Pro Gold read at your own risk!
Subject: Parks Slams our Fiat Monetary System before the House Banking Committee.
Date: Thu, 11 Mar 99 21:27:49
FAME's Fight for Honest Money and honest monetary weights
and measures reached a new level last Wednesday when I was
invited to submit testimony to the House Banking Committee.
FAME
211 East 43rd Street #2202
New York, New York 10017-4707
Tel: 212-818-1206
Fax: 212-818-1197
E-mail: LPARKS@FAME.ORG
Website: fame.org
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PRESS RELEASE
FOR IMMEDIATE RELEASE - March 3, 1999 10:00am
In prepared testimony today for the Subcommittee on Capital
Markets, Securities, and GSE's of the House Committee on
Banking and Financial Services, Dr. Larry Parks, Executive
Director of the Foundation for the Advancement of Monetary
Education (FAME) and a member of the Worker's Education
Local 189, CWA AFL-CIO denounced our monetary system as
being unfair to working people. Parks testified:
"At the end of the day, a Malaysian worker has lost his
life savings so that a Wall Street bond trader can buy a $1,
000 bottle of wine in an expensive restaurant in East
Hampton."
All the money garnered from currency and derivative trading,
about $50 billion per year or more, comes from the savings
and pensions of workers all over the world bringing immense
hardship to ordinary people. Parks quotes famed financier
George Soros as writing in his recent The Crisis of Global
Capitalism re the $2 billion that he "won" speculating
against the British Pound:
"The Bank of England was on the other side of my
transactions and I was taking money out of the pockets of
British taxpayers."
Why should we be saddled with a monetary system that allows
a small number of privileged people to garner so much
unearned wealth from working people at home and around the
world? Most important, this malevolent system has brought us
all to the precipice of a complete financial collapse in
which we may not only lose our savings and our pensions, but
also our jobs. Parks concludes:
It's time to reexamine the evidence supporting fiat money
and to reevaluate the resumption of a fair and honest
monetary regime and a system of honest monetary weights and
measures: the gold standard.
Complete transcript follows (2 pages).
# # #
Written Testimony Submitted for the Record of
Lawrence Parks
Executive Director
The Foundation for the Advancement of Monetary Education
And a member of the Worker's Education Local 189, CWA
AFL-CIO
Before the
Subcommittee on Capital Markets, Securities, and GSE's
House Committee on Banking and Financial Services
United States House of Representatives
Hearing on Hedge Funds
March 3, 1999
Mr. Chairman and Members of the Committee, I am Lawrence
Parks, Executive Director of the Foundation for the
Advancement of Monetary Education and a member of the
Worker's Education Local 189, CWA AFL-CIO. I am honored to
have the opportunity to offer written testimony to this
Committee.
For several years John Meriwether's Long-Term Capital hedge
fund garnered many hundreds of millions, perhaps more than a
billion, dollars annually in "profits" from currency and
derivative trading. Consider the 3,000 other hedge funds
along with major banks and brokerage firms doing the same
thing. All told, back of the envelope, I reckon that these
folks are pulling about $50 billion out of the markets each
year. Citibank alone, according to its 1997 annual report,
garnered $2 billion from this activity.
Since currency and derivative trading are zero-sum games,
every dollar "won" requires that a dollar was "lost." But
who are the losers that not only sustain but continue to
tolerate these enormous losses year after year? Who could be
so wealthy or so ignorant that $50 billion each year doesn't
matter? Haven't they realized what a losing proposition this
has been? What's more, why do they keep playing at a losing
game?
The answer is that the losers are all of us. And, while
neither rich nor stupid, we've been given no choice but to
continue to lose. Every time we, on behalf of our businesses
or ourselves, change one currency into another, we lose
transaction costs. Every time we hedge a payment from or to
a foreign land, the cost of that hedge represents a loss of
wealth. And every time one of these fiat currencies cannot
be "defended," the workers, seniors and business owners of
that country--folks like us--suffer big time.
Indeed, as their currencies are devalued, workers' savings
and future payments, such as their pensions, denominated in
those currencies lose purchasing power. Interest rates
increase. Commercial relationships predicated upon lower
interest rates unravel, and businesses go out of business.
Through no fault of their own, working people lose their
jobs in addition to their savings. There have been press
reports that, after a lifetime of working and saving, people
in Indonesia are eating bark off the trees and boiling grass
soup.
While not a secret, it is astonishing to learn how sanguine
the beneficiaries have become of their advantage over the
rest of us. For example, famed financier George Soros in his
recent The Crisis of Global Capitalism plainly divulges:
"The Bank of England was on the other side of my
transactions and I was taking money out of the pockets of
British taxpayers."
To me, the results of this wealth transfer are inescapable.
At the end of the day, a Malaysian worker has lost his life
savings so that a Wall Street bond trader can buy a $1,000
bottle of wine in an expensive restaurant in East Hampton.
And what benefit to society could possibly justify Long-Term
Capital's, other hedge funds' and particularly banks' and
brokerage firms', ability to reap so much money from this
activity? Does this "trading" result in any good or service
that improves anyone's life?
All the more outrageous is that ordinary taxpayers
subsidize this gambling through the "lender-of-last-resort"
bailout facility at the Federal Reserve or through the
International Monetary Fund. Whenever their reckless
over-leveraging goes against these firms, the rest of us are
called upon to bail them out! Even more incredible is the
size of the bailouts. In the last twenty years, bailouts
around the world have consumed almost $600 billion of
taxpayer money, with about a trillion dollars yet to come in
Japan alone. This represents wealth transfer from ordinary
people to financial firms, plain and simple.
I would like to think that the principals of Long-Term
Capital, George Soros, and the principals of other hedge
funds and the proprietary trading departments of banks and
brokerage houses are not evil. I prefer to think that it is
the fiat monetary system that is evil and corrupt. However,
it is extremely unlikely that those who are on the receiving
end of so much unearned wealth will cooperate in changing
the system.
More imperative than the injustice of the wealth transfer
is the fact that this malevolent system has brought us all
to the precipice of a complete monetary collapse. The
warnings are coming in ever-increasing frequency from those
who ought to know, including Treasury Secretary Rubin,
Federal Reserve Chairman Greenspan and President Clinton. In
foreign lands, fiat monetary systems--which are very much
like our own--have wiped out tens of millions of jobs along
with the savings and pensions of two generations. The danger
is that our jobs, savings and pensions may be wiped out as
well. It's time to reexamine the evidence supporting fiat
money and to reevaluate the resumption of a fair and honest
monetary regime and a system of honest monetary weights and
measures: the gold standard.
# # #
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