The prescription for Argentinean recovery

Wednesday, 17 April 2002

Hugo Salinas Price

The prescription for Argentina:

The Government orders the opening of the Argentinian Mint to free coinage of silver.1

This means that any person or corporation, Argentinian or foreign, can deliver its silver of .999 purity or better, to the Mint for coining into silver ounces. The silver tendered may be of lesser purity, in which case a discount will be made to cover the cost of refining to the necessary purity; the discount will be reflected in the lower number of ounces to be returned to the owner of the silver. The coinage will be free of cost to the owner of silver.

The silver is to be coined in one troy ounce pieces, which will be the monetary metallic standard, and which will circulate in parallel with the established régime of fiduciary (irredeemable paper) money. The troy ounces will bear no stamped nominal value.

The Mint, or the Central Bank, will determine the floating value of these one troy ounce coins, which will be expressed in units of the circulating paper money issued by the Central Bank. The determination of the floating value will be done by the Central Bank periodically, 1. according to variations in the international price of silver; 2, according to the value of the paper unit of money issued by the Central Bank, in international markets and 3. according to the degree of overvaluation which the Central Bank may consider prudent.

The floating value may rise in terms of  paper money units, but this value will on no account be diminished once established.

Considerations regarding the Banking System and the silver coin:

There will be an immediate authorization of:

Sight deposit accounts. These accounts will not pay interest. The banks which open these accounts, will act only as warehousers, and they will charge a small fee for their warehousing service. All coins deposited, must be maintained physically in vaults of the banks which receive silver on deposit at sight.

When the amount of silver in circulation shall have reached an adequate level with regard to the paper money in circulation, there will be an authorization to open:

Time deposit accounts. These accounts will pay interest in silver. No deposits in silver will be allowed for a term under 90 days. The bank which opens these accounts, will have to maintain a physical supply of silver of not less than 40% of the silver received as time deposits.

Granting of loans in silver.  For their account and at their risk, any bank receiving silver time deposits may grant loans denominated in silver, for a term not in excess of 90 days. Such loans will not be renewable. The total of loans granted in silver, may not exceed at any moment, 60% of the total amount of silver received in time deposits.

Considerations regarding taxation and the silver coin:

All profits of those who use the silver coin, which may be attributed to a rise in its floating value, will be tax free.

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On the foundation of these measures, and without alteration of their intention,  the course of events will suggest additional incidental measures guided by convenience and prudence, that will allow for the establishment of a solid and lasting economic recovery which will produce results in a short time: social stability, optimism with regard to the future and economic prosperity.

There is no other viable road to the economic and social reconstruction of a nation devastated by the instability intrinsic to irredeemable paper money.

The return to real money, silver, complemented with paper money redeemable in silver, is essential for the reconstruction of those countries which have collapsed into total crisis, as well as for the salvation of those inevitably approaching such a crisis. In due course redeemable paper money will be issued, but this will take place at a later stage still distant at this point, when financial conditions may allow it and after a clean-up of the present financial structure takes place.

For international relations, eventually it will be necessary to discard the Central Bank use as reserves, of irredeemable fiduciary (paper) money of any another country, and to demand exclusively gold as a reserve asset. This situation will come about sooner or later, as a result of a new international monetary order.

What is indispensable at this time, is formally to graft silver onto the national monetary system of fiduciary (paper) money, and this can only be done by granting a floating value to a silver coin which will not be stamped with a fixed value in terms of that fiduciary money.

It is entirely predictable that in time, and after a great number of events which it is impossible to visualize individually, fiduciary irredeemable money will disappear, and when all is said and done, only silver coins will remain as the basis of the monetary and financial system, complemented with fiduciary (paper) money redeemable in silver. We do not need to know in advance all details with regard to this transformation. We know, because all history demonstrates the fact and theory confirms it, that the result of using silver will be stability, tranquility, optimism and its perennial concomitant, economic prosperity, and that as the use of silver is introduced into the national economy, further changes will take place which will result in the complete elimination of irredeemable fiduciary (paper) money.

From the very instant when free coinage of silver ounces with a floating value is announced, a wave of optimism and hope will rise up among the people, because this measure means the introduction of quality into the monetary system, an element that has been absent for many decades. The quality of silver, will spill over into the paper money and increase confidence in it, providing much needed relief in the present situation.

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(1) Note: The actual minting can also be carried out at any mint in the world, through a contract.