Juan Castañeda talks to Alasdair Macleod about sound money

Juan Castañeda, Senior Lecturer at UNED and blogger at The Old Lady of Threadneedle St, talks to Alasdair Macleod, of the GoldMoney Foundation, about the economy and the dangers of monetary stimulus. They explain that at the root of our current problems is unsound money. Under sound money system there is some kind of objective rule that serves as a guarantee of what money is, that enforces the Rule of Law in economic matters. Prof. Castañeda believes that the US has the largest problem, given the recent monetary expansion.

They discuss the consequences of stopping monetary stimulus that the economy is addicted to. They talk about interest rates, the price level and how this is affected by monetary policy. Nevertheless they insist that the consequences of continuing to print will, eventually, be even worse.

They comment on the pressures on European monetary authorities to print. They comment on the mistake of focusing on CPI in the pursuit of monetary stability, while ignoring asset prices or even expansion of the monetary aggregates, such as M3. They comment on how this was the same mistake made by Peel’s Act of 1844, which only looked at banknote money, while ignoring other forms of money, which is after all fungible.

This interview was recorded on November 15th 2011 in Madrid.

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Alasdair started his career as a stockbroker in 1970 on the London Stock Exchange. In those days, trainees learned everything: from making the tea, to corporate finance, to evaluating and dealing in equities and bonds. They learned rapidly through experience about things as diverse as mining shares and general economics. It was excellent training, and within nine years Alasdair had risen to become senior partner of his firm. Subsequently, Alasdair held positions at director level in investment management, and worked as a mutual fund manager. He also worked at a bank in Guernsey as an executive director. For most of his 40 years in the finance industry, Alasdair has been de-mystifying macro-economic events for his investing clients. The accumulation of this experience has convinced him that unsound monetary policies are the most destructive weapon governments use against the common man. Accordingly, his mission is to educate and inform the public in layman’s terms what governments do with money and how to protect themselves from the consequences.

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