All right, y'all, welcome to the Scott Horton Show.
I am the Director of the Libertarian Institute, Editorial Director of Antiwar.com, author of the book Fool's Errand, Time to End the War in Afghanistan, and I've recorded more than 5,000 interviews going back to 2003, all of which are available at scotthorton.org.
You can also sign up for the podcast fee.
The full archive is also available at youtube.com slash scotthortonshow.
All right, you guys, on the line, I've got my good friend Mike Swanson.
He's from wallstreetwindow.com, and you guys have probably already read his book, The War State, which I advertise on this show, which is a great history of the rise of the military industrial complex in America after World War II.
And I know you all loved it.
And he's got a new one out.
Hang on, I better get it so I can read the subtitle correctly and everything.
Why the Vietnam War, Nuclear Bombs and Nation Building in Southeast Asia, 1945 through 1961.
And I happen to know, because this is my friend, that he's been working on this thing so hard for years and based on really great primary source documents.
And this is not just some synthesis like my book retelling everybody else's journalism.
This is some real primary historical type of research sort of thing, adding to the real history of the origins of the war in Vietnam that I just know is going to be of the greatest of interest, not just to you guys, but to, you know, academic historians and everyone really interested in parsing the reasons for the origin of that war.
So I guess that leads me to, well, first of all, welcome you to the show.
How's it going, Mike?
Oh, I'm doing great.
Yeah.
Thanks for mentioning the book.
Actually, it's just the first part, so there'll be at least one more volume now I got to start working on.
But I just started reading your book, Enough Already, yesterday.
I'm only on page 12, but you talk about how a lot of people promoted or advocated for the wars of Iraq and Afghanistan by saying we have to fight the people over there.
And that idea is basically what I'm trying to argue against in my Vietnam War book, that it really has nothing to do with these wars.
I'm so glad that you point that out and demolish that myth in your book.
Cool.
Man, I can't wait to read this thing.
And I'm sorry, but I know you understand why I haven't had a chance to crack into it yet.
I know how it is.
I've got a mountain of stuff myself, and there's so much going on.
Somehow I wish we could do osmosis or just hold it up against the side of my head and somehow just soak it in.
Do like the lawnmower man and just implant it straight into my head.
No, I can't wait to read this, man.
I can't wait to read this.
It's real exciting.
I guess, let me ask you this.
Has Gareth read it?
And what did he say?
Well, I don't know if he has.
I sent him an older version of it several months ago.
But I'll say this, that I read his book, Apparel's Dominance, probably 10 years ago, right when it came out.
And he says something, I think in the introduction in the first chapter, that he believes the year 1954 was a critical moment that led to the United States being involved in Vietnam because he says that we realized, or the people in the Pentagon realized, that we had a preponderance of strategic power, nuclear power, against the Soviet Union.
And we started to adjust our thinking based on that, or the people in the national security state did.
And I forgot he said that, and I went back looking at it, and I was like, oh.
And that's actually the whole thesis of this book.
So it's that one idea, and I'm just proving it.
He just mentions it in passing, but he's the only other person I've seen do it.
So in a way, I'm simply proving one of the claims in his book.
That's interesting.
All right, well, you know what I need to do is sit down and read them both, and then I'll have you guys on to fight about it.
Okay, that'd be fun.
That might take three or four years to get to, but anyway.
You should see the pile of books that I ain't quite got to yet over here.
It's shameful.
And dangerous, right?
It could fall and hurt someone.
Listen, I want to know what the hell is going on with the economy, and I want to just start out complaining about what's going on here.
I don't know if you saw this thing.
I forgot the origin.
I try not to get into these woke debates or whatever.
I just thought it was funny that the New York Times reporter that got fired was tattletaled on by a white girl for saying the N-word.
And then the lady from the 1619 Project said, well, she's politically black, and so she can do it, and it doesn't make her a tattletaler.
So I was wondering then, maybe I'm politically black now that I am being gentrified right out of Austin, Texas by, I don't know, 100,000 screaming, fleeing Californians trying to get away from Gavin Newsom's tyranny.
And it ain't just the blacks, and I'm telling you, the blacks of East Austin, they will be an endangered species, if not extinct, or completely moved to Elgin or the far side of Bastrop or something within five or ten years from now.
And all the rest of Austinites with them.
And we're going to have an entire capital city that's all bought up by a bunch of Californians offering cash for houses they ain't even seen yet.
And they've driven up the, literally, they've driven up the cost of a house in Austin by $100,000 across the board everywhere in one year because of this germ.
At the same time, you've got massive economic devastation, and even though the lockdowns in Texas have been much less worse than in a lot of places, you've got all kinds of people who are broke as hell, and mortgages and rents and things coming due and all of these things.
And so I want to know what's going on in my town.
I also want to know if there's, you know, for my own sake, is there going to be a crash in these insane prices anytime soon?
Or just because of the artificial demand, because of the California lockdown, you can just, if you're an Austinite, you can just kiss your ass goodbye and go ahead and move to Houston or something.
It's over.
Or what?
Well, that's two questions, so I'll answer the first one first, then talk about is it going to crash or come down at least.
But what you're saying is really the big dichotomy in the economy that we all experience.
And it's been something that has been happening for years, but now is magnified out of control.
And that is financial assets and real estate prices doing well, going up, causing rents to go up, the cost of living to go up, while, you know, up until, let's say, this past March of last year, you know, wages for the, since the 1970s have been fairly stagnant, even though unemployment went down during most of Trump's administration.
You know, wages didn't really go up, people, you know, except most people didn't really feel like they're living through an economic boom, I would argue.
But it doesn't matter.
You know, when March came, the shutdowns happened and there were mass layoffs.
And today, at the beginning of this month, the Labor Department released figures saying that the unemployment rate is like 6.7 percent.
However, the real unemployment rate is over 11 percent.
It's like 11.5, .7, somewhere in there.
And that unemployment rate is when you count what the Labor Department takes out, which is their so-called discouraged workers.
These are people who have been out of job for long enough that they're no longer, you know, really even looking for a job or they feel like they can't find one.
And if you're not looking, then you're called discouraged.
They don't count you anymore.
But if you count those people, we're close to 12 percent.
And the thing about that figure is, you know, historically in the United States, when unemployment has been above 11 percent, there have been social tensions, labor strikes or riots and so forth.
And I'm speaking of the Great Depression.
And also in the 1800s, we didn't have 20 percent unemployment like we had in the 1930s.
But whenever we got above 11, there was big, you know, events that were taking place.
There was a march of unemployed people towards the end of the 19th century.
There's a great railroad strike that took place and just these things happen.
And so I would argue we're living in moments like that, you know, and the Black Lives Matter and the people that ride on the Capitol, I would chalk up as symptoms of this underlying issue.
And there's crime spiking in different areas of the country in different ways or different types of crime.
And all that's going on while, as you mentioned, housing prices are going up nationally.
Housing prices went up 10 percent last year.
A lot of it, some of it is being driven by people leaving big cities to go to smaller cities or ones they think are safer or they're easier, they're not going to get the virus or whatever the reason.
But on the East Coast, it's happening where people are fleeing New York and you anyone get on as a curiosity at nighttime, go load up YouTube and just type live New York City and you'll see someone walking around doing a live stream.
There's no it's not always the same person.
It's just people, so many people there to do it, I guess, and you'll see how empty the city is.
And even the town I live in, I was speaking with a real estate agent a week ago and they told me that there's 70 houses for sale and normally there would be 400 and the housing prices are even going up a little bit here.
So this is a national thing happening.
But I would also say that it's being driven with interest rates going to record lows.
This has been a trend for a long time.
Rates being super low and the idea that they can be too low was something I honestly learned from Ron Paul when he was doing hearings at the Congressional Banking Committees around 2000 in the late 90s saying, oh, rates are too low.
You're creating a bubble.
Well, and we saw the results of that, right?
That was when I learned it too.
In fact, that was part of my question for you that I meant to ask you.
Because I was so smart that I was listening to Ron Paul, I knew this stuff.
I mean, I'd read The Creature from Jekyll Island and stuff.
So I had kind of a basic Mississian sort of an idea here about the boom and bust cycle and all that already.
But Ron was, of course, great.
But I was an idiot because I was telling my friends, I was so smart I was listening to Ron, but I was so stupid I was telling my friends, oh no, don't buy a house now.
Don't you know that it's a giant housing bubble?
You got to wait until the bubble pops.
But before the interest rates go up and get in there on a locked thing and all this, you're making a bad decision.
Well, they're like, whatever, Horton, you don't know what you're talking about.
And then they bought their houses.
And then the crash didn't come for eight years.
And around here, their value had gone way up, I don't know the total percent.
But when the crash came in 08, 09, it only went down 10% and then it went right back up again within two years.
And so they'd have been a fool to listen to me because I was saying it's a giant bubble, so wait till it's not.
But they were right to say it's a giant bubble, I better get in on it now rather than later.
So where are we in that timeline?
Can you tell me that?
Well, I think we're in a little different situation in that I think we're going to go through like a repeat of what happened in the 1970s.
And the reason why is that last year when the stock market crashed in March, the Federal Reserve lowered rates as far as they could go down and then started these bond buying programs or amplified them, they've been doing them since 2008, but they said we'll buy as many as necessary now.
And the 10-year Treasury bond yield fell to under 0.55.
In other words, less than a percent, less than half a percent, a little less than half a percent.
So money, the interest went to nothing, it still is super low.
And this created a situation where it did make housing, it's cheaper to borrow money.
Companies were doing it to issue bonds and people are doing it to finance houses and take out loans and all these sort of things, similar to what happened in the lead up to 2006.
But here's where the one factor that is different is that now the government debt is so large that the interest rates can't go up, but so much higher, or else the government wouldn't really be able to fund them, the deficit anymore, and would have to default on the debt, or I don't really know what the alternative would be.
If rates continue to just go up, and they're going up slowly right now.
So right now, the interest rate on the 10-year Treasury bond is 1.3.
It's almost, it's more than doubled since where it was in August.
I don't know what the magic number is where the whole government would default, but just say it's 3%.
I know four or five years ago, they were saying it was 5%, the Federal Reserve put out a report saying 5%, but I don't know what the magic number is.
But what this is going to mean is that at some point, interest rates will go up so much, or high enough that the Federal Reserve would say, we can't let them go up anymore.
And then they would start to buy even more bonds to completely, you know, they just monetize the bond market, essentially.
And Jerome Powell, the Federal Reserve chairman, has said a couple times in last year that this is a future policy tool that they would use to keep rates super low, prevent them from going up.
So I think this is the future.
I'm not sure when this will start, you know, at the end of this year, next year, or whatever the case, but it would have the effect of creating the side effect, I believe, of creating inflation, causing the US dollar to fall, because it would basically wreck the whole bond market as any sort of investment for a regular person, or foreigners for that matter.
And that would make real estate go up even more, or at least not go down.
And this essentially is what happened in the 1970s.
The US dollar went off the gold standard.
It fell about 50% against most world currencies.
And during that decade, real estate went up and was a good investment for people.
So the stock market's not so much, but, you know, real estate and gold, commodities, they were the best things to be invested in.
So I believe that's really what we're headed for, instead of a repeat of the 2008 type of debacle.
Just, I mean, it's not good, but it's different.
Yeah.
All right.
Well, I guess I got to move out to the country, man.
I don't know what I'm going to do.
I hope that God, man, I got such good internet here in Round Rock, but I'm already, you know, one town north of Austin.
Now I'm going to be, I don't know what.
I ain't moving to Waco, God dang it.
Maybe I'll have to move to, you know what, I actually talked to a, not that I have money to buy a house, but I was just talking to someone, you know, about like, what could someone get, you know, what kind of house could one get for this much money or that one?
And she's like, well, probably get a house for that in Killeen, which is, that's a hundred miles from here.
That's the town adjacent to Fort Hood.
For $300,000, I could get you into a house in Killeen.
So Californians are coming.
My God.
All right, well, so, and you know what I talked to, oh, it was the same lady told me she's got this house that's been in her family for more than a hundred years or something in Travis Heights, this great neighborhood just south of the river and, you know, essentially south downtown Austin.
And she said it's gone up in value so high, but it's killing her.
She's going to go bankrupt because of the property taxes.
There's no break on the property taxes whatsoever.
They just take every opportunity to exploit and exploit it and exploit.
So they're going to end up confiscating this lady's house and selling it to somebody else.
And she's a real estate agent or like some kind of broker or whatever, who's like cashing in on this feast.
And even she can't pay the property taxes for the rising, artificially rising cost of the house.
I know.
Yeah.
The whole thing's nuts, man.
Okay.
You guys check it out.
The new book is finally done.
Enough already.
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It's available in paperback and Kindle.
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Alright, so you know what?
Tell me what you think about all this GameStop stuff and bitcoins and all that too.
I know that you're a cynic on bitcoins, but I'm interested in what you think about what all is going on.
Well, yeah, tomorrow we're due on the 18th.
The Senate, the Congress is going to hold hearings in a GameStop and obviously, you know, the stock went up crazy, went to 400 a couple of weeks ago and it took over the entire news cycle, which to me was the most interesting thing about it.
So I'm sure most people have heard of it.
Now that news cycle has kind of passed, so people probably forgot, but I'll just quickly say that this stock, GameStop is a chain of stores that's on economically hard times.
They were selling primarily video games and now people buy video games mostly on the Internet.
So they haven't been able to really adapt to the changes in the marketplace in a way that, you know, make them profitable.
We have a store about just a mile from my house and it's basically empty all the time.
So it's a dying retail chain and like bookstores have been destroyed by Amazon, GameStop has suffered also.
However, the stock went completely crazy.
It went up from, I think it was like trading under five bucks six months ago to $400.
What happened was a lot of hedge funds and institutional investors were shorting the stock.
That meant they were borrowing shares from their broker and selling them to profit when the stock would fall.
So they're betting the company would go bankrupt or get in trouble financially even more.
And there is a Reddit message board called WallStreetBets with less than 500,000 members a year ago.
And for whatever reason, these people decided we're going to buy GameStop shares because we like it and these people are short.
If enough of them buy it and we make it go up, these people, these hedge funds will lose money and then they'll have to buy to close their positions and drive the stock up more and so forth.
And in fact, this is what happened.
There are several giant hedge funds that lost a lot of money and they ended up having to sell at really high prices.
But by the time of that final week of this thing going up when it hit the news and captured people's imagination, they ended up, you know, millions of people around the country opened up accounts in Robinhood that WallStreetBets, to buy the stock, that WallStreetBets message board gained millions of members in five days and then the stock crashed.
So all these people bought in, you know, at the top and on Robinhood, they show you the top 100 positions ranked by the number of people that own them and GameStop went up to number 12 when it wasn't on the list at all, like a year ago.
So millions and millions of people piled into this thing, even where I live on Facebook, two people were bragging they're buying it and now it's crashed.
But what's interesting about it or what I believe is that the whole narrative, part of the narrative was that as little guys can take on Wall Street, we can bankrupt hedge funds and you as the as before the stock crash, this is what was being said.
And you know, this is great.
It's it's showing how the Internet can empower you and it can and it could change how everyone's dealing with the stock market and it's like a revolution and and all this.
And in the end, you know, I think all that wasn't true at all, because if you go and look, which I did, I found that the people that bought into the GameStop thing in the fall were giant hedge funds themselves.
So it was hedge funds on both sides of the trade doing most of it.
And the little people were just on the margins.
Yeah.
Although, I mean, the little people really did help to screw the big.
I mean, they knew that they were making a bubble and that GameStop wasn't really worth this much, but they were just trying to do it to get past the deadlines to transfer all that money away from the hedge funds who'd made the short bets.
Right.
Well, that was what the people were doing that bought in before the other week.
Yeah.
Yeah.
But, you know, for every one of those, there's probably a thousand or something of people that bought in too late, didn't know what they're doing.
Yeah.
Well, I guess, yeah, probably that's the problem, right?
It's the little guy who ends up holding the bag, not the big guy.
Yeah.
Yeah.
But the little guy should know that, like, hey, man, I'm going to get in there, I'm going to make a couple hundred percent, and I'm going to get the hell out quick.
Don't be the last guy holding the bag.
That's the whole game, man.
It's a game.
One of the other things that happened too during this part of this narrative was that Robinhood and several other online brokers all of a sudden announced, you can only buy a couple of shares in the stock.
We're going to limit trading in the stock.
And people were saying, oh, they're trying to help the short hedge funds by stopping us from making it go up even more.
Well, that's not really what was going on.
These brokers also kind of act as banks because when you have an account with them, they'll let you borrow money and go on margin, borrow money from them.
They'll also lend your shares to other customers without you knowing it.
That's how they let people short the stocks.
They borrow the shares from you and let someone else sell them.
That's how shorting is done.
So they act as banks where they lend securities and lend money.
And that also can put them in a situation where, in theory, if a lot of their customers are on margin and own the same stock and it crashes, the whole broker could default just like banks, some banks defaulted when real estate fell in 2008.
So they were forced to limit trading in these stocks.
Some of the Robinhood went out and was forced to go borrow money itself to cover potential losses that could be generated from all this kind of speculative activity.
And we've got now record margin debt in the stock market.
A record amount of money is being borrowed by people to buy more stocks.
So underlying all this story is, I think it's similar to the real estate thing in that after March, after the stock market crashed in March, there was actually a flood of millions of people opening up brokerage accounts with brokers like Robinhood and so forth to trade for the very first time.
A lot of them were using stimulus money from the government.
And some of them were people that used to do sports betting, and then they couldn't bet on sports because sports shut down, so they just switched to let's bet on stocks.
But all these millions of people, and it's about 5 million, that opened up accounts with Robinhood alone, they became a new pool of traders that had never really traded before.
So they were much of the people leading the activity in a stock like this.
But again, I see that as a symptom of the interest rates being so low, helping the stock market go up and recover after it crashed as quickly as it did, which attracts more people into it, just as rising real estate prices attracts even more real estate speculators.
And that's what I wonder about these California people.
Are these people buying second homes to move to Houston, and New Yorkers buying second homes to go south and so forth, and think they're going to go back, or I don't know what they're doing.
They think they're investing by doing this, partly, I assume.
So it is all, I believe, driven by these Federal Reserve policies and distortions in prices in the market, at various markets.
If real estate, my understanding, what you read if you read economics textbooks, is real estate, the right value for real estate is basically, if you invest $100,000 in real estate, you should be able to make $7,000 if you rent out the property a year.
You ought to be able to cover the mortgage and just make a little bit extra.
It's a 7%, basically.
So there's a valuation metric that makes sense, and we went way beyond that, I know, in 2006.
I don't know where we are nationally on that, but definitely the stock market valuations are higher by a lot of metrics than they were even in 2000.
So it's pretty amazing.
Yeah, oh man.
You know, the Bitcoin thing, I got to tell you, if I hadn't have paid for my wife's surgery last fall by selling my Bitcoins, I'd be able to buy a really nice house in Austin right now.
I'd have something like $600,000 or whatever back of my envelope, scratching, just pretending if I'd held them instead of sell them.
So you got a lot of guys who say, well, the one thing we can all agree on is what a mess the U.S. dollar's in.
As you said, they can't raise interest rates at all.
All they can do is keep printing money.
But jeez, they can only print so much money before things get even worse, and they've backed themselves into such a corner.
And hey, I'm a libertarian, I got ideological reasons for saying not just, wow, I could've got rich quick and bought a house, but also, wouldn't it be great if everybody just opted out of government money, and we just shut the federal government down?
Who needs them anyway?
Not me, Mike.
And so, you know, maybe that's all Americans, and all corporations should follow the lead of Elon Musk here, and diversify heavily into Bitcoins.
What do you think?
Well, personally, myself, or anybody, you have to choose what you want to invest in, and you can't invest in everything, right?
Say I want to buy stocks, well, unless I'm buying a fund that owns every stock in the market, I can't own them all, so if I own 20 stocks, and I see five I don't own go up, I don't really care, you know, as long as the ones I do have are okay.
So I say that because it's best not to just invest in one thing, but spread out, also.
And also not feel like if you're not in something, and it goes up, to beat yourself over the head or even care, and that's how I am with the cryptocurrency stuff.
I don't own any, so I don't really care if it goes up or down.
I own gold and silver for the reasons people that own Bitcoin say they own it, you know.
As you just articulated, the dollar, it has gone down since, you know, really historically, but it's been sliding even more, and I think it's going to continue to do that based on what I was saying about the bond market and interest rates and so forth.
But I personally own gold and silver and mining stocks to bet on that, and for me, Bitcoin would just be another extension of the same bet, but it's more volatile than gold and silver.
So I would feel very uncomfortable putting a lot of money into it, because it can crash, or when it has corrections or goes into bear market, it falls a lot.
And I wouldn't want to have a lot of money tied up in something so volatile.
Silver, for example, is more volatile than gold, so I own more gold than silver.
But there's also a belief factor in Bitcoin, too, and I'm not sure it's going to replace global currencies, and I see signs that other countries may outlaw Bitcoin and other cryptocurrencies in order to create their own controlled currency.
India has said something about doing this, and there's some sort of digital wand that's supposed to be in the works.
So I see these as threats, potential threats to Bitcoin, but maybe they got some workaround on that that I don't know about.
But I also prefer buying stocks more than cryptocurrencies, because I can get a dividend and there's earnings, and some way I can value it.
I don't really know how to value these cryptocurrencies on a fundamental basis.
I don't know what a Bitcoin is really worth, or the other things.
I don't know what the argument is that it's expensive or cheap.
Right.
Yeah.
I mean, I have the benefit of being an outsider on all this, because I don't have any money.
So I have enough to keep the lights on, but that's always about it, which is fine.
It's part of being a non-profit organization for a living.
But it means I don't have a dog in these fights at all.
I hope nobody gets upset listening to any of this, because there are some people who are really devoted to this for ideological and other reasons, and I can certainly see why.
But I wish I'd invented it.
I don't know enough about how it works or whatever, but I'm going to get a million emails explaining it all now.
But the way they preach it, that, man, this is the internet of money, you never need a banker again, you just convert the whole world to this, and we all just pay each other, and it's nobody else's business, and it works great.
And why should anybody else get a cut when it comes to some credit card, or some Wall Street firm, or some IRS agent, or anybody else?
One thing about it is, I'm skeptical of people, when they talk that trading any market, setting Bitcoin aside, that trading a market is an act that's going to liberate you, or it may liberate you financially by giving you more money if you win at it, liberate you from being poor, I guess.
But I'm very skeptical of the idea that trading markets is going to create a revolution, and fundamentally alter society.
With the GameStop thing, when that was going up and catching a lot of attention, people were saying that about that, that this is a revolution, we're going to destroy Wall Street, we're going to do this and we're going to do that, and you're just trading a market.
You put a hedge fund out of business, whatever, that happens all the time.
Hedge funds go out of business, new ones come in business.
So even if the Federal Reserve ceased to function, and we have seen, actually, at least twice, I can think of off the top of my head, where there was a central bank in the United States that ceased operating.
There was one when the founders were there, and Andrew Jackson shut one down.
But we don't even know, we forget about these events.
So I'm trying to say that I don't think it would be as important as people think, and it's not going to fundamentally alter society.
It's not going to destroy corporations or make the economic system go away.
I don't know what people think it will really do.
I guess the argument was, if everyone used Bitcoin, then the government won't be able to tax you.
But I'd assume they'd still monitor it, or do something to spy on you and find out what you're doing.
Yeah, the IRS, they still carry guns and everything.
Yeah, yeah, you got to get rid of their guns.
That's how you create the type of revolution people want.
But how do you do that?
I don't really.
Well, I mean, is there value in it?
Is it disruptive to the financial order in any meaningful way, do you think?
That's what I'm saying.
I don't think it really is.
It's just trading the market.
Yeah, I just see it as market trading.
I think that's all markets do.
They trade, they go up and down.
You can make money in them, but I don't think it's a political act of revolution.
People like to say that and believe they're doing that sort of thing, but I guess I'm cynical and I've been doing this for so long, I just don't believe it myself.
I see what you mean.
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Hey guys, Scott Horton here from Mike Swanson's great book, The War State.
It's about the rise of the military-industrial complex and the power elite after World War II, during the administrations of Harry Truman, Dwight Eisenhower, and Jack Kennedy.
It's a very enlightening take on this definitive era on America's road to world empire.
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All right, well listen, I should cut you loose.
No, I shouldn't.
I should ask you one more thing.
Okay.
We've talked about the money and the bonds and the interest rates and the housing bubble and all of this, but like, and honestly, I've been just so focused on writing a history book about the Middle East here for the last year, and you know, like if you asked me, if you gave me like a pop quiz on, you know, say east of the Mississippi River, who's got the worst lockdowns and who's got the least and that kind of thing, I would fail.
Like I have no idea, really.
I mean, I know that Florida and South, was it South Dakota or at least worst, and it's either Alabama or Mississippi or something.
I don't know.
But I get the idea that the American economy is just, you know, like the devil picked it up and shook the hell out of it.
And just people are just bruised all over.
The thing is just, you know, I don't even know what to compare it to.
Somebody dropped a couple atom bombs on us or something, but then it's causing giant booms in places like where I live, but that's at the expense of a lot of other people.
And in probably the most important ways, right?
Like shutting down major manufacturing and things that are going to have long term consequences for all of us.
So I want to know what's your, you know, rose colored glasses or your nightmare scenario for the decade that we face here, funny money bubbles and everything else included, you know, tell me.
Well, let me say one more thing.
There are freezing cold bums and they're not bums.
They're like, I might've called them bums.
There used to be a time they were bums.
These are not bums.
These are people without houses and they're everywhere, man.
And it's never been like this in Austin, Texas in my life.
And I grew up seeing Vietnam veterans on the side of the road my whole life when I was a kid, which is one of the reasons I'm anti-war now.
It's like, boy, they don't look like they're all they can be.
But anyway, it ain't like this.
I mean, there's tents under every bridge.
There's people under every bridge living on the side of every highway, which that can't be safe, man.
I wonder how many of them are getting hit by cars and stuff, but it's just it's totally bananas.
It's totally out of control.
So tell me what it all means.
What's going to happen?
Well, the moment we've lived in for almost a year now with all these shutdowns, I do think I did, you know, metaphor I had, there's an old Star Trek episode, I think a taste of Armageddon where they had a computerized two planets where they didn't want to have a real war where they would wipe each other out with real weapons.
So they created a computer simulated war.
But when it spit out casualty numbers, they had to go and have these people killed, you know, and vaporized in booths.
So I thought of this as something like that, where it is the damage in the economy is like a war, you know, as if bombs are being dropped on us by shutting down and wiping out so many businesses, although they weren't real physical bombs, they were government edicts to stop the growth of this virus.
And here we are.
I don't really know how bad it is from one state to another.
I mean, the feeling I have just from where I live is that, you know, we have a curfew, I think midnight or something, you're not supposed to be driving, you're supposed to wear a mask all, you know, when you go out in public and all these different things, they don't really arrest anybody over these things.
So it's all kind of, in a certain way, voluntary.
What is damaging is the restrictions on restaurants only being allowed to seat 50 percent, I think it is where what we're at capacity.
But all that said, in the summer, as the shutdowns are going on around July, August, I saw read a study where somebody demonstrated that even if you didn't have these shutdowns, there still would have been a massive drop in demand anyway, just from people being afraid of the virus to not travel, not drive, not do stuff.
So, you know, we still would have be suffering in some sort of recession, even without all the proclamations and laws and edicts and so forth.
But, you know, I don't believe that things will get better in the next couple of months.
I don't know the virus is really going to go away completely, but it does appear to be slowing down now quicker than was expected six weeks ago in Virginia, which is where I live.
They're expecting a peak at the end of February.
And it peaked almost a month ago or over a month ago here and across the country.
So that's an optimistic sign.
And the reason for that peak, I believe, is that more people got the virus than they thought.
And they I read a study this morning that was done over several four or five thousand people in Virginia is done over the summer, fall, and they're now releasing the information that out of this group of people that got the virus and we're speaking of thousands, two thirds of them had absolutely no symptoms.
And now we've got about 10 percent of the population vaccinated.
So I think what's happened is a month ago, they're saying 17 percent of people nationally had the virus at one point.
It's probably double that.
And then you got 10 percent or so vaccinated.
So we probably got 40 percent herd immunity.
And that's what's helping this fade or peak out quicker than was expected.
So I'm hopeful that there'll be a normalcy, you know, by the summer or late spring, even if the virus doesn't really completely go away.
And I don't think it will, because it seems to spread so quickly.
And I doubt, you know, a lot of people aren't going to want to get this vaccine.
But but it's but I'm not worried about that, because, you know, if it dies out to the way it was last August or July, it won't be that bad.
And I think, you know, we can get it'll get to that level and kind of stay there and and we'll just move on of our lives.
I think that's where that's heading and that will help the economy get better.
But it's not going to go back, I don't think, immediately to the way it was.
But I think things will improve and get better.
The bad part is that we've had so much damage done from all this.
And that's the debt situation.
And there will be lots of jobs that, you know, will take a long time to come back.
And the unemployment will take years to get back to the way it was.
So much damage is done.
And I think that will set up problems with inflation, the US dollar over this next decade.
But I don't think that's necessarily like the end of the world or a collapse.
The worst case scenario is what you see have seen happen in third world countries where they go through a debt devaluation where their currencies fall for really about two years and they have a lot of inflation.
And then the situation kind of bottoms out and you go into a sustainable boom after that.
And the country most recently going through this is Turkey.
Their currency collapsed about two years ago and it bottomed last fall.
So they've kind of come through this cycle.
And if you look at what's happened there, you know, the government is still in power.
They have the same ruler.
There hasn't been a revolution and the economy's poised to finally start to improve in a sustainable way.
So that's to me, but they've had like close to 20 percent annualized inflation for two years.
So that's what you that's the what causes that's the bad part.
Right.
But this is what's happened in Argentina.
This is what happened in various countries in Asia, you know, in the 90s.
I think this is probably what we're some form of this is what we're headed for.
And maybe it's just slowly starting with the dollar going down a little bit, but in no way has the inflation completely, you know, taken off.
So that's why I go back to thinking this is going to be like the 1970s, because that's sort of what happened then.
The dollar went down 50 percent, but it did it over a decade.
I think the inflation rate was.
Like five percent a year or so.
Yeah, man.
So I saw a funny tweet.
Boy, it's a world of Twitter and I'm back on it.
The funny tweet said that Peloton, which is an exercise bike company with iPad tape to it, is capitalized at X billion dollars, which is the exact same amount as Ford.
Which makes sense because Ford has had the number one best selling vehicle in America in the F-150 for the last 30 years or whatever it is.
Of course, Peloton, the exercise bike with the iPad tape to it, is capitalized to the exact same degree that Ford Motor Company is in the United States of America.
And I can hear David Stockman screaming, and I get his emails all the time, and I only kind of read half of them because I'm always so busy, but I just see he's just upset always.
Like, what is a price, anyway?
Everything is so distorted that price discovery is canceled and everything is just completely a crap shoot and there is burning hell to pay coming this way.
What do you think of that?
You read him, do you feel the same way?
Yeah.
Yeah.
I mean, that's basically what I believe is happening.
I'm just saying that in his book, what's it called?
The Great Deformation?
Is that the title?
Yeah.
It's this big, giant, thick book.
I would say that's the best book to read, to understand how he got here, and he traces it to the 1970s.
I got a computer monitor sitting on it over here.
Yeah, it's great.
Go ahead.
Sorry, David.
But no, I'm completely in sync with what he's saying.
I'm just saying that when we talk like this or say these sort of things, it's easy to think this is the end of the world coming, this is Armageddon or whatever, but these things play out in a short amount of time, in a couple of years, when the worst of it happens.
Some people get rich during it.
It's not necessarily that everyone is suffering because you can find ways to benefit when inflation goes up, and perhaps Bitcoin is one of the things that will happen with.
I think there'll be people that invest in some ways in real estate and do it, and I believe I'm doing it through investing in gold, but doing nothing is not what you want to do.
Right.
So, yeah, there was this thing, and I'm really, as an economist, I'm a great anti-war guy, I don't know, but I read about the crack-up boom, where the day that comes when everyone realizes, oh no, today's the day, and our money is being completely devalued.
And then the question is, who's the last one holding anything of tangible value while everybody's evacuating from the currency as fast as they can?
And so then the kind of legend was you have these old farmers with grand pianos and chandeliers and all these things that all these rich people were trading for food because the money became absolutely worthless and this kind of thing.
And I mean, I don't know, it's our national government, they're the most incompetent people in the world.
I mean, the 70s were bad, but could it be worse than that?
Are they going to completely destroy the dollar somehow?
And I guess this is what I've heard described, too, is that someday in the world, they're going to decide that $100 bills are no longer good as gold and that the central banks of the different nations of the world will all try to bail out of the dollar at the same time, too.
And at that point, the middle part of North America sinks into the ocean or something, I don't know.
I'd leave you, I guess, with this.
No one could really predict it, OK?
And the bad thing about that is, OK, I don't really expect myself to predict it, but what about the people that are supposedly running these things, the people at the Federal Reserve, the Treasury Department?
What about them?
Well, I get the journal Foreign Affairs in the mail, and it's written for these elites.
It reflects elite opinion back at them, I believe.
And it had an article last year saying that all these policies of quantitative easing, printing money, is the right thing to do, that we need to do all this stimulus.
In fact, one would argue this is what the Biden administration is embracing.
And it argued that, yeah, we will probably have a little bit of inflation.
And Jerome Powell and other people who have spoken for the Federal Reserve, he's the chairman, have said in the past year that we actually want higher inflation.
We would like to see inflation get up to 3% a year, and we'd be OK with that.
The thing is, this article that I read advocating for all this was saying that they can control it, that they can make inflation just get up a little bit and not go up more, and simply control the situation.
And if it started to get out of control, they would then be able to raise rates.
And early enough to prevent that.
And I think you and I would agree that in our lifetime, I've seen no evidence that these guys are able to really control interest rates in an optimal way to prevent bubbles and stop things from busting and all this, and stop volatility in the markets.
The opposite is what we've actually seen.
So what I'm trying to say is these people apparently think they can control it, manage it, make it so there isn't the type of inflation I'm even suggesting, and they think they can predict and control the future.
And I think it's an incredible illusion.
So I'm saying I can't predict it, and they can't predict it.
So I'm thinking it won't be as bad, you know, as the worst case scenarios could be.
And I'm looking at what's happened in other countries, but I have no way to know for sure.
But I certainly don't think the people running things are going to control the stuff the way they say they can.
Yeah.
Now, is this modern monetary theory and all this?
I mean, I see so much talk about this on, not just leftists, but Democrats and liberals and progressives and whatever, that, look, man, look how much money they've created so far, and it's fine.
The answer is that really we could afford to give everybody a guaranteed minimum income.
I don't know.
Why not $500,000 a year?
The sky's the limit, man.
We'll make everybody rich by giving them all this money, and it'll be great, and you're some kind of barbarian if you think that it shouldn't be like that, because you're wedded to some old Austrian.
Well, from my understanding, they're even worse, whereas this article in the Foreign Affairs, it's saying that this can become a problem, we'll just stop it before it does.
My understanding of the modern monetary people is they say this will never be a problem.
We can just print and do all this, because it hasn't been a problem yet, so it'll never be a problem.
It seems to be, from what I understand, they're assuming, which is completely crazy, but whatever.
If that's true, I don't know, and they're just counterfeiting money all day, and they're just paying Northrop with it, maybe they should give us all a guaranteed basic minimum income of half a million dollars a year, and then we can all just go skateboarding all day until we're too old to ...
Does that not make economic sense?
It doesn't make sense to me, but, you know, maybe ...
I just want to skate, Mike, that's all.
I just want to go ride with the boys instead of doing all these chores.
Anyway.
But that's the problem when you have the government spending so much money, because what about the argument, well, they're blowing money on taking nuclear missiles out of the ground and putting them back in.
Why do that?
Well, you could just give me $5,000 a year or something.
Right.
Yeah, exactly.
At the very least, buy skateboards for all the poor kids, you know?
There are kids who cannot afford a skateboard, you know, a new skateboard, just the board with grip tape is 55 bucks, you know, at least 60 bucks, but trucks, wheels, bearings, and hardware and everything, there's a lot of kids that can't afford a board like that, so I don't know.
It's funny, I had this argument with a leftist back 1999 ways, where I'm like, look, I'm just anti-government, I hate these guys.
I think the whole welfare state is just a trick, really, so that we don't overthrow them for all the horrible other things they do with the wars and the police state and all this other stuff.
But you know, one of my leftist friends said, you know, and he had some study, I don't know how accurate it was, but it was in the scheme of things.
When you look at Bill Clinton's budgets, you know, at the end of the 20th century there, that actually just buying a house for every homeless person in America, like a really cheap house kind of on the outside of town where land is cheap and whatever, you could pay it with like, it'd be in the tens of billions of dollars.
Tens of billions.
So you don't have to be a communist to say, like, you know what, that is chump change compared to what the US government spends on every other horrible thing in the world.
Like, you know, you got people sleeping outside, and I understand that that incentivizes more, you know, sloth or whatever.
But at the same time, I don't know how many Texans froze because they're living outside in the last couple of days here.
So not to argue for that, but just to show in the scheme of things how twisted everything is and you could see why the people on the modern monetary theory side, and I hear this all the time from leftists and liberals, they're like, look how much money they have for war.
You telling me they can't afford this?
You got that right?
Spend a trillion dollars a year on the war.
So even if, you know, if the words communism and fascism never existed, and it was just the government having a big welfare state and investing in infrastructure in the country or whatever, the country would be a hell of a lot better off than it is with them spending a trillion dollars a year, as you said, taking nuclear missiles out of the silos and putting them back in again, and the rest of this madness, you know?
I like that one.
That's a good alternative for digging ditches and filling them back up, pulling nuclear missiles out of their silos and putting them back in.
I really like that.
I'm going to quote you on that later, I hope.
All right.
Well, anyway, I should probably stop yammering at you and the audience is probably sick of me by now anyway and anxious for the next one.
So thanks Mike.
Well, it's good talking with you as always, Scott.
Absolutely.
And listen, everybody run out.
It's on all of your favorite book websites right now, probably.
Why the Vietnam War?
Nuclear bombs and nation building in Southeast Asia in 1945 through 61.
This is before the worst of it even began here and all the decision making from the men in DC and across the Potomac there at the Pentagon.
I can't wait to read this thing.
Thank you, Mike.
Appreciate it.
Thank you.
Good talking with you.
Wallstreetwindow.com, of course, for all Mike's financial coverage and advice.
