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 us, 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 Dave Collum.
He teaches, he's a professor of organic chemistry at Cornell University and according to his Twitter bio, he's also good on gold and Austrian business cycle theory, which means he's a friend of mine and of yours.
Welcome to the show, Dave, how are you doing?
Hey, it's great to be on it.
I do like the libertarians in the world, so this is fantastic.
Well, I'm happy to have you on.
I just have a couple of questions for you.
As I say, it says in your bio here, you're a professor of organic chemistry and you've got a bit of attention in the last week on Twitter for taking some position on the story of this poisoning in Britain and the conclusion by the British government that it must have been the Russians who poisoned this former Russian spy.
So why don't you go ahead and tell us what's on your mind there?
Yeah, and I have to dial it back even a little bit further because maybe I was a little heightened sensitivity to this claim, but for years I've been writing this annual survey of geopolitical and economic events.
It's sort of my way of keeping track of all the things that I see and then the write-up at the end is kind of a final exam for me, I guess.
In any case, I've noticed over the last few years we seem to want to blame everything imaginable to the Russians and I've become increasingly of the mindset that Putin, while certainly no snowflake, is, looks to me to be just trying to mind his own business at some level and that we are the aggressors.
That's been my conclusion.
I'm a Reagan Republican, so this is not some weird, you know, pink Okami dog thing that's coming out.
But with that said, so it seems like we're always trying to make up some reason to get to Syria and make up some reason to knock off Gaddafi and make up some reason to bomb Yemen.
And so when Theresa May started spouting off about how she knew the nerve agent came from Russia, I could have imagined her making statements that made sense to me as an organic chemist, but that's not what she did.
So she came out and said, look, these are compounds made by the Russians back in the 70s and this is Russian technology.
And to an organic chemist, these compounds are pretty trivial to make.
Any country in the world could make them.
Any major chemistry department would have the facilities to make them.
You could kill yourself doing it if you were not careful.
But so to say, look, because these are Russian invented molecules, they must have come from Russia.
It was just a lie, in my opinion.
And there are technical reasons why you could say, oh, this is how we track them to Russia, but that's not what was being said.
And now, so you're no professor of the history of the Russian chemical weapons program and its dismantlement and all of this kind of detail, right?
You're just talking about their logical assertions as they stated their case just doesn't follow for you.
That's exactly right.
So I don't know anything about their chemical weapons program.
What I can tell you is the molecules are so simple.
Some benchmarks, you know, we've made molecules far more complicated, orders of magnitude more complicated than these nerve agents.
So the technology to make these things...
Well, could you give us some kind of example?
You turn some beans into ricin or something?
What's the deal?
Well, so at one point in my career, I was what's called a synthetic organic chemist.
My PhD what got me at Cornell was what is now a fairly classic legendary synthesis of a molecule.
It's humongously complicated.
It's huge and it's complicated.
And I was a second year grad when I made it.
So I look at these compounds and these are types of things.
I can't tell you exactly how they made them because every compound has a number of possible ways that you could go at it.
And there's some trial and error, but if you had the formula and you had the recipe, for example, you could make these molecules probably in a week.
And again, you'd have to use protective mechanisms.
You'd have to use something like a glove box, which costs maybe $20,000.
And the chemicals that are used are completely trivial.
You could buy them from a company called Sigma Aldrich, which is a standard chemical supply.
And so to say that because these molecules are of these structures, whatever they're claiming, and again, I saw representative ones.
I don't know what one they think they detected, but they're very simple molecules.
And again, very toxic.
No question about that.
When you said earlier that basically any university with a chemistry lab could be used for something like this, or any company along with that much technology?
I can guarantee you the chemists at Pfizer and Merck and places like that, for instance, have capacity to make molecules that so fantastically exceed what these things demand.
And by the way, there are places where the military complex may be superior, but organic chemistry is very unlikely to be the one.
And people say, well, how do you know that?
Because we see where our best students go, and they're not going off to military labs.
So if they're getting some superhuman organic chemist, it's unclear from where, because they're not getting them from the best PhD programs in the country.
Okay, so now what do you make of the news that the daughter is actually doing much better now and is talking?
In fact, neither the father or the daughter were killed in this attack.
Well, so the way you would dose it, I presume, again, this is just me thinking out loud, right?
I'm not a pharmacologist either, but these nerve agents have some number of sort of molecules that have to hit the receptors to kill a person.
And if in the limit that you get one molecule, you're not going to die.
And in the limit that you get doused with this stuff, you're going to die.
And somewhere in between there, there's what's called an LD50, and that's the dose required to kill half the people.
And if somehow the dosage they got was subclinical in terms of, you know, a lethal agent, then they would get sick, not die.
That's like if you got bit by a tiny little rattlesnake, right?
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Thanks.
Well, okay.
So and again, I know you're not an intelligence agent or anything like that.
But I mean, is that have you ever heard of such a thing really, where intelligence agencies use poison to kill their former spies, but they live because they just didn't use enough or a deadly enough poison?
And what about these poisons that they're describing to you here?
Do they sound like the kind of poison where just a little bit would kill you?
Or how big of a dose?
Yeah.
To the extent that I've read about nerve agents over the decades, I know that there are ones where the dosages are very, very low.
So it wouldn't shock me if someone said, yeah, the Russians have nerve agents where, you know, that the tip of a pin would be enough to kill you.
It's conceivable.
But again, those compounds can be made anywhere.
So the notion that therefore they have to be Russians who did it, that's just common sense, stupid.
And I kind of wonder about the other way around it.
If they lived, then it probably wasn't the Russians because wouldn't they be more effective at this kind of thing if they're going to go that far?
You would think so, right?
I mean, there's a number of people in the world who appear to be getting whacked, right?
And my understanding is that the assassins of the world know what they're doing, right?
Yeah, I mean, and if it's going to be that difficult to get the poison right, then why not just shoot somebody, you know?
Yeah, exactly.
So you get back to the, okay, so you want to make it look like the Russians.
Would the Russians want to make it look like the Russians?
Well, it's conceivable that their messages don't piss us off because we'll nuke you, right?
We'll take you out.
And if you want to make it look serious, then there was a spy who got hit with polonium.
I think it was polonium.
One of the ones that I can't remember where in the periodic table it is, but it's lethal and it's radioactive.
And the guy died a slow death.
And so you know that it was either the Russians, because he's a Russian agent of some kind, or it was someone who wanted it to look like it was the Russians, which is all the other countries of the world.
And so you just never know.
And a bunch of former Russian oligarchs.
Yeah, exactly.
And so someone sending a message to someone, it could have even been a message to Kim Jong-un saying, we're going to get you, dude, and this is a demo, right?
When they killed his brother, for example, it was either Kim or it was someone else to make it look like it was Kim.
And so you just don't know.
And this is just common sense.
But when I listen to Theresa May and I listen to the Western leaders, I hear this weapons of mass destruction story 2.0 showing up.
And I say, well, they're bullshitting us, right?
They're telling us stuff that's just not logical.
But the organic chemistry, you can't hang it on that being fancy Russian technology.
That's the point I was making.
Right.
Well, and you know what, it's the same with, as you're saying, you know, at the reference to Iraq's weapons there, everything they ever claim is a lie.
So, you know, I don't know why this should be any different.
No, it seems that way.
And I don't know if we're getting more of this kind of baloney than we used to, or if we're just now able to get to see it and disseminate it much better than we used to be.
In the old days, a Russian spy could be knocked off and no one would ever know about it.
But now it hits Twitter and it's off to the races.
And so the real ones are getting disseminated.
The fake ones are getting disseminated.
And I've become increasingly frustrated that I have no idea what's fact and fiction anymore.
And it's becoming, it's debilitating.
And so I can only piece together a storyline and then try to just keep mentally cross-referencing it until I finally conclude that the story fell apart.
Or, yeah, it's like the Russian collusion story.
What a bad joke that is, right?
That's a fiasco.
Well, I was just going to say, you know, you're a great comparison, I think, as an expert here to Jeffrey Carr, the computer security expert who came on the show and just said, look, man, whoever did the forensics on this computer, they can't tell for real who did it.
And if somebody leaves behind Russian lettering and references to Iron Felix, that's just as likely a frame-up job as an implication.
It seems to me more likely a frame-up job than a real indication of who did it.
And he just said that, you know, it could be a Dutch boy, I'm paraphrasing, pretending to be a Macedonian, pretending to be the Chinese, pretending to be the Russians, and hiding behind however many different firewalls and fake IPs and this and that in order to do something like that.
And so when they say that they're sure, he's sure that they are not sure.
So there's a hysterical example of this where, you know, as you know, the social media and Google and all these guys are really trying to curb free speech, right?
This is a serious problem.
And they're doing it for the children, of course, right?
But at one point, they listed all the websites that are highly suspect.
And some of my favorites were on there.
I don't know if you go to Zero Hedge, but if you don't, you should.
And these guys are not Russian bots.
These are guys just putting out the edgiest news on the planet.
And so they listed the fake Twitter accounts.
And I recognize a number of one of them was Beverly Hills Antifa.
This is this parody account.
And I think it's probably run by a couple of Harvard kids in a fraternity somewhere having a ball.
And I've watched them for a while.
We follow each other.
And they're hysterical.
But they got banned.
They kept getting repeatedly banned.
And they declared them to be Russian bots.
And then at one point, they said, see, they didn't take the label.
So they had Vladivostok or something right at the bottom of the tweet.
And the press said they didn't take the origin of it off.
So I poked at them.
And I said, so what's with the Vladivostok?
And the guy showed me a screen grab.
He says, here's how you get Vladivostok to show up on your Twitter feed.
It was literally a screen grab video showing.
And he typed it in and popped up.
It shows Vladivostok.
And so I'm convinced these are a couple of smart kids who are just having a ball spoofing the adults.
Yeah, well, and, you know, it's confirmation bias from here to wherever.
I mean, it's the ultimate trutherism, but it's official.
It's coming from the Democrats, the CIA, CNN, and MSNBC and whatever.
And yet, it's all still just, you know, don't you see when you line up all the data points, a kind of large view of the thing, it all fits.
And yet, if you examine any of the pieces, none of them stand up on their own.
So it's hard to make a real connect the dots puzzle out of something where none of the where all the dots ultimately are worth nothing, but they keep pushing.
You know, that's exactly remember the scandal that that that Jeff Sessions met twice with this Russian somebody or other.
And then one of them is yeah, they're both standing next to each other at some event somewhere.
And the other one was he met him in his office with all of his aides who are all former military officers, and who obviously were not in a conspiracy with these Russians to commit espionage or plan anything against the US.
This was, yeah, he's the ambassador.
Sessions was a senator.
This is just business.
If you don't start with your conclusion first, it doesn't mean anything.
It's like $100,000 worth of Russian Facebook ads tipped the election.
$100,000, which by the way, some of them were probably selling Russian girls and stuff like that.
I think it's just so crazy.
Part of the problem here is that when the election went to Trump, which the left completely and utterly lost their minds, and they will now sign off on anything.
And you know, I'm not a huge fan of Trump, but I'm certainly entertained by him.
And I certainly am uplifted by the fact that we finally elected someone that the authority figures in the world don't want.
I'll give credit to the actual leftists, because they constantly are hating on the progressives and the liberals who are going for this.
And they're saying, no, you lost because we hate you.
You know, this kind of thing.
They see right through it.
My year in review, I actually finished with an email a guy put out right after the election.
And he said, you know, you created us.
And I didn't agree with all of it, but he said, you took away our religion, you want to take away our guns, you want to take away our speech.
And he went through a list of about 20 things.
He says, we beat you, we beat you at the ballot box.
And that was so true.
And I happen to run across a definition, a legitimate definition of liberal just the other day.
And liberal is defined as someone who's quote, willing to respect or accept behavior or opinions different from one's own open to new ideas.
And I'm reading that I'm going, that's not true anymore.
Right?
That there's nothing about the liberals that did in any way, shape or form seems to be open minded and respectful of different ideas or respectful of new ideas.
That is crazy.
And all over Hillary Clinton, too.
I mean, what a martyr to have.
Oh, God.
All right.
So now wait a minute, I want to ask you about some economic stuff here, because it says here you're into this business cycle theory.
And now hold your horses, liberals and leftists and progressives and conservatives, all you statists in the audience here, because no matter what your beliefs are, you can keep all of them, except your understanding about how the business cycle works, the boom and the bust, because that's just a factual thing.
But if you like your identity, you can keep it, you can stay commie, you can stay right wing.
But you have to acknowledge that only the Austrian school libertarians are the ones who understand why the economy has these artificial booms of prosperity, especially for the stock market, and the people who are already rich.
And then comes these very real busts every eight or 10 or 12 years or so that knock the hell out of everybody else in the society.
And we got to pick ourselves up off the ground and start over again.
So tell them, Dave, what's going on?
Well, there's a lot of ways to look at this.
One is the Austrian business cycle basically says bigger the boom, bigger the bust.
The booms are always based on credit.
And the easiest way to understand it is by just looking at a microscopic version and then just expand it by hundreds of millions.
And that is imagine a family that goes way out on credit and gets a house and has a mortgage and gets a lot of credit card debt.
At some point, they got to tighten the belt.
And that belt tightening phase where they simply are running out of money and they simply can't afford to spend anymore.
That's the recession, right?
So that's the blowout.
And if we let them get way into debt, then we have a major blowout.
And I blame the authorities.
At one level, I'm a libertarian saying, hey, you made your bed.
Now you get to sleep in it.
But the average person, say, in 2006 was up against a juggernaut of a media campaign to convince you that debt was fine.
Now, any idiot who ponders it for a while will realize that that's not true.
But to imagine that some guy sitting in his double wide and thinking, hey, you can upgrade.
And all these really famous people are telling me it's OK.
Is that guy really going to resist the siren call of debt?
And the answer is no.
And so that's the boom.
And then you get the bust.
And one way to think of the equity booms is that it's appreciation pulled forward.
Right now, the markets are, roughly speaking, 2x over historical valuations.
And I'm a huge believer that the regression of the mean is a force of nature.
Or there wouldn't be a mean, right?
It's a simple math.
You've got to spend half your time below, half your time above.
And if you've been hanging out way above the mean evaluations at some point, you're going to regress.
And it's going to be a mean one at that.
And so we're now 2x overvalued.
And we've got several choices.
One is we can slowly grow the economy.
And it appears to be remarkably slow because it's based on this Potemkin house of credit.
We can grow the economy and have equity prices not move.
And it'll take, I don't know, 20 years, something like that.
Or we can correct the prices and get back to historical norms and presumably substantially below it before we're done.
And I'm rooting for the latter because I'm sitting on a pile of cash.
And I'm not buying an overpriced asset.
And I've been sitting on them for 20 years.
But they're trying to prop it up and through credit.
And as a consequence, we're going to have a credit-based boss.
Bernanke, for example, is either the world's stupidest expert on the Depression, or he's lying to us.
And I think it's got to be the latter.
And that is that Bernanke, they all blame the Great Depression, for example, on failures on the part of the Fed.
And it's always conveniently a failure of them to not be aggressive enough.
And if you look at the credit system from the 20s through the 30s, what you'll see is we had a massive credit bubble in the 20s.
And it was created when people were taking out consumer loans to buy all these newfangled appliances and new cars that Henry Ford was making.
It was an unbelievable period.
And the consumer sort of ravaged the carcass of this industrial revolution with the credit markets.
And then we hit the corrective phase.
And we had this huge, huge debt purge.
And that was the Great Depression.
And for Bernanke to blame mistakes in the 30s instead of the credit bubble in the 20s, either he's lying, or he's delusional.
Because it's real simple.
It's really simple math.
Great books have been written on the subject.
And he doesn't get it, or he's not fessing up to it.
I don't know which.
But that's what we do.
That's the boom-bust right there.
Yep.
And then as the backstop, this is the thing that as Ron Paul and these others have always emphasized, it's the Federal Reserve not only holds down the interest rates by law and makes money artificially cheap, makes debt artificially cheap, but they're also really, you know, all the big bailouts, when the crash comes, that gets all the attention.
But as Ron Paul likes to say, that the Fed is there to provide bailouts day after day after day.
That's what they do.
They're the lender of last resort.
So, they're constantly subsidizing this moral hazard on the part of all banks to always skate on the very edge of the margin, rather than run a responsible business.
Because the federal government has your back.
Yeah, I think the biggest mistake the authorities made in 08-09 was that they failed to round up some scoundrels and put them in prison.
So, if you look at the 30s, they rounded up, they had a thing called the PCOR Commission and they rounded up all the criminals.
And at the end of a big, huge boom, you've got a whole host of criminals, because money brings them in, right?
Wherever you find gazillions of dollars, you're going to find lots of criminals.
And in the PCOR Commission, they rounded up the scoundrels and they threw them in jail.
And what that did was it sort of let Joe Sixpack say, you know, I'm okay now.
We got the bad guys, maybe not all of them, but I'm okay.
And then savings and loan crisis, again, an embarrassment for the banking system.
But we rounded up, you know, hundreds of people and banks closed and stuff like that.
And there was this kind of a sense that we had corrected the system.
And then in 2000...
But they let Greenspan go free.
That was the problem, right?
Yeah, no question.
They let all the bankers go free.
And so in 07-09, we had this big crisis.
And the critical moment was not the crisis itself.
It was preordained, but rather the fact that by policy, they chose not to arrest anybody.
And I think that's what...
That was sort of Occupy Wall Street shows up, and then Black Lives Matter shows up.
And the Tea Party on the right shows up.
The Tea Party shows up.
And so they created the foundation upon which to build social unrest.
And if they had simply let the bad guys get shipped off for a while, even, you know, club fed token would have had a better effect.
Yeah.
Well, or how about not bail them out?
Go ahead and let them go bankrupt, just like everybody else.
Instead of the worst people are the ones who get the most welfare.
What the hell is that?
That's insult to injury, you know?
Yes.
Somewhere between the strict libertarians and the bailout crowd is where I reside.
And I think the Fed had created such a colossal mess that one could argue that by stemming the tide of chaos that showed up a little bit could have helped.
And so, again, it's their fault.
So I'm not saying that they're our saviors.
No, they lit the fire.
So what does that mean?
QE1, but not 2, 3, 4, and 5?
Well, not even that.
I don't think QE was necessarily the right thing.
But I think you could have protected depositors without saving the banks.
And so I think, you know, saving Goldman, saving Citigroup, in their pre-existing form was a disaster.
I, for example, just this morning tweeted that, you know, again, I've written about this.
I've railed on this.
You know, Wells Fargo creates 3.5 million accounts.
Why have they not been broken into pieces and sold off for scrap?
Right?
Wells Fargo, HSBC is the drug runners' bank of the stars, right?
These banks should be destroyed.
Not to say that everything should be lost, but rather they should be broken up and made harmless.
Well, that's where the libertarian point comes in, in that, you know, Hamilton created this whole constitution for the purposes of regulatory capture in the first place by exactly these interests.
And it's not going to hold them accountable.
So at least when the market tries to hold them accountable and destroy their businesses, you know, the best thing to do would at least be united in opposing their bailout.
I mean, I guess nobody was saying, you know, call off the FDIC for the depositors.
But the rest of the companies, as you were saying, they should have just, this should have been handled by bankruptcy courts and let whole new companies buy up these assets.
We did oppose them as a populist though.
You recall when they wanted to push through the first bailout, the TARP, it was a 99% opposition.
Right?
And it died in Congress the first time.
Then they tried again in two weeks.
But that was all cosmetic.
Congressmen say, I can't vote for it right now, but in two weeks, bring it back.
And then they all voted for it.
And that's a disaster.
They really should have, they really should have let the banks get destroyed in their existing form, but not, you know, it's like when a company goes bankrupt, the warehouses, if car companies go totally bankrupt, they don't stop making cars.
They end up with new owners.
They end up with people, like if you took GM, when they really fell apart and you, you, you auctioned off the carcass in pieces, that they would have been bought by people who know how to make cars for a profit.
And, and the factories would have kept moving, but, but, but they should have been, they should have been vaporized in their current form.
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So here's part of the boom bust cycle that, I mean, you know, honestly, I don't know that much about all these money markets and whatever, because I don't have that much money.
And so most people who don't have much money don't have that much interest in this kind of thing.
And most people who do have an interest in this kind of thing, they have some money.
But so what happens is, though, is you have, you know, kind of maybe a kind of division in understanding here, where when we talk about the boom bust all the time, it makes it sort of sound like it just goes without saying that everybody was along for the ride on the boom on the way up.
But the way I remember the 1990s was there were a lot of people who were still hurting.
And when you have this bust that comes every 10 or 12 years or something like that, then what happens is, you know, people are just starting to feel the boom by the time it busts.
Regular working people and poor people, they're just starting to feel the beneficial effects at all, the slightest bit of upward pressure on wages and this kind of thing, and then it busts again.
And then we go through the George Bush years for this example, right?
And they're just finally starting to feel like a little bit of this inflation is including in their wages to cover for the increased cost of living.
And then we have this massive crash.
It's like pulling the rug out from under them, everybody falls on their ass and has to start over again.
And so nowadays they talk about, oh, unemployment is so low and this is the height of prosperity, and we know that this is just the artificial boom before the bust, and yet a lot of people are still really hurting.
A lot of people still aren't done trying to pick themselves up off the ground from what happened last time, you know?
Businesses that shouldn't be marginal, businesses that are perfectly decent businesses must be crushed in this boom-bust cycle all the time.
There's so many layers to that onion, too.
First of all, unemployment's not low, right?
You know that, I know that.
Unemployment numbers cited are low, but the actual number of people not employed is an enormous number.
It's a huge percentage of the population who are not employed.
And it's just that the way they bean count the unemployment and the people who give up don't get counted, there's something like 38% of the working-age population is not employed.
So where you get the 4% from that is totally beyond me.
The most important market in capitalism, not even close, is the money market, where in theory, you know this isn't how it works, but in theory, borrowers and lenders meet in some marketplace and they haggle over the price of capital.
They haggle over how much it is worth to the lender to lend money to the borrower to do something the borrower wants to do today rather than tomorrow.
And that particular marketplace has been so, so subverted by central banks at this point because they say, oh, okay, so according to the free market, the interest rates are this, which is the price of money.
They go, but we don't like that because we think we're so smart that we think we can control the economy better than a Darwinian evolutionary model can control the economy.
And so they say, we're going to force rates lower, as you said, and so now they're forcing the price of money to a non-free market-based level.
And then what happens is, all of a sudden, an employer and a company, which is always delicately balancing between the price of capital, which maybe allows them to automate things, versus the price of labor, which runs these machines, cheap capital pushes it away from labor and towards automation, towards machines.
And as a consequence, it's cheaper to put in a robot than it is to hire a person because capital is cheap.
And so then they do this thing where they have a tax amnesty for overseas profits.
They always say, and I've written about this for years, where every seven years they have a once-only tax amnesty.
And it's always about making America great and will prosper by repatriating all these overseas funds.
Well, first of all, these funds are already repatriated.
They're available for borrowing.
They're just domiciled offshore.
And by repatriating funds that keep appearing elsewhere, it incentivizes making the money elsewhere, moving the profits elsewhere, therefore not getting whatever taxes are being paid, they're being not paid here.
And then it forces jobs offshore and it forces everything offshore.
And it's very uncompetitive for domestic companies who are trying to compete paying real taxes.
And so it's, you know, Mattel is the biggest supporter of lead testing because Mattel can afford the testing and its lesser competitors can't.
And so they love lead testing of toys and stuff like that.
So the tax amnesty thing drives me nuts because it's offshoring jobs.
And I don't think we should be forcing jobs offshore.
I think we should just stop doing things that incentivizes them to go offshore.
And in fact, in the 19th century, we used to bring people in to do menial labor, and the work was done here, and the payments were here, and therefore the wealth accrued here.
Now we're outsourcing the jobs offshore, and we get cheap products, but the payments are made offshore, and the wealth is accruing offshore.
And so it's kind of a losing strategy in the long term, in my opinion.
I don't think we should force it back onshore.
I think we should just let the free market move it around.
Well, another part of that, too, is when these foreign corporations are the ones who own all the means of production in these small foreign countries, these satellites of the American Empire, ultimately, that none of that money, I mean, it may stay offshore so that it's not reinvested in the economy here, but it's not really invested in the local economy there, right?
They only build a road good enough to get their stuff on the truck from here to the port, you know, from the factory to the port.
But they're not reinvesting in the local economy for the people there.
They're, you know, in a sense, have these people at their mercy.
Right.
Yeah, it drives me nuts.
In fact, everyone's focusing on the idea of redistributing wealth.
And if you're redistributing wealth, you've already blown it badly.
I think the real problem is that the incentives that currently exist produce a flawed distribution of wealth.
And that's different than redistributing the wealth in the sense that people are not being paid maybe what they should be paid.
Well, this is what's so counterintuitive, right, is you're ultimately arguing that a real laissez-faire system is more egalitarian than if you're trying to fix it.
Oh, very much so, because labor has bargaining power, right?
We will get bargaining power, we'll get unions, but then they'll just offshore the damn thing.
And so, you know, it's a complicated problem.
Now, we've created a huge, huge problem.
And any chemist will tell you that if you displace from equilibrium, and you're never at it, but you're zigzagging around it in a healthy economy, you get way far away from equilibrium.
As a chemist, you blow up your lab, right?
As a geologist, you get earthquakes and volcanoes, and you get big problems.
So the return to equilibrium from a very, very much non-equilibrium system is destructive.
All right, so now last question before I let you go, then.
How many trillions have they created with all these QEs?
How much has the monetary base expanded compared to what it was?
And how severe of a bust then do we face compared to, say, the last two?
Well, that's a fascinating question.
In terms of dollar quantities, so going back just a second, in 2002, I wrote about the coming bust, and I nailed it.
I was just reading, right?
So you could see it coming from a mile away.
I have yet to run into someone who saw the magnitude of the intervention coming.
That shocked everybody.
And the estimate is in excess of $20 trillion have been jammed into the system.
And it doesn't matter from what country because it spreads across the globe.
So when we stopped QE, Europe started it the next Monday.
And so they're flooding the system constantly with money.
Now, I think the next recession is going to be a killer.
I think it's going to blow out once and for all.
I think it's going to be a big crisis.
And I think all sorts of corrections.
And you've got underfunded pension funds now, massively underfunded.
If the bond market collapses and the stock market collapses simultaneously, which is not what happened in 07-09, then you will have catastrophic collapses of pension funds and endowment funds and all sorts of things that are based on the assumption of steadily growing wealth.
And the system has tremendous potential to truly break this time.
Yeah.
So where on the curve do you think we are now?
We're approaching that time?
Oh, we're very late.
Just because of the metrics evaluation, right?
When you're 2x overvalued, you're now at the pinnacle.
Now, I've given up thinking I know when it's going to happen.
I never predict when.
That's a fool's game.
But I do know that we're so far away now that the return trip's got to be pretty ugly.
And I think to the extent that people lose faith in central bank power, that's when it really snowballs.
And if the Fed, for example, gets boxed in by a rising inflation rate that's inescapable and a collapsing economy that's inescapable, what are they going to do now?
They are boxed in.
So I don't know what happens.
I don't have a good feel.
In 2002, I had a feel for what would happen.
In 2007, I'm having trouble picturing boomers eating.
The pension funds of boomers stink.
What do you do when you have no money and no job and you've retired?
What do you do?
I just don't have a good feel for that.
Is it Argentina?
Bomber on.
What's that?
Bomber on.
Well, so that's a fascinating thing.
One of the things that wars do is they cause debt to be vaporized.
So at the end of World War II, while people were sitting on rubble that used to be their houses, first and foremost, they're not trying to figure out how much everyone owes them.
They're done.
It's over.
They're just trying to eat.
And it turns out 50% of the debts in Europe got whacked, just got vaporized by World War II.
Did they fight the war because of it?
I think probably not.
Although here's a weird one.
Federal Reserve started in 2013.
World War I starts in 2014.
Oh, 19 you meant.
Yeah, excuse me, 1914.
So the question is, is it a coincidence we set up a central bank the year before World War I started?
Yeah, is it a coincidence it was the very same men who set up the central bank who got us into that war?
Exactly, exactly.
You know, a creature from Jekyll Island story.
But the timing is so perfect.
It's like we got to scramble a central bank in a place because we have to pay for the war.
And then you say, oh, that's what caused it.
And Archduke.
And I'm going, really?
You think an Archduke caused World War I getting killed?
And Archduke got killed and that caused World War I?
No chance.
No chance.
We shake that off, dust ourselves off, and move along normally.
But when the drums of war are ready to go, then nothing's going to stop it.
By the way, you want something exciting, send your readers over to look up the prices of the defense stocks.
I just noticed this the other day, whether it's Raytheon or Northrop Grumman or Lockheed.
Go look at them.
They're tooling along for decades, just kind of dribbling upward.
And then in 2012, now this is not 2009, 2012, they all shoot skyward, including Boeing, for example.
They go skyward.
Boot them up on Yahoo Finance.
Look at them.
They all go skyward.
So what's behind that?
Because, I mean, there's been a huge build up this whole decade.
I mean, this whole last 40 years.
Yeah, but on these plots, you can't even see 9-11 as a blip.
But all of a sudden in 2012, they take off.
And I'm going, where is this money going?
Where's it coming from for these companies?
And the problem I'm having is, I don't see it.
And now I worry maybe it hasn't happened yet.
And that's when I get really spooked.
Around 2012, in my opinion, and I got to do some hard work to figure this out, when we started demonizing Putin.
Yeah.
And I'm going, did the drums of war start in 2012?
It's a really spooky thing to look into when you look at it.
There's a half a dozen defense stocks that just took off like scalded dogs.
Boeing, what a boring company.
Wouldn't that be great, though, on the other hand, to make a million dollars betting against Lockheed in the market?
But I'm not sure we're betting against.
If we end up in a shooting war, we end up in a hot war, these guys are going to make money.
So the question is- Well, no, we end up in a hot war, we all die.
Well, guys still make tons of money though, right?
In the previous hot wars, the defense contractors made serious wealth.
Yeah.
We're talking about Russia.
There's no survivable war with them for anybody.
It's the end of all markets forever then.
Cares me to no end.
So I thought Trump's campaign to make friends with Putin was completely rational.
Me too.
And I'm hoping the shit he's doing now is bluff.
When he put John Bolton in his cabinet, my heart sank.
There's nobody worse than John Bolton except for, you say, maybe it's to try to shake something out of the system.
Maybe he's trying to put someone's feet to the flame.
Might be giving him too much credit, but John Bolton would have been my last choice to make it into his cabinet.
I'll tell you what.
And look, right now, with this diplomatic crisis, with dozens of diplomats on both sides being expelled from America, Europe, and Russia- It's a fabricated crisis.
Two spooks get non-lethally poisoned and we have a diplomatic crisis?
We wouldn't even see that in the news any other time.
Yeah.
They're just taking the opportunity is all.
This is SS Liberty time or something.
I don't know.
This is weird stuff.
This is very weird stuff.
Yeah.
All right.
Well, listen, I'll let you go, but I sure appreciate you coming on the show.
It's been great talking.
Okay.
All right.
You guys, that is- Dave, call him.
Oh, wait.
You know what?
Don't go away yet because I want to ask you about your website here.
The website, and I'm sorry I didn't say this at the beginning, peakprosperity.com.
David, how often do you write here?
Once a year.
Okay.
Out of market.
So I write an annual year review.
It's about 100 to 150 pages long.
Oh, okay.
And it gets posted, Peace, Prosperity, then it moves over to Zero Hedge within minutes, and then it spreads out from there.
A couple hundred thousand clicks, right?
Knock me over with a feather.
And it covers every imaginable topic that crosses my field of view, including some of the shootings.
I swore I'd never write about them, but last year I crawled up a dark spot and I wrote about Vegas.
This year, I'm probably going to write about the Florida shootings, not because shootings are interesting.
They're boring as hell to me, but the stuff going around the perimeter of them.
I'll write about that.
College politics is a hot topic.
People want to read about that because of all the wing nuts on campuses these days.
It's everything imaginable.
Anything that catches my fancy, I write about why bonds are not returning as much as stocks and what's wrong with the system and all sorts of stuff.
Good deal.
All right.
Well, thank you again for your time.
Really appreciate it.
You bet.
All right, you guys.
That's Dave Collum.
He's a professor of organic chemistry at Cornell, and you heard him, Austrian school guy on the boom and the bust, and read his year in review at peakprosperity.com.
And you guys know me.
I'm at scotthorton.org for the full archive, sign up for the RSS feeds and all that, and youtube.com has the full archive now to 4,600 something interviews for you there.antiwar.com and libertarianinstitute.org for the things I want you to read.
Get my book, Fool's Errand, now available in audiobook, read by me, yes.foolserrand.us, Fool's Errand, Time Down the War in Afghanistan.
And follow me on Twitter, at scotthortonshow.
Thanks.
