All right, y'all, welcome back to the show.
It's anti-war radio.
I'm Scott Horton and our next guest is Charles Goyette.
Back when he was still on the radio in Phoenix, Arizona, I used to basically cheat and listen to his show in the morning, preparing for my show.
And I don't know everything about economics, but I know that the situation we're in now is the one that Charles Goyette used to always say all the time.
You better listen to me because this is what's going to happen to you.
And then, of course, we took all his foreign policy interviews and posted them up at antiwar.com/radio, where you can still find hundreds of them.
And also, I got to highly recommend his book, The Dollar Meltdown.
And with that, I also have to ask Charles, after I say, welcome to the show, welcome to the show, when's the new book coming out?
Hey, Scott, it's always great to talk to you.
You know, there's a great line from the economist, Henry Hazlitt, who once said that today is the tomorrow that all the bad economists told us not to worry about.
Yeah.
Hey, I just coined that myself just now, having not read my Hazlitt like I should.
Yeah, it's eternal truth.
I got an email.
I'll get back to your question about the new book.
Of course, I'm anxious to do that.
But I got an email in response to my Lew Rockwell piece today, LewRockwell.com, about the economy and another recession, a second recession, a piece that said the first recession never ended.
And I got an email from somebody just absolutely blasting me for my sneering.
He said, sneering criticism of statists and other Keynesians as though they had nothing to do with this business of, you know, blowing up the debt to magnificent proportions and putting off any liquidation of the debt so that we could get about the business of growing the economy again.
So I guess I'm in a sneering mood, sneering about Keynesians and other statists and bad economists who told us to not worry about the things that we're facing today.
Yeah, well, I mean, come on, what's to deny?
They call it counter cyclical spending.
You know, when there's a recession, the government should deficit spend in order to increase aggregate demand to make up for the lack of economic activity going on.
Everybody knows that.
They teach it at a community college.
Wait a minute.
Here's here's the real truth.
When when there's a recession, they teach you the deficit spend.
And when there's a surplus, they still teach you the deficit anyway.
Well, that too.
But I don't know really what's to deny that, you know, Paul Krugman was on the front of Time magazine saying Obama's half right, just like in the title of your article today.
But he hasn't gone far enough.
He needs to spend more money.
I think you meant something else.
Yeah.
And that's always the way, you know, when the the helpful results that they that they wished upon us don't ever materialize, it's because we didn't we never did enough of their policy prescriptions when they prescribe policy, when they come up with a, you know, a seven hundred billion dollar Bush bailout or when they come up with, you know, an eight hundred thirty billion, whatever it was, Obama's stimulus one, when they come up with QE one, it's always going to fix the things.
And then when the fix never materializes, that's when they need stimulus two and three and four and QE two and then QE three, four and five when the fix never materializes.
Well, you know, Keynes himself said, you know, this this business about the about the long run and and, you know, today being the day that the bad economists told us not to worry about it's, you know, the the cliche about Keynes is his answer was, well, you know, in the long run, we're all dead.
So a lot of by and by in the sky, pie in the sky, when we die, somebody else will figure it all out and the debt will somehow be their problem and we're gone.
Yeah, well, that makes sense.
But then again, OK, so when you talk about the QE one, two, three, four coming, I guess, no, they already did one and two, the three, four, five, six coming.
Will that really just be an attempt to, you know, do more of the same thing to try to fix the thing under a bad theory?
Or at that point, that's when they're really giving up and they're buying back the debt with new money, destroying the currency in order to pay off the debt that way.
Yeah, well, it's always it's always the same old thing.
But, you know, this is this is a little bit new in the territory of the Federal Reserve.
I suppose there is a little bit of it in Greenspan, but you didn't see so much of it in in prior Fed chairman like Arthur Burns, maybe a little.
But it seems it seems explicit now that Bernanke believes that the job of the Federal Reserve is to run up the stock indexes, to run up the S&P 500 and run up the Dow.
And he has bragged about doing that in the pages of The Washington Post when he announced QE two.
Well, you know, we'll have a wealth effect because it'll make the stock market higher.
Look, there's there was never any even any, you know, statist Fed supporting Keynesian driven, mad legislative prescriptions for the Fed.
There was never, you know, a recommendation.
There was stuff about, you know, about unemployment rates and so on.
There was never anything about running up the stock market.
But Bernanke believes that there is an equivalency between a high Dow or a high S&P 500 and the economic health of the United States.
And so with the stock market in the fix that it is in today and with the, you know, stocks down six weeks in a row and all of the problems we have, a trillion dollars has been wiped off the books of equity holders in the last couple of weeks, the Dow below twelve thousand for the first time in three or four months.
With all of those things going on.
The the powers, the powers that that that Bernanke is bound to listen to, the Wall Street powers are going to want are going to want QE three.
I mean, I can't smell it coming yet.
I think they're going to hold off on doing it for the time being.
But ultimately, those are the masters to whom he defers.
And so and I suppose the other point is that if you're a Keynesian economist, if you're a Fed money printing chairman, you have no other tools.
What else do they do?
They print money.
So they've printed money.
They printed money.
They printed money.
They monetized it, monetized it, monetized it.
They've exploded the the the reserves on their balance sheet, just literally exploded.
And the economy continues to limp or limp along and actually turn down even further now.
And so what do they do if you only have one arrow in your quiver?
That's the arrow you shoot.
So they just got to do more of the same.
That's that's what they were created to do.
And that's all they can do.
Well, in the early 1980s or late 70s, early 80s, Paul Volcker, like this is a vast oversimplification, I guess, but he basically did what the Austrians, I guess, would have said the market was dictating that the market would have done if he hadn't.
And that was raise interest rates up really high and get rid of all that inflation.
So why can't they do that?
Well, they can't do that because the because the economy will take even even further.
Well, I mean, that was his purpose.
I mean, he deliberately said we're going to strangle all the bad debt and a little bit of the good investments, too, are going to die in this thing.
But we have got to, you know, the decade of 1970s inflationary stimulus policy has not got rid of the unemployment, has not increased productivity.
We've got to like basically picked Friedman over over Keynes supply side, over demand side economics.
Right.
So let me make let me make a really novel point.
All right.
Maybe they shouldn't have anything to do with interest rates.
Well, yeah, I mean, that goes without saying.
Right.
It is my we're all anarchists here.
Charles, we need it is my view as an individual that we need higher rates right now.
Retired people in the retirement communities need to be able to put their money in banks and earn an income so they can pay their their mortgages and their water bill.
And, you know, we need the American people to save money when they can and so on.
So it's my view that we need higher interest rates.
But the point of the piece on Lew Rockwell dot com today, Obama gets it half right, is that, you know, we we shouldn't we shouldn't substitute the judgment of any of these boards or bodies or bureaucrats, be it Ben Bernanke or Paul Volcker, who, by the way, helped, you know, expedite the the severing of the of the relationship of the US dollar to gold.
It's my view that we shouldn't let any of these people be dictating anything about interest rates.
How does Paul Volcker know what the ideal interest rate is in the economy to restore to restore stability in the quickest possible way?
He doesn't know.
Well, and no more no more than Ben Bernanke and the Fed Open Market Committee know what interest rates should be now to restore the restore prosperity in America.
So, you know, I can't I certainly can't praise Paul Adolph Volcker, who did this economy a lot of harm.
Yes, higher interest rates, real and real prevailing market interest rates were needed in the face of explosive monetary creation by the Fed in the 70s.
Yes, that is true.
What what what Volcker did may have been right, you know, like a stop clock once or twice.
What the market would have done with interest rates, how long, how high we would have seen and maybe the recession would have been easier than it actually was in 82.
You know, back in a while, then they just wait, wait, wait, wait.
You got to hold it, man.
We got to go out to break.
It's Charles Goyette.
He wrote the book The Dollar Meltdown.
It's really good.
I'll scare the hell out of you.
Like them ghost stories, my nephew reads.
All right, welcome back to the show.
It's anti-war radio talking with Charles Goyette, author of The Dollar Meltdown.
I said it's scary like ghost stories to tell kids, but I think it's probably pretty right.
And it's not about the terrible crisis that we're in now.
It's about the terrible crisis that's coming.
Charles, you say it's the crack up boom when the dollar becomes really worthless, where hundred dollar bills become dimes, where every bit of private savings in the society is wiped out and we all become completely dependent on, I don't know, the Pentagon or something to get by in the world.
You know, and it's happening in slow motion right now.
And this is this is the amazing thing.
I have a great deal of remorse for the the ignorance of the American people about this, because it is recognized around the rest of the world.
Scott, I've followed foreign central banks and foreign governments that are dishorting U.S. dollars, that are beginning to move their reserves out of the U.S. dollar.
You get Moody's, for example, comes along and says, you know, if the United States government doesn't do this, that we may have to downgrade America's debt.
The market, the world has already downgraded America's debt and the dollar and places you wouldn't even you wouldn't even consider countries like Thailand and Mexico, never a paragon of, you know, economic virtue.
These countries are buying hundreds of tons of gold for their central bank reserves and dishorting U.S. dollars in the process.
So this is already underway.
I mean, if you look at if you look at housing in terms of the gold price, if you used gold as a constant and instead of, you know, saying how much, you know, American housing is up and down in terms of dollars, forget the dollar.
It's a yardstick that can't be depended on.
If you looked at if you used gold, it would give you a real picture of things.
Housing is down 87 percent in in terms of in terms of gold since 2000.
Stocks are down 80 percent.
And lo and behold, oil is about even just what you would expect.
Real things with real value are about even.
But things that are built out of out of debt, like housing and so on, are are way, way down.
Well, and as you said, their only answer is more inflation.
If you inflate and create a giant bubble and then that bubble pops and creates a giant recession, well, then you got to keep inflating and inflating to try to make up for the recession that you're going through.
But then so what's the bubble now?
Is it possible that the price of gold and silver are the bubble in terms of dollars?
Actually, I don't I don't mind telling you that you've already seen a little bit of, you know, commodities, commodities getting ahead of itself.
And and in saying this, I don't mean gold, because gold will be in a separate category, I believe, and need to be judged a little bit differently.
But, you know, the selloff in silver from fifty dollars to thirty four or thirty five, wherever we are today, you know, this all of this, this is implicit in the ending of QE2.
So you're going to see the stock market down and you're going to see some things that profited from this massive money creation practice, this debt monetization practice of QE2.
You're going to see them settle back down for the time being, for the time being.
But as as things continue to get severe when they you know, when they when the heat is on, the federal authorities see the light and the light to them is more money printing.
So for the time being, you know, they've they've shot their arrow of QE2 and they're going to sit back and watch for a while.
But as the screams and and cries of misery continue as as unemployment ticks up again, as it did with the May report of virtually no jobs created, a paltry fifty four thousand jobs created in the month, when they feel the pain, then they start reverting back to the the printing press of Ben Bernanke's basement.
So you may get a brief respite here when some commodities have trend a little bit lower.
And I'm not including gold in that.
It's a special class by itself.
So when you say that everybody all around the world, I saw the University of Texas, maybe it was you that brought up the University of Texas, buying all a bunch of gold for all their savings, these kind of indicators.
So that means, okay, we're going to have, call it in real terms, I don't know, 10 or even 15 percent inflation for 10 years or whatever.
But does that mean we're going to have hyperinflation where the dollar, like in a week, we see everybody's savings completely wiped out, where trade breaks down, the dollars, like literally the whole hundred dollar bills become dimes overnight?
It can certainly happen.
I mean, it's historically it's happened.
It's happened often.
And what typically occurs, I mean, if you had 15 percent inflation for a couple of years, even the slowest, even the most dim-witted statist gets the idea that the problem is not the price of Coca-Cola and movie theater tickets and gasoline are going up, but it is the dollar itself that is losing value.
And when that perception penetrates on a widespread basis, then it doesn't matter how fast they're printing money.
The devaluation of the currency outpaces the printing of money.
And at some point, at the end point of that, as you alluded to earlier, it's what the Mises called the crack-up boom.
So in my view, it can very easily happen.
I share that view with a lot of people.
Jim Rogers expressed the same thing, that it could, it's possible it could end in five months.
He wasn't saying it would end in five months, nor am I. It's simply possible that it could.
Well, so in other words, basically the major bondholders around the world, like South Korea, Japan, China, for example, big banking institutions, they could all decide that that's it, we're not buying any more of these securities.
We know we're going to get nothing but paid off and inflated devalued dollars.
And at some point, they're going to have the red line.
Then at that point, there's nobody to buy the debt except the Fed, kind of thing.
Is that it?
That's it.
There's nobody to buy the debt except the Fed.
And actually, in slow motion right here before our very eyes, I think everybody expects things to happen cataclysmically, but if you did a little time-lapse photography, you can see, before our very eyes, the Federal Reserve has now become the largest holder of U.S. Treasury debt.
Larger than Japan, larger than China, now it's the Federal Reserve.
So we're well down that road.
Alright, well look, you're Charles Goyette anyway, but this is Antiwar Radio and I want to make sure to make this foreign policy enough to get it on the archive on Antiwar.com later anyway.
So what does any of this have to do with foreign policy?
Oh my gosh.
You're better positioned than I am to state it, but I suppose there are three or four roads we could go down.
Let me just pick one.
It's the question of busying giddy minds with foreign wars.
You know, the worst thing yet, the worst things yet, the political and monetary and fiscal authorities are very, very good at finding scapegoats for problems of their own creation.
They're very good at it.
And boy, I'll tell you, we've already lit the fuse on new wars, broader wars in the Middle East.
I mean, it's almost impossible to keep count of how many wars we're in today.
And so it's very easy for them to blame our problems on foreigners, on oil producers overseas, whatever it may be, and to blame it on Muslims here.
Sorry, I was just chiming in.
Muslims here, too.
Yeah, sure.
Well, and it seems like, too, that they can't ever raise taxes for the war.
If Obama said, all right, we've got to do this Libya thing so bad that everybody's going up five percent this year or whatever, that'd be the end of him.
So instead, he just doesn't worry about it because he can borrow it from somebody or the other.
The Fed has always been the enabler of these foreign wars, ever since the beginning.
I mean, the Fed kicked in just in time for World War I. Had you gone to the American people and asked them to finance World War I, they would say, what is this war about?
They'd have demanded some answers on what Americans are supposed to spend money to go fight for what reason, what is the definition of victory, who is the enemy, how many lives we're putting, how much money are we going to put up for.
But instead, they didn't have to do that.
They had the Federal Reserve to create money, and they virtually doubled the money supply to accommodate World War I, and doubled the price level of consumer goods in the American society.
That was in the first couple years of creation of the Federal Reserve.
How does that compare to the last decade?
How does that compare to the last decade in the George Bush years?
Look, gross domestic product in this country hasn't changed.
In other words, the American people are not any better off.
Eight or ten years have gone by, and the American people are not any better off.
Nothing gets better for the American people.
But the debt has exploded.
We've gone from under six trillion when Bush became president to a visible debt of 14 trillion now.
Well, that's all Obama's fault, because he's a Democrat.
I saw it on TV, right?
Yeah, that's right.
And I will tell you, it is my view that as long as people persist in looking at these things through partisan lenses, they will never, never get clear.
I mean, I marvel at, you know, Republicans beginning to dig their heels in on Libya, who never uttered a peep about Iraq.
That's amazing, isn't it?
Yeah.
Situational ethics.
Yeah.
Well, the one silver lining of losing the peace movement, or much of the peace movement with Obama taking office, is that at least it kind of preempted the whole, uh, depression is Ron Paul's fault, because George Bush is Ron Paul, like Herbert Hoover and Lausanne Faire caused our crisis.
At least, because people can't remember the George Bush years, that would probably stick if they could.
But instead, they blame Obama, the big government socialist, for our problems.
So at least, you know, Ron Paul and free market economics is playing the dissenting opposite argument in the public sphere right now.
We got that going for us at least, Charles, and you're a big part of that.
The dollar meltdown is on the bookshelves.
I'll ask about your new book next time, I guess.
