Prof. Dr. Philipp Bagus is Professor of Economics at the Universidad Rey Juan Carlos in Madrid and President of the Board of Directors of Elementum International AG. As one of the best-known representatives of the Austrian School of Economics, he has been dealing for many years with monetary theory, inflation, and the causes of economic crises.
In this conversation, he explains why sound money plays a central role for economic stability, what lessons can be drawn from current developments such as those in Argentina, and why gold and silver have been regarded as a reliable form of money for centuries.
1. Your life path: How does one become a professor of monetary theory in Spain and at the same time bring one’s expertise into the practice of a Swiss precious metals storage company such as Elementum International AG?
I became interested early on in how our society functions. Where does unemployment come from? What is inflation? Why are some countries rich and others poor? In searching for answers, I came across the Austrian School, Hayek, Mises and Rothbard. At the Mises Institute in Auburn, Alabama, I was then advised to study with Jesús Huerta de Soto in Madrid. That is exactly what I did. What interested me most was always monetary theory.
Where does inflation come from, what are its consequences, why do business cycles and banking crises occur? It was therefore fortunate that Huerta de Soto had written a standard work in this field, “Money, Bank Credit and Economic Cycles”, which I translated into German. I wrote my doctoral thesis on deflation. Then came “The Tragedy of the Euro”. Against the background of my long-standing engagement with sound monetary systems and the preservation of value through real assets, it was only logical for me to also become involved with Elementum International.
2. What was your personal “aha moment” that brought you to the Austrian School?
I still remember reading “The Ethics of Liberty” by Murray Rothbard. He writes that the state is ultimately a criminal organization that is based on violence.
3. What misconception about money do you encounter most frequently, and which annoys you the most?
The myth that the money supply must be increased, otherwise there could be no economic growth. Yet that is not a problem. If the economy grows, prices fall.
4. If you were to explain the Austrian School to an intelligent layperson: How does it differ from mainstream economics?
The Austrian School starts with individual human actions and sees the market as a process in which entrepreneurs of flesh and blood compete to satisfy the needs of their fellow human beings.
Mainstream economics looks at aggregates and mathematical equilibrium models. The Austrian School concludes that all goods and services can be provided through the interaction of the market – better, more efficiently, and more cheaply than the state could do.
5. In your view, what are the biggest misunderstandings about “capitalism” in the public debate?
That capitalism is unjust because workers are exploited. In fact, capitalism is the only just social system. Because in it, property rights are protected. It is socialism that is unjust because it systematically violates property rights.
6. Your book “The Tragedy of the Euro” continues to be regarded as a standard work of criticism of the Euro: What is the core thesis, where do we stand today 16 years after publication, and do you still consider the end of the Euro to be likely?
“The Tragedy of the Euro” consists in the fact that a currency can be used by several independent states to finance their expenditures. It is a tragedy of the commons, like schools of fish in the ocean. No one owns the fish, therefore the incentive is to fish as quickly and as much as possible. This leads to overfishing. With the Euro it is similar. Each member state can print government bonds that are then bought by the banks and subsequently passed on to the ECB as collateral for new loans. These new central bank loans mean an increase in the money supply and ultimately a tendency for the purchasing power of the Euro to fall. The exploited resource is the purchasing power of the Euro. In this way states can shift the costs of their government deficits onto other Euro users in other euro countries.
This design flaw of the Euro still exists today. Attempts have been made to limit the deficits, similar to how fishing quotas are set for fishermen. However, these limits are not strictly enforced. As a result, the tragedy of the Euro is still intact. There are three possibilities. First, government deficits are strictly limited. But this requires political will and austerity. So far this has not happened. Second, the Euro breaks apart because those who lose from redistribution are no longer willing to lose in the inflation game. That has also not yet happened. But there is a third possibility. The tragedy dissolves if the fiscal independence of the Euro states ends. A European central state could control fiscal policy and redistribute between the member states. That has not yet happened either, although there have been steps in this direction. It remains exciting.
7. Should every person hold a part of their savings in gold and silver, and if so: Why?
Gold and silver are insurance. They are insurance against inflation and financial crises.
8. In your latest book “The Era of Milei”, you write about Argentina’s new path: What is the decisive aspect of Milei’s approach?
Milei shows that the real conflict in our society is between the political class and the hard-working citizens on whose expense the political class lives. He shows that the state is not the solution, but the problem. With these narratives he has brought about a change of mentality in Argentina. This has carried him into the presidency and now allows him to carry out his market-oriented reforms.
9. The book has a foreword by Javier Milei: How did that come about, and what does it say about your connection to him, especially as Cicero describes you as a “close confidant”?
Like me, Milei is an economist of the Austrian School. I knew him before he became president. Since then we have been friends. So I asked him whether he might contribute a foreword.
10. Which book do you believe everyone should really read?
“Economics in One Lesson” by Henry Hazlitt.
11. Which indicator or number are you currently following particularly closely, and why?
I am following the inflation figures in Argentina very closely. A further decline in the inflation rate would be a great success.
12. What makes Elementum special in your view, and what most clearly distinguishes the company from other providers in the market?
Elementum stands out for its strategic know-how and expertise in the precious metals market. No one comes close.
How can you buy precious metals cheaply and store them safely?
Elementum Deutschland GmbH, based in Sindelfingen (Germany), specializes in trading physical precious metals. Customers who purchase precious metals from Elementum Deutschland (or one of the other national Elementum companies in five European countries) can store them in the renowned high-security vaulting facilities in the St. Gotthard Massif in Switzerland at Elementum International AG.
Of course, you also have the option of purchasing gold and silver directly and having it delivered to your desired address. However, storing silver in the so-called open duty-free warehouse (“offenes Zollfreilager”) at St. Gotthard offers decisive tax advantages:
- The 19% value added tax customary in Germany is completely waived on purchases and sales – a considerable price advantage that effectively secures you 19% more silver for your money.
- If you store your silver in this high-security vault, you can sell it back to Elementum Deutschland GmbH at any time – without any bureaucratic hassle and also without VAT, as the trade takes place within the duty-free warehouse. You will receive the funds via bank wire.
- VAT is only payable when you physically remove the stored silver – either by picking it up in person (after prior notification) or by having it shipped to your address.
More silver, more return
Thanks to duty-free storage, you receive 19% more physical silver when you buy. This additional amount also participates in the performance of the silver price if it rises – a leverage effect that significantly improves your return opportunities.
Secure your storage space now – free of charge and without obligation
Register now for a storage space in the St. Gotthard high-security vaulting facility and receive free access to:
- our General Terms and Conditions (GTC)
- current fee tables
- annual audit reports from the auditing company BDO AG
- transparent proof of use of funds
- family discount information
- the popular children’s program “Schatz4Kids” (“Treasure4Kids”)
- as well as numerous other documents and information on storage, purchase, and resale, as well as the ratio “switching” strategy.
Register now: https://silberbar.elementum.de/
Tip for discounted entry: Enter the promotional code “50” (“Aktionscode“) and the “Vermittler” number 1000166 when registering to receive a 50% discount on the storage space setup fee.
Important: Registration is non-binding and does not commit you to anything – but it is your first step towards an independent and crisis-proof precious metal investment.
Elementum is a second-generation, owner-managed family business. Trust, consistency, and long-term thinking are at the heart of our philosophy. The Board of Directors of Elementum International AG is composed of internationally renowned experts in the money and precious metals markets, including economists, analysts, university professors, and precious metals specialists. This in-depth expertise forms the backbone of our actions—for your security, your assets, and your future.
About the Author
Prof. Dr. Philipp Bagus
President of Elementum International AG
Philipp Bagus is Professor of Economics at Universidad Rey Juan Carlos in Madrid, Spain. His research focuses on monetary and business cycle theory, and he has published in international journals such as the Journal of Business Ethics, Independent Review, and the American Journal of Economics and Sociology. He has received numerous awards for his work, including the O.P. Alford III Prize in Libertarian Scholarship, the Sir John M. Templeton Fellowship, the IREF Essay Prize, and the Ludwig Erhard Prize. Bagus is a member of the Academic Advisory Board of the Ludwig von Mises Institute Germany and the author of several books. His best-known works include “The Milei Era: Argentina’s New Path” (2024), “Full Reserve Banking versus the Real Bills Doctrine” (2024), “In Defense of Deflation” (2015), and “The Tragedy of the Euro” (2011).
Contact
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Email: info@rockstone-news.com
Disclaimer: This article reflects the personal opinion of the author. Elementum assumes no responsibility for the accuracy of the content and accepts no liability for its use. This article may contain links to external third-party websites. Elementum is not responsible for the content of these external sites and expressly distances itself from all information provided there. At the time the links were created, no unlawful content was identifiable. This article does not constitute a recommendation to buy or sell. Elementum International AG is a Swiss company that specializes exclusively in the storage of physical precious metals in a high-security vault facility located in the St. Gotthard mountain massif in Central Switzerland. The Board of Directors and Executive Management of Elementum International AG have been selected solely based on their professional expertise and long-standing experience in precious metals markets. As these individuals may also be professionally active outside their roles at Elementum International AG, the company has no influence over their external activities and respects their right to freedom of expression. Therefore, the views expressed by persons working with or for Elementum do not necessarily reflect the opinion of Elementum International AG. Investments in precious metals are subject to risks, including those specific to the structure of this market. Please read our full risk disclosures and consult a licensed financial advisor before making any investment decisions. Neither the author, Elementum International AG, nor Elementum Deutschland GmbH assume any liability for actions taken based on the information provided. Past performance is not indicative of future results. The cover picture has been obtained and licenced from Shutterstock.com.
