Help Me With Sign New York Banking Notice To Quit

Help me with industry sign banking new york notice to quit

[Music] [Music] three [Music] what is interesting is that the general price level in terms of gold is still back where it was in other words the change in the price of gold is equal to the change in the price of commodities or the general price level [Music] which tells you that there's something about gold i've thought about this for a number of years and i reached blank it's almost as though technically speaking the ability of having a stable price has great value has great value the ability of having a stable price has great value now price stability as you saw in the two charts which appeared as greenspan spoke there was a feature of periods when the world was on a gold standard and it was and it has been completely absent during times when the pressures created by the presence of a gold standard proved too much now this stability was according to david ricardo crucial in trying to create what he called a perfect currency and while mankind has never succeeded in creating monetary perfection hundreds of years of history show that while supposedly baffling to our friend the maestro mankind has employed a monetary system based on a gold or silver foundation for the vast majority of the past five centuries now having a gold backing to the global monetary system generated lengthy periods of great prosperity and stability all of which were ended temporarily by man's insatiable appetite for war and finally rendered essentially extinct by his unquenchable thirst for leverage and make no mistake about it the gold standard does produce pressures under which the system can struggle but much of that pressure is either a function of man's desire to create credit and employ leverage to achieve outside gains or is the result of impossible promises made in order to win an election these promises then increase a country's liabilities to the point where they become completely unsustainable the reality is that the u.s economy was underpinned by a gold standard throughout the most expansionary period in its history the boom times of the late 19th century while britain created the largest empire the world has ever seen one which at its peak covered 24 percent of the earth's land mass while it was subject to a gold standard for over 200 years the gold has always been a great measuring stick for value over time and one of the beauties of its long history is that it gives us the ability to look far into the past to understand how gold has performed over centuries here for example you can see the price of commodities in dollar terms going back to the late 18th century now prices understandably spiked during various wars but when all was said and done the price of commodities remained essentially stable for 150 years and as greenspan pointed out that stability had great value as the world underwent an incredible transformation during the industrial revolution which is something that many people either forget or simply don't realize took place under a gold system however if we look at those same commodities when priced in gold we see a completely different dynamic playing out as commodity prices have fallen in real terms at a little under one percent a year compounded for over 200 years during that period as this chart shows there have been two major turning points roosevelt's one-off devaluation of the dollar in the 1930s put some distance between those two lines as you can see there but they remain pretty much parallel until in 1971 you know who did you know what now once nixon ended bretton woods and effectively the gold standard everything changed and the changes that occurred were profound this chart shows the inflation-adjusted gold price in pound sterling going back to the year 1265 that's 750 years of gold prices and when we look at this chart several things are immediately evident firstly 500 years into this chart the gold price is exactly where it began showing that over the really long run gold does what it's supposed to do it preserves wealth and it preserves purchasing power secondly the period since the end of bretton woods in 1971 is really the only personal experience any of us has in real terms and so it colours our judgment of the gold standard as you can clearly see the pattern on this chart of the price during the course of our experience is totally different to any other period in those 750 years so realistically speaking how could we be expected to understand the benefits of a gold standard and thirdly during that 500 years we effectively saw a 150-year bull market of sorts in gold followed by a 200 year bear market and then another 100 year bull run and gold trends it really does trend but here's a close-up of the last 150 odd years you can get a better understanding of what happened when any limitation on government spending was removed predictably of course the gold price exploded now for the last 47 years the world's monetary system has been based upon the greatest experiment in financial history a purely fiat regime in which the world has for the first time since records began no single sound currency initially as you can see the trepidation in this chart as the world removed as well moved to a purely fiat system but by the time 2000 came around politicians and bankers had got the hang of this whole bottomless coffers infinite leverage thing and they set about trashing the financial ecosystem in some style however even though we're in uncharted waters what makes it difficult to contemplate a world with a gold standard provides the backing to the financial system and this experiment will come to an end it's just a matter of time now behind me you're going to see a list of 594 currencies which have all disappeared over time for one reason or another in fact the average lifespan of a fiat currency is a little under 30 years this list however is anything but exhaustive there have been over 3 000 recorded fiat currencies all of which by the present cohort have failed for one reason or another and so as the current experiment reaches its limits and with pastors prologue i want to talk today about what i believe will be at some point an inevitable return to a variation of the gold standard of some sort now the gold standard has been blamed for all sorts of things most notably the great depression and has created two very distinct camps each of which like everything else in today's society holds its opinion incredibly strongly but the truth is far more nuanced than that now back in 1966 our friend alan greenspan seemingly had absolutely no trouble whatsoever in understanding gold when he wrote his essay gold and economic freedom he said under a gold standard the amount of credit an economy can support is determined by the economy's tangible assets since every credit instrument is ultimately a claim on some tangible asset but government bonds are not backed by tangible wealth only by the government's promises to pay out of future tax revenues and cannot easily be absorbed by the financial markets now having beautifully explained how the gold standard functioned greenspan went on to explain the problems its abandonment had caused a large volume of new government bonds he wrote can be sold to the public only at progressively higher interest rates thus government deficit spending under a gold standard is severely limited the abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit now greenspan singles out what he called back in the time the welfare statists in particular because having no anchor of any kind to sound money not only enabled but encouraged them to promise and spend without restraint the welfare state was signed into existence by franklin d roosevelt in 1935 just two years after he outlawed private ownership of gold through executive order 6102 and just 18 months after the 1934 gold reserve act revalued gold and devalued the u.s dollar by 75 but greenspan didn't stop there the financial policy of the welfare state he wrote requires that there be no way for the owners of wealth to protect themselves this is the shabby secret of the welfare status tirades against gold deficit spending is simply a scheme for the confiscation of wealth gold stands in the way of this insidious process it stands as a protector of property rights if one grasps this one has no difficulty in understanding the status antagonism toward the gold standard the antagonism towards gold by those who greenspan identified as the status in 1966 was real back then and it's real now the only difference is that today we call them the establishment now the system as it stands works really well for politicians and bankers right up until the point when it doesn't but by then they're either out of office or they've retired in luxury gold has stood for everything that greenspan identified for millennia it served as a hedge against deflation during the period we've been talking about between 1929 and the outbreak of world war ii before which it had been the savior of any germans who'd had the foresight to keep their savings in gold during the weimar hyperinflation slightly more recently it performed brilliantly in the period between 2000 and 2010 which will refer to kindly as a period of disinflation and of course back in the 1970s when stagflation was the problem faced by savers gold once again did what it was supposed to do in protecting the integrity of their savings but the title of this presentation as you hopefully have noticed is crywolf so i'm going to leave the gold standard just for a moment and talk about why i chose that particular title because so far i can see a few people scratching their heads the phrase to cry wolf comes from an esop fable about a young shepherd boy and it speaks to the problem in making repeated claims that something bad is happening which turn out to be false because eventually you may find yourself facing the same bad outcome only by then nobody's actually listening to you anymore now this is a very real problem for anybody who's talked about the dangers facing the world since before 2008 and i like many of the people you'll see on this stage count myself firmly among that number but just like the wolves in esop's fable the dangers circling financial markets and indeed the entire world are very real indeed but those who've been warning about them have been made to look foolish by the continued intervention of central banks for a decade now now this doesn't mean the dangers aren't there it just means people are sick of hearing the word wolf now of course in esop's fable the boy's sheep actually end up getting eaten by the wolf as does the boy himself in some of the more grisly retellings of the tale but the bad ending is the whole point of the story without the bad ending there's no lesson in morality now the last 40 years something about which there have been any number of dire warnings from the financial and political establishment is this idea of a possible return to a gold standard of course they have its return would be devastating to both groups now in essence with the exception of world war one and a brief period after the great depression we in this room have all lived through the only pure fiat era in human history and the ramifications of that are considerable most of us have no real experience of living under a gold standard and so a world without one has completely become the norm now we humans are bore change we don't handle it well and so a possible return to a gold standard is completely dismissed out of hand the same way the little boy's cries were dismissed in esop's fable the return to a gold standard after world war one was actually pretty straightforward the idea was still very fresh in public minds it hadn't been absent long enough to allow huge credit and balances to build up same goes for the implementation of bretton woods after world war ii but today its reintroduction is commonly believed to be both unnecessary and impossible to pull off so let's talk about the gold standard and see how the cries for a return to one might eventually be proven fair warning and i suspect catch a lot of people by surprise but before we do and to help me tell the story i want to introduce you to this fella the grey wolf or canis lupus to his friends now at one point in time the gray wolf was the most widespread mammal in the world with large populations roaming north america asia and europe but coincidentally by the time of the great depression the gray wolf was battling extinction in the united states the population had dwindled to about 30 odd wolves in yellowstone national park by 1973 when the endangered species act was passed there were no gray wolves in the west of the united states though there were several packs in canada and northern minnesota the gray wolf is what's called an apex predator this means it has no natural predators of its own it sits comfortably at the top of the food chain alongside things like lions and tigers and great white sharks the apex predator gets its name from being at the apex the highest point of an ecosystem and we think of it as a shape such as a pyramid for example now sadly there's very little you need to know about pyramids it's a pretty boring shape it has a base it has an apex and it has four sides and that's pretty much it but you can turn them upside down which is something john extra an american economist and a former new york fed governor did when he created what became known as exeter's inverse pyramid now this is a visual representation of risk and value which shows the layering of increasingly risky assets on top of a small base of gold or real money now extra also understood the very nature of our present day monetary system within the context of history and that is something he had in common with friedrich von hayek the distinguished austrian economist who observed that the absence of a gold standard allowed governments to issue money with abandon in order to defraud and plunder the people now that plundering of course is achieved through inflation something which our old friend the maestro himself was all too aware back in the days when he read ein rand and espoused the value of gold and before of course he became chairman of the federal reserve in the absence of a gold of a gold standard greenspan said there is no way to protect savings from confiscation through inflation there is no safe store of value a gold standard does provide a way to protect savings from confiscation through inflation so is it any wonder that the loudest cries you're going to hear about the dangers of its return are from the financial establishment to them unfettered leverage is a metaphorical licence to print money and to the political establishment the absence of a gold standard is a licence to print metaphorical money so let's take a quick look at the history of the gold standard and examine how it worked now the classical gold standard began in 1871 after the franco-prussian war and by the turn of the century the idea had swept right across the globe with the notable exception of china and a few central american countries now under the classical gold standard each country's domestic money supply was directly tied to its store of gold and its central bank had a very very limited set of responsibilities adjustments in interest rates could be used to speed up or slow down the natural adjustment mechanism embedded within the gold standard but otherwise that was pretty much it currencies were fixed against a specific weight of gold or against another currency which had done so domestically currency would be converted into gold on demand and the import and export of gold was completely unrestricted what this did was effectively create a fixed exchange rate under which the majority of the world not only operated but flourished any country running a trade deficit would experience outflows in their gold stocks which would then reduce their ability to issue gold linked notes and therefore contract their money supply in turn that made their goods cheaper and imported goods more expensive this dynamic ensured that the whole problem was self-correcting global imbalances were constrained by credit expansion in the surplus countries and contrac ion in deficit countries a country's currency was pegged to gold and if the price of gold deviated too far from the peg gold flows would instantly and automatically bring it back into equilibrium this was the so-called price specie flow mechanism laid out by the 18th century economist and philosopher david hume it was simple and it was incredibly effective and that's why it lasted for centuries now the system had twin achilles in the shape of any hoarding of gold which reduced supply and the potential slowdown in the discovery of new metal but the system's real vulnerability was the exact limitation that the gold standard was designed to put in place it eliminated discretionary monetary policy by central banks and it also eliminated fiscal recklessness by politicians period and by doing those two very simple things it also limited the amount of leverage in the system now throughout history the global economy has gone through periods of dramatic expansion invariably from a stable footing which was typified by limited leverage and in such times the the imposition of a gold standard could definitely be a hindrance even under the gold standard the world has always had a single currency which was accepted everywhere it's called the reserve currency in the 15th century it was provided by portugal of all places a seafaring nation which built itself an empire until it overreached and fell into decline next up with the spanish then the french the dutch and the british all of whom were mighty naval powers and all of whom overreached and saw their empires and their preeminence crumble now of course the current provider of the world's reserve currency is the united states and the us has the luxury of wearing this crown during this period of purely fiat money and that dynamic has allowed it to maintain its position longer than most of the others despite having arguably also overreached because there's been zero restraint on its ability to create the money necessary to fund its empire gold at the top there well that's been a reserve currency for 5 000 years and it's going to remain one long after everybody in this room is gone now the way in which the reserve currency is important to understand because as things currently stand one of the stated aims of president trump is to tinker with the very foundation atop which the dollar's exorbitant privilege rests and that's the u.s trade deficit whichever currency serves as the world reserve is by definition required to be held by all the world's central banks and unfortunately there's only one way to acquire those reserves and that's to run a trade surplus with the united states as you can see in this chart things changed after the closing of the gold window with the u.s being required to run larger and larger deficits in order to fund the expanding dollar requirements of the rest of the world and once the last restriction on the creation of money by the world's central banks was removed of course fiat reserves exploded now i'm sure you don't need me to point out that something material changed in that rectangle at the top right of this chart central banks started to reduce their reserves now trump's trade wars and his attempts to reduce the trade deficit are the reason why there is a stealth panic for dollars right now causing the dollar to spike but this system is also the reason why things can't be allowed to get out of hand if president trump has his way and meaningfully narrows the us deficit this dynamic will reverse and that is trouble for the current system and all of this was laid out by the economist robert triffin in what became known as triffin's dilemma now trivia identified the conflict between domestic policy requirements and the burden of satisfying international demands for the reserve currency and he stated quite correctly as it turns out that you can have one but you can't have the other at least not over the long term now as i mentioned the strains being placed upon the current system by donald trump's policies are being seen in the recent strength of the us dollar although as you can see from this longer term chart it's necessarily weakened over time because under this current system the dollar essentially has to recently however other central banks have been actively moving themselves away from the dollar's orbit and trying to establish an alternative financial framework within which to operate without their being hostage to us policy and we'll get to those shortly first time we need to take a look at the world's goal reserves because at some point in time i believe they will once again be placed at the center of the financial system not out of choice it's crucial to understand but through necessity now even under a gold standard the uk's gold reserves were minimal until 1914 even though the country could claim stewardship of the world's reserve currency at the time reserves climbed steadily between world wars 1 and world war ii and plateaued in the 1960s under the bretton woods system now the uk found its gold reserves depleting dramatically during the 1960s until that slide was halted by nixon's closing of the gold window in 1971. from there britain's reserves went sideways until chancellor gordon brown decided they were no longer necessary and he sold 400 tons at the lowest recorded price since the late 1970s now the same chart for the us has a very familiar shape to it although the u.s hasn't been as foolhardy in the uk as depleting its gold reserves down to almost zero but instead it's maintained eight thousand one hundred and thirty three tons of this supposedly useless metal now those eight thousand tonnes are the all the backing the us has for its debts and yes people talk about the value of national parks and government buildings et cetera but there's no way the u.s is going to sell yellowstone or yosemite to pay off the chinese anytime soon now if we look at the all-important gold coverage of the monetary base of the united states we find a compelling illustration of not only why this is incredibly important to understand but also just how badly out of hand things have become without the discipline imposed by a gold standard the gold coverage of the monetary base was 130 when gold price peaked in 1980 at 800. so to see that coverage languishing below 25 today with gold at 1300 shows just how wanton the money printing has been the two devaluations of the dollar by roosevelt nixon redressed the balance temporarily but man's thirst for leverage is strong every now and then it requires a reset and if past is prologue as shakespeare said now looks a lot closer than then okay so like the forests and the parklands formerly inhabited by our friend the grey wolf the removal of the apex of extra's pyramid from the financial system has allowed the unshackling of central banks from financial discipline and it's also meant that the financial sector itself has proliferated with bankers and financiers multiplying like deer in a forest that has no apex predator to keep them in check owning the reserve currency of being required to run a deficit with the rest of the world has necessarily meant that u.s managing u.s manufacturing sector shrunk because outsourcing that part of the economy was the easiest way to guarantee the existence of those trade surpluses that the rest of the world absolutely requires in the current system from its peak in 1980 the manufacturing sector in the us has shared some seven million jobs and that's a big reason why donald trump's campaign promises resonated so strongly with middle america as you can see here the manufacturing sector has seen its share of employment fall steadily since the end of bretton woods and its share of gdp essentially flatlined during the same period meanwhile however for the financial sector it's been boom time with its share of employment growing strongly and consistently since the end of bretton woods as manufacturing declined and financialization slowly took hold after the deregulation of the 1980s the sector's share of gdp has completely decoupled soaring to almost nine percent and the desperate need the world seemingly has for yet another banker has seen wages in that sector relative to other industries absolutely skyrocket exactly i might add as they did in the roaring 20s right before the great depression took its toll on financial industry remuneration and brought it back into line with the rest of society where it belongs in fact the correlation between expanding financial industry and rising income inequality is incredibly strong as you can see from what is a somewhat complicated chart here which essentially uses four different metrics over time to provide a longer term measure of the finance insurance and real estate or fire sector's income and we we contrast that with the one percent which as you can see here correlates incredibly tightly as you would expect this is another downside to the absence of any kind of a gold standard those who earn their money from money make a fortune when there's no limit to the amount of money they have to play with in a world without an apex predator like the grey wolf financial sector deer have been gorging themselves and that feasting's had an inevitable effect on the landscape since the demise of the gold standard the destruction of the dollar has picked up speed as the new found freedom granted to the fed to print money and the complete removal of any restriction placed upon america's politicians to make outlandish promises in order to get elected have combined to ensure the destruction of the dollar's purchasing power now that destruction is officially one half of the fed's twin mandate and since the creation of the federal reserve you'd have to say they've done a superb job the dollar's lost 96 of its purchasing power in that time and by way of comparison from a couple of thousand years ago this is the physical silver content of the roman denarius as that particular empire crumbled meanwhile the amount of leverage in the system has understandably exploded and this chart perhaps above any other illustrates clearly the damage done to the landscape in the absence of an apex predator the deer of the financial industry have gone crazy so we've looked at the past but as shakespeare told us that's nothing more than prologue so has the time arrived to consider a return to a gold standard of some form well whenever the idea gets raised it is always shouted down as a ridiculous proposal that would do a lot more harm than good and which would supposedly lead to another great depression or worse now the reason for that we've already covered discipline is not something anybody wants imposed upon them particularly when they've had free reign for almost 50 years the reintroduction of gold to the financial system wood we're told upend an ecosystem which has spawned massive and ravenous financial population and given politicians the means to make the very foundations of our monetary system unstable by changing the boundaries within within which finance has historically flowed for centuries now already there are signs that a move has begun at the fringes of the global financial system to at the very least place the foundation stones for a possible return to some form of gold standard in place and of course it makes sense that these fringes would be where such a change happens because why would it ever begin with the dollar or within the u.s why would those who've had it for so good want to change things they wouldn't they won't the chinese though and the russians well they certainly would and if you look closely you'll see that they most likely are physical withdrawals from the shanghai gold exchange have risen dramatically over the last several years and they show no sign of stopping meanwhile russia the world's third largest oil producer has also been accumulating gold at a breakneck pace quintupling its reserves over the last decade but none of this is new i spoke about this in a presentation i gave back in 2016 called get it got it good but what is new is the fact that alongside their rapid accumulation of gold the russians have begun doing something else something important steadily dumping their u.s treasury holdings and with it their dollars at least it was steadily until april and since then they've basically taken those holdings down to zero in just a few months this puts them in good companies the chinese have also been reducing their holdings of treasury steadily over the last five years and with the current trade war escalating this will be another background a battleground should tensions be allowed to rise too far now if you look carefully increasingly stories about either the dollar's demise or the end of its hegemony or dominance have been creeping into mainstream media as a once unthinkable idea seems to be gaining more credence by the day if you're looking for them you'll find articles about the end of the current dollar system and a possible rise and alternative base outside the west increasingly prevalent now to be clear am i saying a return to the gold standard is imminent no i'm categorically not saying that am i saying it's inevitable well in some form or another i believe it is but what's crucial to understand is that before it happens there has to be another crisis these sorts of changes can't and don't take place without one they don't get made through choice they get imposed under extreme conditions so what might a new gold standard look like well any return to some form of gold standard would be a massive deleveraging event the that purges the system of excess credit and creates chaos there's simply no way to move from unlimited credit to the rigid discipline of a gold standard without all hell breaking loose but just hold that thought for a minute of course there are ways to build a degree of flexibility into whatever comes next but it will by definition have to be more restrictive than current conditions and that means a lot of unserviceable debts will be revealed as such a new gold standard would lead to massive social upheaval as bankruptcy saw and unemployment rises it would also lead to great political upheaval as incumbents get blamed and potentially extreme alternatives get chosen by an extremely angry electorate and finally of course there will be tremendous financial market upheaval as the finance sector is decimated banks that are levered to the hilt go bust and the massive overvaluation of equity and bond markets thanks to a decade of qe and 40 years of limitless credit get wiped away this is what would undoubtedly happen if a gold standard were to be reimposed and it's the reason why people say it can never happen and you have to admit it's hardly what you call an appealing prospect however as i already said gold standards don't get imposed through choice but they get imposed through necessity and if you look at things a little differently the picture changes dramatically we already have social upheaval all around us left against right man against woman boomer versus millennial everywhere you look you're going to find conflict we have political upheaval from the white house to the uk parliament to brussels hungary austria turkey and beyond politics is in utter chaos across the globe what we don't have yet is our people in the financial markets the very subject i and others have been crying wolf about for a while now but here's why it's important to at least listen to those crying wolf this flow chart shows what would happen if a gold standard were to be imposed but as i've already said they don't get imposed through choice they get imposed through necessity and when that happens you don't begin with the gold standard the gold standard is where you end up and we're perhaps a stock market crash away from all the conditions being in place financial market upheaval social upheaval and political turbulence lead to the imposition of a gold standard not the other way around that's where people get it wrong and that's how you need to think about this now there are of course many ways in which a gold standard could be reimposed which is another reason why when the financial and political establishment state categorically that it's unworkable they do so out of pure self-interest the gold stan ard has had multiple forms over the years and its next iteration will perhaps offer a new alternative altogether but it's likely to be one of three basic systems the first system is one in which the price of gold as a reference is fixed at a certain level pick one two thousand five thousand some people make a very viable case for 50 000 gold and the brick bet that most often gets thrown at this idea is this one there isn't enough gold available to back the world's money supply and or assets with gold which is anybody who bothers to think about this in practical terms will tell you is nonsense it's a question of price at the right price gold backs every asset on the planet but given the extent of the leverage in the system the price required for it to do so would be astronomical that's the flaw in this particular system set the price too low and you cause massive deflation if you set it too high the problem becomes massive inflation the level of finesse required in this system combined with its inflexibility does make it essentially unworkable in the modern world the alternative a system where the amount of gold exchangeable for a given currency unit is fixed is essentially a return to the bretton wood system now under such a system if the gold price falls money flows out of gold and into financial markets which is a de facto easing and if prices rise the opposite occurs the necessity of being able to convert that fiat currency into gold on demand places limits on the amount of currency in circulation central banks would still be able to adjust rates and speed the self-correction process in both directions when deficits and or surpluses occurred and this would in most cases avoid reaching the stage where large amounts of gold needed to be physically moved to settle balances again the institution of such a system would occur against a backdrop of chaos and confusion but it's a proven way to stabilize a system that's creaking another option is a currency board whereby instead of a single currency a fixed amount of gold is exchangeable into a basket of multiple currencies now this system has flourished in the uk and the us in centuries past and it's highly flexible it functions very similarly to bretton woods but with the notable absence of a single hegemonic reserve currency a role which essentially gets taken by gold in this system now the sdr system which jim rickards talks about employed by the imf is a variation on this theme and it's likely to be as jim says front and center of any discussion about a return to some form of gold standard now i'm fully aware that i've been superficial in sketching out these three possible types of gold standard but sadly we don't have time to dig into too deeply today but i wanted to talk more about this from a conceptual standpoint as opposed to getting into the wheat and help you start to actually just think about it what we need to do before wrapping this up is return to yellowstone national park and our lupine friend the grey wolf now as benjamin franklin franklin famously described democracy hang on that's jim rickards there we go benjamin franklin famously described democracy as two wolves and a lamb voting on what to have for lunch and i think it's safe to assume that had you asked the lamb for his opinion it would have been rooted in one thing and one thing only his own survival now that dynamic exists in the financial system today as the financial and political deer which have proliferated in the absence of gold's apex predator are naturally motivated wholly by self-preservation if you ask them about the possible reintroduction of an apex predator they'll tell you in no uncertain terms it's an absurd idea one which will end disastrously of course they will and this is exactly what happened in the early 1990s when a proposal was made to reintroduce our friend the grey wolf to yellowstone national park in order to try and reduce the massive overpopulation of deer and elk which was systematically grazing away the park's vegetation as you can probably imagine the proposal was met with a fire alarm what the hell is that the proposal was met with massive resistance reintroducing wolves to yellowstone was a ridiculous idea people said and would have had catastrophic consequences protests were organized politicians were lobbied and a great debate waged with very little common ground evident between both sides once again now eventually after an almighty battle it was decided that just 31 walls will be would be reintroduced to the three and a half thousand square miles for the park in 1995. now when that decision was announced the protests intensified and warnings of a catastrophic outcome grew louder but then something incredible happened the reintroduction of those 31 wolves caused something called a trophic cascade to ripple through yellowstone national park with profound effect what's a trophic cascade i hear you ask i'm glad you asked now before the wolves turned up they'd been absent for about 70 years and the numbers of deer because there'd been nothing to hunt them had built up and built up in yellowstone park and despite the efforts by humans to control them they've managed to reduce much of the vegetation there to almost nothing they simply grazed it away but as soon as the wolves arrived even though there were few in number they started to have the most remarkable effect at first of course they killed some of the deer but that wasn't the major thing much more significantly they radically changed the behavior of the deer the deer started avoiding certain parts of the park the places where they could be trapped most easily particularly the valleys and the gorges and immediately those places started to regenerate in some places the height of the trees quintupled in just six years their valley sides quickly became forests of aspen and willow and cottonwood and as soon as that happened well then the birds started moving in the number of songbirds and migratory birds started to increase greatly the number of beavers started to increase because beavers like to eat the trees and beavers like wolves are ecosystem engineers they create niches for other species and the dams they built in the rivers provided habitats for otters and muskrats and ducks and fish and reptiles and amphibians the wolves killed coyotes and as a result of that just the walls in coyotes the number of rabbits and mice began to rise which meant more hawks more weasels more foxes more badges ravens and bald eagles came down to feed on the carrion that the wolves had left bears fed on it too and their population began to rise as well partly also because there were more berries growing on the regenerating shrubs and the bears reinforced the impact of the wolves by killing some of the calves of the deer but here's where it gets really interesting the wolves changed the behavior of the rivers the rivers began to meander less there was less erosion the channels narrowed more pools formed more riffle sections all of which was great for wildlife habitats the rivers changed in response to the wolves and the reason was that the regenerating forests stabilized the banks so that the banks collapsed less often so thanks to the wolves the rivers became more fixed in their course similarly by driving the deer out of some places and the vegetation recovering on the valley side there was less soil erosion because the vegetation stabilized that as well so the wolves small in number transformed not just the ecosystem of the yellowstone national park this huge three and a half thousand square mile land but they also changed its physical geography now the financial system just like yellowstone national park is a natural ecosystem which needs an apex predator in order to function effectively removing any ecosystems in aprix predator can seemingly have no effect for a while but gradually the system's natural balance is affected and the imbalances that build up threaten its very existence gold was the apex predator of the world's financial system for centuries until like the grey wolf its existence became threatened in the 1930s in the 1970s thanks to richard nixon's actions it was officially placed on the endangered list and today the idea of its reintroduction stirs emotions on both sides just as the proposal to reintroduce the grey wolf to yellowstone did in the early 1990s in gold's absence bankers have multiplied precipitously creating new products that are all variations on the same theme credit as they've multiplied they've grazed away the financial landscape to virtually nothing gold's reintroduction to the financial system however it happens will reintroduce an apex predator one that keeps bankers in check one that reigns in wanton credit creation and allows surprising parts of the financial ecosystem to flourish companies reliant upon abundant low-cost capital will be preyed upon by those strong enough to survive on their own the deer herd will be cold forcing them to change their behavior and as the effects of gold's reintroduction ripple through the financial ecosystem its geography will change the banks of the rivers along which money flows will become stronger more robust and for the first time in almost half a century the balance will be tipped away from those keen to use leverage and making possible promises and back towards savers who will once again be offered protection from confiscation through inflation it's almost as if technically speaking the ability of having a stable price has great value thank you all for listening