Aaron Russo Interview

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I spoke with Aaron Russo last night. He’s still in Germany receiving medical treatment, but he doing a lot better. Here’s a recent interview of Russo talking about his new movie.

Stephen Gordon

I like tasteful cigars, private property, American whiskey, fast cars, hot women, pre-bailout Jeeps, fine dining, worthwhile literature, low taxes, original music, personal privacy and self-defense rights -- but not necessarily in this order.

  1. The video was cut off several minutes in, when the hammeroftruth page refreshed itself. Can you prevent this?

  2. I’m so upset that I missed my local screening of the movie. This interview shows what a good grasp on things Russo really has. I wish him the best, and hope for a big, popular release that will finally wake people up.

  3. LOL. People aren’t going to finally wake up anytime soon. The only time they will is when there is no choice and it will be too late for them to admit it then. They’ll have to keep it so themselves.

  4. I’m not sure how I feel about this interview.

    The Gold Standard was one of the reasons the Fed could not prevent the great depression. The great depression was as bad as it was because the Fed DID NOT have the power to control money supply. Fiat money is much better for monetary policy which has contributed to the stability of inflation, low unemployment, and moderate interest rates which Americans have grown accustomed too. The European Central Bank has also been extremely successful in achieving these goals.

    The Fed makes billions of dollars every year, but they give all that money back to the Treasury. Theres plenty of evidence that nations with independent central banks have lower inflation. It’s not as if the Fed can just print money with no regard to the consequences. Money supply and inflation are directly related.

    I could go on and on about this, but both Russo and the interviewer especially show a complete lack of understanding about the economics of money and banking.

  5. Wow, I don’t even know where to begin with this Mark guy. The Federal Reserve is one of the greatest scams of all time. Read G. Edward Griffin’s book “The Creature From Jekyll Island” for more details.


    Also check out anything that Murray Rothbard or Ron Paul have written on the subject.

  6. Mark, look again at your link: http://en.wikipedia.org/wiki/List_of_countries_by_past_GDP_%28PPP%29#1820

    Right at the top of the page it says:
    The factual accuracy of this article is disputed.
    Please see the relevant discussion on the talk page.

    Selected excerpts from the talk page:

    This is an appalingly badly researched and flawed document. In my opionion it should just be scrapped.

    I consider most of these estimates as made out of thin air, with includes all then made before the late XXth century.

    This is ridiculous – any kind of ppp comparison going back more than a hundred years is incredibly difficult to reliably calculate, and to go back to 1ce is absurd.

  7. Sure, the Fed itself gives back the interest it earns. But that’s a parlor trick.

    The real theft is all the uncertainty it creates in the value of assets.

    Markets tend toward making
    Income from Asset = Interest Rate x Asset Value

    The (real) income from an asset stays approximately constant over time (all else being equal), so the effect of this is:
    Asset Value = (Income from Asset)/(Interest Rate)

    Rates go up -> Assets go down
    Rates go down -> Assets go up

    We all know that rates will change again in the future. This damps the effect, but makes the return on investment unpredictable — especially in the short term.

    This all enormously favors the people who are in the know about what the Fed will do (or do better psyching them out on average) versus those who don’t. It also favors those with large net worth, who can ride better out much of this fluctuation.

    It makes it more difficult for everybody to plan well, costing the economy billions.

  8. Andy, if The Fed is one of the greatest scams, what excatly are we being scammed out of? Wealth? No.

    Wes, I agree, that info on that link is probably not accurate, but regardless, if the world keeps getting wealthier every year, wheres the fraud by central banks that Russo claims.

    Money, wealth, and currency are all very different things.

    Is control of moneytary policy necessary to sustain stable economic growth? Yes.

    Is a central bank the most efficient way to control monetary policy? Seems to be, bank failures are a thing of the past. Read how the Fed avoided a financial crises on 9/11. Read up on the Treasury Accord of 1951 and president Truman’s desire to freeze interest rates to pay for WWII. The Fed refused to buy the surplus of bonds in order to maintain price stability.

    Andy, read “The Economics of Money, Banking, and Financial Markets” by Frederic Mishkin. Well, its advanced economics, you might want start with a more basic Principles of Economics.

  9. Wes, the great depression was caused by lack of intervention in the money supply by the Fed. Are you suggesting to me that interest rate risk costs the economy more then the Great Depression?

  10. Just because there’s more to go around now doesn’t mean the politically-connected aren’t skimming off the top.

    People who say control of monetary policy (i.e. coercive top-down monetary policy) is necessary to sustain stable economic growth are either brainwashed or have a vested interest in saying so.

    I don’t worry about the “efficiency” of controlling monetary policy. I worry about the inherent coerciveness of it and the corruption it creates.

    Some banks need to fail. Otherwise we’re all subsidizing bad management and corruption.

    Freezing interest rates couldn’t “pay” for WWII, only punish productivity and encourage black markets to provide scapegoats for war hysteria.

    Your arguments aren’t based on economic principles. They’re based on glorifying the power of the totalitarian state.

    What principles (not anecdotes) in that book support your arguments?

  11. The Great Depression was caused by various government interventions in the economy, both in the US and elsewhere, as the world embraced foolish anti-market and anti-freedom policies.

    You can blame one agency for not trying to fix problems caused by another, but that doesn’t take into account the greater problems caused by piling distortion on distortion until nobody remembers what a free economy was like.

    One of the best things Truman ever did was remove economic restrictions after the war. That’s what finally brought prosperity back. People like you were saying he should pile on even more top-down micromanagement, which would make things worse.

  12. I only fault Russo for making it sound like such a deliberately evil conspiracy, when it might have been only well-meaning but wrong-headed leaders following the current fashions of political thought.

    But knowing the sort of people who are attracted to power, maybe he’s more right than it sounds.

  13. I misspoke because I had my timeline mixed up. Truman wanted to freeze interest rates to pay for the Korean War, not WWII, sorry that was stupid mistake.

    Wes, the Treasury sold bonds to fund war, correct? The bond market tells us that bond prices and interest rates are inversely related. Bond prices and interest rates are two sides of the same coin.

    In order to fund war, bond supply had to increase significantly (supply curve shifts right, no change in demand). Quantity goes up, price goes down. Hence, interest rates go up making it much more expensive for the gov’t to borrow money. Truman wanted to freeze interest rates to make borrowing cheaper, but this would create a surplus of bonds, a quantity between the original equilibrium and the new supply curve at the same price. Draw it out if it helps you to see it. Truman and congress ordered the Fed to purchase the surplus but the fed refused because they could only do so by printing money, which would cause significant inflation.

  14. Here is some reading to learn more about central banks and the Fed.

    “A Look Inside Two Central Banks: European Central Bank and the Federal Reserve”

    “The Federal Reserve Responds to Crises: September 11th Was Not the First”

    “Monetary Policy in the Great Depression: What the Fed Did and Why”
    -Note edit error: Fig 3 is really Fig 4 and vice versa.

    Bank failures arguably caused the great depression. Yet the gov’t has no responsibility to prevent bank failures? What about guaranteeing deposits? You view of let the banks fail was part of the problem during that time (read: liquidationists). Because of the bank panics, people help more money, so the money multiplier crashed, so money supply fell, which disrupted financial markets that significantly reduced national output

  15. Mark smokes crack.

    And I wouldn’t call the Fed a very independent information source.

    The Depression, along with every other boom/bust cycle since has been caused as a result of the Fed and their “stable” policies.

    Only with honest weights and measures combined with a commodity based currency (specifically gold & silver) can you have any semblance of price stability and true wealth. Debt through unlimited creation of promisory notes is not the path to wealth. Any moron can understand that. Mark may be to smart to understand that, but the coming fiscal crisis might learn him a thing or two…. I won’t hold my breath.

    It is highly alarming to me that there are people here who insist that such an obviously fraudulent and foolish idea is not only sound, but preferable. But, then I am going to profit wildly from their folly, so fuck em.

  16. DD, does belittling me make you feel better about yourself? I smoke crack because I choose to disagree and attempt to change the opinions of others?

    “The Depression, along with every other boom/bust cycle since has been caused as a result of the Fed and their “stable” policies.”

    Gee, thats interesting. Major bank panics were occurring every 20 years or so in 1819, 1837, 1857, 1873, 1884, 1893, 1907, and 1930-1933. Yet the Fed was created in 1915, the Fed caused those too?

    “Only with honest weights and measures combined with a commodity based currency (specifically gold & silver) can you have any semblance of price stability and true wealth.”

    Would you mind explaining your definition of price stability and true wealth? I can predict what my rent will be next year and the year after. I would call that price stability. How might we achieve this “true wealth” you refer to, as opposed to the false wealth of today?

  17. the bank panics of 1819, 1837, 1857, 1873, 1884, 1893, and 1907 were not as bad as the great depression.

    Only the panic of 1819 occurred during a time of a national bank.

    This national bank didn’t use fiat currency, was much weaker, and of a far better form, than the current Fed. [Just like our Constitution is of a far better form than the UN or Articles of Confederation]

    [James Madison opposed the national bank in the 1st Congress in a famous speech on Feb 2, 1791. As President, he let this bank die. After the War of 1812, he also vetoed another national bank bill, before finally signing what he called a better national bank. The War convinced Madison that some sort of national bank was needed and constitutional]

    Speech in Congress Opposing the National Bank

  18. Mark,

    When the Fed brings more dollars into circulation, it decreases the value of all other existing dollars. This is a stealthy form of theft.

    It also causes asset prices to rise. People have failed to realize just how much the dollar has been devalued because of cheap goods from China and increased world trade. Energy and housing prices show a different picture.

    Inflation is one reason the minimum wage is ratcheted up, which also affects prices or causes businesses to go bust when they have trouble passing on the increases to customers.

    Inflation eats up the benefits of a raise. Are you really getting 3-5% more, or just keeping up with inflation.

    Central banking, with easy credit drove the boom in the 20’s followed by the bust in the 30’s. Government intervention delayed the market from correcting itself and moving on.

  19. A house bought three years ago is worth a house today. If you sell it, you can buy…a house.

    Too many people are using their houses as ATM machines. Rather than make their mortgages go down, they borrow and their monthly payments go up.

    If a bank did not have the government safety net and fractional reserve lending, and fannie mae and freddie mac, would it take the risk lending to someone that buys consumer goods with the equity of their home? People are marrying themselves to debt.

    Too many baby boomers are cashing in on an asset they worked their lives to pay for that could be handed down generation to generation.

    In an alternate world without inflation, someone could save money to put a downpayment on a house, knowing that the price should not run away from them beyond supply and demand trends. Inflation also requires lenders to charge a greater %.


  20. I have a lot of things I *could* say on this thread. Many of them I have reiterated before.

    Instead I will merely state this: How is using a devaluing commodity any better than fiat money? It hardly creates any form of price-stability given the extremities to which gold & silver both have been fluctuating — on a daily, weekly, monthly, and annual basis — in value, for the last thirty years especially.

    Further — If abandoning the commodity-backed currency is such a fiscally bad thing… why is it that each and every country that has attempted to revert to this standard from a fiat standard later found it necessary to return *to* the fiat standard?

    Yes, prices in terms of *numbers* keep going up. Yes, people continuously live in debt. What makes any of you think this would be any different with gold?

    Shocker, people: They’re still mining more. More gold into the economy is precisely the same as increasing the # of dollars.

  21. Mark,

    You said, “I can predict what my rent will be next year and the year after. I would call that price stability. ”

    I can too – it will likely increase. I call that price instability.

    I have a rental, and have to increase the rent on a regular basis to keep up with increasing taxes, increasing energy costs (I no longer pay any utilities), and increasing repair and maintenance costs. If I had to increase the rent in proportion to the appraised value, which is now completely ridiculous, I would not be able rent the place. Who could afford it?

    If I had to buy my house now, 4 years after buying it, I would not be able to afford it. The market is distorted due to the fed.

    Most non government workers, who don’t get cost of living adjustments, are actually making less than they were 5 years ago. Does that make sense for someone with more experience and increased productivity?

    Why does it now take two income earners to be able to afford a house? Fed.

  22. (cont’d)

    Every ounce of gold found and added to the market devaluates each and every dollar printed…

    This will only get *WORSE* as high-energy chemical-element transition becomes more and more feasible.

    Sooner or later, the fiat standard will become NECESSARY. Because *EVERY* commodity will be infinitely reproduceable.

    Granted, that’s “far future” “Sci-fi” stuff… but it can already be done, and energy generation/transformation/storage technologies are the most-heavily driven research field of any today.

    To whit: Recidivism will always fail. The gold standard is dead. Let it die. There will be no “coming crisis” in DD’s terms. That’s the same hysteria as you seem from
    “greenhouse gas global warming!” people.

  23. IanC,

    Governments don’t like commodity backed currency because it limits how much they can spend and grow. Government taxes and regulations consume 53% of the economy. Compare this with the 1800s, 1900s, 1950s, 1970s, or even 2000.

    Government spending has continuously increased faster than the growth of the ecomomy. It is a leech. The government is in the business of wealth transfer. The fed helps government do this. They get their cut, or the government gets its cut, depending on your perspective.

    One thing nobody has commented on from the interview, which I find to be the scariest thing, is the executive orders.

    Who else is alarmed by this? We seem to be emulating pre Nazi germany in so many ways.


  24. http://en.wikipedia.org/wiki/Inflation#Effects_of_Inflation
    Read effects of inflation.

    Mike, you responded “I can too – it will likely increase. I call that price instability.”

    Err, kinda not really… If the market expects the Fed to target low inflation, which it does, then the market can expect inflation to be around 2-3%. If year after year the rate is low, thats what we call stability, because you can predict the increase in price. Inflation Risk is the uncertainity about expected inflation rates in the future.

    …”The fed helps government do this. They get their cut, or the government gets its cut, depending on your perspective.”

    This is just untrue, what do you mean?

    Yes Gov’t spending is out of control. The Fed has NO control over that. None. Zip. Zero. Thats all congess (president’s policies too obviously)

  25. Mike R — there’s really very little mandatory/direct correlation between the abolition of the gold standard and the increase of governmental consumption. Take, for example, the simple fact that the gold standard wasn’t *completely* abolished in the *USA* until 1973. Besides; the only way to make a non-fiat currency stick in today’s world-market is to get *ALL* countries to switch-over. The practice of currency exchanges as a commodities market has obsoleted the concept’s practicability.

    Like it or not, the fiat currency system holds that a dollar holds a relative value to the dollars of other countries… as a variant/determination of the strength of a given economy comparative to the number of currency units available. Now, granted: It now costs roughly 1.05 cents to mint a penny. There’s a real problem here.

    But the fact is that this wouldn’t be any better or worse under the gold-backed system. Given the resource investiture to obtain the gold…

  26. (cont’d)

    It could conceivably be even worse. Let’s all face this: gold currency standards wouldn’t prohibit fiscal irresponsibility on the part of any government. Not to mention that switching over would actually require a reduction in the total amount of currency in the market — let alone the “phantom” currency in the banking systems generating interest-accrual wealth.

    I’ll finish my statements here with the same tired thread:

    The gold/silver standard is dead. Any attempt to re-establish it would at this point be recidivism.

    Recidivism *ALWAYS* fails. The genie’s out of the bottle, folks.

  27. Different thread:

    My rent hasn’t increased one numerical penny in five years.

    Is this instability?

  28. The Federal Reserve is a grand counterfitting operation. They create money out of nothing and back it with government force. The Federal Reserve robs the average person of their wealth through the hidden tax called inflation.