The Capitalist System’s Agenda with David Morgan

TWS 11 | Capitalism


Some say that many governments have tried various economic systems, but there’s nothing like capitalism. How true is that in today’s government and market? Capitalism is a financial system where goods and services produced are through supply and demand in a market economy. A precious metals aficionado armed with degrees in finance and engineering, David Morgan gives more precise and in-depth insights on the different types and principles of capitalism. In this world of chaos that we live in, The Morgan Report founder sheds light on the importance of being accountable and trustworthy in business as he critics the current monetary and market systems.

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The Capitalist System’s Agenda with David Morgan

We’re going to dive into some philosophy as it relates to capitalism. I have an incredible individual that’s on. His name is David Morgan. He’s an economist, a precious metals expert, a writer and is the publisher of The Morgan Report. David, thank you so much for joining me.

Thanks for asking me. It’s a pleasure to be with you.

I thought I’d start off because of your expertise as it relates to precious metals, how your perspective about the tenets of capitalism is maybe slightly different as an expert in precious metals than maybe someone with an economics degree?

I’m going to go through a stream of conscious, I’ve thought about what you asked. First of all, I adhere to pretty much the Mises Institute, so that’s the if you’re interested. There is a huge book called Capitalism that you can get actually download or get the PDF for free off of the Mises Institute’s website. There are a lot of critics about capitalism and I would say justifiably so. Every system has been tried and nothing succeeds like capitalism. First of all, you have to define it and I’m not sure this is a textbook definition but basically, it’s laissez-faire or the free market. There are a lot of people that say, “If it’s a free market, anything can happen. You have to have rules, you have to have regulations, you have to have regulators and without this you’re going to have complete chaos.”

You can’t legislate honestly. You can legislate it but you can’t do anything but enforce it. In other words, the market itself is the purveyor of right, wrong and good, bad and that type of thing. In a free market, the idea is the sound principle is that if I create something, I can benefit myself. Capitalists are selfish, yes and no. In true capitalism or idealize capitalism, I invent something because I’ve got this idea that’s going to save me time and energy, and it works. My neighbors come over and say, “That’s so awesome. I want one of those.” You build one for them and you barter. That’s true capitalism. Real capitalism or idealized capitalism, I am benefiting myself and society at large. This is the free market. I’m going to expand from this idea.

Let’s say in the real world, that’s the idealized world. We have a situation where there’s competition of capitalism. If I invent something, it works, I start to have a market, I get my neighbors involved and they all like it. One of the other neighbors says, “That’s a great idea but I know how to make that better,” and he does. Then basically, I’m more or less out of business or theoretically, I’m out of business because my idea has been made better and away we go. The market itself has determined, “This is the better product.” I want to take that theme and explore it a little bit. If it goes way back into the early days of self-entertainment, meaning the television but then this thing came out called the VCR, where you could actually get a movie and play it on your own TV.

There were actually two main thrusters there. There was the VHS and Betamax. Betamax was the far superior system than the VHS but if you had pure capitalism, the Betamax probably would’ve won out. In our society, we have something called advertising. If you can advertise something that might be inferior but convinced the majority or the consumer that your product is better for variety of reasons, you can have an inferior product take over the market, which is what happened with the VHS. This is another example because this one that hits close to home because I was all for the Betamax. When I went to buy one, the salesperson was nice enough to tell me, “Don’t, it’s not going to happen. It’s going to go the other way.”

TWS 11 | Capitalism


I want to point out some flaws to capitalist. Let’s go to non-classic Liberal. In some cases, they’re justified because there are people out there that only think of profit. They are greedy and basically run scams. It happens but again, you could legislate in a way and say, “You can’t do that.” In an idealized capitalism, if I make a product and it’s an inferior product, no one’s going to buy it. The market itself is going to give me true feedback and I’m out of business because word gets out. I might think that the product, but if I think it’s great and the market doesn’t, it’s useless. That’s where the real free market will work if it’s allowed to. People have this greed thing. This is probably something out there, I don’t know if I’m inventing this word or not. I’m sure it’s out there somewhere but I would consider conscious capitalism.

Conscious capitalism is where you actually take into the large picture something like the Native-Americans and the Chinese purportedly where you’re looking out four or five generations. You’re saying, “If I build this product like this, is this to the highest and best good of all involved?” Take off on that thing and hopefully you can follow my train of thought. In this day’s capitalism, there’s built-in obsolescence. You have an automobile, a washing machine, a refrigerator or whatever. A lot of these products could be made better. Meaning that they don’t have to have built-in obsolescence. It’s possible. An automobile, it’s not a good example but a refrigerator washing machine and stuff, they can be built to last 30, 40 years fairly easily.

Of course, they’re machines and they can break down and need repairs but overall built-in obsolescence is morally correct or morally incorrect. That’s a tough question. In our view of capitalism, if I build this VHS tape player and it only lasts five years, then I’ve got a market every five years because people are going to go back and you’re going to get a newer one. I have my business model so that I stay in business. If you’re a conscious capitalist, “I’m building this thing that’s going to be so good that this is going to last a lifetime.” I have to build it one time. That’s a much better use of resources. This is more conscious capitalism, more than driving out where you think it through and I could take it on a tangent if you don’t mind but this is more where the Millennials are going with the minimalist idea. That I only need one of these things, I don’t need twelve.

I only need one set of dishes. I only need one set of glass or only one set of coffee mugs. I like that idea because, we speaking to the society at large, have become brainwashed or the propaganda has got us to such a degree that rather than take what we need, we’re constantly taught what we want. Our want can never be satisfied because we always want the next iPhone. You’re taught this. In your heart of hearts, you may actually realize it doesn’t matter. It functions the same. There’s not much difference between my six and the ten. I’ve got a six and I don’t want upgrade it but that’s the idea. We’re built into this obsolescence, consume, consume, consume. Whatever I’ve got, there’s a better one coming out and I must have it. These ideas are not necessarily capitalistic ideas. They’re more bet on the propaganda machine from Mr. Bernays and teaching people what they think they should think rather than use what I call conscious capitalism. I said a mouthful. I’m sure you’ve probably got some ideas throw back at me. I’d love to hear your thoughts.

I would say the premise of humanity is that we have fallibility. We make mistakes. We make wrong calls. We have a unique perspective. Everybody has a different perspective of the world. We operate off of that, but it doesn’t mean that the other person’s perspective. I look at capitalism and the framework itself is the exploration of what you think and figuring out a way to do well, to appease that self-interest exchanging with others. Equally, as capitalism can create a lot of wealth, it equally could destroy wealth. A person may have the right idea but they bring that idea to the marketplace and to them it was a good idea but nobody else thinks the same. I think capitalism goes both ways. It appeals to both sides of humanity, our side which is brilliant and can bring value.

If you don't profit, then you're basically out of business. Click To Tweet

In the process of trying to figure that out, when we do fail, it has to equally support that. As I’ve thought through this concept and thought through some of the things that you’re saying, in the end we have to believe that. We have to believe that there’s going to be success and there’s going to be failure. Ultimately, as you brought up laissez-faire capitalism, it’s one of those things where the equality is essentially the equal protection of individual rights. I think capitalism is definitely confused. There are multiple definitions and it depends on who you’re asking. Warren Buffett has a definition for it. Everybody has all their definitions of it.

Fundamentally, I think it’s pretty simple if people would actually take time to research it and it’s understanding that, we as humans have shortcomings and we also have this notion of self-interest. It’s figuring out what is the right system in order for those tendencies and instincts to operate. That’s where I go to, whether it’s Mises and there are a lot of others like the Austrian school but there’s also the Chicago school too that understood some of the primary fundamentals of capitalism. It’s one of those things where it’s reasonable to expect that system would work now as it was assumed to work 100 years ago just because of how much perception says we’ve progressed.

It’s been corrupted so much. Most of what we called capitalism is crony capitalism. Rather than go out and let the best product win in a real free market where there’s competition, they have a defense contract, which is a good example where it’s basically favoritism and political infighting. Who’s got the best lobbyists in Washington, DC to get a given contract during a given weapons program? It might be an inferior product but in real capitalism rather than the government funding and even the startup or the initial, let’s say piece of equipment or a piece of hardware, the entrepreneur wouldn’t have to go out and get funds one way or the other. Maybe they had a big success and had a lot of capital like Howard Hughes and they want to make something.

They have it within their own means to create something new and then there’s someone else that’s a competitor that raises funds. The market would decide which is the best. Like a foot race as a metaphor, this piece of hardware versus that piece of hardware, which one function the best, which one has the longest life and which one is easier to repair? We don’t have this anymore. We have a very small amount of it. There is this true free market capitalism in existence, yes but it’s rare. Most of the stuff, especially when you get government bigger and bigger has to do with who you know and this is called crony capitalism. It’s who you know, it’s what political cloud. It’s your district. It’s like, “We’ve never gotten funds for this. We should give it to them because they need to bring up their standard of living in this part of this district, of this town, of this state.”

TWS 11 | Capitalism

Capitalism: Every system has been tried, but nothing succeeds like capitalism.


It goes and it all sounds well-meaning but it doesn’t serve everybody to the highest and greatest good. The highest, greatest good is one capitalism and its real free market form and the market determining who’s right and wrong. I remember one of my earliest interviews I ever did on the internet is capitalism. It guarantees the right to succeed and the right to fail and that’s part of the process. I’m going to pick on Elon Musk. I don’t know him. I’ve seen him on TV, the internet and I heard him speak. He’s obviously quite brilliant. If Tesla was a true free market where he wasn’t subsidized, it would have failed. I’m going to add onto that. You can have a great idea who is ahead of its time, which means that you can have this electric vehicle from his Tesla motors and you can’t raise the capital and you can’t make it profitable.

Unfortunately, capitalism is based on a profit motive. That’s the way it is. If you don’t profit, then you’re basically out of business. We have crony capitalism, subsidies or whatever. He gets pushed. We need electric vehicles. It’s great and it’s wonderful. We’re going to subsidize them. He may have been ahead of his time where it wasn’t profitable at that time. He goes back to the drawing board and says, “I created a luxury car and it’s too expensive. I’m going back and I’m going to reinvent this thing. I’ve already got the basics, I’m going to go and I’m going to make the beetle, the initial Volkswagen of the EV market. That’s going to be my initial Tesla product.” It comes back out and the market’s like, “This thing is only $13,000. Are you kidding me?”

I’m not trying to pick on Tesla but everyone’s familiar with it so they can understand what I’m saying and get a picture in their mind. This is the idea of real free market capitalism. He might have failed temporarily and gone back. What does the market need? They’re awesome but is that what the market needs? What if the market needed a $17,000 EV that’s got a 200-mile range and everybody loved it? That’s what the market needed. The market comes out like, “Holy moly.” He’s only making, let’s make up a number, $1,500 per vehicle but he’s selling $12 million the first year.

There are two thoughts I have. The first one is agree with you. You look at whether it’s Amazon who is putting retailer after retailer out of business or it’s a Tesla that’s completely disrupting the auto market. Those markets were already manipulated. If you go back and look at how much GM has suffered through the years and how much political clout that they’ve built and spent. That cycle goes on forever, the unionization and how that has affected certain things. The second point I’m trying to make is our whole system has these elements of capitalism but the whole system is not based on it. This system is based on this cycle, which I think academia is part of it. You have funding for academia which bids up prices of tuition. You have students that are trained to be workers because of how our school system is set up based in the Prussian system.

Energy is a very important asset to own. Click To Tweet

You have the government that’s involved at local levels, federal levels in pretty much everything as far as who they’ll fund, what they will subsidize and what they’ll back. This entire system has been based on that vicious cycle and because of the capital markets, whether it’s leveraged by the Federal Reserve because of loose lending standards. You have a whole system which is based on these fundamentals, which is in capitalism. Still, I look at some of the fundamentals of capitalism very well would have prevented a lot of what we’re experiencing right, which I think there’s a lot of good stuff. There are also some things to be concerned about. I’m trying to figure out, where we haven’t had necessarily sound money for 50 years, 71, I believe. We never had capitalism so knowing that, what do we do? How do we understand what’s right, what’s wrong and how to understand what we do to live a fulfilling life?

I look at the study of economics and the study of capitalism, the free market system. It’s being aware of what those principles are. A lot of the unintended consequences, a lot of damage hasn’t occurred yet based on some of how our economy works but it’s ultimately going to occur whether it’s one fell swoop or whether it’s in pieces, it’s still going to happen. The awareness of these principles will allow people, to understand what to do when a lot of the chaos starts. In the past, what has ultimately been done? It’s, “Government should take care of it. I’m not responsible for that. They should take care of it. They’re smarter than me or that’s their role.” Other than that, I look at what capitalism was as far as the intention and the principles around it and what we have. I think there are some stark differences. At the same time, the notion of capitalism is still very much alive in everybody. It’s part of our instincts.

One of the fundamental principles of capitalism is property rights. You have the right to your own body. You have the right to make a living. Let’s go to a real baseline example. Let’s say we are somewhere in the 1800s and you can own land by staking it for example and you go out and you build a cabin for shelter. That is all by your own labor. Do you own that or not? On capitalism, of course you do. It was your labor, your ingenuity, you designed on a piece of paper or both and you made it. You took something that was raw, which was land and trees, you converted it into something more meaningful and of higher value. That’s an example of property rights and without that, capitalism breaks down. The idea that, “You made it but I need it more than you do so I’m moving in, you go build another one.” This is absolutely fundamentally anathema to true capitalism but this is the idea of socialism, each according to their need. I need it more than you do because I can’t work and you can or I’m too old to build one. I get it, you don’t and that’s the way this is equal. This is fair. This is what’s right.

This is a concoction of the mind is what’s fair and what’s right. To harp on it, the real capitalism is determined by basically competition and by the ability of someone or someone’s company corporations or whatever. What happens when these systems break down? This is not unusual. I want to assure everyone that there are cycles through the monetary system. It’s happening again and again. We’re in a situation where certain times in history, you have the fundamental philosophy breaks down and the fundamental philosophy is trust. What can we trust? Can we trust these big corporations to do what they say? Can we trust the government to do what it says? Can I trust my company to provide me the pension that it has promised me? Can I trust the city to pay me the pension that it has promised me?

TWS 11 | Capitalism

Capitalism: In most of today’s capitalism, there’s built-in obsolescence.


What happens in a corrupt system which we’re in and have been for quite some time, is the trust starts to be questioned. First by the intelligentsia, the intellectuals or whatever, I’m not trying to differentiate. People are different. Some are deeper thinkers, some look ahead and some don’t, some don’t care. It’s something the government should care take care about. I don’t have to worry about it. The company should do it. I worked for you. All I have to do is collect my check but you cannot overcome Mother Nature. There’s Mother Nature in the marketplace and the more you distort the market place, the more you’re going to have a price to pay. This is cyclical. This isn’t something that’s just unique to our generation. The trust breaks down and the confidence breaks down. The whole system is based on confidence and the whole system is a lie because the idea is you can’t print wealth and you can’t.

If you could print wealth, Zimbabwe would be the richest country in the world and everyone would be down in Zimbabwe because they’ve printed their selves as one of the wealthiest nation on the planet. America pretends that you still can print wealth and we’ve been doing it for a long time and we’ve gotten away with it because of the reserve currency of the world that’s basically enforced our currency on everyone else that must accept it. The people that must accept it of course use it because it works still to some degree. At the top, what Mises calls the crackup boom more and more people in the market place start to question, what is the viability? What is the long-term confidence that I have in this piece of paper, in this idea, in this unit, in this thing in my account? That starts to break down and it’s already breaking down. In fact, it broke down to such a degree in 2008.

We’re a cat’s whiskers away from having to complete financial collapse. Most people don’t believe that. I’m not saying that to gain points or to scare people but it is a truth. Most people are unaware of actually how close we came to a complete collapse. The reason I say complete collapse is because when the banks give up the trust of each other, which had happened, then the whole system would freeze. As Jim Rickards says the Ice-Nine situation. He used the metaphor where everything freezes up. We’re very close to that. The only reason we didn’t freeze up because it was starting to happen, the ice was starting to freeze. It was starting to take off and the Fed intervened and said, “Bank A don’t trust Bank B’s paper. Bank B doesn’t trust Bank A’s paper. Here’s what we’re going to do. We’re going to buy all this worthless crap, we’re going to give you treasuries for it, the most trusted paper out there.” That kept the system from freezing out but we’ve got very close.

The next time, will the Fed be able to intervene, paper it over, make it better and all of that? The answer is no one knows. I don’t know. You don’t know. No one knows but the game is getting very near the end. The main thing to watch of course is the bond market, the debt markets and credit markets. Do you trust that dollar to be worth enough in the future for you to loan it for a given period of 6 months, 2 years, 5 years, 10 years or 30 years? It’s breaking down and yet the system isn’t allowed to function as a free market would. In a free market or a true capitalistic system, the right to succeed means the right to fail. The bond market would fail and these bonds would be marked to market.

The government produces misery most of the time. Click To Tweet

They might not go to zero but it would certainly be worth less than face value almost across the board. This, of course, is allowed to happen because of the powers that we are able to basically buy up their debt. They could come in and buy up their own bonds, issue currency for it and keep the game going. Eventually, it gets to the point where enough of the market says, “I don’t trust what that dollar is going to be worth in the future. I’m going to spend it for something that’s a hard asset that I can maintain value and I am going off these dollars. I want to get rid of them because I’m not sure what they’re going to buy a month or a year.” This takes place over and over throughout the world. It’s happening in Argentina. It’s happened in Valenzuela. It’s all over the place. There are so many times it’s happened. The idea that it can’t happen in United States or the world currency, the US dollar is preposterous. This actually is happening but most people don’t recognize it. That’s what we see. Philosophically, it’s a loss of confidence, loss of trust and once that’s lost, it’s very difficult to get it back.

One of the points was this notion of accountability. That’s what you were saying when it comes to trust. Part of that human element that we have is some people don’t tell the truth and some people do it consciously. Some omission and commission. It’s one of those ideas where, what is this the standard way to protect everyone? It’s to have something that doesn’t attach to a human being that can be used as a unit of accountability. That’s where precious metals because fundamentally it’s very difficult to manipulate. You can’t create gold out of nothing. That’s I think the fundamental premise but we’re way beyond that.

We’re in this environment where the United States is that beacon of trust when it comes to any financial exchange around the world. Whether the reserve currency or whether because we have the biggest military force or whether it’s our influence on goods and so forth. It allows making sanctions at other countries. It allows us to throw weight around but in the end it’s a fallible unit of trust that we have. I was curious to understand your perspective and understanding of precious metals at a very deep level. How do you balance that with what our current system is, which is operating around the same thing in a sense like trust? That’s where the accountability is. At the same time, it’s not a completely objective trust.

I want to hold that thought but you did a great job on why the dollar still remains where it is, is it the military forces? One thing I’d add to that as the Rule of Law. The other nation states don’t necessarily operate in the same standards of the United States and also used to. The reason it is that the rule of law is breaking down. The reason there is the legal system in a lot of ways is due to business and contract. If you didn’t meet the contract, then there’s a legal remedy but that also is breaking down. The loss of confidence goes to, “What can I have confidence in that will see me through financially?” The answer there is primarily gold. Gold has stood the test of time for thousands of years. Ups, downs and in between and the value does vary but nonetheless, it never goes to zero. It’s always coveted, especially in times like these where we’re unsure of what that dollar is going to buy a year out or ten years out or whatever.

TWS 11 | Capitalism

Capitalism: The society at large has become brainwashed or the propaganda has got us to such a degree that rather than take what we need, we’re constantly taught what we want.


You’ve seen the banking system actually had the largest purchase of gold that they’ve had in I think eleven years or something. It’s a massive amount that they purchased relative to what their purchase has been in the past. The public is burn out on the gold story. Gold went higher year over year for eleven years straight. That’s a pretty darn good bull market. That peaked out in 2011 and here we are years later, it’s been going sideways to down. We found the bottom, I believe. Even the gold bugs had given up. The thing about gold is I think a big misunderstanding about it. Here’s the idea that I have and it’s pretty simple. One is you buy gold, you sleep better and you forget about it. You own it because at times like these it’s a must if you can afford it.

The other part is you buy it because you want capital gains. You want to have a better life, you want to see the price appreciation so good relative to when you bought it you can basically improve your lifestyle. There’re two types of gold purchases. You have people that understand that by some enough for their protection, which is generally thought to be 5% to 10% of your overall net worth. It could be as small as 2%. It’s basically what makes you comfortable and forget about it. That is not the vast majority. Those are the true gold bugs. Most of those people don’t consider this to them gold bugs, they consider themselves smart enough to understand the nature of fiat money to hedge. The vast majority are looking to trade it or swap it or whatever make these big gains on it. When gold doesn’t perform within a certain timeframe, then they’re very disappointed.

Silver is even a different story. Silver as Professor Jastram called The Restless Metal. As he wrote that book, you looked at silver’s relationship to commodities over a vast period of time like he did with the gold constantly. He looked at gold the same manner. What he determined was that gold basically is the ultimate money and regardless of conditions, especially during depressions, gold was the best asset you can own. Silver was mixed. Some other time during the depression, silver actually did well, sometimes during depression it didn’t. Silver, the conclusion of the book was during inflationary times, nothing outperforms gold. We saw that take place when QE2 was announced, when QE1 took place, the market acknowledged where we probably need it. We saved the banking system. We’re going to get back on track.

When QE2 was announced, most of the people that are monetary savvy said, “Here comes the inflation.” The problem was that all those savvy people and yours truly included and I traded that market did very well but none of that money, none of that QE hit main street. It only went to Wall Street. Basically, it was static money. It was sterile. It was there but it was all printed. It went to a vault and stayed there. It didn’t circulate. It had no velocity. It didn’t have any meaning in the marketplace. Once that was made clear to the market, the price of silver basically crashed. Most of us, myself included thought when it was announced that we’d see the velocity of money increase. We’d see it hit main street but didn’t. That’s been the story ever since. A lot of forces going back and forth.

The only thing that you can control and influence is your awareness, your knowledge, and your understanding of how the system works. Click To Tweet

The idea that I think was the best that I can give to the public at large is, take the attitude of someone that buys gold, silver or both with a comfortable amount and go about your life. You can pretend that we’re not going to have a financial collapse. I think we will. I think it will occur in my lifetime but you don’t want to harp on it. You don’t want to live your life thinking about it. All you need to do is be hedged but most people that learn this think, one is going to happen. It’s almost imminent and that the only asset class to own is this one. That’s poor thinking. Energy is a very important asset to own. If you’re a capitalist as far as, “Where can I put my money and make money with it?” What is the one thing that’s gone on from 3,500 BC where have been 14,000 wars since there has? If you want to invest, buy defense stocks, buy Lockheed and the war machine continues. Chris Duane calls it the Debt and Death paradigm and he’s correct. Unfortunately, that is the real world that we live in.

I look at the complexity of the world we live in and it’s interesting. I would say at the same time you look at how concerned you could be looking at debt clock. You’d look at that and it’s like, “This thing’s going to pop tomorrow.” You also look at humanity and how much they’ve taken ideas and done some brilliant things with it. It’s one of those things where it’s always been the case with humans. There’s always been good stuff that’s going on. There’s always been some bad stuff. It’s trying to figure out how to keep a balance of it. As much as there are a lot of ways to be concerned, there’re also a lot that can be celebrated to an extent. I’ve stood back and I’ve said, “I don’t know what the future’s going to hold. I love your point about trust. People especially in times of difficulty will seek trust but they’ll seek something that they trust. Somebody or some group of somebodies failed them and did things that weren’t trustworthy.

They’ll seek trust but in the end it’s an awareness of how people work. It’s also an awareness of what principles are. I know that there’re some principles to capitalism that still are extremely relevant when it comes to personal freedom, personal capitalism. Which is taking who you are and what you know and doing something with it that’s of value to somebody else. If that is claimed, you definitely want to be aware of questions to ask and a good foundation of knowledge so that you know what they’re talking. There’re so many different definitions of capitalism. In the end, I look at it being an incredible time to be alive. It’s understanding that when you go against principle, there’s probably some sayings around, when truth or principles followed what the result is going to be. It’s going to come home to roots.

These are decisions that are unprincipled and they are decisions that have to have a price paid for them because failure means loss. There’s lots of different failure being papered over, whether QE, what the Fed’s done, government policy in general but there’s a lot of failure being deferred. It’s being aware of how to position yourself both from a business standpoint, from a personal standpoint, from a money standpoint, so then when those corrections happen, you know what to do. You’re not operating out of scarcity and emotion. You’re operating out of awareness and knowledge. That’s the most that we can do in the end.

TWS 11 | Capitalism

Capitalism: What can I have confidence in that will see me through financially? The answer there is primarily gold.


Maybe we’ll do a little bit more a philosophy. The idea of founding the nation, you can work capitalism into it and the idea of property rights that we already discussed is the rights of the individual. In a constitutional republic, the rights of the individual are protected. Democracy actually comes from the word mobocracy which is mob rule, majority rules. In the constitutional republic, the rights of the individual are preserved. That’s key in a way that the system was set up initially because that protects someone to have the right to not only free speech but free thinking and motivations based on their own personal goals. If in an idealistic world, if you have an idea and make something of value to you and the market says we want it to, you can become rich. There’s nothing wrong with that, at least from my perspective.

The whole thing has been usurped and corrupted by such a degree that people don’t even seem to understand how the system could work. If you go back to the financial failure of 2008, in real capitalism all those banks that were over-leveraged would have failed, not only Bear Stearns and Lehman Brothers but many others. In fact, AIG would have failed. AIG that insured all of these CDOs, all these swaps and everything else is out there in this derivative Never Neverland couldn’t make good on it. The backing of full faith and credit means that everybody that’s a taxpaying person in the United States is responsible but why are they responsible for a bank’s failure? The banks should be held accountable. It comes back to your accountability. Who’s accountable? Let’s make the people accountable. This is what most people don’t even understand. They didn’t have a clue. They think the government actually produces something. The government produces misery most of the time.

The reason of the misery is because the failure of those institutions are put on the backs of the people. It was subsidized by you. If you’re a US-taxpaying person, you’re the one that’s paying for that failure. It’s not the government paying for it, you are but this is a concept that most people don’t even get in school. I don’t think it’s even taught anymore. It comes to accountability. Who’s accountable? If you go run up to your credit card and you can’t pay it, then it’s your right to put it on your uncle because after all, that’s the way the system works. He’s more capable of paying it than you are. Let’s swap it over to him. That’s basically what’s taking place. Most people are so under-educated. I don’t want to offend anybody but I’m not here to sugarcoat it either. You’re responsible, why are you responsible? You shouldn’t be, the bank should be held accountable, but they’re not.

This is one of the biggest problems with the system at large and this is why the distrust in the currency goes to the next level. The velocity of money starts to pick up where people would rather own a jar of peanut butter that they know that’s cumbersome. I see inflation in a much higher level and many do. John Williams, I have him on my mastermind series about once a year. I read his work. The hamburger index and everything else are going off down a rabbit trail. I’m not a big fast food guy. I try to eat healthy most of the time but occasionally I do it. Here’s my point. A basic meal is $12 in there. I couldn’t believe it has been such a long time since I’d been into one of those places. I thought I misheard the guy. I thought I ordered two meals but this is real inflation. This is what mom and pop in America are facing. I think the inflation rate is squeezing a lot of people and it’s evident across the board.

Money is important but you don't have to make it the center of your life. Click To Tweet

You’re right but here’s the thing. Nobody knows what that means. They see higher prices, they hear the word inflation, but they have no idea how it’s created and why it occurs. It’s not a natural phenomenon. It’s like, “Why are prices going down? Isn’t that a good thing?” but yet prices are going up. It’s a fundamental question around, “Why is bed policy for things to become 3% more expensive every year? Why is it 3% less expensive?” I was in Walgreens. I had to renew my passport. I heard this older woman at the counter and she was buying makeup and she was stuttering. She didn’t know what to do. She was like, “I can’t afford it.” She didn’t pay for the makeup. She paid for some other things. People are experiencing it, but they’re not aware of what it is and why it’s occurring. That goes to everything that we’ve been talking about, which is the current monetary policy is fundamentally flawed. It’s not trustworthy but yet people are trusting it. It’s not going to be this slow process. Everyone’s buying stuff and exchanging and it goes really quick. The only thing that you can control and influence is your awareness, your knowledge and your understanding of how the system works. When things start to happen, you know how to respond to that, not react.

I think one of my main job for the public good on a global basis is to teach these principles to the people and have an understanding. Then they can go and take an action, or not take an action but at least they could explore. They don’t have to take my word for anything. Look it up, do your own research. Do some reading. Look at the grand inflations of the past. There’s so little awareness and that’s the reason there’s such a small market for the gold and silver markets because most people have no idea that they preserve wealth and there are financial asset for thousands of years. If that was well-known, you’d have a lot different percentage into those metals than you have now.

One of my most popular videos called Myths in the Silver Market. One of my pet peeves I said in the video was this idea of most of the coin dealers or precious metals dealers that you will talk to, especially those that are more established than I am. I’ll tell you why I think everyone should own a little. This goes back to the idea we talked about that everyone should know a little. What people don’t understand is how few people actually take action. In that example on this video, I said at the time the mining activity was roughly 700 million ounces a year on the silver market. If everyone in the United States owned two ounces of silver, which is very little. It’s $30 worth. It’s not going to change your life. Two ounces of silver, believe it or not, goes to $100, it won’t change your life. It goes to $1,000. It might change it a little bit but it’s not changing your life. It’s a little warm up.

If everyone in the United States bought two ounces of silver, it would take up the entire mine supply on an annual basis. The United States is only 5% of the world’s population. If we include everyone, the other 95% of the people on the planet should own a little. There isn’t enough silver for everyone is my point. Yet, so few people own it or understand it and it doesn’t have to be silver, but silver is a good example. It is my specialty and I enjoy a lot of aspects. If you go back to 1980 at the top, most of us think that the amount of gold in portfolios of roughly 2% maybe 3% and now it’s about a half a percent. If we went back to the 2%, we need a four-fold increase in the amount of gold demand that we have right now. Think about that. Think if there was a four-fold increase in demand for gold, the world would be a better place.

TWS 11 | Capitalism

Capitalism: In an idealistic world, if you have an idea and make something of value to you and the market says, “We want it, too,” you can become rich.


This has been fascinating. I know we could probably keep going and all on all of this. I look at as an expert in a certain field. Historically, it has been pertinent to understanding money in general. Looking at where we’re at now, I’m sure you’re as surprised as I am. The more you learn about how the monetary system works, the more you learn about business cycles, especially if you understand about the Austrian business cycle, which shows that the Central Bank is at the hub of financial collapses or financial corrections. We’re well beyond what is reasonable but at the same time we’re still kicking along every day. The future is going to be bright, but also the future is going to be very volatile I think because of the technology that’s coming online. I also think because of how connected the world is becoming, how many people are joining the internet and becoming connected in emerging markets especially.

It’s going to be interesting to see how things transpire. I still cling to my understanding of financial principles and monetary principles in essence. Even though they may not be the clearinghouse right now, it’s a deferment of what should be clearing right now. If you understand that, you’re going to understand what those signs are when things start to get volatile. I also step back and say, “That could be totally wrong.” Who knows? They can maybe come up with some new principals. The modern monetary theory is absurd. People are advocating, some of these don’t make any sense. In the end it’s what can you do? It’s becoming aware and becoming educated. With that being said, I’ll give you the final word. Then would you mind giving out your contact information, your website, your YouTube channel, social media, so people can start following you?

First of all, money’s important but you don’t have to make it the center of your life. Most people think about it almost constantly, especially if you don’t have enough. It is part of life. There’s probably a better system out there. As it stands now, there’s nothing better than a true free market capitalism. It’s been proven over and over again. Where we are going to go in the future is very interesting because with this Modern Market Theory, which is preposterous, but I have to say with the advent of the digital currencies, which is basically everything that’s on your VISA or credit card and the advent of the cryptocurrencies. It’s not inconceivable to think that you could create more something out of nothing, ad infinitum and keep this thing going a lot longer.

I’m certainly open-minded enough to see that that’s a possibility. It’s unlikely, but unlikely doesn’t mean impossible. As far as getting ahold of me, the best place to go is our main website, which is If you’re interested in my new project, there’s a webinar that you can get for free. The URL is We’ve broken it up. I think it was about an eight-hour lecture between me and some of my colleagues. They’ve got it toned down to about an hour and a half. As far as social media, I am on YouTube, I’m on Twitter. I do have a Facebook presence. The best thing to do is type in any search engine, David Morgan Silver. If you type in David Morgan then the word Silver, you’ll find the LinkedIn, you’ll find the YouTube. You’ll find all of the social media.

David, it was an honor to have you on. Thank you for sharing your wisdom and everything that you’ve studied for so many years. It’s been an awesome conversation.

Patrick, I appreciate having a conversation. Thank you.

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About David Morgan

TWS 11 | Capitalism

David Morgan is a precious metals aficionado armed with degrees in finance and engineering. David considers himself a big-picture macroeconomist whose main job is education—educating people about honest money and the benefits of a sound financial system. Besides being an author of three books dealing with precious metals, he is also a much sought-after public speaker. Additionally, he consults with hedge funds, money managers, and mining executives.

His ideas can be seen in the movie Four Horsemen, a Feature Documentary. Available for free at

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report, and numerous other publications.

Additionally, he provides the public with a tremendous amount of information by radio and at times writes in the public domain. You are encouraged to sign up for his free publication which starts you off with the Ten Rules of Silver Investing where he was published almost a decade ago after being recognized as one of the top authorities in the arena of Silver Investing.


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