09/20/13 – Charles Goyette – The Scott Horton Show

Hey y'all, Scott here.
Man, I had a chance to have an essay published in the book Why Peace, edited by Mark Guttman, but I didn't understand what an opportunity it was.
Boy do I regret I didn't take it.
This compendium of thoughts by the greatest anti-war writers and activists of our generation will be remembered and studied long into the future.
You've got to get Why Peace.
You've got to read Why Peace.
It features articles by Harry Brown, Robert Naiman, Fred Bronfman, Dahlia Wasfy, Richard Cummings, Karen Gutowski, Butler Schaefer, Kathy Kelly, Robert Higgs, Anthony Gregory, and so many more.
Why Peace?
It does.
War is the health of everything wrong with our society.
Get Why Peace down at the bookshop or Amazon.com.
Just click the book in the right margin at ScottHorton.org.
All right, ScottHorton.org is the website.
Keep all my interview archives there.
Got the chat room up and going today, well, like every day, ScottHorton.org slash chat if you want to hang out in there with the guys.
And yeah, you can follow me on Facebook, Twitter, and YouTube.
I guess, you know, it's true now I've been tweeting more than Facebooking lately.
I thought I liked Facebook better, but I don't know.
I'm wasting time on both.
I should be reading books.
Anyway, you can follow me on Facebook, Twitter, and YouTube at slash Scott Horton Show.
All right.
So our next guest is our good friend Charles Goyette.
Even though he doesn't have a radio show anymore, he's still the most independent talk show host in America, and actually sort of kind of does have a show.
He's the host of Ron Paul's America, which is pretty awesome even if it ain't quite a radio show.
I don't know what the hell you call it.
But anyway, welcome back to the show, Charles.
How are you doing?
Scott, my friend.
It's always great to talk to you.
Well, it's very good to have you back on the show.
I'm going to tell people about your books for a second.
Charles wrote a couple of books.
One of them is The Dollar Meltdown.
That one is big and yellow and has a melting dollar on the front, and you can find it at your local bookseller and trade melting dollars for it.
And then the second one is Red, Blue, and Broke All Over, and it's about the decay of the American empire and that kind of thing.
It's great.
Oh, and it's also, it's about how all we need is freedom and we'll be all right.
All we got to do is stop acting wrong and everything will be okay.
We don't need a giant project to fix everything.
We just need to stop doing what we all know we shouldn't be doing in the first place for crying out loud.
Isn't that right, Charles?
Isn't that the truth?
I'm watching a Northrop Grumman commercial of all the new highest tech drone air fighters right now.
That's what I'm talking about this, sorry.
It's unbelievable, but you look at this fiasco with the Federal Reserve the other day.
If you think about it, the Keynesians, the fiat money people have had their way in this country for years now.
They had the Bush stimulus program and the Obama stimulus program and the Bush bailout program and the Fed serial quantitative easing, money printing, deficit accommodating programs.
They've had their way for everything and we're still in the doldrums.
We were told that in June 2009 the recession ended, but I'm just looking at the numbers this morning.
Wall Street, of course, is doing well.
You probably talked about it, but the top 1% has seen their income climb to the point now that they are taking over 19% of median household income goes to the top 1%.
For the rest of Americans, median household income is down and not just a little bit.
It's the same thing in Washington, D.C.
Washington, D.C.'s median household income is up.
If you look at the counties in Virginia and Maryland and surrounding Washington, D.C., it's way up.
But for the nation as a whole, median household income is down and it's way down.
The middle class has been squeezed and is being wiped out and it has been going this way really since they severed the last link of the dollar to gold in 1971, but this process has accelerated since 2000.
Nothing has gotten better for the people.
Nothing has gotten better for Wall Street.
Everything has gotten better for the governing classes in Washington.
You just wonder how long the people are going to be willing to put up with this nonsense.
The thing is, we put up with it because we don't understand it.
For most of us, smart guys like you are the ones who talk about stuff like this and we just hope that you guys got it worked out.
The thing is, it seems like you sound money guys are still such in the minority because everybody knows, really, Charles, that inflation is good for the poor, for the middle class, for the debtors because they can borrow $100,000 and pay it back over 30 years.
By the time they're done paying it off, $100,000 really isn't that much compared to when they first bought it and they can own a home and a guy who works for a living.
So he can borrow in dollars and pay back in dimes and it's the creditors, the rich are the ones getting screwed, call it a progressive income taxation kind of a thing that benefits the every man at the expense of the big guy kind of a deal.
I don't care what your numbers say about the reality of the situation.
Who exactly is selling this bill of goods to the people?
It's the governing classes and it's Wall Street.
Yeah, this is good.
But you know, the people, I mean, look, if you want to know how to get out of a mess like we're in, don't you think it makes some sort of a sense to look to the people who told you that you were about to step off the precipice before you did?
That makes a whole lot of sense to me and Mises and the Austrians told us for a long time that when you wipe out a currency, when you destroy a currency in this manner with fiat currency, with central bank, you know, artificial money creation as we have been doing, you end up making the rich richer, you end up squeezing the poor terribly but eliminating, wiping out the middle class.
So it seems to me that, you know, when somebody's selling you a bill of goods like this, you ought to ask, you know, whose bread are they buttering?
But you're right about the American people not understanding any of this stuff that Reuters did or either reported on a survey or did a survey itself the other day about how many people, what percent of the American people have any idea from a list of possibilities could identify even closely what quantitative easing is.
And it was like, it was astonishing, I mean, only 27% of the people could even come close and like 12% of the people thought it was a, was a, was programming software that the Fed used to manipulate the dollar.
I'm talking with Charles Goyette, my good friend, your good friend, charlesgoyette.com is his website.
I'm going to try to remember at the end to ask you, Charles, to tell the people about your newsletter and all of that too, I forgot to say during your introduction.
But the books are The Dollar Meltdown and Red, Blue and Broke All Over and you were describing inflation and quantitative easing, the fancy name for inflation, I think.
If you ask me, that's what it means.
And how that's a war against the poor and the middle class by the elite.
How exactly is that again?
Yeah, I mean, that says it in a nutshell, but the, the, the real, the real key to understanding this is who told you that what has happened now would happen?
It was, it was the Austrian school economists.
You know, when Greenspan and Bernanke professed themselves utterly clueless about the real estate bubble in formation, you know, the, I don't know a single person that employed even the rudimentary elements of Austrian school analysis to the economy that didn't see that coming.
So once they have marched us into the swamp, into this brass, who do we turn to for directions to march us out?
The very same people that marched us in, we're going to buy another map from these clowns, you know, instead of consulting the people that said, Hey, listen, if you do this, you're going to get that.
Sure enough, we got that.
So the people that said, if you do this, we got that.
And we got that.
Say, if you continue on this course, you are destroying the currency.
And the end game of destroying the currency in this way is, is to make the poor worse off, to eliminate the middle class and to make the rich richer.
And I'm looking at each with each passing day now, we're getting more and more statistical confirmation as if you need statistical confirmation that the governing classes in Washington are doing very well, indeed, and Wall Street.
Well, I mean, we're setting new record highs on, you know, on the Dow, new record highs on the S&P 500.
Wall Street is doing great.
We've been stove piping money their way.
Washington is doing great.
You know, it's the Empire City, the capital city of the new Rome.
So all of these places are doing great.
But unfortunately, for Americans as a whole, things aren't so good.
Full-time jobs are being transformed into part-time jobs and, and, and income just keeps going down, down, down.
Well, now, Charles, I got to admit, I think as an Austinite, maybe, maybe we don't usually admit this that much.
But here in Austin, we don't really make that much.
I guess there is a lot of computer money and whatever.
But mostly the government of Texas robs Houston and Dallas and Fort Worth and all the, you know, San Antonio and all the places in Texas where people actually make things at gunpoint and takes all their money and then spends it on the university and on all the government buildings and government jobs here in the city.
And so we all kind of get the benefit of that.
And I think Austin might be one of these places like D.C. and New York that you mentioned where things don't seem that bad.
Apparently, everybody can afford a new truck.
Not me, but everybody else can.
I don't know how they do it all the time.
But things don't seem like they're that bad.
But I also get the idea that, as Robert Gates might say, I'm looking at the war through a soda straw and that there are really places in this country where, don't tell them this is just a recession, not a depression, because things are really bad, especially for minorities and for the young when it comes to employment and even prospects for employment.
Yeah, well, there are, you know, rotating pockets of prosperity and they generally have to do with, you know, either government extraction of money from people who are less prosperous or from, you know, from the distortion of natural economic conditions, the artificial contrivance of interest rates, and things like quantitative easing.
I mean, look, there's no question that we got a little boost in real estate prices.
We got a little activity in real estate.
My wife's a realtor.
I guess that's good for us, you know, glad to see her make more money rather than less.
I think that's good.
And automobile sales, there's no question automobile sales got jacked up a little bit here with the, you know, zero interest rate policies and really, really low interest rates.
And that's good for those pockets.
But you know, there are two sides to every balance sheet.
And the contrivance of interest rates low that have benefited those classes of businesses have been very hurtful to other people, been very hurtful to retirees that now go out looking for more and more risk.
Oh, this is a calamity in the making, looking for more and more risk to generate a decent return so that they can keep alive on their meager savings.
It's been very, very bad for any kind of savers.
It's been very bad for pension funds that are all underperforming because they thought they'd be able to generate normal interest rate returns for years.
And for years, we've had abnormal, abnormally low interest rate return.
So that's another calamity in the making.
There's no such thing as a free lunch.
I don't often quote Milton Friedman, but he liked to use that expression.
If you're going to push down here, something's going to pop up there.
If you're going to artificially contrive interest rates for the benefit of the crony classes, for the benefit of Wall Street, if you're going to help the money-sitter banks reliquify their balance sheet by giving them access to the Fed window to borrow money at zero so they can turn around and loan it to the Treasury and make a couple of percent on it for free without risk, if you're going to do that, there is a cost, and other people will pay that cost.
And so the other people are people like retirees, and there are people like pension funds, there are anybody that saves money.
There are consequences.
There's no free lunch for anything that the Fed does.
So there's this article today in the Pakistani paper, The News, that says that the wars in Afghanistan and Iraq, to cost $6 trillion, they're reporting on a Harvard University study and I guess they're including the cost of rebuilding the military back up to what it was after leaving all their trucks behind and that kind of thing, as well as the medical care for all the wounded and maimed, $6 trillion.
How much is that?
That actually doesn't sound like that much compared to how much our government spends, really, I don't know.
Well, I mean, if you figure, you know, when Bush left office, the national debt wasn't even $10 trillion, it actually just, in his waning days, it cracked over $10 trillion.
This is the visible debt.
Not for real, below the waterline, it's an iceberg of debt.
Just the visible debt that everybody acknowledges, it was less than $10 trillion, today we're $17 trillion.
So, yeah, $6 trillion makes a big, big difference.
If you could have taken $6 trillion out of that debt figure, you know, we'd be a lot better off.
Instead, we're a lot worse off.
But look, it's all, you know, this is all boondoggles.
I mean, I had dinner the other night with a retired military officer who just went touring around the country and staying, as they do, at military bases.
I guess they have, you know, guest housing or visitor housing or something.
And he described to me a boom in construction building on military bases, I think he said especially on Army bases across the country, that would just boggle your mind.
I mean, there is so much money that has flown into the defense budget, you know, that they're just like, spend it before September, spend it before, you know, you have to zero out your budget, spend the money.
And so they're, you know, they're building monstrous edifices and stuff.
So, I mean, yeah, that's another pocket that's doing well is, you know, the military-industrial complex.
Of course, the intelligence-industrial complex has been doing really well, too.
So anybody that's a recipient of government largesse has been doing well.
Unfortunately, there are a lot more people who pay from whom government largesse is extracted than for whom it is received.
I got to say, Charles, I'm pro-edifice.
I think let these people build statues to themselves all day long and keep them busy, you know?
Oh, you know, it probably beats the hell out of, you know, killing people around the world and making enemies for the American people in places that the American people can't even find on a map.
I mean, I grant you, you know, it's better that they, you know, they build, you know, towers and, you know, and turn big rocks into little rocks and dig holes and then fill them up again than killing a bunch of people, but it's a massive waste of the American people's capital.
And that actually, who does the money really belong to?
It's the American people's capital to begin with.
So you not, you know, it's not only you do, you spend it on wasteful things like turning big rocks into little rocks, but, you know, you deprive the people that actually could use that money to create new wealth, new jobs, new opportunities, new growth, new prosperity, restore the American dream.
You deprive them of the money that they need so that you can go about these, these futile little exercises.
Hey, so let's, nevermind the gigantic bubbles and all that, but let's say I have a time machine, but it only goes back to the fall of 08.
And let's say you could really keep the Congress from passing TARP and you could keep the Fed from creating all the new money and, and making all the loans and loan guarantees and all that, and just halt the bailout in its tracks.
And all of them, Citigroup and Wells Fargo and Bank of America and all of those guys all went the way of Lehman Brothers and Bear Stearns and went completely, they cratered like John McCain threatened at the time.
How much worse would that have been, Charles?
Oh my word, Scott, it would have been infinitely better.
You know, we'd have, we'd have had our recession, it would have lasted a year or so and we'd have pulled out.
Look, people think that, you know, people think that, you know, to let these institutions crater is the worst thing in the world.
It's the best thing in the world.
First of all, do you want to, do you want to perpetuate the management of major financial institutions by people who are utterly inept at managing their own affairs and their own risk?
Because that's what we've done.
We've maintained their, their death grip on the, you know, on the financial pipelines of America by keeping them in place and let, instead of letting their shareholders and their boards kick them in the butt and kick them out the door.
So we've kept, and by the way, the sound financial institutions that didn't get caught up in this stuff, that used good judgment, they found themselves at a competitive disadvantage in the aftermath of this stuff because, you know, the, the, the influential, the crony banksters, you know, got free money from the Fed, they got subsidized.
So they had a competitive advantage over companies that behaved well.
Now, what do you get when you, when you subsidize failure and you penalize success?
That's exactly what we've got.
But, you know, some of this understanding of these economic situations or bankruptcy of these institutions is, is it doesn't mean that everything ceases, it disappears in the middle of the night.
You know, there, there are, there are solvent financial institutions that would look at their portfolio and they say, you know, we think we, you know, we want your Asian portfolio.
We think that sound for this part of your portfolio.
We're not interested.
We won't bid.
Maybe somebody else for this part of your portfolio, we'll pay you $0.60, $0.70, $0.80 on the dollar for this part of your portfolio, maybe some $0.20, and all of this stuff gets shaken out by people that are capable of assessing the, the valuation of these troubled portfolios.
Economic reality asserts itself.
Instead, you had the Neal Cash Carey, a Goldman Sachs guy working for John Paulson, a Goldman Sachs guy.
And he figured out on his, he figured out on his BlackBerry, how much money the Bush bailout had to do.
He just made the numbers up.
You've got, you've got the investment banking community that has whole floors of analysts, risk managers and stuff.
They're perfectly capable of going in and look at these portfolios and say, you know, we want that one.
This has huge profit potential.
And then good functioning enterprises keep working.
And then the ones that should fail because they're toxic are allowed to fail.
And the people who ran them into the ground pay the price for doing so.
The shareholders lose money because they invested in a company run by morons.
They weren't careful.
They elected morons to the board.
The board appointed morons.
You know, the, the, the capital investors in those companies, you know, the board members lose what they have.
You know, management loses, their stock option goes bad.
It's worth nothing.
This is exactly what should happen.
People should understand that there are consequences to the risks that they take.
But instead, we've cultivated a society and a financial system now in which the most reckless among us are subsidized and sustained no matter what they do.
And they know it.
All right.
Now, anybody who goes grocery shopping knows that it's really hard to go grocery shopping with the high cost of everything all the time.
However, I've heard it argued a lot, and I don't know what all the percentages are and the real rate compared to the government contrived rate and whatever.
I know they contrive, those contrivers.
But I've heard it said that, you know what, the Federal Reserve, they're bad.
I mean, Ben Bernanke, he's a Friedmanite, inflationist type.
And yet, he's also learned the lesson of the 1970s, which is, man, you can't just have double digit inflation for a decade and whatever, because it'll cause a lot of problems and get the Reaganites elected.
So they've learned a lesson from that, and they've figured out this brilliant loophole in maybe even a loophole in Austrian school theory of what happens when you create a bunch of money.
And that is, they bail out the banks, they pay off all their bad debts for them, guarantee all their bad debts, you know, make them whole.
But then they pay them to keep the money on the shelf at the Fed instead of loaning it out to Main Street like they promised, thank goodness.
And so the fractional reserve ratio is not kicking in, because the loans aren't being made.
And so the money supply out here in the marketplace is not being completely flooded.
So we only have uncomfortable inflation, not devastating inflation.
And so really, they're geniuses, and they kind of pulled it off, right?
At least, you know, not that they were ever trying to save us, but at least they saved themselves without completely destroying the economy, didn't they?
That's what you would say if you've only seen the first act of the play.
You know, everything looked good in the first 30 minutes of the Titanic.
Everybody was having a great time aboard the ship, you know?
But you know, we're not privileged people.
We don't believe in magical faking.
We don't believe that the Fed can, you know, come out of the clear blue sky and create, you know, $2.7 trillion of funny money that they just printed up in the basement or created electronically.
We don't think they can create $2.7 trillion and buy things, buy U.S. Treasury debt, buy securities from the troubled banks, get the securities off the balance sheet of the banks and put them onto the balance sheet of the U.S. dollar and the American people.
We don't think that they can do that without consequences.
There is no such thing as a free lunch, we're saying.
This isn't a magical world in which things happen magically.
There are consequences.
And just because the consequences aren't seen doesn't mean that, you know, that the Fed can embark on these.
Look, if the Fed could do this, why don't they just print more money and make us all millionaires?
Why don't they just do that?
So what you basically have, and you've alluded to this, is, you know, the Fed has created an awful lot of money to bail out the banks, to buy their troubled paper, to buy the downgraded debt of the United States Treasury, and so on, to contrive low interest rates to help the banks reliquify their troubled balance sheet.
It's created a lot of money to do that, and that money is effectively in the basement of the Mariner Echols building, and it's all shrink-wrapped.
As long as it stays there, you know, that's fine.
But it can't stay there because, first of all, it's not really printed money and wrapped up in shrink-wrap.
It's digital money, it's on the accounts of the banks with the Federal Reserve, it's on their reserve accounts with the banks, and it will bear fruit, it will have consequences.
And you know, it actually puts us in a little bit of a curse, because we all want the economy to recover, we want things to get better, we want, you know, businesses borrowing money and expanding plant and equipment, we want people taking out loans to create new jobs.
But the consequences of all that are just what you've alluded to.
That's the basis for really high-powered money creation from the Fed.
So you know, we are not consequence-free.
The stock market has been flying on the wings of this monetary inflation for years, and you know, it's gotten to the point, as we saw this week with the Fed policy, that they dare not stop.
They've got a junky stock market, and they dare not go cold turkey on it.
They don't even dare cut back the dose just a tiny bit, because they know that the consequences will be catastrophic.
So they've really painted us into a corner in this country, and it's not going to be pretty.
Right.
Man, I wish the music wasn't playing and the interview wasn't over.
Charles, we're going to have to follow up soon with some more like this, all right?
All right, bud.
Appreciate it.
Everybody, that's the great Charles Goyette.
Oh man, he's got an investment newsletter thing.
You can find out all about it at CharlesGoyette.com, and read his book, The Dollar Meltdown, and Red, Blue, and Broke All Over.
See you Monday.
Hey, y'all.
Scott Horton here for WallStreetWindow.com.
Mike Swanson is a successful former hedge fund manager whose site is unique on the web.
Subscribers are allowed a window into Mike's very real main account and receive announcements and explanations for all his market moves.
The Federal Reserve has been inflating the money supply to finance the bank bailouts and terror war overseas.
So Mike's betting on commodities, mining stocks, European markets, and other hedges against a depreciating dollar.
Play along on paper or with real money, and then be your own judge of Mike's investment strategies.
See what happens at WallStreetWindow.com.
Hey, you own a business?
Maybe we should consider advertising on the show.
See if we can make a little bit of money.
My email address is Scott at ScottHorton.org.
Today's show is brought to you in part by Audible.com.
Get a free audio book download at AudibleTrial.com slash Scott.
Audible has over 100,000 titles to choose from for your iPhone, Android, Kindle, or MP3 player.
For Scott Horton Show listeners, Audible is offering a free audio book download with their free 30-day trial.
I personally recommend Dirty Wars by Jeremy Scahill.
It's great for anyone wanting the inside story on the cruel and counterproductive terror war of the Obama years.
You can sign up for a free 30-day trial and download Dirty Wars at no charge by going to AudibleTrial.com slash Scott.
That's AudibleTrial.com slash Scott.
Hey, I'm Scott Horton here to talk to you about this great new book by Michael Swanson, The War State, The Cold War Origins of the Military Industrial Complex and the Power Elite.
In the book, Swanson explains what the revolution was, the rise of empire, and the permanent military economy, and all from a free market libertarian perspective.
Jacob Hornberger, founder and president of the Future Freedom Foundation, says the book is absolutely awesome, and that Swanson's perspectives on the Cold War and the Cuban Missile Crisis are among the best I've read.
The poll numbers state that people agree on one thing.
It's that America is on the wrong track.
In The War State, Swanson gets to the bottom of what's ailing our society, empire.
The permanent national security bureaucracy that runs it, and the mountain of debt that has enabled our descent down this dark road.
The War State could well be the book that finally brings this reality to the level of mainstream consensus.
America can be saved from its government and its arms dealers.
First, get the facts.
Get The War State by Michael Swanson, available at your local bookseller and at Amazon.com.
Or just click on the book in the right margin at scotthorton.org.
Hey, y'all, Scott here.
The jobless rate in America keeps climbing.
Food stamps and other social welfare spending continue to increase at an alarming rate.
And the only thing that's kept this whole so-called recovery going at all is the Federal Reserve's inflationary printing press.
Seems like 2008 might have just been a rehearsal for the financial crisis still to come.
So now let me talk to you about this great video by Dr. Martin Weiss from moneyandmarkets.com.
The video spells out how this disaster will affect you and create enormous financial opportunities if you know how to recognize a true diamond in the rough.
Weiss shows when stocks have crashed and even gives the names of the biggest banks that are most likely to fail.
Before you invest $1, take the time to watch this new video.
Go to crisis16.com.
That's crisis16.com.
Learn from the experts how to evaluate these opportunities and start making better informed decisions that will lead to a better return on your investments.
That's Dr. Martin Weiss at crisis16.com.