[Posted November 9, 2007]

That's not money; it's paper

A.C. Bhaktivedanta Swami

At last someone talks sense on monetary policy

CNBC News - Congressional hearing: Ron Paul questions Ben Bernanke on monetary policy

Ron Paul Schools Ben Bernanke Again

We have a serious problem. We don't talk much about how we got here. We talk about how we're gonna patch it up. The bubble has been burst. We saw what happened after the NASDAQ bubble burst, but we don't ask how it was created. And then we have a housing bubble, and it's deflating, and it's spreading. And yet nobody says, "Where does it come from?" And what is the advice that you generally get? That is "Inflate the currency." They don't say "inflate the currency." They don't say "debase the currency." They don't say "devalue the currency." They don't say "Cheat the people who have saved." They say, "Lower the interest rates." But they never ask you, and I don't hear you say too often, "The only way I can lower the interest rates is I have to create more money. I have to lower the discount rate. I have to make it generous. I have to increase reserves. I have to lower the interest rates and fix the interest rates and overnight rates." And the only way you can do this is by increasing the money supply. And I see this as the problem that we don't want to talk about.

... At the end of your testimony, you suggested that we should address this housing crisis, and we should have rules that would address deceptive lending practices, and I just think that is not the answer at all. The real deception is when we distort the value of money. When we create money out of thin air, we have no savings, yet there's so-called capital, there's money available, but it comes from what you have to do, and the pressure is put on you. So I think we have to get back to the very fundamentals of where this problem comes from. And the bubbles occur when we have this malinvestment and the creation of new money. So my question boils down to this. How in the world can we expect to solve the problems of inflation, that is, the increase in the supply of money, with more inflation? go to video clip

The Bhaktivedantas World Sankirtan Party and Inside Nam Hatta are hosted by Hansadutta das, a senior disciple of Srila Prabhupada and trustee of The Bhaktivedanta Book Trust. Participate or learn more about World Sankirtan Party.

Stamp Out Inflation

Restoring Money's Worth A.C. Bhaktivedanta Swami

Everyone can understand this is pure cheating. I give you a hundred dollars, a piece of paper. That's all. And you accept it. You want to be cheated. You thought, that "I have got now daily, hundred dollars. So let me work very hard." He does not consider that "I am not getting a hundred dollars. I am getting a piece of paper." So people have no brain to understand even. "This is not hundred dollars. Give me cash, hundred dollars." Then everything, solution will be... There will be no inflation. Because I know that paying you a piece of paper, I can cheat you, therefore I am printing notes, to cheat so many people. Therefore inflation. But when there will be no possibility to cheat you, then there will be no inflation. Here I have got the opportunity, because I know that pushing forward a piece of paper, I can cheat so many people. So there must be inflation. Is it not? This is not psychological? If I know that I can cheat you by this instrument, so why shall I not increase that? That is inflation. more

Reintroduce gold coin

excerpt from conversation with disciples, Bhuvaneshwar, January 21, 1977

RAMESVAR: There was one question I had, Srila Prabhupada. You have written in the Third Volume of the First Canto [Srimad-Bhagavatam 1.17.39] different instructions for the age of Kali, how there'll be compulsory marriage and so on and so on. And you mentioned about the gold standard, that this is very bad, this artificial standard of monetary exchange.

PRABHUPADA: Oh, yes. It is very bad.

RAMESVAR: In the future this is something that we should try to correct.

PRABHUPADA: You should introduce coin, real money.

HARI-SAURI: Real gold coins. No paper.

PRABHUPADA: Anyone has got money... It is fact. And what is this nonsense, keeping some paper and thinking he has got money? How cheating it is going on, from government's side. And therefore artificial inflation. You can print, so the price is increased. Because you haven't got to pay him real money, you print and pay him, and he will ask, "Give me this money. Then I'll supply." "All right, take." You print and pay.

RAMESVAR: It's definitely a means that the government has for controlling. Because they can withdraw money, pull it back out of circulation by increasing the interest the banks give, or they can get more money in...

PRABHUPADA: Anything done artificially.

RAMESVAR: They control the amount of interest on loans. It's all standardized from what they call the Federal Reserve system. This was introduced during the Depression by the bankers.[1]

PRABHUPADA: Whatever they do, when you receive money in the paper it has no value. Bad money. It is bad money. It is not good money.

RAMESVAR: Actually most purchasing in America is done on credit now. Even a step beyond paper money is credit, no money, buying on no money, loans.

PRABHUPADA: That is in India also.

RAMESVAR: We don't find these things in Vedic culture too much.

PRABHUPADA: There was never paper money.

HARI-SAURI: No. They used to...

PRABHUPADA: That barter system. You have got rice; I have got something else. So I give you something; you give me something.

HARI-SAURI: But isn't inflation possible even with coins? Even if you have gold coins, isn't inflation still possible?

PRABHUPADA: No, gold is acceptable by everyone.

RAMESVAR: The main point is the barter system.

HARI-SAURI: Yes, well its value is recognized by its purchasing power.

PRABHUPADA: Yes.

HARI-SAURI: So you can alter... Say, you have one gold coin. You can alter what it...

PRABHUPADA: No. If you introduce real metal coin, then there will be no inflation.

HARI-SAURI: There's only a certain amount of metal.

PRABHUPADA: That's all right. The exchange... The more demand, more price. So suppose here is a spectacle. I am demanding ten rupees. So both of you are customer, and you are asking for this spectacle. Then I am increasing my price. So if you can pay me by printing paper, you'll accept any price. That means artificially price is increased. Is it not?

RAMESVAR: Yes.

HARI-SAURI: So the idea is that with coins the man who has the goods, he can't...

PRABHUPADA: Therefore... Suppose he has got ten coins; you have got ten coins. I am wanting fifteen coins. So there will be no competition. I have to accept either from you or you, ten coins.

HARI-SAURI: Right. Because there's only that much money.

PRABHUPADA: But if I increase price and if you print... If you have got power to print, "All right. Take fifteen coins, er, fifteen rupees." But you can print and pay me. But if the gold, the coin, is there, you cannot increase on that.

HARI-SAURI: He can't increase the price of the product, and the man who got..., because there's only a certain amount of money there.

PRABHUPADA: But I can increase the price provided you pay me. But by printing, it is easier. But if you have to collect coins, that will be difficult, so there will be no artificial increase of...

HARI-SAURI: Yes. Coins is a check...

PRABHUPADA: Yes.

HARI-SAURI: ...on charging too much.

PRABHUPADA: That is wanted. And these rascals, they are artificially printing paper as money. And I am a rascal; I'm demanding more because I have got customer.

RAMESVAR: The difference between Vedic culture and..., the Krishna conscious culture and the modern culture is very, very dramatic, very big difference. So the transforming of society...

PRABHUPADA: And besides that, if we concentrate in farm project there will be no need of exchange, because I'll be satisfied with my products. That's all. There is no need of exchange. Whatever I need, I get in my farm.

RAMESVAR: Weaving, cloth.

PRABHUPADA: Everything I get. So I haven't got to go outside for exchange. If you are satisfied in your farm—I am satisfied—then where is question of exchange? There is no need of artificial... So this banking, "fanking," everything will collapse automatically. There is no money, who is going to keep money in the bank?

HARI-SAURI: Who needs it?

PRABHUPADA: [laughs] So this artificial way of banking, that will be also collapse.

HARI-SAURI: This is revolutionary.

RAMESVAR: It's very hard for the mind to...

PRABHUPADA: No, simply do this.

RAMESVAR: Such a dramatic transformation of society.

PRABHUPADA: Yes. Whatever it may be... We should be satisfied locally by our food, by our cloth, by our milk. That's all. Let the whole world go to hell. We don't care. If you want to save yourself also, you do this. Here is an example. If you want artificial life, city life, and hellish life, you do. But we shall live like this. This is the ideal life.

HARI-SAURI: But still, we're going out to attract people to come to our lifestyle.

PRABHUPADA: Hm?

HARI-SAURI: We're still going out to attract people to come and live like us.

PRABHUPADA: Yes.

RAMESVAR: Well, even more than that, we know that we have the secret to real life, so it's our duty to actually... Just like you say...

PRABHUPADA: That is preaching. That is preaching.

RAMESVAR: ...the surgeon, he must cut.

PRABHUPADA: Yes.

RAMESVAR: The doctor must...

PRABHUPADA: Yes.

RAMESVAR: ...save the patient. It's his duty.

PRABHUPADA: No artificial dealing. Purge out.

HARI-SAURI: When one actually has the power, he can do that.

PRABHUPADA: Yes.

HARI-SAURI: So by our preaching now, we have to try and establish a Krishna consciousness government first through the democratic system.

RAMESVAR: You said, "Think in terms of the whole world, not just one nation. That is our preaching." So you are training us to think very big, global.

PRABHUPADA: We keep the ideal style of life. You learn and do it. I am not encroaching upon your independence, but if you want to be happy, you follow. This is our process. Apani achari' jive shikhaila bhakti. [Chaitanya-charitamrita Madhya-lila 1.22: "...Through His personal behavior, {He} instructed all living entities in the mode of devotional service."] You be happy, very ideally, and people will learn. But this can be possible only on the basis of Krishna consciousness. If you make minus Krishna consciousness this thing, it will never be possible. Then it will not be possible. All these scheme will be successful if there is Krishna consciousness.

HARI-SAURI: Only if the chanting and prasadam is there.

PRABHUPADA: Prasadam, Deity worship, devotional life... Then it will be all right.

HARI-SAURI: Yes. Gandhi could never implement his program.

PRABHUPADA: Nobody can do. They simply... Even... What is that? Marx? He could not. There is no real attraction. Artificial, by force. Here the real attraction is Krishna. So other thing he doesn't mind: "Let there be little inconvenience. I don't mind."

HARI-SAURI: A devotee is actually getting a higher taste. He's getting some real enjoyment, so he doesn't care for the other things.

PRABHUPADA: So unless there is enjoyment he cannot stick. But that enjoyment is Krishna.

HARI-SAURI: Just that chanting is enough. It's just so much nectar.

PRABHUPADA: No, everything—Deity worship, chanting, kirtana, preaching, publishing, distributing—everything.

1. — The Federal Reserve Bank was created in 1913, and has been fingered by some as instrumental or at least implicated in faulty monetary policies that led to the collapse of the economy and the Great Depression; not that it was created in the Depression to rescue the economy. back to text

Sri Guru and Gauranga