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Sorry I'm late, I had to stop by the wax museum again and give the finger to FDR.
We know Al-Qaeda, Zawahiri is supporting the opposition in Syria.
Are we supporting Al-Qaeda in Syria?
It's a proud day for America and by God we've kicked Vietnam syndrome once and for all.
Thank you very very much.
I say it, I say it again, you've been had, you've been took, you've been hoodwinked.
These witnesses are trying to simply deny things that just about everybody else accepts as fact.
He came, he saw, he died.
We ain't killing they army, but we killing them.
We be on CNN like say our name, been saying, say it three times.
The meeting of the largest armies in the history of the world, then there's going to be an invasion.
All right you guys, introducing our old friend Charles Goyette, and he's the author of the dollar meltdown and red blue and broke all over.
Welcome back to the show Charles, how are you doing?
Scott, it's always great to talk to you.
Cool man, yeah it's been way too long since we've spoken, and so I brought you on to make fun of you.
You were obviously wrong, you said that there was a limit of how much debt our government could get into and that something bad would happen, and these guys have proved that yeah I mean it does generate the boom and the bust and that kind of thing, but still they can print money forever and they can do whatever they want and basically America will never go broke.
Yeah, so far so good.
I'm telling you, I saw somebody the other day, I think it was somebody in the American conservative, he said you know what these guys are doing now, it makes PJ O'Rourke's old title calling Congress a parliament of whores, he says that's a slur against brothels.
You know these people are just so disgusting, but you're right, they've cranked it up far beyond what reasonably could happen, but you know the bigger the boom the bigger the bust, so you know the more painful the consequences.
You know my view Scott has always been this, that in Christian metaphysics there's the concept of the forgiveness of sins, but there is no equivalent thing in the hard reckoning world of economics, and so you know they can get away with stuff for a surprising amount of time.
It's like you can smoke for 60 years, you know some people get in trouble after 20, but maybe you know, but at some point you know there's a day of reckoning, there's a day of accounting, and they've shown that they can you know they can smoke the debt for a very very long time, but it just makes the you know the ultimate clawback of reality much more severe.
All right now one of my problems is I don't have any money, and I mean not to complain, but just to illustrate the fact that I don't pay that much attention to the stock market, and the bond market, and the derivatives markets, and the naked short selling double blind whatever the hell default things, because I don't have any money, so why would I you know be all invested in all that, and you know therefore I have little experience with the technicalities, and the different smoke, and mirrors, and bubble gum, and string, and different sorts of cliches that can be used to help keep this thing going.
So can you break down where we are in the boom bus now?
People are talking about the rock in a hard place in the bond market these days.
What's that mean?
Yeah yeah well I mean the whole game ends eventually when nobody is willing to fund American debt.
That's when the game ends, and in fact let me even go back to the president of the United States himself when he was running for office.
Somebody you know somebody asked Trump about you know what happens when the debt keeps going, and one of these days interest rates begin to normalize.
You know they climb two percent, three percent, whatever it is they do, and he said at the time he said well at that point we don't have a country.
It's probably the soundest economic thing he's ever said.
So the game is up.
The jig is up when you know nobody's willing to loan money to the United States government, and it's every now and then there are flashes that that is about to materialize, but you know people are willing to loan money to the government as long as they think that the game can be stretched out a little bit further, and so far it always has been.
Well that's the thing right?
If you're a bond holder then all you need to know is that the IRS is still here, and they're going to rob your next door neighbor and make sure and pay you plus interest for holding the bond right?
So why would they stop buying bonds?
Yep.
You're saying interest rates are going up a little bit, but why does that mean they're going to not buy bonds anymore?
Yeah you're right, and the whole system has been predicated for a very long time already on the idea that a bond that comes due today can only be paid by the expedient of issuing a new one tomorrow.
So you know it's a game that has gone on for a very long time, and it looks like today if you look today you say well we'll continue to go on for some time, but you know at some point everything you know everything comes to an end, at some point even, and it doesn't have to end with a bang, it can end with a whimper, it can end with somebody saying well you know we're still happy to fund U.S. government debt, but we see how fast you're printing money, or we see the quantitative easing of a few years ago beginning to leak its way into the consumer economy and drive prices higher.
We see all these things going on, so we're not happy loaning to you at four percent or five percent, we want seven percent or eight percent, and that's when the game gets a little bit dicey.
That's when you're borrowing on your Visa to pay off your MasterCard, and all of a sudden your Visa cranks your interest rate up to 19 percent, and you realize you've got a problem.
So in other words you're saying the cost of paying just the interest on the national debt every year will break the federal government's bank, that's the bottom line.
Let me even put it in more vivid terms I guess than that.
The United States government debt now is more than 100 percent of the GDP.
The GDP is a grossly inflated measure of how productive the American economy is, how much goods and services does it produce.
It's a wildly statist kind of measurement because it includes government spending in it, and I'm not sure how government spending on regulators that make the economy less prosperous should be counted as a part of our gross domestic product, but in any event it's a measure of some sort of American productivity.
Well the debt now vastly exceeds the productivity of the American people, and it's sort of like if you owe MasterCard and Visa more than you earn every year, but it's even worse than that because the productivity of the United States isn't the property of the government.
The gross domestic product of the United States belongs to the people that need to put food on their families in Bush's term, need to pay their mortgages, need to pay other expenses, want to send their kids to school, need to buy clothing and gasoline and even fire gas taxes on it.
So to compare the debt of the United States to the GDP should be an eye-opener, but it's even worse because the GDP doesn't belong to the government.
Your income, if you look at your income versus your bills, your debt, that's a real-world measurement that you could kind of find out what position you're in, but to compare the GDP to the indebtedness of the United States, the GDP of $20 trillion and almost $23 trillion of debt, it is a shocking measurement by itself, but it's even more shocking when you realize that all of that GDP of $20 trillion isn't available to the state if it were to begin to want to pay out its debt.
You know, I saw a clip of David Stockman on one of these CNBC shows, the former Reagan-era budget director and, you know, a pretty hardcore libertarian now, and he just started railing against the cost of the wars.
And the lady says, look, I mean, David, you know, half of the planes in the Air Force can't fly right now.
I mean, what are we going to do?
And he says, well, cancel the wars, lady.
And she says, well, I mean, come on, that's beyond the purview of this show.
You know, that's not what we're talking about.
And he said, but that's where all the money's going.
Why are we in Somalia?
Why are we in Afghanistan?
And, you know, to be fair to her, he's the only crank in the world she's ever heard say that, other than Michael Moore or something, she thinks.
And so, it's something quirky about David Stockman rather than an actual, you know, a point even worth entertaining.
I mean, call off the empire.
We're running this thing into the ground.
Forget it.
There's no other option.
We're not turning around.
Yeah, it's stunning.
You can talk about, you know, that the prosperity of the country is being eaten up by seven wars that nobody understands.
Nobody remembers when did we decide, when did the American people decide to go to war in Syria?
Nobody remembers.
Nobody knows anything about it.
Nobody knows what the point is.
Nobody knows what the objective is.
You've got wars like, you've got seven wars like that going on all the time, eating up far more than the nominal budget expense of whatever Trump wants now.
I think he's at 716 billion in the new year.
It's far, the actual military spending, war spending is far higher than that.
But sure, I mean, it's eating this up.
But here's what it is philosophically.
Here's what I believe it is.
The American people know that America is at decline.
That's one of the reasons they voted for Trump.
His campaign motto, to make America great again, is a specific acknowledgement that America is in decline.
But the problem is that these people see their knee-jerk response to America's decline is to spend more on military and more on the empire.
The result of that, of course, is they divert resources, they divert capital that could actually be used by real people in the real world that produces real goods and services and real wealth.
It diverts resources from those people that could actually be instrumental in halting America's relative economic decline.
They're in this knee-jerk response that they have been in forever.
The armaments industry, the military-industrial complex, and the surveillance-industrial complex, the big government-industrial complex, they basically call the shots.
They don't want to end their good thing, and the Republicans don't want to end it, and the Democrats don't want to end it.
So seven dirty little wars that nobody understands go on forever because they keep the pipeline filled with contracts.
Yeah.
Well, that's the whole thing.
All the perverse incentives behind the foreign policy, other than just what any family at their kitchen table would consider for a minute to be America's national interest, what's good for the people of this country.
But that's their mistake for thinking that the U.S. government is their security force, when really, it's not that.
It's something else.
But so, let me ask you this.
You know, I says to you, I says, but the IRS can keep taxing everybody to pay the bondholders.
And you said, yeah, but still.
At some point, when the interest rates get too high, then you still run into that brick wall.
You're still going to have that problem.
But so, what about global hegemony?
What about force being used there?
There are different tellings, and there are people who dispute the importance of this, too.
Robert Higgs says, you know, whether, you know, Iraq, Iran, or Libya start denominating their oil sales and some other currency is going to have the slightest negligible effect on dollar hegemony.
Dollar hegemony rules the world for a lot of other reasons than just being backed by oil.
But then there are others who say, well, you know, maybe regardless of the reality of the situation, that seems to be part of why America picks these fights with these countries.
They would dare set the example that they're going to start denominating their oil sales in different currencies or in gold or something like this.
And so, I just wonder whether you think that's really a big part of the imperial policy?
And then, I already know your answer is, it's still counterproductive anyway.
We're spending way more to extort these countries into staying in the dollar and hurting the dollar more that way.
But I just wonder whether, I mean, actually, I shouldn't assume that, right?
Because maybe you'd say that about the cost of war against Iraq, for example, and what disruption they can make, except maybe killing them is a real example to everybody else that they better not change up or this could happen to them.
And maybe that's worth a lot.
Yeah.
Well, I guess my short answer is that it's thanks to dollar hegemony that foreign nations hold much of their reserves in U.S. dollars.
But you know that there was the hegemony of the British pound and the oil from the Middle East and the rest of the world was priced in British pounds.
And it ended very fast.
And it is true that it ended because there was a superior competitor, which was the U.S. dollar.
But it had provided a boost or a valuation under the British pound that it wouldn't have ordinarily had.
It was a little bit higher.
It was a little bit more desirable.
And this is the case with the dollar.
It's true that the markets are very sophisticated.
And if anybody can instantly pay for without holding dollars, could instantly use euros in the commodities market, in the currency market to transfer it to dollars to pay for a dollar priced oil.
So, you know, we're not in as strong a position as the World Reserve currency as the British were at one time.
And it only makes our situation, I think, a little bit more precarious.
Hey, people keep telling me, man, you got great show notes on your show nowadays.
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He's doing a really great job on that.
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Now, let me ask you about something else that Stockman says, which is, yeah, yeah, about the giant rise of China.
Everybody knows they have a very political economy, meaning a very crippled and broken one.
And he didn't want to hear your excuses for building new aircraft carriers.
I don't want to hear any excuses for building new aircraft carriers either.
But I just mean, do you think that the rise of China's wealth and power is really overstated the way he seems to?
I don't really think so.
I mean, if you look at shipping in that American lake that we call the South China Sea, if you look at shipping there, it grows vastly.
And it's shipping coming from China and to China.
So there's commercial activity that is vastly greater than it was 20 years ago, or 30 years ago, or even 10 years ago.
And it keeps growing, and it keeps growing, and it keeps growing.
So clearly, something's going on.
I'll give you even, I think, a more subtle indicator.
There's a huge subterranean flow of gold from the West to the East, from Europe and the United States to Asia.
And my rule of thumb has always been that the nations that are net acquirers of gold become more dominant in the affairs of mankind, and the ones that are net disorders of gold become less dominant.
So there's a huge flow of gold and trading to places like Shanghai and so on that wasn't the case 10 years ago.
So there's clearly a really important macro trend going on here, Scott, in my view.
With all respect to Stockman, I think everything he ever said was right, except I don't think I would downplay the growth of of China and the other Pacific Rim.
What is important, I think, is the relative economic power of the United States.
And this is what Paul Kennedy talked about years ago, when he talked about the decline of the United States in his book.
It was not that we had to have, in real or absolute terms, an economic decline, but just that we would be surpassed.
And that is clearly going on, in my view.
Yeah, well, I know a guy who was a businessman all through the 90s and talked about just the difference between the early 90s and the end of the 90s flying into Shanghai.
It was like watching Round Rock, Texas turn into Dallas in the course of 8 or 10 years.
Well, they have some pretty unsound economic policies.
I read an interview a couple of years ago by one of their leading central bankers, and it astonished me because it sounded exactly like a guy from Princeton or Cornell or something.
It sounded exactly like Ben Bernanke and all of the others, all of the same Keynesian precepts and stuff.
So there's certainly nothing sound about their economics.
They're doing the same kinds of stuff that we're doing, but they have unleashed the energy of an awful lot of people who want better lives and have proven they're willing to work and have them.
I mean, that part of it's self-evident.
You know what?
With wealth and productivity growing so fast and technological advances and stuff, I hate sounding utopian and everything because, of course, libertarianism is not a utopian thing.
And yet, I can't help but think how much more wealthy and better off everyone in this country would be right now, just if we could repeal the 21st century.
Never even mind everything that they did before that, all the wealth wasted.
But just if George W. Bush had just played down the attack and said, look, we're going to kill these 400 guys and we're going to call the whole thing off and get back to making money here.
And then it started the 21st century off that way.
Just how different things could be.
I guess it'd be the same thing.
They just wasted the money on something else, huh?
Well, I'm really concerned.
All of the technological improvements and everything from the industrial revolution on to the digital revolution and all the things we have, you know, microsurgery and all the improvements in human life, modern dentistry, and the elimination of so much hunger from a third of the world, I think, to a tenth of the world now is underfed.
All of these things are so dazzling.
They're so overwhelming that we have absolutely forgotten in the West.
I don't mean we, because you haven't forgotten and I sure as hell haven't forgotten.
But in large part, the West seems to have forgotten the concomitance of that.
They have forgotten the things that make all that possible.
And I mean things like, you know, the relative supremacy of the individual, the presumption of innocence, free speech, the elimination of things like collective guilt.
It's one of the most pernicious doctrines in the world.
You know, collective guilt is responsible, in my view, for most of the really ugly affairs in human history.
And yet it's in ascendancy again in the West.
And the presumption of innocence is being forgotten.
And free speech, my God, you just have to watch, you know, even from a distance what's going on on the college campuses.
So all of those things in the superstructure, in the infrastructure of our prosperity are being undone.
And as I've tried to describe it, you know, liberty has a number of beautiful daughters, and among them are prosperity and opportunity.
And so there are young people that like prosperity and like opportunity about the United States.
And there are people from all over the world that want to come here or elsewhere in the West because of prosperity and because of opportunity.
But those daughters of hers don't wander very far from their mother, which is liberty.
They're not found in the absence of liberty for very long.
And so they're coming here for the things that dazzle and make them all gasp compared to their poor circumstances in sub-Saharan Africa.
They're coming here, you know, for three square meals of modern dentistry and things like that.
But they have no appreciation of the substructure, you know.
I don't know, man.
Every Nigerian I know is a sound businessman.
Well, they may be sound businessmen, but I'm telling you that you don't have to look very far to find people that don't think that the presumption of innocence is too important.
Yeah.
Well, yeah, I don't know about that.
We definitely need brainwashing everybody on libertarian grounds all over the place.
And this is really the real problem, right?
Is that, you know, my real libertarian point of view is that all of left and right and conservatism and liberalism and worse socialism and fascism, that these are all anti-American horrible deviations from Americanism, which is, you know, the Declaration of Independence and this kind of thing, the very simple stuff that you're saying, which is freedom first.
And yet it's been so long like this, where actually, no, these perversions of the doctrine of liberty, modern day liberalism and conservatism, that this is what America's about.
It's not about liberty anymore, if it ever was, really.
I mean, a lot of times liberty always just meant the right to pick on somebody else to Americans anyway.
So, yeah, here we are, where we're somebody who would say, hey, natural rights first, presumption of innocence first.
I mean, for one thing, free speech, these very simple premises, like you're saying, where this is, you know, old words from some old history book, it's not about us anymore now, you know, in so many ways.
These things were important.
I don't blame the immigrants either.
I blame the supermajority population of the country, man, of whatever color and religion, you know?
Yeah, you've absolutely got to.
I mean, it's the, you know, it's the people's fault.
I mean, we started off talking about the economics and fiscal and financial probity.
The American people don't value it anymore.
They have no interest in it.
I mean, Obama, you know, could go on David Letterman's show and Letterman said, how big's the national debt?
He doesn't know.
And he stumbles and he trips around, he falls around, and he basically doesn't know.
And even, this was the most shocking, I think you'll appreciate it, because a couple of years ago, Marco Rubio submitted an editorial to the Wall Street Journal calling for a currency board for Ukraine.
And it wasn't evident from reading his submission, you know, he was explaining that, you know, the Ukrainians deserve a sound currency and stuff.
He, you know, didn't really explain why it was the American people's, you know, burden to provide them that which they weren't willing to provide.
Because we overthrew their government, and so it's on us.
No, I'm sorry.
Yeah, it's on us.
So he says, you know, we need this currency board, and here's what a wonderful thing it will be.
And now this is in the Wall Street Journal.
I mean, you can't spend your life in journalism and imagine any self-respecting editor that would look at that article and not say, there's a huge problem in there.
Our beat is finance.
Our beat is money.
And there's not a word in here, not even a wild-ass guess, of how much Rubio's currency board would cost, and still run the article.
I mean, they kicked back, the New York Times kicked back Joe Wilson's What I Didn't Find in Africa because they wanted more color, and he had to write in a thing about green tea.
Oh, I drank some green tea.
They go, oh, now it's better, it's more readable.
The Wall Street Journal won't kick back an editorial submission by Rubio that doesn't have a word about the cost of a major new economic venture coming from a senator who was running for president at the time.
It's crazy.
But that's because the Wall Street Journal's, you know, mission of American global military empire and serving the complex is more important to it than even its own charter, which is supposed to be, you know, reporting financial news.
But the American people don't care because they don't demand, you know, basic economic 101 from anybody.
And this has been the case with Bush and McCain and Trump.
They have no interest in fiscal property.
They have no interest in somebody coming on to them and talking about, you know, I mean, you know, don't even get me started about how, you know, how you can engineer a tax cut one day and they come out with a 25-cent-a-gallon gasoline tax the next.
You know, this is all madness.
Yeah.
Well, I think it goes back to where we started with me saying, yeah, but they've gotten away with it so long.
Yeah.
Apparently it does work.
And this reckoning that you're warning about never does come.
And that's the way the Wall Street Journal thinks.
And that's the way the rest of it.
Yeah.
And and, you know, but I go back to the words of, I don't know, one of the one of the Republican economists, I don't know, Martin Feldstein or one of those guys, he said, you know, everything, everything goes on until it can't go on anymore.
And then it stops.
That's basically the way it works.
All right, you guys, that's Charles Goyette.
I'm sorry, man.
I know you got to go.
And I'm late, too.
But I like talking with you.
We could go on all afternoon if it was up to me.
But dollar meltdown and red, blue and broke all over.
Those are the books on Amazon, et cetera, like that.
Thanks, Charles.
Appreciate it, man.
It's good to talk to you.
But all right, you guys, that's the great Charles Goyette.
And, you know, me, websites and et cetera.
