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Hugo Salinas-Price: What Every Politician Needs to Know About Silver

Hugo Salinas-Price: What Every Politician Needs to Know About Silver

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Published by Ron Hera
With the encouragement of Hugo Salinas-Price, the country of México may become the first country to provide its citizens with a guaranteed store of value. Enabling citizens to save hard money offsets the inflationary power of the central bank and protects the savings of ordinary people from financial system turmoil and profligate government policies. Savings represents capital formation and capital, in the hands of ordinary citizens, is the foundation of small businesses, jobs and of the middle class. Without savings, there can be no middle class. A strong middle class is a fundamental requirement for higher living standards and for a strong and vibrant economy. Without a middle class, the overall wealth of society is reduced, upward mobility evaporates and the economy becomes less resilient. While the United States seems to be heading in the direction of a 3rd world country, México may soon lead the way to a brighter future for the Mexican people and for Latin America.
With the encouragement of Hugo Salinas-Price, the country of México may become the first country to provide its citizens with a guaranteed store of value. Enabling citizens to save hard money offsets the inflationary power of the central bank and protects the savings of ordinary people from financial system turmoil and profligate government policies. Savings represents capital formation and capital, in the hands of ordinary citizens, is the foundation of small businesses, jobs and of the middle class. Without savings, there can be no middle class. A strong middle class is a fundamental requirement for higher living standards and for a strong and vibrant economy. Without a middle class, the overall wealth of society is reduced, upward mobility evaporates and the economy becomes less resilient. While the United States seems to be heading in the direction of a 3rd world country, México may soon lead the way to a brighter future for the Mexican people and for Latin America.

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Published by: Ron Hera on Dec 09, 2011
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Hera Research, LLC
7205 Martin Way East, Suite 72Olympia, WA 98516U.S.A.+1 (360) 339-8541 phone+1 (360) 339-8542 faxhttp://www.heraresearch.com/
1
Hugo Salinas-Price: What Every Politician Needs toKnow About Silver
By Ron HeraDecember7, 2011©2011Hera Research, LLCTheHera Research Newsletter  (HRN) is  proudto presentavitally importantinterview withHugoSalinas-Price,Founder, DirectorandHonorary Presidentof Grupo Elektra, S.A.B. de C.V.,which isnow run byhis son, Ricardo Salinas-Pliego.GrupoElektrais a part of GrupoSalinas,whichowns businesses in thetelevision industry, thetelecommunications sector,banking andfinancialservices, andother industries.Grupo Salinascompanies includeTVAzteca, Azteca América, Grupo Elektra,Banco Azteca, Afore Azteca, SegurosAzteca, Iusacell, Azteca Internet, GSMotorsandItalika y la Asociación del Empresario Azteca.Each of the Grupo Salinas companiesoperates independently, with its own management and board of directors.Born in 1932, Mr. Salinas-Price became a follower of Austrian economics at a young age and isthe author ofthree booksandofnumerous articles, both inSpanish andinEnglish,onthe use of silver as legal tender in parallel with paper money.Mr. Salinas-Priceserves asPresident oftheAsociación Cívica Mexicana Pro Plata A.C.(MexicanCivic AssociationforSilver), which promotes the use of silver as legal tender inMéxico.Mr.Salinas-Priceisan outspoken proponent of sound financialand monetarypoliciesinthe countryofMéxico.
Hera Research Newsletter (HRN):
Thank you for joiningustoday.Would you tell our readersabout your efforts to make silver coins legal tender inMéxico?
Hugo Salinas-Price:
México is the firstand only country where we have a Congress that isconsciousofan alternative to paper money andthatis favorable to it.Méxicois the only countrywhere this type of reform is being contemplated at the national level. The rest of the world isstagnating completely in the morass ofun-backed papermoney without considering anyalternative.
HRN:
Why do you think that’s the case?
 
©2011 Hera Research, LLC
2
Hugo Salinas-Price:
We had, not too long ago, the experience of severe inflationin México. Iused to graph the inflation but to keep that graph on the same scale I’d have to have a roll of  paper hundreds of yards high. That’s what’s facing the United States right now. The U.S. isdoing the same thing that México did, even worse.
HRN:
Can you comment on the Utah Legal Tender Act?
Hugo Salinas-Price:
The UtahLegal Tender Actwas heralded with optimismand any effort torecognize gold and silver as money ispraiseworthy,but it falls short because simply making goldand silver coinslegal tender gives them no stable value that will be recognized by everybody.
HRN:
Do you meanthe value of the coinsfluctuates, like a commodity,with metals prices?
Hugo Salinas-Price:
Yes.In order for something to work on a large scale, it has to be verysimple.In 1979the President ofMéxico,José López Portillo y Pacheco, hada one ounce silver coindeclared legal tender and asked the central bank to assign it a monetary value. The troublewas that the valuewas not stable. One day the value was
 X 
then,the next day,it was
 X 
minus afew pesos and the dayafter thatit was
 X 
plus a couple of pesos. This created a great deal of confusionandthe law was allowed to lapse. The mistake was that the monetary value wasn’tstable.
HRN:
And that’s an issue for the Utah LegalTender Act?
Hugo Salinas-Price:
Yes.It’s almost as ifgold andsilverwerenot monetized.
HRN:
So, people who buy gold or silver coinsaremerelyspeculating on metals prices?
Hugo Salinas-Price:
In México the majority of people are poor and cannot afford to speculate.If they buy a coin for 500 pesos and it goes down to 480 pesos and they’ve lost 20 pesos, that’s alot to them. That is why there is relatively little silver in the savings of the Mexican people.People areafraid of speculating. They can’t afford to speculate.TheAsociación Cívica MexicanaPro Plata, based in México City,is actively lobbying the MexicanCongress to institutea new, oneouncesilver“Libertadcoin with
no engraved monetary value
aslegal tender in México. Makingsilver legal tender will provide astable store of value for Mexicancitizens to save money so thatsavings cannot be destroyed byinflation.To prevent savers from becomingspeculators on metals prices, the monetary value, in Mexican pesos,of the new silver Libertad coin willbeset by theBanco de Méxicoslightlyhigher thanthe commodity priceof silver. Themonetary valueof the new silver Libertad coin can beraisedby theBanco de Méxicoifthe price of silverrises,
but must remain fixed if the price of silver alls.
 
©2011 Hera Research, LLC
3
HRN:
Precious metals pricesseem to beextremely volatile.
Hugo Salinas-Price:
Of course, volatility is constantly reported. They never talk about the factthat silver has gone up seven times in the last twelve years because of inflation.Volatility in goldand silver is artificially induced precisely to scare off savers. It’s really very cruel, but that’scentral banking for you.
HRN:
Are you saying that central banksactively discouragepeoplefrom exitingfiat currencies?
Hugo Salinas-Price:
Of course.
HRN:
Canmonetizing silver work?
Hugo Salinas-Price:
Unless the valueof a legal tender coinis stableitcannot be used as money.It has to be given a firm value.What we are proposing is that the quotefrom the central bank bea stable quote.The valueof thenewone ounce silver Libertad coinwill remain fixed unless the price of silver rises to a point where the value should be increased. The Utah Legal Tender Actdoes not address this. It has to be done at the federal level, not at the state level.
HRN:
But whatwillhappenifthe price of silver falls?
Hugo Salinas-Price:
 Nothing will happen. Ifthesilver coinis valued at 500 pesos and the priceof silver falls, it’s still worth 500 pesos.
HRN:
Won’t that encourage speculation?
Hugo Salinas-Price:
A speculator might sell his silver coinsifthe price of silver falls and perhaps invest in silver bullion, but speculators are a small number ofpeople. The majority of  people would keep the coins because they are better than a 500 peso paper note.
HRN:
So,peoplewouldhoardsilvercoins?
Hugo Salinas-Price:
That’s right. They would have savings. That’s the important thing. Weneed people to get off the drug habit of constant spending. People have to save again.
HRN:
You want toencourage saving?
Hugo Salinas-Price:
Absolutely. What we want is to create a refuge where those who cansave—the middle class—can do so in a medium that will retain its purchasing power. There is nosafe harbor for the middle class today. The middle class is being financiallyraped anddecimated.
HRN:
Do youbelievethe same thing is happening in the U.S.?
Hugo Salinas-Price:
Yes. The U.S. needs a law like this too.
HRN:
Issaving the foundation ofsmall businesses, jobsand of the middle class?
Hugo Salinas-Price:
Of course. The withering away of the middle class is a terrible situation for the economy.

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