The Daily Bell: Interview with Thomas Jacob
The Daily Bell is pleased to present this exclusive interview with Thomas Jacob.
Introduction: Mr. Jacob studied economics at Zurich University and spent a year as an exchange student in Indianapolis. Afterward, Mr. Jacob attended Swissair pilot school and spent 15 years as an airline pilot flying the DC10, DC9, B747 and A320. During his time as a pilot, Mr. Jacob had time to “indulge extensively” in his interests in free-market economics, libertarianism and people worldwide. As he says, “It all began with Ayn Rand.” Thomas Jacob attended several Mises University courses and many ISIL conferences during this time of intensive study of Austrian economics, all of which led to his introduction of the idea of the Swiss gold franc. Since 2002, he has worked as a financial consultant and coach in Switzerland.
Daily Bell: Please tell us about your idea for a gold franc.
Thomas Jacob: Gladly. The idea is the result of my interest in free market economics and especially my conviction that a commodity money is the most effective way to curb government involvement in the economy. The idea is simply to re-introduce an additional gold-coin currency in Switzerland on the constitutional level.
Daily Bell: Is this similar to the idea of a silver libertad being pursued in Mexico?
Thomas Jacob: The similarity is that it is a legal parallel currency and a commodity money. The difference is that the Swiss gold franc will be a privately issued money. The government’s role is limited to defining the appearance and the gold content of the coins and to protecting honest business practices.
Daily Bell: Where are you with your program?
Thomas Jacob: Dr. Ulrich Schlüer from the biggest party of Switzerland, the SVP [Ed.: Swiss People’s Party aka Democratic Union of the Centre], introduced a parliamentary initiative on March 8 – incidentally, the same day the Utah parliament [legislature] passed their gold law.
At the same time a group of dedicated politicians and economists, including I, have founded the gold franc association to coordinate the activities to help realize the idea on a non-partisan basis.
Daily Bell: What are the next steps?
Thomas Jacob: The appropriate commission will discuss the proposal probably in the winter session. They will either accept and work on it or it goes directly to the parliamentary floor. Should they also unexpectedly have no interest, we will start a popular initiative. With 100,000 signatures the voters can vote on it directly, independent of whether the politicians like it or not.
Daily Bell: Are you hopeful?
Thomas Jacob: No, I am confident. The time is right; the issue simple. We are talking about freedom of choice in monetary matters, something that cannot be opposed in good faith. It is not primarily about attacking today’s monetary system, but giving people the freedom of choice. If today’s monetary system remains as good as today’s authorities claim it is, they shouldn’t worry – if it isn’t, we, the people, shouldn’t be forced to use it.
Daily Bell: Give us some background. Where were you born and raised?
Thomas Jacob: I was born in Zurich and grew up in Schaffhausen (30 miles north, near Germany and the Rhine Falls). I spent one high school year in Indianapolis and have lived in Zurich ever since.
Daily Bell: What is Zurich like? Give us your impressions.
Thomas Jacob: With the weather not living up to the global warming promises, this rainy summer makes it a bit harder to be all praises for Zurich. I love it. You can find almost everything in Zurich, one of the positive aspects of the 30-plus percentage of foreigners from all over the world. It is clean enough to go swimming in the river running straight through the city. It is wealthy enough that we are doing well despite the wasteful socialistic government. Complaining at our standard of living has a touch of decadence to it.
Daily Bell: You were a pilot for 15 years. What was that like?
Thomas Jacob: Great. It was my boyhood dream. I always say today are the good old times of tomorrow but the times I had as a pilot won’t come back for two simple reasons: on the one hand the airplanes in the ‘80s didn’t have the range for direct flights and there were fewer flights, so going, for example, to Beijing and back took 12 days with three stopovers for the crew. I had tons of time to study cultures, people and economics. On the other hand, Swissair was the only privately owned airline in Europe. We had competitive working conditions but with the competition being state-owned bureaucracies we did very well.
Daily Bell: Why did you retire?
Thomas Jacob: After 15 years even piloting becomes routine. The folding up of Swissair at the end of 2001 gave me a reason to reevaluate my future.
Daily Bell: You went into financial consulting in 2002. Why?
Thomas Jacob: It combined my interests in finances and in people and offered a challenge pretty much opposite to that of a pilot.
Daily Bell: What is the financial environment in Switzerland like now?
Thomas Jacob: The economy is strong and so is the financial sector. I see a special challenge in the uncertainty about future rules and regulations and their enforcement. A friend of mine, Robert Nef, coined the term “vorauseilender Gehorsam”, which means the Swiss authorities tend to implement and enforce national and international rules and regulations not only to the letter but ahead of time, and over-complying.
Daily Bell: What is the political situation like?
Thomas Jacob: Pressing issues are our relation with the EU, financial themes and immigration. Party politics is pretty much divided into SVP and the rest. The SVP has often been the first one to pick up issues that the people worried about and politics ignored, and has had unprecedented success to become the largest party ever, with currently about 30 percent of the votes. The main losers were the parties in the middle, which had drifted to the left and toward the EU during the ‘90s. They seem to have an anti-SVP reflex in most issues. The parliamentary elections this fall will be interesting: if the SVP keeps winning votes will the middle parties ally with the left or move back to the right? This will be decisive for the general heading of Swiss politics in the next years.
Daily Bell: Are you a fan of the European Union?
Thomas Jacob: No. Power corrupts, and centralization always means more power. I am a federalist, ideally down to every individual.
Daily Bell: Is Switzerland growing closer to the EU? Should it?
Thomas Jacob: Polls show 80 percent oppose joining the EU. The majority of the politicians and almost all bureaucrats want to move closer and eventually join the EU but they have to move carefully today. There is always the threat that the voters will rebel, and with our direct democratic system we can vote on any and every issue if the politicians overdo it.
Daily Bell: Why is a gold franc needed?
Thomas Jacob: Why not? Freedom of choice is always beneficial. There are many potentially great advantages and the worst that can happen is ignorance, that is – nothing.
Then there is the issue of the future of today’s monetary system. I have my personal thoughts on that but I want to stress that there is no need to agree with me on this to support the creation of a gold franc. There is, for example, the moral issue of the fractional reserve system, which means some people create money “out of thin air,” and the general public pays via inflation. Then there is the “pretense of knowledge” that Hayek talked about: there is simply no way the authorities can know all they need to know to make decisions for the whole economy.
Last but not least, there is another question I haven’t been able to answer: if the monetary authorities want positive inflation, this means that the money supply must grow faster than goods and services – and this monetary growth is, in today’s system, all backed by an equivalent amount of debt. But whom can you impose an ever increasing amount of debt onto? Isn’t that an insane idea? As far as the road to change, I like what Hans Sennholz said in a 1984 speech at the Mises Institute: “Only in freedom, only through a parallel standard, can there ever be a just monetary reform.”
Daily Bell: What would the gold franc do?
Thomas Jacob: An easily understandable and useable commodity coin-money would give people a “sensual experience” with real money. People who feel and possess gold francs immediately and intuitively understand the difference between “real” and “fiat” money. For them the monetary world would never be the same again.
On the practical level, gold franc coins could be produced as a bimetallic coin, starting with as little as 0.1 grams of gold in the center. This coin would cost about $5 and give many people access to gold for the first time. This will open up huge new markets for gold in and outside Switzerland. The legal protection from taxes makes gold francs attractive for life insurance companies, pension funds, etc. By one estimate the additional demand for gold in Switzerland alone will raise the gold price by 11 percent.
Daily Bell: What will it force other countries to do?
Thomas Jacob: Depending on the developments in Switzerland, I can imagine different scenarios. They are all positive but it is too early to speculate on specifics.
Daily Bell: What gave you the idea?
Thomas Jacob: To be honest, the “healthy currency” group of some SVP parliamentarians. Their concern then was the safeguarding of the remaining gold in our national bank, which I think is a nice idea but doesn’t address the issue at heart. Originally, I wanted to use this remaining gold as the base for a parallel gold franc currency. After the huge losses the national bank incurred last year this became increasingly utopian, and I concentrated on today’s proposal.
Daily Bell: Are you an Austrian – someone who believes in Misesian Human Action?
Thomas Jacob: Absolutely. But since this is a political proposal it could be distracting to get into these discussions.
Daily Bell: What is your position on silver?
Thomas Jacob: Once the gold franc is introduced I expect it to be easy to do the same for silver and eventually “separate money from the state.”
Daily Bell: Is there a new world order or a financial elite determined to create one?
Thomas Jacob: I follow your discussions with much interest and sympathy but I simply don’t know.
Daily Bell: Would the gold franc have an impact on globalization? If so, in what way?
Thomas Jacob: The gold franc is the name for a weight of gold and therefore immediately a world money. It will have practical and psychological impacts; just where and how much I don’t know yet.
Daily Bell: Why did Switzerland give up the gold link?
Thomas Jacob: It is even hard to define just when “give up” took place. Fact is the Swiss people have always clung to gold much more than the politicians and still do. In 1948, for example, the voting public forced the authorities by way of a referendum to get gold-backing of the Swiss franc back into the constitution. In the ‘90s it was the national bank and politicians who wanted to get rid of the gold. The constitutional change this required was sold to the people as part of a complete overhaul of the constitution “with purely formal changes.” Even one of the responsible federal councils admitted later that this was probably misleading, to put it mildly. The initiative to safeguard the remaining gold and get a minimum of 20 percent of gold backing into the constitution should get launched any day now. It promises to be popular and put the issue of gold and money onto the media and political agendas.
Daily Bell: What is Switzerland’s future without a gold franc?
Thomas Jacob: Worse than with one. After all, we are talking about freedom of choice, which is always beneficial.
Daily Bell: Have the Swiss forgotten about sound money?
Thomas Jacob: Not the Swiss people. Sometimes it seems some politicians and monetary authorities have.
Daily Bell: Has the banking community?
Thomas Jacob: They play the game according to the rules as best they can, I suppose.
Daily Bell: Is Credit Suisse a Swiss firm or a globalist one?
Thomas Jacob: By what standard? Turnover, profit, owners, laws they abide by? The answers would probably differ.
Daily Bell: Does Switzerland need to focus more on private banking?
Thomas Jacob: I like private banking for the accountability it (used to) mean. I don’t know what Switzerland should do.
Daily Bell: Is the dollar reserve system failing? We think it is virtually dead.
Thomas Jacob: I can follow your arguments but really don’t know.
Daily Bell: Do you think the world will end up with a basket currency and an IMF central bank?
Thomas Jacob: Conceivable and tragic.
Daily Bell: Are the IMF and World Bank a good idea?
Thomas Jacob: They are the ultimate political centralization short of a world government. Centralization means power and power corrupts.
Daily Bell: Should Switzerland stick to itself or try to become more and more an international country?
Thomas Jacob: Economically international, politically independent. Goods should move freely and without restrictions, the gold franc of course being part of it.
Daily Bell: Where do you go from here?
Thomas Jacob: On vacation for one week.
Daily Bell: Any other comments you wish to make?
Thomas Jacob: The speed of the political process depends on public pressure, in this case on publicity and the means to threaten the politicians with an immediate and efficient popular initiative. For those readers interested in becoming part of this historic project, we can gladly supply them with our “investors plan.”
Fun questions. Thanks and congratulations!
Daily Bell: Thanks for speaking to us. Good luck.
The Daily Bell, Sunday, August 14, 2011