I’m in New York once again for the annual spring meeting of the CMRE, the Committee for Monetary Reform and Education. This group attracts men and women from the investment community who share your editor’s disdain for fiat money and other falsehoods promoted by Big Government.  Here’s the line-up of speakers at tonight’s dinner, along with program notes on each:

James Grant, publisher of Grant’s Interest Rate Observer.. On the record for the importance of The Gold Standard, Grant suggests Mr. Bernanke be asked to explain how the central-banking methods of the paper-dollar era represent any improvement, either in practice or theory, over the rigor, elegance, simplicity and predictability of the gold standard.  (WSJ 12/20/08, Is the Medicine Worse Than the Illness?) Grant is incomparable with his knowledge of history as well as current issues..)

The Honorable Andrus Ansip, Prime Minister of Estonia. First elected in 2005 and reelected in 2007, Mr. Ansip has also worked in business and banking sectors.  Before becoming Prime Minister, he served as Minister of Economy and Communications. A former Soviet-bloc nation, Estonia’s economy is ranked as one of the most free in the world, a remarkable feat for a former communist country. He has been a global leader for the Flat Tax movement. He recently led his country in a successful defense against a Russian computer based cyber attack thus winning the world’s first cyber war. His agenda is to continue Estonia’s policy of tight fiscal control, support for an unrestricted market economy, with markets open to the outside world and strong GDP growth.

Jack Willoughby, Editor, Barron’s, will speak on how “Europe’s Growing Crisis Puts the Fed at Risk”. Willoughby observes Europe’s commercial banks have more exposure to wounded emerging markets than U.S. counterparts. He contends one can debate the merits but not the size of the swaps program.  It is big.

Martin Mayer, having written several books on banking, thoroughly understands the industry. In his book The Fed, he wrote, “A thread that runs though American banking for its entire history is the fear that the money center banks … will vacuum the money from the American people and spread it out on Wall Street for use by the city slickers. The twelve Federal Reserve Banks stand as monuments to the wistful national desire to create separate money markets in different parts of the country.” From his wisdom is Martin’s concern about credit default swaps. He recognized their hazard well before the market was aware of their danger.

William (Bill) W. Beach, director, Center for Data Analysis, Heritage Foundation, will speak about “Paying the Tab”. It is doubtful that anyone knows more about the “stimulus” package and the pending tax programs that Americans face than Bill Beach. His Center for Data Analysis competes with the Congressional Budget Office, the Office of Management and Budget, the Joint Committee on Taxation, or any other government agency when it comes to “scouring” potential costs and benefits of legislation.   His work is obviously critical to the market developments and the economy.

Gene Schroeder:  Our favorite, wise farmer rancher from Colorado. If you have never met Gene, do not miss this occasion.  Jim Rogers says agriculture is the place to be. Gene knows that whole business and money and banking, too.

Rogue Wave Economics

If you’d like to know more about the CMRE, click here.  I was a speaker at this annual event myself, during the 1990-91 recession. An essay that I’d written for Barron’s caught the attention of a CMRE director, the late Ed Hart, a well respected commentator on CNBC before the network adopted its current show-biz-‘n’-babes model. My thesis was that a “rogue wave” created by a combination of public and private debt was about to swamp the economy.  David Ranson of H.C. Wainright went sharply against the grain that night with a very bullish forecast. In retrospect, he was right – very right, since, not long afterward, the stock market began an ascent that would make all previous bull markets look like pikers.

Three More Zeroes

At the time, the doomsday scenario making the rounds had it that Third World debt would do us in. A year or two earlier, Tad Szulc of the New York Times had written a scary article on the topic that appeared, if memory serves, in Penthouse magazine. The article convinced me that a severe downturn was imminent, but in retrospect it seems almost quaint that anyone should have worried about the relatively meager sums involved. For in fact, the Third World owed U.S. banks mere hundreds of billions of dollars, and the problem got papered over as easily as a kitchen wall. Few could have imagined back then that, with the advent of the derivatives game in the late 1990s, three zeroes would get tacked onto global debt totals.

One can be reasonably certain that we are not at a similar threshold today, since debt would have to soar into the quadrillions or even quintillions. That would occur in a hyperinflation, of course, but that scenario is implausible for reasons that I have tried to make clear here before. (To believe hyperinflation lies ahead is tantamount to believing you will one day sell your home to some greater fool for a thousand times what it is presently worth, and that automobile manufacturers and air carriers, among other employers, will be paying their workers thousands of dollars per hour. I have long argued that the credit implosion now well under way in real estate and banking can produce only a deflationary outcome.

I’ll be interested to hear what these speakers have to say and will report on the proceedings in the Rick’s Picks chat room. Talk to you later.

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-- Posted Friday, 15 May 2009 | Digg This Article