09/30/13 – Alan Butler – The Scott Horton Show

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All right y'all, welcome back to the show.
I'm Scott Horton, this is the Scott Horton Show.
And on the line is our good friend Alan Butler from the Liberty Express.
Hey Alan, how are you?
I'm fine, Scott.
Thanks for having me.
How are things out there in lovely Austin, Texas?
Everything's great.
It's a beautiful day.
Appreciate you joining us today.
So, you know, I saw on the TV that people were complaining that there was going to be a government shutdown.
And I thought, people complain about government shutdowns?
That's odd because that's the only thing I want in the world is for the government to shut down.
But I guess my priorities are a little bit different than everybody else's.
What does that even mean?
And in fact, what is this whole gimmick with the debt ceiling?
There ain't no ceiling in the world that you just, you know, crank it up like a car jack and just keep raising it and raising it and raising it up to the moon.
It's not a ceiling at all.
And all they ever do is raise it anyway.
So why do they even have one unless it's so that they can, I don't know, shut the government down every once in a while?
I mean, I'm for that, but...
Oh, you know, to me, it's funny when they, and you and I both know, they're going to raise the debt ceiling.
And I think this will be the 101st or 102nd time since the debt ceiling was raised that they will raise it later this week.
And the media will act as if we averted some sort of crisis from my perspective.
The crisis is them raising the debt ceiling, not failing to do so, because however much they raise the debt ceiling by this time around will be how much new money Ben Bernanke prints and puts into the economy.
And then that's going to cause prices to go up.
Them raising the debt ceiling is a bad thing, not a good thing.
Well, and I think you were telling us before that the only people, the only net buyers of U.S. debt at this point is the Federal Reserve Bank, the Federal Reserve System that China keeps buying debt, but yeah, they're selling it too.
And they're selling more than they're buying.
Absolutely.
Through August 28th of this year, the Federal Reserve has purchased right at 115% of the net new treasuries issued so far this year.
The way they get into exceeding 100% is that they're buying not only all of the debt that's been issued so far this year, but debt that was issued in prior years.
So essentially the government now has only one buyer.
That buyer is the Federal Reserve.
And we are generating tremendous amounts of future inflation with all of this bond buying.
You know, I once knew a paper money guy and he wanted it to just be the treasury, not the Federal Reserve.
But basically he was saying that, look, I mean, the way it is with the way that the gimmick works, of course, with the Congress spending money they don't have and then the Federal Reserve creating money out of thin air with their magic and secrecy and whatever police power and then buying that new debt, that they can just keep doing that forever.
And that really, when you say a dollar, what you're saying is a $1.16 trillion.
And they can keep on going.
In fact, I think at the time he probably used $1.16 trillion as the ultimate example.
It was back when the national debt was only $7 or $10 trillion or something like that.
And he was going, no, I mean, you could even have where a dollar is just a $1.16 trillion.
And we just keep on going like this.
Why not?
In fact, at this point, why not have Nixon's guaranteed minimum income for everybody as long as they're counterfeiting money all day?
What's the problem?
Well, I think you bring up a good point.
And if the American people understood the monetary system, like Henry Ford said, we'd have a revolution by morning.
But as you know, since you're well-informed, what we circulate for money in the United States is the national debt.
It is a note.
It's a promissory note.
It's an absurd system that we, the American people, pay interest to the Federal Reserve on money that the Federal Reserve creates out of nothing.
Boy, and you know, it really hits hard when you think about a 30-year note.
We're like, okay, it makes sense that you got to pay for a house to live in, whatever the market value of a house is.
But first of all, we don't know what the market value of a house is, not by a long shot.
But second of all, who do you have to pay?
You have to pay a bank that didn't even have any money when they loaned it to you?
Well, that doesn't quite seem fair.
How come you can't just loan the money to yourself and pay yourself back for 30 years then, if that's how it is?
As long as we're just making stuff up here.
Anyway, I could see the temptation to be a paper money crank rather than a gold standard guy, but...
Paper bugs is what we call them.
So now back to this whole shutdown thing.
So this whole thing's arose, and they're not going to shut down a thing because the Republicans are just going to pass the thing just like always, or this time there's going to actually be a little hiccup in it.
Does it matter?
No, I think they're going to pass it.
And if this were the crisis they're making it out to be, would they have taken a five-week vacation?
And then the Senate doesn't even convene until later on this afternoon, hours, within hours of the government supposedly shutting down.
And if they do shut it down, which they're not, it'll wind up being a paid vacation or paid holiday for federal employees.
This is nothing but a smokescreen.
Yeah, well, and of course, the only thing so close, they won't close down the DEA or any, you know, band of thugs out to seize your bank account.
They can still do whatever they want, but they'll shut down Yosemite National Park for you, make you hate them Republicans good.
Yeah, I mean, I couldn't agree with you more.
The GOP, I mean, they're not, we've seen what they do when they have office.
They spend money the way the Democrats spend money.
In fact, I would argue that both political parties are parties of inflationists.
And when the Democrats claim they're out to help the poor and the disadvantaged and the senior citizens and refuse to cut spending, then that means they're for inflation.
And when Republicans refuse to cut spending and refuse to raise taxes, I don't want to see them raise taxes.
I'm just saying that that is what they do.
Then that means they're for inflation, which means both political parties are essentially for inflating away our standard of living.
Yeah, I mean, that's the whole thing that other than the boom in the bus cycle and all of that, it seems to me the most insidious thing about the monetary system that we have is, you know, where people say inflation is good for the poor because they can borrow dollars and pay back in dimes and all that.
But it makes sure that they stay on the debtor end of that equation and make sure that somebody who's a debtor never becomes a creditor of his own because he has no ability to save.
Really, if you have any, if you make more than you're spending to stay alive, then you got to find some way to risk that money to take care of.
You can't just put it in a savings account or you'll lose out to inflation.
Might as well be a crime.
And so then everybody's forced into betting on the stock market or betting on the housing market or whatever else.
They end up getting taken.
All the money gets taken out from the top and all the losers at the top get bailed out at their expense and get double screwed on.
And meanwhile, though, if you had an actual capitalist system where loans came from actual capital that was saved up, you had whatever prevailing free market interest rates, then, yeah, it would be difficult maybe to take out a loan and pay it back at a higher interest rate.
But it would also mean that you have the ability to save and maybe one day be the one making the loan, you know?
The inflation tax is the cruelest tax of all because it's an indiscriminate tax.
It takes most of its, in percentage terms, most of its money from the people who are most vulnerable in our society, the poor, our senior citizens, our middle class.
And I believe that this constant debasement of the currency is what has, in large part, helped to erode the moral fiber of America.
You know, when I grew up, you had one spouse work and the other spouse stay at home and raise a family.
Well, that's not possible anymore.
It's not possible because both spouses have to go out and work because the currency isn't worth as much.
I have a friend of mine's son.
He's 12 years, I mean, he's 26 years old, Scott.
He's making 12 bucks an hour.
And the only thing preventing him from being forced to live at what we call the Atlanta Union Mission, which is for the total indigent, is the fact that he's living with his family.
And he and I sat down and did the math.
When I was his age, $12 an hour, which today is $24,000 a year and some change, the purchasing power of me making $12 an hour when I was 26, in today's dollars, I would have to be paid $106,000 a year.
And that's staggering to think that 12 bucks an hour back then would compute to $106,000 a year today.
That is what they have done to the currency.
And when, you know, people talk about a currency collapse, hell, it's already collapsed.
All we're arguing about is this last little 3%.
It's a crime.
Well, you know, it's hard to break this down, and I ain't a scholar on this kind of stuff.
Man, I'm more interested in foreign policy kinds of things.
But Sheldon Richman and the C4SS guys, they're really better on all this kind of thing than me.
But there's, you know, somewhere in there is a sophisticated libertarian class theory that it sounds in some ways like communist class theory, but not quite the same.
Because of course, the division is those who use state power against their neighbors, as opposed to just rich versus poor.
But the thing of it is, an honest libertarian has to recognize, of course, that it's the rich that are using the state power against the poor more than anything else and against the middle class more than anything else.
And I think that really, you know, it's like that George Carlin routine, where he starts just he just repeats it over and over again, like he's just trying to drill it through their head.
He knows that it's too difficult for them to comprehend.
So he just says it over and over again, they don't care about you.
There's a big club and you're not in it.
Stop believing in them because they're not here for you.
They really aren't kind of a thing.
And I think that, you know, we're all raised to believe in patriotism.
And we just kind of assume we kind of project the idea that, you know, a senator or, or someone who's rich and powerful enough to pick a senator that or have, you know, major influence in who the next senator is going to be or whatever, that those kinds of people at some level, they care about the country, they do care that, you know, people on at least the right side of town have the ability to get a job, if not the people on the wrong side of town.
And it's, I'm reminded, from time to time, it does sort of sound like communist class theory and whatever.
But again, I think it's partially accurate.
But it's like this one commenter is always saying on my blog, on the archives of this show, is this is all a war of the rich versus the poor, and they do not care about us.
And that goes for the state and its enforcers.
But it also goes, you know, it's just like this is fascism in Italy, too.
It's not just that the state is bossing around all the private property owners.
The private property owners made it that way.
They like it that way.
They want their will to all be law there for all their prices to be fixed.
You know, it's it's them conspired together against the rest of us.
And I guess I think people just can't comprehend it because of the red, white and blue flag floating in their face all day and all the hoorah and whatever that obscures who's zooming who here who has influence over the Fed, who is it that wants inflation, the poor or the very rich, you know, I'm sorry for going on so long, but seems like it's pretty brutal what's happening to people right now.
Like you could tell them about, say whatever you want about that whole ramp, but then also work in about the real unemployment rates right now, and especially among the poor and among, you know, racial minorities and that kind of thing.
It's horrible.
Yeah, right now the media has done a great job of painting a portion of the unemployment as the representative of the actual number of unemployed.
As you know, every month I am privileged to have the former head, the former commissioner of the Bureau of Labor Statistics on my show.
And as a result of over 100 hours of interviews, I've gotten quite the education on the unemployment slash employment rate.
The go to rate for the Bureau of Labor Statistics for the career statisticians is what they call the employment ratio and the employment to population ratio, which measures the percentage of the workforce currently employed.
And that number is at a four year low.
We hit bottom back in May.
We, excuse me, that's not at a four year low.
We made a four year low.
It is at a 38 year low of 58.6%.
Among men, among males, we have the lowest employment among men that we have seen since the early 1940s.
It's staggering.
And yet we're being told that things are getting better.
Things aren't getting better.
They're getting worse.
Tell us more about the unemployment, the discrepancy between what they tell you and how you read it, because it's kind of a complicated mess, but it's very interesting.
Okay.
The, what the media represents as being the unemployment rate is actually the U3.
The U3 measures only people who have been unemployed for six months or less and who have actively looked for a job in the last four weeks.
So if you have been unemployed for six months and a day, or you have not gone out and looked for a job, been on a job interview in four weeks, then you're not included in the U3.
However, you are still unemployed.
In fact, you're still getting unemployment checks.
To elaborate on that further, the average unemployed person in America today has been unemployed for 44 weeks, which means the average person who's unemployed in this country isn't even included in the U3.
So the reason the U3 has improved, or the reason that number has gone down, is actually a bad sign when the total number of people working has gone down.
It's because they have been unemployed so long that they roll out of the U3, and they're not counted as being unemployed.
It's like lopping zeros off the end of your dollars, right?
Absolutely.
Although, that's maybe where we're heading.
So how long do unemployment benefits last?
Because they don't just keep on paying forever, right?
Well, you remember we've had, under these various stimulus programs and continuing resolutions, they got out for 52 weeks.
Now they're at 99 weeks.
At 99 weeks.
And then what happens?
You just move down into the Salvation Army?
Yeah, or go to the Atlanta Union Mission, like I was talking about.
But right now we have, what Keith told me is a good way to look at the, what you and I would think of as unemployment.
He is pegging at around 24.4% of the total population.
Currently is out of work, wanting to work.
One in four.
And this is worse than it was when the when the recovery supposedly started in June of 2009.
And anecdotally, we're beginning to see more and more evidence that the economy has turned down yet again.
And it's turning down in an environment where unemployment is already high, and interest rates are already at zero.
Clearly, the medicine isn't working.
They need to change what they're doing.
Right.
Well, sort of back to the patriotism thing, the difference between the country and the economy versus how those who are the vested interests involved are doing.
And they're all still doing great, right?
The arms dealers, the pill pushers, the bankers, the farmers, I mean, the farm corporations, the insurance companies, they're all still making money hand over fist, the leading hedge firms and all of that.
It's everybody else that's screwed.
Well, I don't think it's any coincidence that the wealthiest part of the country now is in that Washington, D.C. area.
The best housing market in terms of housing house prices is in that Washington, D.C. area.
And obviously, No.
2 is up there on Wall Street.
So, you know, what we're seeing is that revolving door between Washington and Wall Street.
This has all been engineered to benefit the political and financial elite at everyone else's expense.
This has been probably the greatest transfer of wealth in the history of the human race.
Well, and then so but it's like the mob.
They take over your business.
They liquidate all your stock, take whatever money, then burn it down for the insurance and go.
But where are these people planning on going if they're not going to leave in America left when they're done burning it down and taking everything that we got and looting?
It's like that old Onion article at a shirt like this.
One percent finished construction of their own private escape pod, you know, but where are they off to Mars?
What are they going to do after they're done destroying America forever?
Move on to the next one.
Go to China.
I mean, Chinese.
Well, Mandarin, we probably should learn Mandarin, but not for that reason.
Of course, China's got problems of their own.
I did one description.
I thought that was good, though.
China, the Chinese have given communism a good, good name.
We have given capitalism a bad name.
Yeah, that's a good way to put it.
But yeah, boy, you talk about housing bubbles.
They got whole cities that nobody wanted over there.
You want to talk about malinvestment.
Should send the Austrian school on a field trip to China right now and go and check out some of that stuff, man.
Well, you know, I think that points to the worthlessness of GDP as some meaningful economic measure.
That counts towards their GDP, just like here in this country when they were doing quarter of a million dollar studies of male prostitutes in Vietnam and shrimps on a treadmill and things like that.
I mean, GDP counts all of that wasteful government spending as if it were, you know, real economic activity.
Man, all those Navy ships.
Just think of the the aircraft carriers, you know, and George Orwell at the part where O'Brien, the torturer, is pretending to be Winston's friend and he gives them the manifesto about how we screw everybody.
And it says in there that the only reason we're at war all the time is so that we can keep everybody on edge all the time.
And we could take it's our excuse to take all the excess productivity from the people and either blast it off into space or in the case of the floating fortress, sink it into the ocean where they can't get their hands on it, where they might be able to better spend it improving their own lives, improving their own minds and asserting their own power.
That's what it's all about, is just finding something to spend the money and then call it GDP, too.
Look, everybody, we created a giant floating fortress.
Aren't you impressed?
Scott, do you think any of your listeners actually believe that they're not going to raise the debt ceiling?
Oh, you know, I don't know.
I mean, I think whatever possibility anybody entertains, we all understand that it would only be as a political stunt kind of a thing so that the Republicans could make one sector of their constituency believe in them for a minute or something like that if it was to happen at all.
I mean, I don't think any no, I don't think any listeners of my show are caught up in the in the they may be left and right to a degree, but they're not Republicans and Democrats so much, I don't figure.
Well, you know, look, not for too long, anyway, not after hanging around here.
Since you mentioned the Republicans, I mean, they're negotiating against themselves right now.
If all spending originates in the House and the Republicans control the House, then the Republicans, it's not up to them to come up with something that Harry Reid agrees with, since it is the House that is responsible for the spending.
It's up to Harry Reid to accept something coming out of the House.
So it's as if, you know, okay, you don't like this one, we'll offer this and this.
I mean, the fact that they are engaged in that kind of tactic tells me that they really genuinely do not want to cut spending.
But I think you and I both know that.
Of course not.
Um, well, and why would they when they can just keep printing?
And apparently, the Federal Reserve, I think because Ron Paul probably scared the hell out of them a little bit.
I think out of Ben Bernanke, I think that they had to figure out this great scam where they can inflate all this money supply, but keep it on the shelf, make all the most powerful people hole on Wall Street, and never give it to Main Street.
But then, you know, in parentheses, thank God, right?
Because if they started loaning it all out, especially with the multiplier effect of the fraction reserve ratio and everything, then we would really be lopping zeros off of dollars and have a real, you know, dollar crisis.
Right now, we can't we can't afford groceries, right?
But the grocery store is open, which is a different situation than a real hyperinflation, right?
Well, it's, it's a tragic situation.
And they will raise the debt ceiling, the media will act as if they have averted a crisis.
And when in reality, they are creating the next one.
Well, and then so when Alan, when Alan Greenspan, when Ben Bernanke announced that he was going to not taper, and he's just going to continue buying the debt, that's an indication, right, that he knows that if he stops inflating, then the whole jobless recovery, such as it is comes crashing down, right?
He's inflating to prevent the recession that we had come and do.
And I guess at some point, if the inflation got too far out of control, then he would have to force that recession anyway.
And we'd end up going through the same pain only, you know, six, seven years later, whatever.
Am I right?
I would agree with that.
But I think that using the economy, that Ben Bernanke is using the weak economy as a cover to continue to prop up the banks.
Because how could even a Princeton-educated economist, a Keynesian, actually think that creating money to buy mortgage-backed securities and treasuries off of bankers, and then paying them interest not to lend the money to the rest of us, how does that help the economy?
And I would argue it doesn't help the economy.
It's not designed to help the economy.
It's designed to monetize the government's debt and to enrich and bail out the banks.
All right.
And now, that's a new law, right, that enables them to do that, or a new rule or regulation that enables them to do that.
But so if it was, if all that money was just going to the banks, it would still have to be in their interest to loan that money out.
And right now, you still have so many bad debts still being liquidated, and so much downward pressure on wages and prices, as somebody wrote or said in the chatroom there, I can't pronounce that, then that wouldn't necessarily lead to a bunch of new loans, right?
All that money could, well, just be sitting down at the local thrift in their vault and still not being loaned out, because who to loan it to?
Well, but they're being paid interest not to lend the money out.
That's the thing.
Ben Bernanke is creating this money out of thin air, buying these mortgage-backed securities from whom?
From the banks, and then paying them interest on that newly created money that the banks received for selling Ben Bernanke mortgage-backed securities.
Worthless paper.
Well, but he's paying them interest so they won't lend it out.
So, I mean, there's no way one could argue that that somehow or another is benefiting the general economy.
I don't believe it's intended to.
I believe it's, like I said, it's designed to monetize the debt in the case of the treasuries, and to continue to bail out the banks in the case of the mortgage-backed securities.
It doesn't make sense.
Well, my fear is that if he wasn't paying them interest to keep it at the Fed, and it wasn't their interest to loan it all out, that it would help too much, and it would end up leading to real price problems across the board, you know?
Well, it would lead to hyperinflation.
That's what I'm saying.
That would be my word.
So, really, we're screwed either way, coming or going.
That's the bottom line.
And now we got to go.
Thanks very much for coming on the show, Alan.
I sure appreciate it.
Hey, I always enjoy talking to you.
All right, everybody.
That's our friend Alan Butler from the Liberty Express, libertyexpressradio.com, host of Butler on Business.
Hey, y'all.
Scott here.
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