The Hinterland Gazette Interviews Bill Baker, Author of "Endless Money: The Moral Hazards of Socialism"

I talked with Bill Baker, CFA, author of "Endless Money: The Moral Hazards of Socialism,"(readendless.com), this morning and I must say that it was a very riveting and educational 36 minute-conversation. Bill Baker, has over 25 years experience as an equity money manager or investment research analyst in an institutional environment. As his bio states, more than half of these years he has spent concurrently developing two companies: GARP Research & Securities Co. and Gaineswood Investment Management, Inc.  He did not pique my interest for his investment operations, but because of an article he wrote recently, in which he countered Dr. Howard Dean's recent speech at the "Cafe Rouge" in Paris, where he "declared that capitalism should be blended with socialism." According to Mr. Baker, this combination, viewed in a historical context, can be a very explosive mixture. No doubt, Howard Dean infuriated the right, but in a broader context, many people on Main Street just don't really understand the implications of what such a mindset means.

It is imperative for each of us to put the events that are unfolding before us today in a historical context. During the 18th and 19th centuries, the central banks failed and we are now operating under the third central bank that is teetering on the brink of a collapse. Mr. Baker maintains that we must go back to a gold-based currency, rather than the paper-based currency we have today. Politically speaking, the Democratic Party under Jefferson and Jackson, as he stated, operated under a gold-backed currency and Wall Street was essentially reined in -- quite the opposite today. The government is in a precarious position, weighed down with massive deficits, though they tell us that things are getting better and the economy strengthening. Have you ever wondered what the Federal Reserve is really doing with our money? Mr. Baker brought to my attention the fact that a petition is making its way around the Internet to audit the Federal Reserve system. Visit this link to read more about it.

Here are two of the questions I asked Mr. Baker, along with his responses:

1. Elizabeth Warren, Chair of the Congressional Oversight Panel created to oversee the banking bailouts, recently posed the question, “can you imagine an America without a strong middle class? If you can, would it still be America as we know it?” Given the high unemployment, frozen credit markets, escalating foreclosure crisis, disappearing pensions and savings accounts and a myriad of other problems, can this country survive without a strong middle class? How can the government end this erosion of the middle class?

You picked up on a theme in the book that is a really essential theme. I think kind of unique to the book, in that I have come to conclusion that the monetary system, as it interacts with the tax code, really does stack the deck against the middle class and I think it really benefits the super-rich and the super-rich then masquerades as being friends of the poor and enlists them to their cause. I think that’s not stable. I go back and I have a chapter on the Roman Empire and how the middle class got squeezed out of existence there. I see many parallels. It’s a great concern of mine.

2. How would you address that as someone who is in the investment business?  What would your suggestions be to fix this problem, where would you start?

There is one very good cure to it and that is to move away from a central bank controlled fiat currency, basically a paper-based currency that is not based on anything. Move away from that and move to a gold-backed currency. It’s an oddity now to speak this way. I think people will become more aware of this issue in the last year. Immediately when you put forth a solution like that I think it’s just not well understood by 99 % of the people out there have been paying attention to it. Yet it’s odd, it really was a big political issue back in the 19^th century and the 18^th century and times before this. It brings to mind a lot of interesting things because, not to get terribly political, the real strength and origin of the Democratic Party was in Jefferson and Jackson, who really believed in having a gold-based currency and not letting power banks on Wall Street go wild. 

You may remember from your history, the first central bank collapsed, the second central bank collapsed and we are now operating under the third central bank. Things have gotten pretty precarious. Although in the mainstream press, the narrative is that everything has been fixed. Things are getting better and it’s okay. Don’t sweat it. The problems that I see, well, there are really a couple problems. One is when you operate under that kind of a currency, basically banks are the creators of money. There isn’t any fixed amount of it. So, since Nixon closed the gold window in 1971, if you look at the money that is present today, 95% of all the dollars that we use today have been printed since Nixon. That’s huge. There’s a profound consequence of that. The consequence of that is any individual in the economy says to himself, well if the amount of these dollars is going to go up by 20-fold in 40 years, then there’s one way back. The government is telling me to borrow, borrow. The price of everything will move up. If I want to buy a house, I have to rush, borrow the money and buy it now. Now there is twice as much debt relative to our national income as there was in 1929 before the crash. Nobody seems to care.

I would encourage all my readers and visitors to listen to this riveting and highly educational interview in its entirety. Click the divShare link above. I am also offering a free copy of the book to the first commenter. It's time for all Americans to understand what is going on in the Federal Reserve and how the government is spending our money. Listen to this powerful interview and you will come away with a renewed determination to hold your elected leaders accountable for their actions and put the president to task.

To read more about Bill Baker, visit him at the Conservative Economist.

HARRIET CAMMOCK WINS THE BOOK!!!!!! She wrote a very informative follow-up article to this interview.