It takes an unusually robust personality to forgo “perhaps tens of millions of dollars” and describe that as “character building”. But Ron Wayne is an unusually robust person.
He co-founded Apple with Steve Jobs and Steve Wozniak in 1976 but left in its earliest days; today Apple’s market capitalisation is almost £3 trillion. He sold back to Jobs his 10% stake in Apple for a pittance. At 87, Wayne has since pursued a career as an author and historian. He remains a vigorously powerful voice on behalf of sound money, as expressed in his latest and soon-to-be published book which, he tells me from his home in Ohio, will be titled Counterfeit Trust — the nature of money. His website tells us that this book is “vital to the personal security of each and every one of us”.
We are facing a potential massive problem, according to Wayne. At its centre is fiat money, the paper currency issued and sanctioned by governments and which has “given them more power than ever realised by ruling authority in the history of the world”, he says. He anticipates that eventually the roof will cave in, that the fiat money system will collapse, but as to when that might happen he says “my crystal ball blew a fuse last week. It could happen twenty years from now — or ten years — or two — or a week from next Tuesday. For example, some years ago the Republicans pulled a very dangerous (purely political) stunt by threatening to obstruct the raising of America’s debt ceiling. If they’d actually done so, the US would have defaulted on all of its debts!” Which are currently in excess of $29 trillion.
If that had happened, says Wayne, “the Dollar would have fallen like a rock, and since our dollar is the world’s reserve currency, such an event might well have triggered a worldwide fiat currency collapse. Yet even though they’d failed to follow through with their threat — just the threat alone cost the United States its triple-A credit rating, and the people of the United States tens of billions of dollars in increased interest payments”. The US Congress has just voted to raise the national debt limit by £2.5 trillion and extend it into 2023.
Inevitably, we quickly get onto the topic of inflation, now at an official 6.8% in the US (but more than twice that according to unofficial sources ) and threatening to get out of hand everywhere. In the UK, the Bank of England has just doubled rates, from 0.10% to 0.25%, as inflation in Britain has exceeded 5%. It’s now widely expected that the US Federal Reserve, America’s central bank, will raise currently rock-bottom interest rates three times in 2022.
As a child, Wayne lived through the Second World War and the extremely high inflation which struck the US in 1946, more than 18%. It’s little wonder that he is therefore attuned to the dangers of inflation, which he argues are intrinsic to a paper money system — governments find it too easy to print more cash and issue more debt if they are under pressure from domestic demands or foreign ventures. How else did the US fund its Afghanistan expedition, which cost an estimated $6 trillion? It was all financed through debt.
Wayne asserts that “it doesn’t matter whether the political system is a dictatorship, a kingdom or a republic — in any society which is economically based on hard currency (silver and gold), the administrators of that society must pay for anything they want to do (or have to do) with gold and silver coins… once the ruling authority can get its buying power out of a printing press, the whole civil authority equation turns upside down and inside out. That authority becomes no longer a mere user of money, but becomes the ‘creator’ of money — and as such, they no longer need the public. They can go to the printing press any time they want, for all the buying power they want, to do anything they want”.
The power this control over the printing press (plus control over what is officially sanctioned as money) becomes, argues Wayne, “politically irresistible”. This can easily lead to flooding “society with unlimited issues of worthless script”. Grasping this point, says Wayne, “drove Adam Smith… to the conclusion, that any society which adopts a fiat money system, will inevitably experience run-away inflation, monetary failure, economic failure, and probably political failure with it… every fiat currency, by its nature, is doomed to inflate itself out of existence”. The consequences of this could be character destroying, not just character building.
It’s a bit like dropping a hapless lobster in a saucepan and gradually turning up the heat. “It’s one of the unfortunate aspects of inflation — it moves in tiny incremental steps at the beginning and at the end it’s monumental”.
Wayne doesn’t see cryptocurrencies as offering a solution. Bitcoin “is entirely ethereal, based on the internet. Silver and gold as money you can’t play tricks with — it’s either there or it’s not.” If electricity goes down, then what happens to all transactions carried out via the internet?
Wayne remembers very clearly, like an epiphany, when he discovered his interest in sound money. “I was about 11 years old, and I heard my parents talking about a successful family friend. Then one day he went to his bank and it was just a hole in the ground. This bothered me, to hear of a guy who played by the rules and yet still got swatted. It was about 10 years later, I had been pondering this, when I suddenly understood what was going on. I developed an understanding of what was happening, why it was happening and I started ‘clocking’ things”.
It will take a few centuries to pay off the US national debt of $29 trillion, I suggest to Wayne. His reply is immediate — “it won’t be paid down, it will be abandoned, as all such debts are. Because the whole world is running on money that is the purest essence of debt. It’s all debt”.
The world’s paper money system is running on empty. Wayne favours gold but prefers silver. His reasoning is that the gold/silver ratio is currently around 80:1 — it takes about 80 ounces of silver to buy one of gold. When the purchasing power of gold “goes through the roof”, the buying power of silver will rise even further.
It’s hard to disagree with Wayne, not just because he is such a pleasant person to talk to but because he argues from such empirically sound positions. His logic cannot be faulted. It’s an uncomfortable future that he envisages, but one that certainly will build character. I can think of no better preparation for our uncertain future than to read Counterfeit Trust. Gold will probably end 2021 having lost 6% of its value year-on-year, but fiat currencies will have lost about the same thanks to inflation — and unlike gold they didn’t go up in their purchasing power by some 24% the previous year, and by almost 19% in 2019.
Glint’s Editor, Gary Mead, interviewed Ron Wayne in December 2021, at a time when inflation, low interest rates and rising national debt were driving people to look at alternative currencies like gold, silver and crypto, to save and spend their wealth. At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.
