating
I can hear drums beating, beating
I can see there’s blood on the street
There’s marching angry peasant feet
waving flags / false / friends / fists / shaking / earth / leaders / singing
Bomb Bomb Bomb
There’s opium for masses
Mideast oil and gas and backroom banker passes
Tongues and tails (tales) wag the dog if all else fails
While they beg, borrow and steal
They want steel
I can hear them beating beating
I can hear the drums
Beating Beating Beating
Currencies and empires all fall down
Coins and Crowns
words and music Elaine Diane Taylor
© Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes
Single featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.
The Gods of the Copybook Headings
words by Rudyard Kipling and music by Elaine Diane Taylor
©2014 Intelligentsia Media Inc.
SOCAN/ASCAP
from the album Preparing for the Fall available on iTunes
Another Week on Wall Street (Naked Short Selling and Fiat Currency)
words and music Elaine Diane Taylor
© 2013 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns available on iTunes
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Nothing on this site is personal investment advice. We’re all watching how the wind is blowing.
Elaine Diane Taylor 