Dr. Vieira - The Evolution of the Federal Reserve

PodcastAuthor

Jul 12

Few of us really ever question the way things are. That includes the finance system, which could be likened to a house of cards. At the same time, we're at a time in history when a lot is happening at once. Despite rapidly expanding technological and economic growth in recent decades, many people remain on the fringes of opportunity. Add a global pandemic - which has triggered an economic depression and an increasing agitation for racial justice.

In this episode, Brad is joined by Dr. Edwin Vieira, a Harvard lawyer, a constitutional and monetary expert to make sense of it all. Dr. Vieira contends that if the US had followed the constitution, a lot of the challenges it faces today wouldn't exist.

Below are some of the highlights of the conversation.

#1. Congress-backed manipulation of the price of gold

Brian and Dr. Vieira delve into the US government's Executive Order 6102 of 1933 that required citizens to hand over their gold in exchange for $20.67. A subsequent act by Congress, the Gold Reserve Act of 1934, allowed Roosevelt to increase the price of gold from $20, to $22, to $25, and on and on until $35. Dr. Vieira notes and finds it interesting that this was done "arbitrarily."

A Bitcoiner listening in cannot help but note the ease with which government-controlled assets can be controlled and manipulated. This is a sharply different world from Bitcoin's - which is entirely autonomous and whose price only responds to supply and demand forces.

#2. Can Congress change existing monetary laws?

Brad wonders if Congress can change the existing monetary legal structure to go back to gold and silver coinage. But the Federal Reserve is a private organization, and constitutional law forbids changing private corporate charter. And even if Congress could do something, change doesn't just happen overnight. Dr. Vieira also thinks such a drastic change could roil the national and even the international economy.

States, however, have the power to make gold and silver legal again. Texas actually has something of that nature in place. People can safely store their gold, silver, and other precious metals in the Texas Bullion Depository.

#3. Will it be deflation, hyperinflation, or stagflation that'll do the finance system in?

With out-of-control money printing and an ever-increasing federal deficit, the current setup of things is just not sustainable. The question is, will this state of affairs culminate in hyperinflation, deflation, or stagflation? Various finance commentators have offered their take. Nouriel Roubini thinks we're going to have a stagflation event, while Max Kaiser foresees deflation.

Dr. Vieira thinks it might not matter because we can expect the government to rein in any of these adverse events with emergency powers, much like we've seen during the Covid pandemic. But if push came to shove, both he and Brad agree that stagflation would probably be the least evil.