Sorry, I'm late.
I had to stop by the Wax Museum again and give the finger to FDR.
We know Al-Qaeda, Zawahiri, is supporting the opposition in Syria.
Are we supporting Al-Qaeda in Syria?
It's a proud day for America.
And by God, we've kicked Vietnam syndrome once and for all.
Thank you very, very much.
I say it, I say it again, you've been had.
You've been took.
You've been hoodwinked.
These witnesses are trying to simply deny things that just about everybody else accepts as fact.
He came, he saw, he died.
We ain't killing they army, but we killing them.
We be on CNN like, say our name, Ben, say it, 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 Mike Swanson.
He runs wallstreetwindow.com.
And of course, he wrote the great book, The War State, which is a great history of the rise of the military industrial complex during the early years of the Cold War.
And yeah, you'll like reading that.
But wallstreetwindow.com, that's where he gives his investment advice.
And I'm actually reprinting one of these at the Libertarian Institute today, which I guess, full disclosure, as you all know, because you hear it every day.
He's an advertiser on this show.
But this is no infomercial.
I just got real questions.
So this is called Today's Federal Reserve Rate Cut Marks the Start of a New Financial Era.
And that's, oh, my God, I don't like the sound of that at all.
That's from, what, two days ago there.
So I guess, first of all, give us the shortest sort of thumbnail thing about the basic take on the Federal Reserve rate cut.
How far did they cut?
What did they cut?
And in what context?
And then get into your speciality here, what it really all means.
Yeah, sure.
Well, on Wednesday, the Federal Reserve lowered interest rates for the first time in over 10 years.
The last time they lowered interest rates was 2008.
And then they started doing these so-called quantitative easing programs also and increased them over the years.
And that was where they were basically issuing money out of thin air and buying bonds from the Treasury Department to help finance the deficit and banks and whatnot.
And that's a program that they started to say, we're going to run this off and do less of that.
So what happened on Wednesday was they also announced that they're going to stop the runoff of that program.
But the bottom line is that this is the first time in 10 years that they've made these sort of changes where they're doing an easier monetary policy with the Fed funds rate.
And what does that mean?
Well, when they announced the decision and now the Fed funds rate, for those that don't know, I should add that that's the interest rate that banks charge each other.
And the Federal Reserve charges banks.
So banks have to deposit a certain amount of money with various Federal Reserve banks.
And they also can borrow money, too.
And this is the rate that they do it at.
And it's really a short-term interest rate.
So as we're speaking, that target rate is two and a quarter to two and a half.
And the Federal Reserve Chairman Powell, Jerome Powell, when he announced this decision, he gave a press conference.
And he said that the reason that the Federal Reserve is doing this is as insurance against a future recession, that there's been signs that the economics expansion since 2008 is slowing down.
For example, the GDP number for the second quarter came in around 2 percent, which is lower than was expected and below 3 percent, which when Trump got in office was kind of what people were thinking.
Oh, we're going to have 3 percent growth now with the combination of tax cuts, increased government spending.
So the economy is sort of slowing down.
The world economy, definitely parts of it are slowing down.
But this is all stuff that's not a shock, because last year various financial markets were forecasting that.
The bond market, the yield curve got inverted.
That's a reliable indicator of a slowdown.
So they're basically responding to these sort of pressures.
Now, what Powell said that is interesting, noteworthy or whatever, is he made the argument that they are seeing this as one to three cuts before the end of this year.
And then they would stop and just see what happens, see if there's a real slowdown in the economy where they'd have to do more or if they would, in fact, be able to raise them back up.
And he was suggesting that, hey, this is what the Federal Reserve did in the 90s when Alan Greenspan was in charge.
So this is kind of similar.
This isn't, in other words, like 2008 where everything just collapsed.
We're just doing a small change and we're going to see what happens next year, basically.
Now, the problem or the thing about this in the long run is we're already at a really low level on this.
So in 2007 and 2008, when the Fed lowered interest rates, the Fed funds rate started around 7 percent.
And also in 2000, in that rate-cutting cycle, it was even higher.
So we're starting at what is a really low level.
And that means that the Federal Reserve, when it lowers rates, it doesn't have far until it gets to zero.
And if that were to happen, if we have a recession and we see the rates go down, then they're going to have to do some extreme measures, do some really big quantitative easing or something.
And that's what I've put in there.
This is the start of a new big cycle in the markets.
I believe last year was when the stock market fell 20 percent, that that represented the warning of changes coming.
Now, the stock market came back more than I thought it would.
There's no doubt about that.
I didn't think it was going to make a new high, but it did.
But here we are with the real important thing is what's going on in the Federal Reserve.
Well, I mean, I guess I'm always just looking at 1999 and 2008 and the aftermath of each.
Well, the bubbles before them and then the aftermath of each as my kind of measuring stick for how this works.
So in that sense, the question is, is it 2007 right now or it's 2008 right now?
Because it sounds like what you're saying is this is sort of the last ditch effort.
In fact, you have this paragraph in your piece where you say, you know, the interest rate cutting cycle.
I guess they had been raising the rates, you know, from 2005 or something, a little irrational exuberance.
They were trying to calm that down.
But then by the time of Bear Stearns and all that, it sounds like you're saying they started panicking and started lowering the rates again to try to prevent the collapse.
But then it almost sounds like you're saying that caused a collapse or it helped lead people to believe that the bear market is coming.
Here it comes.
Or otherwise, they wouldn't be trying to cut the rate as bad loans are being called in and all of this stuff.
But so anyway, I don't know.
And I don't keep track of the numbers at all.
So what the hell do I know?
Well, one of the things I was really thinking about, and this is provoked by an article, I'd suggest everyone read it.
It's by Ray Dalio.
It's titled Paradigm Shifts.
And he was one of these giant hedge fund managers who made a lot of money in 2008.
So he's become famous.
And this article is real interesting because he makes a comment in here that, you know, what we all do is we kind of look back at the last, you know, in our lifetime, what we've experienced.
And as you said, we've had these big bubbles that busted and the stock market crashed.
And so it's easy to expect the same thing to happen again.
And that's sort of what I've been doing myself over the past couple of years, like thinking, oh, we got a big bubble in the stock market.
And the valuations in the stock market are actually higher than they were in 2007, judging by things like the price to sales ratio of S&P 500 companies, the S&P 500 and so forth.
You know, you've just got these giant valuations.
And also the debts, of course, are bigger.
I mean, the government debt's bigger.
The balance sheet of the Federal Reserve is bigger and so forth.
So it's easy to think, well, there's going to be some sort of repeat of what happened in 2008 or even 2000, some example.
And I know people who also, you know, they're not just regular people that kind of think, oh, the real estate's going to crash again, because that's what they knew people that happened to.
But what this guy argues is that, yeah, we are on the edge of something different, but it's not going to be the same thing exactly all over again.
And the biggest factor is going to be the Federal Reserve eventually being forced to print money like in a way we haven't seen as a result of the government deficit, which now, you know, is over a trillion dollars.
And when Bush was president, it was a trillion dollars when he left office because of TARP.
And Obama, his first year, he did a trillion dollars because he had all the stimulus.
But it's a trillion dollars now without a recession.
And that begs the question of when a recession does come, you know, that deficit will probably explode and cause a lot of problems.
Now, for me, I've always kind of run on the model in the back of my mind like, oh, this could be like 2008 with the stock market or 2000 because we had horrible bear markets.
And in 2008, I was someone that shorted the stock market.
So at times I've tried to short the stock market when I see signs of a top, thinking something similar is going to happen or start.
But the thing he makes an argument for is that if the Fed ends up printing money like crazy and he's not saying this is going to happen this year and it would take interest rates going to zero first anyway.
But if we come to that in the next decade, then the real thing that will happen, that we'll experience, is high inflation.
And that may actually make it so the stock market doesn't fall like it did in 2008 or even 2000.
You know, we still see drops here and there.
We saw a 20 percent drop last year.
But if there's a lot of inflation, it'd be more like the 1970s in a sense, where stocks would be something that people put their money in because of inflation.
Now, personally, I think it's hard to predict all these things and figure it all out.
And I kind of stick when it comes to trying to make money to the charts and the trends and so forth.
And the most obvious thing I see is gold and silver have broken out.
Gold went through $13.50 in June, which is like a high for the past four years.
And both are poised to benefit anyway from lower interest rates.
That's what happened in 2007 and 2008.
And from the decade before that, gold and silver did better than the stock market.
So that's what I'm primarily now focused on when it comes to my own money, trying to play those trends and so forth.
But it's just – it's really worth reading this article, his model of every 10 years the financial cycle is different than it had been.
And it's not just that.
I mean politics seems to be a little different every 10 years.
I mean we're in a different era now than when Obama was president, which was different than when Bush was in different ways.
And that would suggest to me too that whatever happens, whoever wins the next election could be remarkably different environment than what we're experiencing now.
And foreign policy is like that too, which you know a lot more about than I do.
But I mean we're in a different time than when Bush was president, even with the madness going on in Iran that makes the headlines.
I created the company back, I don't know, a generation ago.
I sold it to Rick McGinnis and he's done a great job with the company ever since.
They got what you need over there at thebumpersticker.com.
Well you know Dick Cheney said deficits don't matter, but it seems like that's true until it's not anymore, right?
And at some point – do you have the equation or whatever?
How long at this rate before the interest on the debt every year is half the damn federal budget?
Well I don't have that off the top of my head, but I've seen the projections from the – Because it's hundreds of billions of dollars a year.
Yeah, yeah.
Well the government, the Congressional Budget Office projects by the end of the next decade that's going to happen, you know, without so-called entitlement reform and all these kind of things.
So that's already the baseline.
Now Trump or his administration, when they passed the tax cuts, were changing their projections, claiming that if we got more economic growth then that could be pushed out or something.
And whoever the president is always seems to do that, but that's the one thing about this moment is the weakness in economic – or the weaker than expected GDP growth and the fact that the Fed is lowering interest rates suggests to me that those rosy predictions aren't going to happen.
I mean whatever the reason is, I'm not going to – is it because the tax cuts weren't as effective as they thought or is it because of trade tensions or is it because the economy has been sort of stagnant anyway for ten years?
That's what I believe is a big factor.
But trying to finger or blame something, I'm not really trying to personally do myself.
Yeah.
Well, you know, in the Bush years it was said all the time that inflation is really low.
But then the Austrian school guys were saying, yeah, but that's because you're not right.
Because you're asking about price inflation across the board on essentially everybody's market basket of whatever the hell, but that's not how this works.
Instead what you get is inflation in certain sectors, otherwise known as bubbles.
And so in the 90s, of course, at the end of the thing, a lot of it was going into housing, but a lot of it was going into all these tech stocks.
And then it was the stock market and the NASDAQ that crashed as a result of that.
Then as Ron Paul said at the time, we're not having a real correction now because you're just inflating another bubble in housing.
And yet it took another eight years before that bubble popped.
But you could see in the Bush years that fuel and groceries and housing is more and more expensive.
And a lot of people like that.
If they own a home and magically it's getting more and more valuable, the more worn out it is, the more time goes on.
Unlike their car, which depreciates, for some reason their house just keeps appreciating.
And so keep voting for the status quo, guys.
Everything's working out for you.
But meanwhile, nobody else who's on the outside, they have this huge barrier to entry with all these massively inflated prices.
And then anyway, that's beside the point, because the real point is, then it all comes crashing down at some point.
So my question is, is it a housing bubble right now?
Or it's a housing bubble and or what other categories of bubbles are really being pushed right now with all the money they created in order to create a soft landing from the last crash, from the last bubble?
Yeah.
Well, the real bubble, like I like I was saying, you know, in my mind, I'm thinking all the stock markets, the bubble, right?
Because that's what we experienced the last two times that a crash.
And some people are as you just asked about real estate.
But the Fed and you mentioned inflation to the Federal Reserve.
And I was surprised, actually, they didn't say this Wednesday as one of the arguments for cutting rates.
But this has been something they talked about in interviews, different Fed officials.
There's articles in Wall Street Journal.
It'll probably become a theme again.
But that is that they claim inflation is low and it's too low.
And they wanted the CPI number to be growing at 2 percent.
And it's like one and a half.
And it's too low.
And it's sort of like what you just said, that they've said this before.
You know, there's no inflation.
So we've got to keep lowering rates.
And that's sort of one of the justifications they've put out there in the media.
They didn't really go on it on Wednesday.
But, yeah, I think the Austrian school is exactly right.
Even though in some way there are some places you can look and see low inflation.
In reality, they've created bubbles.
So where is that at?
And this time, the biggest bubbles in the economy, besides government debt, which, as you said, Dick Cheney and others would say, well, what does it matter?
But the biggest ones are in the corporate bond market.
And that's really what's helped drive the stock market up.
So what happened is, starting around 2016, the Fed did another one of these quantitative easing programs.
And central banks around the world also did it even bigger in the beginning of 2016.
And at that moment, already low junk bond rates for corporations.
These are bonds corporations issue.
They made a record low.
Never before in 100 years at least.
And companies just took advantage of that and issued more and more and more junk bonds to investors and used that money in a lot of cases to buy their own share of stock back, reducing the shares outstanding, making their stocks go up.
And that's been a big driver of the entire stock market.
So it can be dangerous because if a company does that too much, when things turn down, they've got all these debts, they can run into trouble.
And in fact, that happened to some companies in 2008.
So to me, that's actually the biggest risk.
The other biggest bubble in the economy, which is linked to this, is private equity companies.
So in the 2000s, I had a small hedge fund with $5 million in it.
And there was a boom in hedge funds for a couple of years.
And I was part of that.
There was like 5,000 hedge funds.
Now, that hedge fund industry isn't anything like it was back then.
Now it's all dominated by a few small hedge funds with hundreds of millions, sometimes billions of dollars in them.
And if an individual tried to set one up, there's a lot more cost to it.
It's more regulated.
And you're not going to really get investors unless you are linked in with some big institution.
And what's happened is the new big thing isn't hedge funds, but private equity funds that are buying up other companies.
And they use leverage to do it.
Then they'll try to flip it to someone else.
And this is using borrowed money and leverage in a giant, massive thing that's just taken off like crazy.
And it's sort of linked together with that junk bond situation.
So the two of these is where I think the real bubble is.
Not so much in the real estate or the banks this time.
Yeah, well, I don't know.
It seems like if they're going to inflate, they should give some of that money to me.
I don't know.
I always thought that was unfair that some of us get to create money out of nothing, but others of us don't.
Hey, you want to maybe open a bank together with me?
Well, that would be a good idea if you figure out how to do it.
Because I actually, I mean, it sounds funny, but I looked.
The worst case scenario would be some extreme inflation like Turkey is experiencing now.
Well, you know, David Henderson says, no, they'll just repudiate the debt.
They're not going to hyperinflate.
They know better than that.
They'll just say, bondholders, you're screwed.
We're going to start over.
Well, it's funny.
That is what.
And that would be funny.
I'm sorry, go ahead.
I don't know what would happen if they did that.
The Soviet Union did this after World War II in 1946 or 1947.
What they did is they just said, OK, all the debts you got are we're devaluing our currency by 90 percent and wiping out all the debt.
Where is what the United States did.
We had the Marshall Plan and all these things to help Europe finance themselves out of it.
They just devalued 90 percent overnight.
Their currency.
And that would be how you would repudiate the debt overnight.
You just say, OK, boom.
So it would still impact the value of your dollars and everything.
It would just happen overnight instead of over several years.
It's made some kind of.
I mean, there's still be consequences.
You'd wake up with, you know, less money than your money would be worth less than it was the day before.
Would it be a clean break and a fresh start, though?
Or I mean, I'm not sure.
It doesn't sound like you really prefer one method to the other.
Well, I actually think this is that likely to happen.
But I think repudiating something overnight would be better than dragging it out for a long time.
You know, because, I mean, it would be shocking to people.
But the differences, like from a market or psychological perspective, if it was done overnight, it would be shocking.
You know, people would have a lot of their savings wiped out, you know.
But that's what they get for investing in the national government.
Yeah.
But what would happen is it would happen overnight.
They'd wake up the next day and they'd be so shocked.
They wouldn't really expect it to happen again.
And that's the problem with doing it slowly over, you know, let's say three to five years.
People would feel like it's never ending and keep expecting more and more inflation to come.
You know, that's sort of what happened in the 70s.
And Paul Volcker, I mean, he had to raise interest rates to 20 percent.
Because every year that there's inflation of 10 percent or something or higher, people just keep thinking it's going to be like that the year, the next year, the next year, the next year.
So he had to shock everyone with sky-high interest rates.
So, you know, that's kind of what it takes to change the psychology of people.
You know, right now, you know, I'm saying all this stuff and it seems so far out that we could have inflation of 10 percent or something a year.
I mean, it sounds crazy.
And no one, because we never experienced that.
You know, I haven't.
It's been since the 1970s.
And no one, you know, it's just so.
So that's like that would be the big difference.
So the sort of academic point of view here would be that, no, we just have this dynamic economy that is so productive and we just need to make sure it stays that way and gets even better.
And then it's fine, essentially.
It's a race for the productivity of the economy to keep up with the expansion of the money.
That's the lifeblood of it all.
But so it can work if whatever you check all their right boxes and do it their way, they would say, right.
Well, the only time I've really heard an argument exact that might come close to that in the in the 90s when they did some interest rate cuts in 98 and 2000, I think, 95 or so, and everything went back up.
There was a financial crisis in Russia in 1998.
And they were saying Alan Greenspan saved the world and Robert Rubin and so forth.
And they kind of mastered mastered it.
And there's talk like that a bit.
Ben Bernanke around 2006.
And I don't know.
Well, I just went to community college.
But that was essentially their explanation for it all.
Was that, you know, I mean, if there's a crash that, yes, you have to do this counter cyclical spending and including sometimes with inflation and government monetizing debt in order to give everybody a soft landing and a boost to keep going again.
But then the idea is that the real economy catches up with that because of free market capitalism working so well and all of that.
And so it makes it OK that the government is sort of intervening by dumping a lot of new money in because the economy ends up making it true, even if it started out counterfeit.
Does that make sense?
I would say it was taught to me.
Yeah, I'm not saying not by the Austrians.
I mean, the reason I don't talk about it in community college, basic one on one stuff.
Yeah.
The reason I don't believe that is because in the 2000s, I was watching CNBC whenever Alan Greenspan would have a meeting and watching Ron Paul talk to him and basically question question that.
I mean, that's how I learned about libertarianism, actually, is through him.
And he would point out in every one of these things like, look, you don't know the perfect interest rate to peg this at.
And I think that's right.
The system is too complicated for someone to manage so exactly.
But yeah, I mean, I heard some arguments like that back then where they were saying things like, well, because of the Internet, they got actually Greenspan sort of made that argument that because of the Internet and computers, we just have so much more information that we got a better idea of exactly what's happening.
So therefore, we can manage things better.
And so can places like Walmart or just in time inventory and all this kind of stuff will smooth out the business cycle.
But I think events proved that theory not to be real.
Yeah, certainly can't keep up with their money machine.
And, you know, my funny Ron Paul anecdote from that time, like I say, this is how I knew about the stock market bubble in the 90s and how even right after it, I was still right on with, yeah, but see, now it's just a housing bubble.
And I remember talking with people in my cab about it.
It was all because I was watching Ron Paul on C-SPAN essentially that whole time.
But what's funny about it is, is that, of course, I was way too far ahead of the curve.
And so my information was useless.
And I remember telling some friends of mine in like the year 2000, no, don't buy a house now.
Don't you know it's at the top of the bubble?
You don't want to do that.
And they're like, yeah, yeah, yeah.
What do you know about it, Horton?
You don't have any money.
And then, you know, of course, they bought a house and the value of it appreciated for eight years.
And then it never did crash anywhere near down to the price of what they bought it for around here.
The bubble wasn't that bad around here in 08.
And so if they'd listened to me, they would have totally lost out renting that whole time instead of buying that house they've been living in ever since then.
I was right, but too clever by half, basically.
Yeah.
Well, I mean, I saw other people in other parts of the country, though.
They would have been better off to listen to what you're saying, especially in Las Vegas or all kinds of places, Miami, all kinds of places.
Yeah.
Even then, even if they listen to me in 2000, huh?
Oh, in 2000?
I don't know.
I don't know.
But anyway, you know, that's part of the problem of having access to Ron Paul's articles is he's really good on a lot of things and way ahead of the curve on, you know, essentially everything under the sun.
So if you want to get on the right page of what's going on around here, tune in for sure.
Well, one thing to be said about that, though, is that nobody is able to call or predict every single one of these markets accurately.
I don't know anyone who has.
And like you said, you can be right about a general thing and then not exactly have the time.
Well, you said at the beginning you made a really good bet in the fall of 08, right?
Yeah, yeah, in fall of 08, yeah.
So somebody can, you, be right about this stuff.
Well, I'm not, but I'm not, yeah, but I'm not in the fall of 08.
But, you know, like right now at this moment, I'm not sure.
You know, someone told me what to do with the stock market.
I don't know.
You know, I don't know.
I don't see much upside potential to be excited about.
But I also don't think it's going to crash over the next 90 days.
So I don't see anything to do.
You know, I mean, that's the thing.
You can't figure everything out and about everything.
Yeah.
Well, and that was always Ron Paul's argument, too, that those people in charge, they didn't know either any better than some Soviet commissar.
You know, there was famously back when Ron Paul was running for president around that era, I guess a little bit before that, where Jon Stewart had interviewed Alan Greenspan on The Daily Show and said to him, well, hey, man, how come you set the interest rates?
You know, set the prices for everything else, but you set the prices for money itself.
It seems like you always set the price in a way where it hurts grandma to the benefit of some Wall Street guy.
Which, hey, that's a pretty good analysis for somebody who is, you know, essentially a progressive.
And, you know, I'm not exactly sure who gave him that talking point, or if he had just recognized that himself, that a low interest rate obviously hurts grandma when it's held artificially low.
And then you say yourself that the reason you're doing it is to make the stock market go up.
That doesn't really seem fair.
And I thought, it's a free market around here.
Why the one big exception, Mr. Greenspan?
I don't even remember what Greenspan's excuse was, but it didn't hold up at all.
Well, one thing about these guys being experts, too, is the Federal Reserve has released transcripts of its meetings.
Not the ones of recent years, but ones going back decades.
So you can read transcripts of what they were saying to each other in the 1970s, and even 2008.
And one thing about this is, if you look at the 2008 one, in 2007, they didn't understand what was going on.
Because there was a meeting, they did an emergency cut in January 2008, which I'll never forget it, but they lowered the interest rates by three quarters of a point before the stock market opened on the day after Martin Luther King Day.
And I was scared.
Because the stock market in Europe was open the day before, and basically was down like 10%.
And our market was poised to gap down 10% too.
And such a big move could trigger panic selling or a crash or something.
And I didn't know how bad things were.
And that scared me.
But they lowered rates by three quarters of a point.
And I thought at the time, saved things from crashing that day.
And that scared me so much that I went and read up on what the heck might be going on, and found out that the banks had all these worthless mortgage securities.
There are articles about it.
And that's when I found out.
But they released these transcripts of this meeting, and they were just talking nonsense.
They were only responding to the futures falling, and the people in the Federal Reserve meetings were, I'm talking about the board, Bernanke and other board members.
One of them was saying things, well, our computer models say everything's fine about the economy.
And they weren't seeing the real problem that was apparent months later.
So they don't really know what's going on themselves.
Well, I like telling the story of that summer.
And I'm almost certain this is in the new Ron Paul book coming out that we talk about this.
Well, maybe not.
Anyway, but certainly it's in the archives.
We talked on the show in the summer of 2008 about how I was reading Gary North at lewrockwell.com.
And especially at that time, I wasn't really reading very much economics at Mises.org, but I was reading LRC every day.
And Gary North is, of course, a student of Mises.
But not only that, he's a specialist in watching all of the charts of the money supply and M1, M2, and M3 and all these things that I don't know the exact deal of what they mean.
But I do know what it means when he says, oh, my God, look, everybody, at the vastly shrinking money supply.
Bad debts are being canceled all across the board right now, big time, and there's more coming, and there's a massive crash coming, and there's no way to stop it now.
And whatever you have, bet against it and all of those kinds of things.
And that was like in August of 2008.
And then, you know, exactly four weeks after that article was published, something like that, the whole thing came crumbling down.
Yeah, I mean, it was out there.
The story about what was coming, it was out there.
And in fact, Barron's had a front page story around that same time.
Might have been a month beforehand, but I know it was before September.
Right on the cover saying that Fannie Mae and Freddie Mac were bankrupt.
And we're going to go bankrupt in the fall.
It was going to have a tipping point.
So that was right there, too.
And at the time, you know, they had more mortgages or held more mortgages than anybody.
But the Federal Reserve Board is saying, I don't know what you're talking about.
Or they're not even noticing these headlines.
Yeah, it's like they weren't even noticing it.
And then when things did fall apart and they started to react to that in the fall, you can read, again, it's been a couple years since I've read these transcripts, but they were like laughing and just saying things like, we're going to make this, you know, they're talking about the TARP program, we're going to do this, we hope it works.
And they're like laughing, you know, like a doctor would laugh.
Like watching MASH, you know, they're all laughing while they're operating.
Right, nervous laughter from the pressure.
Basically, yeah.
And then there's this epic episode where, oh, it's gone.
And then it shows the Federal Reserve Board and they cut the head off a chicken and have it run around this game board and wherever it dies.
I've got to look that up.
Problem, problem again.
All right, cut the head off another chicken.
Let's see where it ends up.
Yeah, all right.
What a lot of fun.
What a great job being the commissar of the currency.
And nobody ever blames you except you and me and some guys in Alabama.
Yeah, that's about it.
And that's, you know, politically, you said something a few minutes ago.
You know, yeah, people have a license to get money from the government, basically, low interest loans, banks, print money out of thin air.
So why can't we?
And, you know, when it comes, that's what I'm afraid we're going to see, arguments like that from the left, so to speak.
Oh, and I wanted to ask you.
I just gave her one of guaranteed incomes.
That's what they're basically saying.
Well, you know what?
So, you know, there's this whole thing, this modern monetary theory that says that, no, no, no, government can create all the money that they want.
And all these old rules that say that they can't are archaic.
And you don't understand the real science of money.
And it actually does grow on trees.
The federal government grows it.
And they can, if they can do it for Lockheed, they can do it for all of us.
But they can't.
Yeah, I mean, it's just total nonsense.
But I think what could happen is, the big thing for people to watch for isn't really the stock market, but it's if interest rates do end up, even if they cut three times, that's fine.
But if they end up going beyond that, close to zero and start some new program, then, you know, the next decade is really going to be defined by inflation.
But these people with this monetary market, what is it, modern monetary theory, what will probably happen is, they'll use that theory as the basis to do this quantitative easing money printing thing of some form or another.
They might call it something different.
But they'll just say, we're just going to print money and do infrastructure.
We're just going to print money and do this.
And we're in a new era.
I mean, it'll be some strange argument used to make some crazy, you know, they're not going to do the same thing as 2008 with TARP.
They'll call it something else.
But isn't that Green New Deal?
Yeah, that's the whole basis of it.
Yeah, one of these things, a guaranteed government job for anyone who wants one.
Oh my God.
Like on a SWAT team, is that it?
Or on a tax collection?
An interesting thing about this is like that Yang guy, I think, has said, just give everyone a guaranteed income, a couple thousand dollars or something.
And that's sort of the same idea.
We're just going to print money out of thin air and give you a guaranteed income.
I like Lew Rockwell's idea where he goes, how about we give a guaranteed income to all of these politicians?
Pay them a billion dollars a year each to just go on vacation and leave us alone.
Is that enough?
We'll pay them a billion.
No problem.
Cold hard cash, transferred right into your Swiss bank account if you would just resign and go away.
That would be a dream, wouldn't it?
Seems fair to me.
It'll probably be cheaper in the long run, too.
Yeah, it's like paying the North Koreans some chump change to not make nukes like in the Bill Clinton years.
Meh, you know what?
I'm not usually for welfare, but in this case it could be worse.
It's time.
No offense to the Tahitians, but somebody's got to put up with these people.
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You know, as a regular newshound, anybody who just spends time around the headlines in the 08, 09, 010 era there saw just a mass epidemic, essentially.
There's a lot of algorithmic bias in this kind of thing.
They're picking and choosing and showing us what to see.
Oh, yeah.
So I'm not a scientific type of a mathematical graph here.
However, it sure seemed like there's a rash of murder suicides all across this country as people are completely bankrupted and helpless and have no ability to treat their family's cancer.
Oh, for sure.
I mean, I know several people and I had a friend of mine, his neighbor hung himself in a tree.
It's a real thing.
And, you know, man, I try to mention this when I can because it's so telling.
This is in the book Secrets of the Temple by William Grider from the Washington Post.
And it's essentially a liberal criticism of Volcker for raising interest rates so high, which, as you were explaining, was required at the time of the stagflation, you know, leading into the Carter years there.
But either way, I mean, the point is still the same where he talks about how at the Federal Reserve they keep all these charts and graphs and they keep very close eye on suicides and divorces and, of course, business bankruptcies for all different reasons, but also in their category of research for the social consequences of their policies is the mucks of the USA.
How many kids are going off into foster care?
How many dads are blowing their brains out?
How many, you know, what all is going on?
How bad is society suffering?
And they know that at the end of the sentence it's due to their policies.
How far can they push it before it's just too far?
And so, of course, the argument is that Volcker was trying to mimic and deliberately bankrupt a bunch of marginal enterprises that didn't really belong in a free market and try to get a fresh start there.
You're talking about severe consequences, but, of course, the same thing applies for all of the crashes, low interest rates and high and all the booms and busts and all the crises that they cause for the American people.
And they know it's their fault.
And, as he explains in the book, it's their valor.
That's what makes them, like the SS guys who are saying, oh, I am such a brave person that I have to bear the burden for my country of massacring all these innocent civilians rounded up in the town square, you know, and it's there.
They have to do this terrible thing, but they're such brave people that they're willing to go through with it.
And that's just how they look at their job.
And they are cutting straight to the chase there, right?
You know, modern day Dan Rather, whoever's sitting in that chair now, they never explain it that way.
Yeah, government policies lead to X number of suicides.
Just how far can they push it?
They don't talk about it that way.
But inside the temple, they do.
Well, you know, today, in either the Times or the Washington Post, there is this big story that the Federal Reserve, and I've never heard this before, so this is new, but they're now engaging in some sort of propaganda campaign to burnish their image.
And they're holding like roundtable meetings across the country to talk about social issues like income inequalities, one of them, but also how many women are employed and even like what is it?
Gay, lesbian issues.
And one of the Federal Reserve banks, they've put one of those rainbow flags on it.
And the whole article's about they are becoming more sensitive to their image and want to do whatever they can to, you know, to look like they're progressive or whatever in the eyes of the public instead of just, you know, just describing it these mean money grabber people or something that are hurting society or are willing to do so.
They're, you know, seem to be preparing the way to try to do this big PR campaign.
Or they are doing one and hoping that's going to help them going forward.
Yeah, and you know what?
It'll probably work wonders.
Why not, you know?
Thank God they're here to control the money for us.
It's the greedy corporations we're in charge.
All right.
Anyway, I got to let you go because it's time for me to hear you, Mohammed Sahimi, about America's Treasury Department's economic war against the people of Iran.
Speaking of necessary evil government powers to control the economy for everyone's benefit.
And we'll learn about people dying of easily treatable diseases under non-sanctioned circumstances.
That's the other side of it.
Absolutely.
Same kind of same group there, the Treasury Department and the Fed and the rest.
Oh, one more thing here.
Donald Trump has been so overt politically in trying to pressure the head of the Fed to lower the rates and don't you dare raise them and this kind of thing.
Does this prove that that really does work and that, of course, they're not independent?
They do serve ultimately at the pleasure of the president.
I think they would have lowered rates anyway.
Yeah.
But, you know, for sure.
I mean, they respond.
They really do seem to respond to the Treasury, what the Treasury bond market's doing and stuff.
But his statements after the after the Fed met yesterday or Wednesday, he talked about putting on tariffs on China.
He tweeted angry about what the Fed did that they weren't aggressive enough.
And he said, he's going to put tariffs on China.
And the impact of that is it's shifted the odds to having like a certain three rate cuts instead of two.
So I do think he wants Trump lower interest rates as far as the independence of the Fed.
I actually think it is going to erode over time.
And if especially if this sort of thing happens, if they go to interest rates at zero and have to do, you know, extreme money printing stuff in the next couple of years, if that all happens, then the Fed's monetary policy will become kind of meaningless.
They, you know, they won't be able to raise interest rates and they'll just become kind of politically irrelevant.
Yeah.
All right, guys, that's Mike Swanson, WallStreetWindow.com and check out his great book, The War State.
Thank you.
Thanks again for coming on the show, Mike.
Thank you.
Great talking with you.
All right, y'all.
Thanks.
Find me at LibertarianInstitute.org, at ScottHorton.org, AntiWar.com and Reddit.com slash Scott Horton Show.
Oh, yeah.
And read my book, Fool's Errand, Timed and the War in Afghanistan at Fool's Errand.us
