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FIAT CURRENCY: DESTROYER OF CAPITAL Captains of American industry should issue a Mayday call

By A. E. Fekete and Antal E. Fekete

Abstract

Summary for the busy executive The true story of de-industrialization in America has never been told. The boat of American industry has collided with the iceberg of falling interest-rate structure. The damage to capital is great and the boat is sinking. Auto manufacturing could go the way of TV and VCR manufacturing that went down in the 1980’s without the captains knowing what has hit them. Commentators blamed the demise on Asian sweatshops, on American consumer preference for services, and on the alleged rigidity of foreign exchange rates. These explanations reflect warped official thinking as well as the false teachings of mainstream economics. The true explanation can be found in the phenomenon of ‘linkage ’ that translates falling interest rates into falling prices. There is a vicious process of destroying industrial capital under a falling interest-rate structure. This observation also shows the way out. Remedy is to be found not in more flexibility of foreign exchange rates but a return to the system of fixed exchange rates. The only known way to stabilize interest rates is an immediate return to the gold standard. During this presidential election year we have, for the first time in half-a-century, the possibility to debate the merits of the gold standard, thanks to Dr. Ron Paul’s candidacy for the Republican nomination. The challenge is enormous. Conventional wisdom maintains that fallin

Year: 2007
OAI identifier: oai:CiteSeerX.psu:10.1.1.353.2227
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