Interview with Franz Pick

The colorful currencies specialist speaks his mind

Dr. Franz Pick, at the age of 83, is as fearless in his fight for monetary integrity as he was on the battlefield in his youth. His life is a series of adventures that outdo a fiction writer's imagination.

His publishing career in the United States started in 1945 when he began distributing black-market rates for the exchange of currencies. Soon he was putting out a monthly entitled Pick World Currency Report. In addition, Pick's Currency Yearbook, published annually since 1955, is the standard reference book of currency values, chronicling the ineptitude of the world's money managers.

Dr. Pick's consulting clients come from all corners of the globe to his office on West Street in lower Manhattan. The seminars he conducts periodically in the United States and Europe clearly show his contempt for paper money—the admission charge has recently been expressed in Krugerrands.

Dr. Pick's office walls are papered with facsimiles of French Assignats and US Continental Dollars ("the world's first two fraudulent currencies"). The bookshelves are lined with the approximately 80 books he has published since the late 1940s. Technology consultant Christopher Witzky and New York University finance professor Rolf Wubbels interviewed Dr. Pick at both his office and his Long Island Sound estate where he spends his summer weekends enjoying sailing.

REASON: I am sure that everyone would be interested in where you were born and your early education and orientation.

PICK: I was born in Leipa, Bohemia, Austria, in the Year of the Lord 1898. I went to grade school in a little town in northern Bohemia and later on to the gymnasium, or what you call here high school. I was drafted at the age of 17 years and six months into the Austrian army. I flunked officer's school, but I was granted a battlefield commission a little bit later and was a first lieutenant at 19. I ended my World War I career in 1919 as the commander of a battalion of flame throwers.

After the war, I went to the University of Leipzig to study law and business administration. I believe it was in 1922 that I got my doctorate of law. Studying business administration and law gave me a complete antilaw philosophy. For postgraduate studies, I studied currency theory at the University of Hamburg. I was still not completely convinced of the criminality of government. Today, I do not believe in law, because there is not one clean government in the world anymore. It doesn't exist. Until a few years ago, I considered Switzerland to be a clean government, and I considered the upper echelon of Britain to be clean. All this has gone down the drain. The imbecile who buys a $1,000 government bond will not be repaid with the purchasing power he originally paid for it. He cannot sue the government that issues the bond.

My first doctoral dissertation was "The Legislation of State Bankruptcy." My second doctoral dissertation was "Austrian Monetary Policy and Currency Organization During the Napoleonic Wars: A Contribution to the State Theory of Money." After completing my studies at the University of Hamburg, I went to the Sorbonne for further studies in currency theory.

The whole world suffers from the inability to manage currency. This inability is contributed to through the—let's call it obedience, or whatever, of the media, of the banks, and of the industries in order not to disturb economic expansion. We live today under horrible expropriation in the United States. Since 1940, we have lost 95½ percent of the purchasing power of the dollar in unofficial constant terms, without any protest by the public.

REASON: In the past, you have said that "government bonds are certificates of guaranteed confiscation." If what you say about government bonds is true, why do so many people and institutions still buy them?

PICK: They are brainwashed.

REASON: How is it that you first came to be interested in currencies and currency theory?

PICK: I lived through the German hyperinflation, but it really started when I was studying law. I had no money, I was a poor student. One day I met a woman in the Mensa Academica, where we got cheap luncheons, and she suggested that I go to the University of Hamburg where she said there was a Prof. Kurt Singer (a pupil of George Frederick Knapp), who was teaching a revolutionary currency theory.

I went. I was interested in currency because as a young second lieutenant, I was stationed in the Balkan part of Europe, and there I saw that the people hoarded gold coins—Austrian gold coins. That interested me. These Austrian gold coins increased 100 to 200 percent in paper value. And that's how I started. I wanted to get to the bottom of it and find out who made it that way. It has not changed!

John Law established the first paper bauble through the Mississippi Company. All that capsized in the end. [John Law, a Scotsman, having failed to convince his government, talked the French Regent into a private bank, subject to government control, with note privileges. Established in 1716, the bank issued notes redeemable in specie and was highly successful. On December 4, 1718, however, the notes were no longer redeemable, but were based on the government's general credit. This was the beginning of the end for the bank and its notes. Schemes to keep up the value by making stock subscription to various trade monopolies and to companies formed to colonize the Mississippi Valley flourished for a short period but ended in complete failure.]

And that's how I look at the events in the financial markets of the United States. Today the dollar is worth 4½ cents at prewar value, and that we do not want to admit. We have to cheat and lie as long as possible to postpone the liquidation of the present currency.

REASON: Liquidation of the present currency? That's interesting. In an interview with the Gold & Silver Report in early 1979 you predicted that "the U.S. government will issue a new currency—perhaps as early as 1980." It is now two years later and the dollar is still around. Do you stand by your prediction?

PICK: I stick to it. We have no possibility to continue with this currency. With the high interest rates, we have killed the automobile industry in the United States, we have damaged the steel industry, we have damaged home building.

REASON: How would it happen—the currency exchange, that is?

PICK: On one Friday afternoon, the government would announce the closing of banks, stock markets, and the commodity markets and will invite the people to exchange the currency they have in their hands, beginning Monday morning and for another six days, for a new currency. And I believe it cannot be less than 100 to one.

I was in Brazil a number of years ago, and on the second day of my presence, I woke up and 1,000 old cruzeiros were one new cruzeiro. The fact is that the destiny of every currency is devaluation and expropriation. Why not read the second edition of my book, The US Dollar, 1940–1980: An Advance Obituary, which I sell for $50.00 per copy? It explains everything.

REASON: I take it that you do not think too much of supply-side economics and President Reagan's program.

PICK: Supply-side economics is an excuse for debasing the currency.

REASON: You don't think that the Reagan administration understands inflation and currency problems?

PICK: I am glad that you asked that question. In the Treasury Department, there is not one person who has studied currency theory. All of them are amateurs, bloody amateurs. They will not admit that the dollar is worth only 4½ pennies.

REASON: There have been some hints that the Reagan administration will restore the gold standard. Is it likely?

PICK: Never.

REASON: If it did, would that solve our currency problems?

PICK: I am for gold, not for a gold standard, because I believe that governments will never be clean again. Governments will be criminally and disgustingly corrupt. Therefore, a gold standard cannot function in our civilization. And especially with a subterranean economy, we cannot have a gold standard. We could not have $300 billion in hard-narcotics business without the tacit cooperation of civil servants. But this naturally is not welcome in any public discussion.

REASON: Do you think that there will be a chance to turn things around and stop inflation?

PICK: No. No government in history has ever managed inflation but by state bankruptcy.

REASON: Are we then at the threshold of hyperinflation?

PICK: I don't see that yet. But, I will tell you, a friend came to visit me and saw part of my stamp collection. She simply could not digest that there was once a postage stamp of 5 billion marks.

REASON: When do you see things getting completely out of hand?

PICK: I do not see it for the time being. We will not, however, go back to gold. The underworld is too powerful. We are not intelligent enough to go back to the gold standard.

REASON: Dr. Pick, I believe you once had an interesting experience using gold as a bribe during World War II.

PICK: Yes. It was approximately early November 1939. I was called to go to Le Havre to British Headquarters. [Dr. Pick lived in Paris for many years working as an economic consultant and free-lance journalist.] I took the train. It was five o'clock in the morning, and I was in Le Havre by seven or eight. A car from British Headquarters was at the station and took me to their headquarters. I was welcomed by a colonel, and early in the morning I made the acquaintance of "Black Velvet." Do you know what that is? It's Stout and champagne, mixed. And the colonel told me, "Sir, we believe you know something about international currency. Can we use your knowledge?" I told him, "Why not?" He said, "One of our best men was caught the day before yesterday in Bolzano [Italy]. He had no papers on him. He was in workmen's overalls. On a motorcycle, he nearly killed an old woman. They have him in jail, and they don't know who he is. Can you get him out?" I did—with one 400-ounce gold bar for the director of the jail and a smaller, one-kilo bar for the concierge of the jail. I had a Danish passport at the time. The only burden was to carry the gold in a little suitcase. I would like to say that there were no questions asked. No one asked why I came. I simply said, "I want this man." And we were escorted to the French border. And now I give you the bitter pill. About two miles outside Frejus, on French soil, the man asked the convoy of two cars to stop. He said, "Thank you, sir," and got out.

REASON: You were also once paymaster…?

PICK: Of the European underground, prior to the breakdown of France.

REASON: How did you get that job?

PICK: I didn't ask for it. I had a lot of interesting assignments. At the beginning of the war, I was in currency intelligence. And I was able to find out about a half-dozen German payment centers in neutral Europe; they directed their entire intelligence actions from them. I blew them up. For that, I was sentenced to death over the German radio. What amazed me most was that in my death sentence they gave my academic titles.

REASON: If we may, let's get back to inflation. It's true that inflation is continuing, but isn't the dollar still the best currency relative to the alternatives?

PICK: No sir! No currency is good. Maybe some of the isolated Moslem currencies are good, I don't know. But the whole thing is a swindle! How can you talk about the dollar whose crown is the Dow Jones Industrial Index? The Dow Jones Industrial Average is a cheat. When it's around 1,000, the fact is that it is 47 in unofficial constant units. Why aren't we entitled to say it? But the big mergers are all based on constant dollars. This dance of billions of dollars is all based on unofficial constant dollars now worth 4½ pennies each.

REASON: What do you think of the Federal Reserve's efforts to curb money growth?

PICK: The money supply is smaller than it ever has been on a per capita basis. On a per capita basis, the money supply was $317 in 1940. It is now only $77 in unofficial constant dollars. In unofficial constant dollars the money supply has declined 58 percent since 1940, and on a per capita basis, it has declined 76 percent. These are deadly maladies. The GNP now is $2.8 trillion. It has increased in mini-dollars 2,700 percent in 40 years, but in unofficial constant dollars it has increased only 34 percent! On a per capita basis, it has declined 18 percent.

Journalists are grave diggers of the republic. They do not want to admit the truth. They masturbate with untrue figures, with the falsifications of the federal government, and they are not ashamed of doing it.

REASON: Will the Fed's actions slow inflation?

PICK: The Federal Reserve has no freedom. The Federal Reserve has to serve the needs of the government.

REASON: Amongst all of the central bankers of the world, are there any that you truly respect?

PICK: I speak only to three of them. The others are politicians, amateurs, and adventurers. I don't give a damn about the governor of the Bank of England, who is weak, or the chairman of the Board of Governors of the Federal Reserve System. I have only pity for them. They do not know the currency theory I know. If I teach currency theory, I have to start by saying that every government bond is a certificate of guaranteed confiscation. Never has a government debt been reimbursed fully to the imbecile who bought it.

And the big trick is the following one. We will expropriate all of the bond holders in this country. The biggest debts outside of the federal government belong to American Telephone & Telegraph. They will be valueless, these bonds! What will we do with the pension institutions? They are an activity without conscience. There is not one legislator who was elected with his own money. How can we tolerate that? I am very bitter, and I don't hesitate to say it.

REASON: What is your prediction for interest rates?

PICK: I am unable to give you any projection, for this is purely political. We have to expropriate the monetary assets of people.

REASON: Which country's economy do you consider to be in the best shape for the long run?

PICK: None. We do not want to admit that currency has become a hunting ground for rulers like al-Qadhafi or Reagan. Reagan seems to be a clean man. But, from a movie actor to a man who wants to master currency theory, I believe he has no chance. Currency theory is a hard discipline.

REASON: In your estimation, what is the real significance of the underground economy in this country?

PICK: I am glad you asked that question. Let me give you a breakdown. Moonlighting, $15 billion. Hard narcotics, $300 billion. Municipal and state corruption, $60 billion. Kickbacks and misrouting of defense funds, $100 billion. Loan sharking, $20 billion. Official shoplifting, $10 billion. Porno and prostitution, $75 billion. Numbers, $5 billion. Flea markets, $5 billion. Capital flight, $100 billion. Labor shakedowns, $50 billion. Total, $850 billion.

To give you one example. I have some underground contacts. The project of the Westway Highway in New York City—$2 billion, of which about 5 percent will be kickbacks and payoffs to politicians. Unfortunately, there is no proof of the underground economy.

Everything is underground economy. From the tips to my doorman to the bordellos in New York City, everything is underground economy.

REASON: What do you think will happen to all of the loans that US banks have made to Third World governments?

PICK: I am completely uninterested. I am interested in one loan complex: the Western loans to the Iron Curtain countries—Poland, the Soviet Union. That interests me. But I cannot talk to any banker, because I have to tell him that he is intelligent because he is going to gargle stupid words of patriotism. Patriotism and currency theory are opposite sciences. There is no possibility of being a patriot if you are being expropriated.

REASON: If those countries were to default on their loans, what would be the effect on the US economy?

PICK: The loans to Poland will never be repaid. They will be rolled over in order to fool the public. If you read the report of the Polish Congress, what do you get out of it? That they are mostly corrupt. They have villas in Gdansk and everywhere, the so-called members of the Politburos. And they have yachts and race horses. There is no communistic ideal. These are power problems.

REASON: Do you think that the present South African society and the government will survive to the end of this century?

PICK: Yes. With cruelty.

REASON: What do you see for France with the election of Mitterrand?

PICK: Devaluation.

REASON: What about the European Monetary System? Will it stick together?

PICK: No. Look, I remember the first socialist government under Leon Blum. His enemy was Paul Reynaud. Paul Reynaud was my mentor in France. One morning he said, "Pick, this afternoon you come to the Chamber of Deputies. I am going to attack the government." He attacked the minister of finance and the prime minister with, among others, the following sentence—and I never will forget this sentence—"Et aux porteurs de rentes, vous n'avez laisse que les yeux pour pleurer." (To the owners of government bonds, you have left nothing but the eyes to cry.) And they had to shut up and couldn't say one word any more.

REASON: Do you believe in democracy?

PICK: No, I do not believe in democracy, because democracy without corruption cannot flourish. Today, the most corrupt country in the world is Israel. The United States is number two. The Soviet Union, number three.

REASON: Dr. Pick, thank you very much.

PICK: You are quite welcome.