For Antiwar.com, I'm Scott Horton.
This is Antiwar Radio.
Charles Goyette, my main mellow fella.
Scott, how are you?
It's good to talk to you.
I'm doing great.
Welcome to the show.
How are you doing?
I'm doing really well, and it's good to catch up with you.
And I know that Antiwar Radio is in good hands because you're in the driver's seat.
Well, you know, I've got to tell you, I've missed you.
And I know, well, judging by the hundreds at least of emails that I've gotten along these lines, the audience does too.
But, well, you know, now that I've read the reason that you've been gone all this time, well, it's almost worth it anyway.
Brilliant book.
And pardon me for sniffling all over your interview.
I kind of have a cold hair.
The Dollar Meltdown, Surviving the Impending Currency Crisis with Gold, Oil and Other Unconventional Investments.
At the top of the book it says here, Goyette does a great job explaining why America faces a looming financial crisis and outlines common sense strategies for individuals to protect themselves and their families.
This book is truly a must read.
Congressman Ron Paul, I like that.
And that's where we're going to start here in a second, is the looming financial crisis.
Not the one that we're in, but the one that is still on its way.
But I want to go ahead and, you know, try to show for the book as best I can here, Charles.
And I really do mean that I love the book.
First of all, it's bright yellow.
So after October 29th, everyone will be able to find it.
No problem on the shelves at their store.
It's got a melting Federal Reserve note on the front there.
And it's really funny.
You know, it's like listening to your radio show, all the metaphors and turns of phrase and everything like that.
It's just brilliant.
You make the subject matter easy to understand for anybody who, you know, maybe doesn't already know about a lot of monetary policy and stuff like this.
It's going to be it's going to be great for them, too.
And, you know, it's going on the shelf on my shelf next to in the Fed and meltdown and the case against the Fed and the rest of my favorites from, you know, in that genre.
So great job, Charles.
Congratulations, man.
You really did a great job.
I'm proud of you.
I like that time that you opposed the war on the radio.
Yeah, it was a while back, too, but I'm really happy that you liked it.
I thought that there was a there's a vacuum in the market in the it.
There's a gap that needs to be filled in the knowledge of the American people about what's going on around them, how this stuff works.
So I surveyed all the financial news media, you know, the TV shows, the cable networks that talk about stuff.
And it's all about you know, it's all about the closing bell and the open tomorrow and missing projections or hitting projections by a penny and which analyst is calling for what kind of quarters, so on, so forth.
And it sort of leaves the American people behind.
And so it's no wonder that Americans have been in this slumber about things economic because it's all it's all very confusing.
But in the course of slumbering, they've let the authorities in charge.
And by that, I mean the governing classes and the Republicans and the Democrats and the rest of them.
They've let them mesmerize them with a whole bunch of of of childlike sort of naive beliefs about about economics.
Yeah, well, you know, that's what I was just going to say was that, you know, when you're in first grade and they teach you counting.
I mean, part of the way that they teach you how to count is with money.
And then you learn your percentages and all these kinds of things.
And we all just sort of learn in first grade that, well, there's this thing called the money.
And the government makes sure that there's enough of it for everybody to pass around and everything like this.
It's all very kind of vague.
And I think that actually that's pretty much what sticks until you really learn otherwise.
They at the highest stratus of of the intellectual leadership of America, such as it is and the governing classes and so on.
They they don't know any better themselves.
They believe that money is created out of thin air.
They subscribe these Keynesian dogmas that a country can spend its way to to prosperity, that that the richest people in the world could continually borrow in forever from some of the poorest people in the world.
And so you get this madness that results like we saw this time last year when the credit bubble finally popped, a bubble created by the Fed by artificially lowering interest rates.
When the credit bubble finally popped, the the geniuses in charge decided the best solution was to try to reinflate it.
In other words, you get a you get a you get a tire that goes flat.
And instead of repairing the tire, you just start trying to pump more air into it.
But so you've got the American people been been believing all kinds of impossible things to the extent they think about money at all.
And so my job was to come out here and explain to them where we are.
I mean, where we are in this mess, what's going on, how we got here in a clear, understandable manner, what happens next and what they can do about it.
And that's the book, The Dollar Meltdown.
Yeah, that is the book.
And again, if you're just tuning in, it's The Dollar Meltdown by Charles Goyette.
It hits the stands on October 29th.
Let's talk about war.
Let's talk about war.
That's what this bubble is really all about.
And, you know, when I was, I don't know, 17 or 18 or something, I read The Creature from Jekyll Island by G. Edward Griffin, which is sort of the John Birch Society version of the Federal Reserve System, although it is based on Austrian economic theory, not that kind of bogus inflationary populist thing.
You know, he gets that part right.
But, you know, he really, G. Edward Griffin, really makes the link between the warfare state and the Central Bank.
And, you know, says, hey, look, it's the guys that created the Central Bank were the guys that got us into World War I.
They are the boo-bahs of the establishment, at least for the generations, you know, around the time of Woodrow Wilson and through at least the beginning of the Cold War.
And that's really what it's all about.
We don't know whether they have war so that they can inflate or whether they inflate so they can have war.
But the things are completely inseparable from each other, Charles.
I try to walk people through this over and over and over again in the book.
The extension of empires to the point of bankruptcy, the cost of war, and the monetary deceit that the monetary and fiscal authorities employ to pay for their wars.
And, you know, it's like living in Groundhog Day in which the same syndrome unfolds over and over and over again.
Same notes, maybe a different octave, maybe, you know, a century later or 50 years later.
But it's always the same notes, the same tune over and over again.
And the people, for some reason, continue to sleepwalk through it.
So that's also, you're right, one of the jobs.
And nothing could be more clear.
I mean, I cite Murray Rothbard in there about how convenient the Fed was to the disaster, the debacle known as World War I that immediately upon the creation of the Fed, they were able to effectively double the money supply so the prices doubled to fund the war that the American people most likely would not have been willing to pay for in the legitimate and legal means of financing the costs of government.
And by that I mean selling bonds and paying taxes.
Well, let me ask you this then.
Does that mean that the American people would not have supported the American Revolution, that the only reason that Benjamin Franklin and them got away with it was because they inflated the currency?
I think every time you see an inflation of the currency, you can see somebody behind it with some...
Look, this is very clear throughout history.
A central bank, an inflation of a currency, enables the rulers, the governing classes of a country to steer a nation along a course that it otherwise wouldn't be able to pursue.
Now, I'm not telling you that you would never have been able to win the so-called consent of the governed.
Perhaps in some cases you may, perhaps in other cases you may not.
But the consent of the governed becomes almost irrelevant when you have your hands on the purse strings and you don't need to use the so-called legitimate methods of funding the government.
Right.
And that's why George Bush could say, Alright everybody, we're cutting your taxes and in fact we're sending you a check in the mail.
Go shopping with it and we're going to invade Iraq.
Yeah.
And how much is the Iraq war going to cost?
I think you quote this guy Stiglitz in the book.
But he's an economist.
What does he really know?
Yeah, but at least he tried to look at it holistically.
And by that I mean this war has been a massive transfer of wealth from the American people in ways that they haven't even begun to consider.
I've been concerned, I'm sure you've talked about it on the show over the years, about the fear premium on the price of oil.
And every time we started saber rattling about, well first of all Iraq and then later Iran, the price of oil would jump by another $10 a barrel.
And it was a huge transfer of wealth from the American people to Hugo Chavez and to Vladimir Putin's Russia and to the Middle Eastern oil shakes.
Over and over and over again the price of oil had a fear premium on it that did not need to be paid but was a great means of decapitalizing the American people.
Wow.
Well, what do you think?
Do you think they inflate so they can have war or do they have war so that they can inflate?
I mean, in a serious sense, is the purpose not to just go ahead and rob us all blind by this hidden taxation that one out of 100 people understands?
Well, it's sort of a Dai Chi thing to me.
It's an interplay of the yin and yang that one does not live without another.
It's an everlasting, ever-moving dynamic that they move in one with the other.
And if you want to end this dance of death, you've got to separate, as Ludwig von Mises says, you've got to take government out of charge, put them out of control of the money.
A money separate from the governing authorities is as essential to people's freedom as constitutions and bills of rights.
Well, let's stick to empire here for a second.
How much does it really cost, Charles, to maintain the American empire around the world?
And, in fact, let me just build in here.
For those who have an emotional aversion to hearing the word empire in context of American foreign policy, there are over 1,000 military bases in other people's countries.
There's more than 5,000.
I think maybe it was more than 8,000 in the United States.
And we spend trillions of dollars, at least about a trillion a year, on the Department of Defense and the wars.
How much does this really mean?
Since World War II, how much wealth has really been diverted to containing communism or Osama Bin Laden or whatever they call it?
It's untold trillions.
And it's hidden in more ways than you can possibly unravel.
In fact, let me give you an idea just how cleverly this stuff is hidden.
Last year, the fiscal year when Bush was still president, the fiscal year that ended September 30, 2008, the federal deficit came in at, I think it was $455 billion for the year.
$455 billion deficit.
But, lo and behold, a peculiar thing had happened in the 365 days that had elapsed in the course of that fiscal year.
The national debt had increased by a trillion dollars.
Well, wait a minute.
The government takes in money at this level down here, spends money at that level up there, and there's a gap there.
There's a deficit that needs to be filled, and we're told that the official deficit is $455 billion.
But then you look at the growing visible national debt, and it jumped by a trillion dollars.
What's going on?
Well, a little trick of off-the-book funding of things like wars and a little social security.
Oh, this is an emergency appropriation, that kind of thing.
It goes on over and over.
We saw the same thing in the fiscal year that just ended.
We are told that the fiscal year, Obama's 2009 fiscal year that just ended September 30, that the deficit was $1.4, maybe $1.42 trillion.
But if you look, the national debt increased by $1.8 or $1.9 trillion.
So all of this, but look, I don't have to tell you, Scott, and your listeners know too, you can't even begin to determine the extent of the cost of empire and war spending by looking at the Department of Defense budget.
I mean, look at the Department of Energy.
Half of the Department of Energy or more is defense projects that are hidden away.
Yeah, well, plus there's the Veterans Administration and all the medical care and, of course, the Madison Avenue advertising budget, which has got to be, that's probably almost a trillion a year at this point, right?
State Department expenditures.
It's tucked in here.
It's tucked in there.
It's tucked in everywhere.
So tell me how this works.
Explain to me exactly how this works, this bookkeeping trick where government, they create debt, and then they create money to buy the debt they created.
And I'm kind of confused, Charles.
Why don't you straight me out here?
Well, the idea was actually to confuse people.
The government, I like to use this example, Scott, that I'm going to ask you to loan me money, and you're going to say, sure, Charles, I'm happy to do it, but I'm a prudent guy.
What are you going to give me for collateral?
And I say, okay, well, you take this here.
These are MasterCard receipts.
I spent a whole lot of money on dinner with friends the other night.
We had expensive wine.
Here, you take these receipts from MasterCard, evidence of my debt, as collateral for the money that you issue.
Oh, that sounds great.
How much do you need?
So that's what goes on in the government.
The government runs debts.
It runs a deficit.
It takes the money at this level down here, spends it at that level, and it has to fill the gap, and it fills that gap by borrowing the money.
It prints up a nice bond or creates an electronic entry that is the equivalent of a bond, and then it goes to the Chinese at treasury auctions and to the Japanese and to American citizens, and they sell those bonds, but they also go to the Federal Reserve.
And the Federal Reserve says, yes, we'll buy those bonds, and they create a deposit in the bond dealer's account for the amount that they are paying for that bond.
So that money, that check entry that the Federal Reserve makes to the dealer bank is money that did not exist a second before.
In the wink of an eye, they created that money with an electronic bookkeeping entry and credited the bond dealer with new money.
So that's basically how the money supply is created.
It's a lot more sophisticated than what we used to see in olden days.
The kings of old would take the coins that came through the accounting house, and they'd melt them down and add a little bit of copper or something to dilute the purity of the value of the coins and finance their wars doing that.
But now, it's much more sophisticated since we're a technological society, and it can be done with electronic bookkeeping entries and a sleight of hand known as monetizing the debt or creating money that is, rather than redeemable in something tangible of real value, is redeemable only in debt.
All right.
Well, now, America used to have a gold standard of some kind, and I guess Roosevelt, by executive order, made it illegal for Americans to hold gold or at least to use as currency.
And then, after World War II, there was this Bretton Woods Agreement that lasted until 1971, and then Nixon abandoned that.
But why don't you fill in all the rest of that story?
Because there's a lot there, and I want people to understand how it was that we got from here to there.
It doesn't seem like it's probably a coincidence that 1971 was after tons of money had been spent on killing people in Southeast Asia and on the great society socialism here in America.
Yeah.
In fact, it's been a multistage process.
And actually, it takes us to one of the things that we're about to encounter.
Americans used to hold gold in their pockets.
They used to hold a $20 gold piece and go about their daily business with money in their pocket that was made out of gold or sometimes silver coins.
And because of convenience, they occasionally would hold a piece of paper money with all the fancy embellishment and scroll work or green piece of paper.
But the people at that time understood that that green piece of paper was a warehouse receipt or a claim check for the gold that was held in the bank's depository or by the central bank.
And at any time, they could present that piece of paper for the underlying gold.
So, over the years, Americans have become somewhat mesmerized into believing that the piece of paper itself is money.
But the printed money, paper and ink money has never been anything real other than a claim check for something else.
But now, if you go to turn in that claim check for something else, you get another claim check exactly like it.
It's redeemable in absolutely nothing.
It's an I.O.
U. nothing.
So, President Roosevelt in 1932, 1933 and 1934 ended up taking Americans off of the gold standard for the most part.
Now, I want you to follow the narrative of this because it begins to show you what's going to happen to the American people and how they are going to be shafted in the coming currency crisis.
How was it that Americans had all of their gold taken from them under penalty of law?
It was a felony to continue to own it.
And you could be fined $10,000 and sent to prison for 10 years as an American citizen if you continue to hold your gold, your monetary gold, your gold coins that people used to carry every day until it was made illegal by FDR.
So, all of a sudden, the government – let me give you the rough numbers.
The government called in all that gold at $20 an ounce.
You turned in your $20 gold piece and they'd give you a $20 bill.
And once the government got all the gold, they suddenly devalued the dollar or changed the price of the gold to $35 an ounce.
They didn't raise the price first and then call in all the gold and pay people at the higher price.
They called it in at the lower price and then raised the price.
So, Americans were literally swindled out of billions of dollars by that maneuver.
Now, if you were a foreigner and you held gold, United States gold coins, somebody else's gold coins, now you could get $35 instead of just $20 for it.
But Americans couldn't get any.
It would be a felony for them to have it.
So, Americans got shafted in that deal.
Now, you take us forward to people talking about, you know, we need to devalue the dollar.
We need a cheaper dollar.
We need to destroy the purchasing power of the dollar.
And it'll help American manufacturing.
Roosevelt and most of his lieutenants were so economically naive that it's almost criminal.
And they thought, in part, one of the multitude of motivations that they had was that they somehow believed that if they could destroy or devalue the purchasing power of the U.S. dollar, they could provide a shot in the arm to things like American manufacturing.
Scott, everything old is new again.
This is exactly what you can hear today from the Commerce Secretary of the Obama Administration when they talk about somebody asking, well, what about the dollar?
The dollar's been pounded for months.
The dollar goes down, down, down.
And he weeps crocodile tears for about a fifth of a second about, yeah, we were in favor of a strong dollar.
And then they loudly proclaim just how wonderful the new cheap dollar will be for American manufacturing.
Well, but they also kind of at least imply there that, well, you know, the dollar might be losing value compared to other currencies.
But inflation here in America, the inflation rate, the prices are basically not rising all that fast.
And so, I don't know, screw those foreigners or something, but it's not going to hurt you.
It's going to help you.
Like I said, you're going to be able to export your stuff to foreigners more easily.
Let me ask, as Dr. Phil would ask, just how well has that been working out for us now, Scott?
We had this country, look, during Bush's eight years, the U.S. dollar lost 20% of its purchasing power.
And at the same time as the dollar was being devalued, the United States lost a quarter of its manufacturing base, 4.4 million jobs.
So how well did that work out exactly?
How well has that been working out during the period that the Fed is overseeing the destruction of 96% of the dollar's purchasing power?
It hasn't been working out well.
I mean, 60 years ago, this country was the manufacturing hegemon of the world.
How well has this constantly cheap and constantly devalued dollar been working out for us?
Not so well.
Well, I guess I'm still confused why not, though, right?
OK, we export all our inflation to China, for example.
But then they don't buy our stuff with it.
They only buy government debt to finance more war on their western border.
But they don't turn around and buy American stuff.
How come?
Well, first of all, they make it cheaper there.
Well, so if you just had a free trade situation, even with perfectly sound money in a Ron Paul-style economy, then that same thing would happen, right?
All our jobs would just go there because there's a billion-plus Chinese and they work cheaper.
That simple as that.
You can't say that.
Our jobs would go there.
What is the advantage of being a free economy in a capitalist system?
The advantage, of course, is capital.
I mean, if you want to compete with the Chinese, you compete with them.
You don't start trade wars and currency hijinks to try to win an advantage.
You compete with them.
Now, look, what is the difference?
Wait, wait, wait.
I'm sorry, but I'm reading the mind of a liberal in the audience right now.
And Charles is saying that unless you're an owner, then you ought to live like a Chinaman, not like an American.
That their wages would have to go down to compete with the Chinese.
Is that what you're saying?
No, but wait a minute.
Let me get back to the other point.
I mean, Scott, what's the difference?
Ultimately, the money that people earn is a result of their productivity.
What is the difference between a farmer in Bangladesh and an American farmer?
The American farmer has capital.
Yeah, he has some intellectual capital.
He knows more about modern farming methods and so on and so forth.
But he's not behind a water buffalo plowing a field.
It's capital that makes huge productivity the blessing that supports all of us.
It's productivity that makes us rich.
It's not the transfer of wealth.
It's not an adjusted currency.
It's productivity.
Well, now you've got 3 billion people around the rest of the world that would like to be capitalists and like to be productive too.
So if Americans want to be productive, if they want to maintain their living standard, then they ought to worry about making America a safe and welcoming haven or harbor for capital.
Because now there are competing places.
It was fine in the 1950s when nobody in their right mind would dare invest in third world countries because you didn't know if there was going to be another revolution the next week, who was going to take over when they'd nationalize or appropriate your property or your investment or your plant or your oil well or whatever it may be.
But there are capitalists out there around the world now.
So if you want to compete with them, you need to have capital.
And you need your country to be an attractive place for capital to come work.
Lots of other places on the globe are now, the United States much less so.
Well, and The Worry, apparently, the title of your book is The Dollar Meltdown.
It's not about the stock market meltdown from 2008.
It's about the coming breaking of the dollar, the end of dollar hegemony.
And I guess I sort of interrupted you off of the path of Richard Nixon in 1971, taking us off the gold standard, the end of the first Bretton Woods, the beginning of so-called Bretton Woods II and all this.
But I don't know.
We've still got plenty of time for you to talk about this kind of thing.
I want to understand the evolution that we went from what Roosevelt did to what Nixon did to what George Bush and Barack Obama are doing and what's in store for us.
And then, of course, we talk about all the terrible things that might happen if the dollar really does break.
And we really do face a situation where $100 bills are worth one and things like that.
Well, let me pick up the thread then.
We talked about, and I want to make clear that the underlying moral of the story I want people to understand is that the Americans will be screwed.
The Americans will be forced to bear the load, to suffer the consequences of these policies, just as in 1934 the American people had gold taken away from them at a low price and then it was revalued by the government at a higher price.
It didn't bother foreigners.
The foreigners still had their gold that was now worth $35 instead of $20 an ounce.
So you fast-forward the story to the end of World War II and under the Bretton Woods Agreement, the dollar became the reserve currency of the world.
Let me explain briefly what that means.
There was a time that other governments, other central banks, much like our government or our central bank, would hold gold reserves against which they issued their currencies.
I talked about claim checks or warehouse receipts that you could take a $20 bill and go to the treasury and get a $20 gold piece.
It was a claim check, a piece of paper that represented something for which it was redeemable.
Well, other central banks and other governments used to hold gold similarly against which they issued their own currencies.
But under the terms of the Bretton Woods Agreement, it was agreed that participating nations would all hold U.S. dollars as their currency reserve, as their reserve against which they would issue their own currency.
So the U.S. dollar had the rather extraordinary position of being the reserve currency of the world.
This created an artificial demand, a higher demand for U.S. dollars than otherwise would pertain.
If the central bank of Japan held dollars, if the central bank of England held dollars, if the central bank of Germany and France held dollars, there was market demand.
The dollar was valued higher because of that demand.
Its purchasing power was greater and has been over the years because of that unique role for the dollar.
I'm sorry to divert you from the point here.
I'll let you get back to it.
But I'm kind of confused about that because it makes sense to me that the whole world basically was burnt to the ground, except for the Americas during World War II and that we inherited everything.
But how has it stayed this long that the dollar is the reserve currency when they basically had the money machine on full speed this whole time?
These people have got to know that they're piling up dollars that are one day going to be worthless.
Well, the people were told under the terms of the Bretton Woods Agreement, other nations were told, that you hold these dollars as the reserve in your central bank or in your government, but don't worry.
If at any time you're suspicious about this dollar standard or you suspect that we're running the printing press and creating a whole lot more of these, you can come to our central bank and we will take these U.S. dollars and give you the underlying gold for them.
The world was assured that the dollar would always be redeemable in gold and so it was believed to be after World War II.
So that's what lasted until 1971 then?
Yeah, except that even that didn't last.
The rest of the world began seeing, just as you've described and just as should have been apparent to everybody, that we were printing excess dollars, that we were printing more dollars than were reasonably redeemable in gold.
And so they began to line up and they'd go to the London Gold Pool, which was created to maintain the fiction that the dollar was still redeemable in gold and they'd start trying to turn in their dollars in exchange for gold.
Before long, it was no longer immediately exchangeable.
You had to wait in line, but if you were a foreign central bank or a foreign nation or a foreign institution, maybe if you could get in line and you could wait long enough, you could ultimately get gold for your dollars.
But it became progressively more and more slow and finally, just in one day, they took hundreds of tons of gold off the London Gold Pool and that was just about the end of it.
So the end of the Bretton Woods dollar-gold exchange standard was August 15, 1971.
Nixon slam-shut the gold window entirely and said, You can't get gold, just continue to hold your dollars.
And just as Americans have been persuaded through habit since the 1930s to hold the green pieces of paper as though they were the real money themselves instead of a claim check, so too the rest of the world has been persuaded to hold dollars even though they were no longer redeemable in gold or for anything else.
Well, obviously, Scott, it doesn't take a genius to see that that standard is not going to last forever, particularly in light of the very visible activity of the Fed and the irresponsibility of the Congress in continuing to create more and more dollars to spend beyond our capacity and to print money to make up the difference.
Well, and part of this is the empire too, right?
Of course.
And I'm not too sure I understand exactly how this works because I've read a lot of competing points of view about this.
And, in fact, I think I might have even heard Ron Paul sort of change what he had to say about this, which was about the petrodollar and the pressure on the world oil markets to use dollars to denominate their oil sales.
And, in fact, after the hype came out in the London Independent a couple of weeks ago about all the countries are conspiring to dump their dollars or at least no longer denominate all the oil in dollars or whatever, I read something that said, no, actually, that's really not much of a thing.
Even if they all said, okay, from now on, we're going to price our dollars in euros or whatever, that would really have a negligible effect on the dollar itself.
And so I just wonder if you can kind of tell us what you think about it.
I've heard others say, Charles, that we actually abandoned the gold standard for the oil standard.
They said, well, okay, we're just going to use, in a sense, oil and the money Americans spend consuming oil that goes to Saudi Arabia and comes back in the form of purchasing American debt.
That is the full faith and credit loop there that backs the currency, right?
Well, there are a lot of things implicit in what you've just said.
So I'm going to pick the one I want and take it from there.
No, because this is ground that needs to be plowed, and we're going to plow it in this conversation.
And it fits in perfectly where we left off in 1971, because the petroleum-producing states, the OPEC nations, said to the United States, look, if you sever the last link of gold, if the dollar is devalued in this way, that is, you can continue to create more and more U.S. dollars that are redeemable in absolutely nothing.
If you do this with the U.S. dollar, the price of oil is going to go up.
And within a couple of years of Nixon's act of severing the link of the dollar to gold, OPEC petroleum had run up like four times higher, had quadrupled in price.
The obvious mathematics for this are something a schoolchild could work out.
Let's see, they're going to sell us their appreciated and depleting petroleum for paper dollars that we can create at no cost.
I don't think so.
And so the price of petroleum, priced in dollars, as you pointed out, OPEC oil is now priced in dollars around the world.
If Japan buys oil from OPEC, they acquire dollars, they have dollars from other transactions with which to do so.
So the price of oil has been kind of an inverse measure of the deteriorating quality and quantity of the U.S. dollar.
And I've heard a lot of the discussion, Robert Fisk's story in The Independent, about that they're secretly planning a basket of currencies to leave the dollar standard behind.
My book had already been written and was at the printers and on its way to bookstores with that exact same point.
In fact, I described in there how a likely basket of currencies for petroleum would develop.
There are those who say, oh, but the currency markets are sophisticated, and they can continue forever to sell their oil in dollars, and then they just exchange the dollar for whatever other currency they want for yen or for euros, and so there's no need to abandon the dollar pricing of oil.
To those people, I would like to remind them that as recently as the early 1970s, 25% of the global oil trade, the petroleum trade of the world into the 1970s, was still in the British pound sterling.
But in the face of serial devaluations of the pound sterling, they finally washed their hands of it completely, and it was only then that 100% dollar pricing of OPEC oil was implemented.
So does that mean that when the central bankers of the world decide, we can no longer do this, we've got to figure out a way around this, that abandoning dollar pricing of oil is sort of the first step to abandoning the dollar as reserve currency in general?
They go hand in glove, and there's nothing new about this, and I find most of the skeptics who say, oh, no, the dollar, and I've been in debates with these guys in conjunction with the publication of my book on the radio and so on, and I'm astonished that they seem to not know a lot about it.
First of all, I try to cite for them the recent experience of the British pound still being a pricing component of international petroleum trade, even though the markets then were very sophisticated, all of the major banks had branches and locations and facilities and telex services and telephone services for currency exchange.
They could have taken the British pound forever under that logic and still been pricing oil in the British pound if the logic was that they don't care what they're being paid in.
But let me even take you a step further.
During the awful monetary mismanagement of the 1970s, during all the inflation and stagflation of the 1970s, the central bank of the central banks, the Bank for International Settlements in Basel, Switzerland, made it really clear if the United States didn't get a handle on this double-digit inflation stuff, then that would be the end of the dollar's reserve standard.
That was in the 70s.
How much more likely are they to abandon it now when there are others clamoring and competing for some kind of prominence in the world monetary affairs?
Well, I'm sure you saw that Geithner, the Treasury Secretary, was asked in a press conference at the Council on Foreign Relations, or at the end of his speech I guess it was, at the Council on Foreign Relations about creating a new so-called basket of currencies to serve as the reserve currency.
And he said, well, yeah, you know, we're kind of looking at that and this and that.
And then a friend of mine sent me a link to him saying just yesterday that, oh, no, King Dollar will be there for a long time.
I think their lips are moving, Scott.
Huh?
Their lips are moving.
I was interviewed by Reuters yesterday, and she said, well, should the administration get out there and say they're in favor of a strong dollar?
I said, why bother?
Anybody that sees their lips moving will know that they're lying.
Yeah, I guess unless they're answering questions at the Council on Foreign Relations, in which case they think they're supposed to tell the truth to that crowd.
But they didn't know they were on C-SPAN.
Yeah.
Geithner is the one, too, that tried to pull the wool over the eyes of the Chinese college students in Beijing.
Not so many months ago he went over there and said, oh, your investments, your U.S. investments, your investment in the U.S. dollar is perfectly safe, and they laughed at him.
Yeah, the entire auditorium full of people, right?
Yeah.
That's pretty funny.
I mean, anybody that doesn't understand that the dollar's days are numbered is really not paying attention either to the historical precedents or to where we are now.
This isn't to say that the dollar – look, the dollar has been going way, way down.
The last, I don't know, five days or so it's having a recovery.
Everybody understands that these markets move in a sawtooth direction, but the saw is pointed downward.
Well, so – but there's some sort of breaking point where the head of the Central Bank of Australia wakes up in the morning and goes, oh, my God, and dumps all of his dollars as fast as he can, and every other central banker in the world is in a race to get rid of their dollars before they're completely worthless, even as, you know, like newspaper for starting a fire in a fireplace with.
Well, I mean, this is actually going on before our very eyes right now.
You had – in fact, this ties back to my prior counter narrative about how Americans are getting set up to take the shaft on this deal.
Look, when the Federal Reserve has become effectively a hedge fund, I mean, they own all kinds of junk.
The Federal Reserve owns billions and billions of dollars of mortgages.
The Federal Reserve owns just – I mean, you can't even imagine what's in the so-called portfolio of the Federal Reserve.
They're nothing but a highly leveraged hedge fund at this point.
But what have they done?
In this time last year, during the panic of last year, it was all about public consumption.
The debate was all about bailing out the beleaguered homeowners of America before they lost their homes.
But you didn't see the people in Kansas get bailed out.
You saw $200 billion get set aside by the Fed to go in and rescue Freddie Mac and Fannie Mae.
To whose benefit?
Well, I'll tell you whose benefit because the evidence is very clear now that even though those government-sponsored enterprises were not the full faith and credit of the United States government obligations, they are not guaranteed by the United States government, still that money was taken to provide some solvency to those funds while the Chinese began to roll out of their investments, which they had substantial in Freddie and Fannie, and to roll into treasuries.
Because the American billionaires already have invested all their money in China and they're just leaving us to burn or what?
What they're doing is rolling into more and more secure and presumably more and more short-term U.S. obligations, so that they're in only guaranteed obligations for which the ultimate virtue is the printing press.
They know that the United States government, if nothing else, will at least print the money to pay them back.
It's always the bankers and the foreigners that make out on these deals.
It's the American people that are going to get the shaft.
The American people are going to get the bill for the $200 billion that we rolled into Fannie and Freddie.
The American people aren't going to find their home mortgages taken over or that bubble re-inflated, but the monetary and fiscal authorities are desperate to keep the Chinese in the game of funding their debt.
Oh, I see.
They got the bailout so that they wouldn't get cold feet and want to back out entirely.
Keep them in the game and avert a crisis for now.
So the Chinese, not being stupid or looking at it, say, yeah, go ahead and do that.
We'll start rolling out of the riskiest of the investments, the unguaranteed investments like Freddie and Fannie, and start rolling more into treasuries.
But at the same time, they're going around the world buying natural resources lickety-split in an attempt to spend what assets they have that are dominated in dollars in real things.
Yeah, I saw that guy Max Keiser.
That's what he was saying, that it's already on.
The whole world is already racing to get out of dollars.
But the problem is, like Greg Palast told me, if you owe me $1,000, you're in trouble.
If you owe me $1 million, I'm in trouble.
And what's happened is they're all trying to, as you say, get out of these investments and start buying up mines and real resources around the world, stuff like that.
I've seen China investing in Australia, I thought, something like that, all that kind of thing.
But they can't do it too fast, right, without setting off that panic that I was talking about earlier.
Is that right?
Yeah, I mean, their eyes are shifting left to right, right to left, and everybody's kind of looking at the exit, and they're looking at the other guy, and they don't want to be the last.
Nobody wants to get stuck holding the old maid.
Nobody wants to be the last man standing holding U.S. dollars.
Yeah, but the point is, the American people, no matter what, we are going to be the last man holding them all.
Exactly so.
So we will bear, and little kids and playgrounds of the public schools around America today at lunchtime or on recess on the slides and stuff, you drive by and you look at them on the playgrounds, just laugh.
Because they're going to be burdened with debts that will make their lives miserable so that they no longer even have a chance of having the standard of living that we've had in America.
Because all of these burdens, to bail the Chinese out of Freddie and Fannie, all of these burdens are being shifted to them.
Well, so is it the case that basically whether there's a massive panic or not that all this inflation is coming home, there's nothing we can do about the fact that our $50 bills are going to be nickels?
Or what are we talking about here exactly?
Well, if you're talking about what the monetary and fiscal authorities are going to do or what they're capable of doing, I mean, it's too late.
I keep employing this example, Scott, that if you want to, the time to complain about your Sunday morning hangover is on Saturday night.
If you're aware you're going to have it on Saturday night, then you show some temperance on Saturday night.
Otherwise, you get the Sunday morning hangover, period.
End of story.
So we're at the point now where we're facing the Sunday morning hangover.
Everybody says, well, surely there's something we can do.
There's something that maybe we'll take another drink.
Maybe we'll hit the bottle again.
Instead of metabolizing the excesses of Saturday night, paying your dues, and then getting responsible.
So in my view, the crisis cannot be averted now.
It's far too late for the crisis to be averted.
The fiscal damage has been done.
All right.
Well, what about all my crazy hyperbole about $50 bills becoming nickels?
I mean, is that really what we're facing?
A destruction of the dollar as even the American people even believing it has value, and all American savings accounts wiped out, the division of labor destroyed, and nightmare scenario here or what?
Well, I mean, if they play it out to the end, that's certainly one endgame scenario.
It's the end of the division of labor.
When you're talking about it's already too late, it's already too late for how severe of a consequence here.
It's already too late for the government monetary system as it's currently configured.
People can begin to find alternatives for themselves.
And alternatives, the market will present hundreds of unforeseen alternatives, ways for people to continue to pursue commerce and to do business and so on.
And even very, very clever things that I can't foresee today will be developed so that people can hedge against the destruction of the dollar, that they can find means of doing business.
But all of it, all of it, all of it will be insulated one form or another from the government money.
The government money is finished.
In the book, you talk about what you call a runaway inflation.
As once the debts are so big, there's a certain point where there's no way to even pretend that you'll ever be able to grapple with them other than trying to inflate them all away by creating new money.
And I think you even say in there that it's conceivable as unlikely politically as it could be or anything like that.
It was still within the realm of reason to think that even last year, that at some point somebody could have said, no way, we're raising taxes and cutting spending massively, say, for example, abolishing imperialism in America, that kind of thing, and that we could have been put on the right track, but not anymore.
Now, with the bailouts and the TARP and the God knows how many trillions of dollars worth of loans and guarantees and all these things that the Federal Reserve and the Congress have done to us, that now, forget it, now there's no way out of, well, and this is a whole other subject you bring up, it's not a $12 trillion national debt, it's a bazillion trillion dollar national debt.
No, you're right.
It's my view that, look, when Bush became president, the national debt was, I don't remember, it was $5 trillion or $6 trillion.
And something could have been done as, you know, a $13 trillion at the time, I suppose it was a $12, $13 trillion economy, something could have been done at the time.
But instead, we piled another $5 trillion on in the cost of war and empire, another trillion or $2 trillion in the cost of bailouts and reckless spending, you know, new Medicare programs, Bush's prescription drug plan and so on, unfunded liabilities all the way around for everybody.
And then, in the face of that, new spending measures that are on the docket right now in Washington.
I mean, these people are out of their ever-loving minds.
We can't pay the bills we have now, and they continue to dig in deeper and deeper and deeper.
So it is my contention that we are past the point of no return.
And what does that mean?
It can mean the destruction of the currency.
It clearly means, and we're coming back once again to the fact that the American people will end up holding the bag, the American people are the ones that will get the shaft on this, because debts will be repudiated.
We have seen evidence that the fiscal and monetary authorities right now are desperate to keep China in the game, to keep funding our debt.
But if somebody has to eat the shortfall, who's it going to be?
It's going to be the American people.
And so that means, Scott, the repudiation of promises upon which the American people have grown accustomed to depend, promises about retirement, promises about medical care, promises about pension guarantees, and so on and so forth.
All of those promises are going to be repudiated, either through a slow-motion inflation or outright.
I mean, when they raise the retirement age from 65 to 72, that is effectively a form of repudiation of a promise that you have been given to pay.
So they're going to have to go through all of these kinds of dislocations and repudiation of promises.
And the people holding the bag won't be the bankers, and it won't be their foreign cohorts.
It will be the American people, as it was in the 1930s with gold, as it was up until 1971 when foreigners could at least get gold, but Americans could not.
Well, now, in the 1970s, I guess if what we were heading into now was like the 1970s, that would be the best-case scenario, right, where we have this horrible inflationary depression, but we don't all star, at least.
Yeah.
That would be, as tough as that was, that would be a lot better than what I imagine that we're going to find ourselves heading into here.
Look, in the 1970s, Americans were still savers.
America was still the manufacturing hegemon of the world.
America still had a very vigorous economy.
Americans' governmental debt in the 1970s would be just a rounding error today in 2009.
So the problems are much, much worse, and the scope of the debt and the promises upon which people depend, the visible debt and the unfunded liabilities is much, much larger.
And now, there are other places around the world, as we discussed earlier, that are hospitable to capital.
There are other places around the world where capital could go.
There are other places around the world that are willing to manufacture things.
There are other places around the world that compete for business.
So America doesn't have the whole world in its hands like it did in the 1950s and 60s and 70s.
All of that has changed now.
Are we really going to live in a South American kleptocracy where there's skyscrapers and then everybody else lives in cardboard boxes, and that's it?
There's just every hundred thousandaire in America, every small businessman in America, every family that has a business that's lasted a generation or so, every farmer.
All these people are going to be wiped out now?
Or should they all go into debt now because they'll be able to pay back dollars with dimes, right?
Well, you know, it's the one universal truism of these kind of inflationary economies is that they wipe out the middle class.
I mean, you'll have a class of people like the Tim Geithners of the world and the people at AIG and Goldman Sachs and so on.
You'll have people that are involved in the money shuffle that will continue to do very, very well.
And you'll have the very, very poor.
But the middle class will be decimated, and it always happens that way.
And I know it's important to you because you know that the middle class is the bulwark of individual liberties.
Yeah, I mean, property rights and liberty don't go together when ten people have property rights and everybody else is their serf.
That's not libertarianism.
Well, jeez, man.
I mean, is that really?
See, I hate doing the whole, I'm terrible like this because I do nothing but hyperbole, but I also hate it.
And I hate predicting the worst because it never really turns out as bad as I think it's going to, or at least a lot of times.
Hell, they haven't nuked Iran so far.
Maybe it's not going to be as bad as all this.
Are you selling me a book, Charles Goyette?
I am, and it may not be that bad.
But in the meantime, your primary responsibility, the primary responsibility of everybody listening to this program now is to protect themselves and their family.
So I walk people through the likely scenarios.
I can't tell you, nobody has perfect knowledge, and I certainly can't tell you how all of this will unfold step by step.
I can show you the propensities, and I try to give people enough knowledge so that they understand that when we come to this juncture, when we come to this fork in the road, the governing authorities will make this choice.
If they make this choice, these will be the consequences.
I'm not predicting hyperinflation, but I'm certainly predicting inflation.
I'm not predicting that it's the end of civilization and it's hyperinflation, but I do give people the warning signals.
This is what you will see if that's the road that we're on.
This is how you will be able to judge the developments, the economic developments of this country going forward.
And that's my job.
Rather than to be pressured about everything, I want to arm people in a simple and understandable way.
First of all, to waken them up from their economic slumber and all the childlike myths that we continue to believe about money and wealth that we've been sold over the years, and then show people how to protect themselves and their family from this kind of currency crisis.
People need to break out of the mindset, too, that the people who are in charge of the establishment and in charge of the state in this country are a bunch of patriots who care about us and care about our grandma and care about our health care and whatever.
It seems like you could have them be invaders from a foreign country who are a plot to liquidate us and destroy our country or something like that.
That's how much they really are concerned about what happens to us at the end of all this.
I think it's kind of like the coalition for the Iraq war that you and I have talked about many times.
There were a whole bunch of different people with different objectives.
There were people that I talked about and named their names who thought it would be good for the economy, and that's why they were for it.
And there were people who thought it would be good for Israel, and that's why they were for it.
And there were people that thought it was...
I mean, people had all kinds of different objectives, and they all came together in this very peculiar coalition to move this thing along.
It is the same with the American economy.
There are people out there in government in high places who literally believe this Keynesian nonsense that the country can spend its way to prosperity.
They are not serious people.
They have never thought about this stuff seriously, but they just believe the catechisms that they've been taught in their education, in their public schools, and from government all these years.
So there are people that believe that.
There are others that clearly know better and have different objectives.
There are people that really think it's okay to create money out of thin air.
There are others that have never thought about it, and this is the way it's always been done, and it's okay with them.
So there are all kinds of coalitions of different people running this show, and they have objectives.
Some of them are personal enrichment.
Some of them are the acquisition and maintenance of power.
Some of them are because they're good civil servants, and this is the way it's always been done, and they don't know any better.
There are all kinds of people with all kinds of objectives.
But the net-net-net is that we're going to have a rude awakening from our childlike slumber about money and reality.
Well, you know, in the book you make the great comparison.
You say, this isn't like the American people are the goose that laid the golden egg, or maybe we are, but the way they see it is we're a piñata.
This whole society is a piñata, and they're having a piñata party, and the piñata does not survive the party.
Man, you can loot a whole bunch of treasure out of one of those things, but when it's over, it's over.
It's over.
Everybody gets a crack at the American piñata.
You're exactly right.
That's exactly what it has been.
And all of American politics is centered around the idea of who gets the next swing, who gets to hold the big stick, and the American media is the mariachi band, and they try to keep the festive spirits high while everybody in their interest groups and their demographic groups and their political parties and so on gets to take a crack at the American piñata and gets all the goodies they can.
And think how different that is from the founding of this country.
Instead of a constant party over who gets the power, who gets to wield the big stick, in the founding of this country wasn't the discussion about how was power kept in check?
How was it divided against itself?
How was power limited?
How was it best minimized?
In this case, it's all about give me the big stick, let me have a crack at the American piñata, but you're right.
The piñata, at the end of the party, the piñata has been destroyed.
It has no more gifts to dispense, and it's all over.
What's the crack-up boom?
Is that the panic we were talking about before where everybody just races out of their doors?
I think I remember reading something about how still to this day out in the German countryside you can find poor old farmers who have the very nicest grand pianos and golden gilded mirrors and all these wonderful things that the people in the cities had gone out to the countryside with their finest possessions in hopes of putting food on their family for one day.
Yeah, they put the food on the family.
The crack-up boom, it's a term used by the great economist Ludwig von Mises to describe the point of no return when everybody suddenly begins to realize that the understanding becomes widespread, that the depreciation, the destruction of the currency is ongoing, that it will continue to lose value, that it's not just an interim phenomenon, but that it is a syndrome that will continue to worthlessness, and they begin desperately to scramble to buy anything tangible that they can.
Yeah, you're right.
It's anything they can get their hands on regardless of the price just to convert their paper money into something real, a basket of eggs or an old used bicycle or anything tangible.
Yeah, an old piano, because they know that the paper money is a deteriorating, a wasting asset.
And once that strikes, I mean, that is the definition of the end of the game.
That's it.
Once you get to the crack-up boom, the paper currency is utterly destroyed and commerce destroyed with it, and all of the things that make a prosperous culture possible that you alluded to, like the division of labor and stuff, they all come to an end.
I mean, imagine if everybody that goes to work in the morning has to figure out a way to pay for their lunch with a bicycle seat or a tire or something tangible because the money is no good.
Commerce comes to a halt.
How are people paid if commerce comes to a halt, if there's no money, if there's no dependable, reliable form of money?
Here's the thing, though, is we have extremely advanced markets and an extremely advanced division of labor in this society.
I mean, what you're talking about in something like this means cities full of people starving and things, right?
Yeah.
Well, it sure can.
That means no more 18-wheelers on the highways bringing us grub.
My description of what we are encountering is a command economy, and a command economy is a top-down model.
It's a model that is ordered and organized not by the mutual advantage of parties to an exchange, but by coercion, by force, in which labor, business, economic activities are all ordered from the top down.
It's very, very inefficient.
It's very destructive to prosperity.
But that's clearly where we're headed in this country.
And if need be, the National Guard and the Army can deliver gasoline to the gas station, and you can take your ration coupon and still get gas.
That's the living standard of the American people, though, under the consequences of getting kicked back 50 or 60 years.
Man.
Well, and, yeah, let's talk about rationing and price controls and all that.
I mean, short of the crack-up boom where everybody just completely abandons the currency and we've got to wait until there's some new one develops or whatever, but if we just have terrible inflation, what often happens is what Richard Nixon did back in the 70s with the wage and price controls, and, of course, Alan Greenspan.
I remember way back in the 1990s watching Alan Greenspan, probably because Ron Paul was cross-examining him or something.
But one of the things that he said was that, well, you know, if wages continue to rise, that could cause inflation.
We've got to keep those wages down, always blaming the last guy to get a cost-of-living increase for the inflation that he's causing.
And, of course, when prices at the store go up, the government will be the first ones to tell you that, yeah, it's the fault of the store owner who's trying to rip you off for a price of bread.
And for the American people who don't get around to reading the dollar meltdown and don't understand the cause of this, it's pretty easy to see that, and it's pretty easy to see in history where it's already happened, and it's easy to see how it could happen again where people accept the fact that it's the guy at the gas station's fault, it's the owner of the grocery store's fault, it's greedy whoever's fault, that they're gouging us and raising their prices.
And then what they do is price controls, but you explain in your book, again, the dollar meltdown, that this makes matters worse and worse and worse, and it creates shortages.
How?
Why?
The governing authorities are always very anxious to divert attention from themselves to these problems of their own creation, the problems of their own making, so they have to find somebody to whom they can point as responsible for these problems.
One of the first things that they do in the face of rising prices is demand a law to stop prices from rising.
I walk through this in the book, and anybody with a familiarity of the term supply and demand will easily understand what this means.
If prices are artificially capped, an artificial cap below the real market rate of prices keeps goods from coming to market.
People will not continue to feed cattle, to go out and buy expensive food for cattle, so that they can feed their cattle and take the nice plump cattle to market and sell for less than what it costs them to raise.
They will no longer engage in that business activity.
Until we had this during the Nixon years, you had wage and price controls implemented by that conservative president, Richard Nixon, so you had nice, low prices at the meat counters in America's stores, but the meat counters were empty.
So this is one of the syndromes.
This is perfectly predictable.
And, of course, they blame the greedy farmers, right?
I think I saw a thing last week where Tom Woods talks about Truman threatening to use the National Guard to invade the farms and take the meat, because he knew that the farmers were hoarding it.
Well, and the Housewives of America got in the 70s, they got all up in arms, and they started demonstrations outside grocery stores to get the attention of the farmers.
Of course, in the background all the time were the monetary authorities destroying the purchasing power of the currency.
The currency that brought us to that hit.
Well, listen, it's really expensive to slaughter 3 million people in Vietnam, Laos, and Cambodia, Charles.
Sometimes we've got to make sacrifices.
You've got to pay for your wars by any means necessary.
And if that means destroying the value of your currency, as we have seen in the Bush years, the U.S. dollar lost 20% of its purchasing power just in the Bush years, then so be it.
So I try to show people, and I don't want anybody to misunderstand and think this is a dense book of economics and it's for specialists.
I want them to understand that it will give them an overview so they're prepared to understand economic events as they unfold, so that they can protect themselves and their family from these kinds of shenanigans, like the price controls and its cousin, rationing, which always follows along with price controls and high inflation rates.
Well, I've got a couple of questions.
First of all, let me ask you about a criticism that I often hear about the idea of having a gold standard, and that if our currency is based on gold, then we'll be at the mercy of foreign governments, which can manipulate the price of gold on the world markets and screw us over.
Well, I don't have any idea in the world how that's done, and I'm not trying to implement a gold standard.
I'm trying to implement economic freedom.
That's all I care about.
If some people choose to denote their commercial transactions in terms of gold, that's fine with me.
If people want to denote their commercial transactions in terms of a decimal point to the 7th or 8th place of a barrel of oil, that's fine with me.
It looks as a very sophisticated age, and people are capable of developing all kinds of monetary systems in the absence of legal tender laws.
Well, how about government purchases and taxation?
Should they be bound by some kind of gold standard?
Ron Paul often says that he thinks a big problem, well, obviously this whole interview has been about how government is unleashed by this power of printing money, but if you say legalize different competing currencies and contracts and let people make whatever currencies they want, what about the national government?
Well, look, I go back to the great economist Ludwig von Mises.
You've got to understand that separating money from the governmental authorities is a way of protecting the civil liberties of the people.
So I'd like to see monetary systems develop as they have in the past, as they're perfectly capable of doing.
Look, I don't care whose picture is on the money.
I don't care the date.
I don't care the signature.
I don't care the color of the ink.
All I care about is that it is an honest and reliable form of money.
So all kinds of honest and reliable forms of money are ready to take the place of the irresponsibly managed U.S. dollar in the absence of the legal tender laws.
But you know, right now, Scott, if you write a contract for gold, if you say that the dollar is a wasting asset, Charles, I want to sell you my house, but I want you to pay me over the course of ten years, but I don't want to denominate this transaction in terms of dollars, which I feel will not retain their value.
I want to do it in terms of, for example, ounces of gold or ounces of silver.
The courts will not protect that contract, even though it's entered in by – we're both adults of sound mind.
Even though it's entered in – That might be debatable.
Yeah.
But the courts will not protect that contract the way they will a dollar-denominated contract because of the legal tender laws.
Right.
All right.
But what about the government spending?
Should they only be able to buy things in certain kinds of dollars, like, say, ones backed by gold or something like that?
What effect does that have, the way Congress acts?
Even in a world without a central bank or in an America without a central bank, what about Congress's spending?
Yeah.
Once you audit the Fed and then you enter the Fed, then all of a sudden you start to have some sort of cap on the irresponsible spending of the Congress because they don't have a little closet in the back of the Capitol where paper dollars can be printed to accommodate their wars or their other spending devices, their re-election schemes.
So all of a sudden there's a limiting mechanism on their willingness to spend because they have to go face the people in a straightforward way, as was originally designed in the Constitution, and tax them for their schemes.
So they can't pretend that there's no cost.
Look, when they create bailouts, when they give guarantees to FDIC member banks, they do all of this stuff at no cost.
They do everything at virtually no cost because they have the central bank in the back room.
Well, you know me.
I don't want Congress to have any money at all.
In fact, I want to exile them all to Baghdad, the red zone.
But the thing is, though, wouldn't they say that part of their legal tender laws is that they can't tax us?
I mean, this may be a good reason to support your position.
I think it may be a reason I do, but I'm not sure it's really right.
If there's no uniform currency recognized or whatever by the state, then how can they tax us?
Well, if I have a legal obligation to pay somebody a certain amount of money in a form in which I'm legally obligated, then I can go and transfer the form money that I used, the one in which I'm legally obligated to pay it.
I guess that's about all I can really say about that.
Because if you're suggesting that the government can't collect revenues to which it's entitled from the people in a dependable form of currency, I mean, who are they to complain about the currency in which they get paid?
But you can always, if you have an obligation that you have to meet in certain terms, in terms of currency unit A, B, or C, you can always go to a financial institution and exchange the currency you use for the currency in which your debt is due.
I see.
So the state could say, well, this is the currency that we use, but we would just, when we had to pay our taxes, we would just do the converting there.
As can anybody else.
You should be able to tell me what terms you want to be paid by me in.
All right.
Well, I mean, but that assumes that there's any legitimacy on the part of the state at all, but that's a different question.
Let me ask you this, Charles.
I don't want to just tease him with this.
Give the people a little bit of advice here about how to protect themselves.
And let me build in here a little bit of devil's advocate, which is that I hear people say that, you know, right now you should buy a bunch of gold because the dollar is going to, you know, obviously decrease in value and whatever.
And other people are saying, yeah, but the last time there was a giant gold rally, a bunch of people got completely screwed in the early 80s there.
And then the answer to that, I guess, from Peter Schiff, I heard him say, yeah, but it's not 1980 right now.
It's 1970 right now.
You bought gold in 1970 and you sold it in 1980.
You were all right.
You know, where are we in that?
What are people to do?
You talk about, in fact, the title of the book.
Here is Charles Goyette, the dollar meltdown surviving the impending currency crisis with gold, oil and other unconventional investments.
It's not 1970 and it's not 1980.
Now, what it is, is the culmination of a long term process.
There's an old saying in the markets that a trend in force is a trend in force.
The long term trend of the U.S. dollar since the institution of the central bank has been down.
I mean, we risk being redundant and saying that the U.S. dollar has lost 96 percent of its purchasing power as compared to the dollar that prevailed when the Federal Reserve was created.
By any standard, they have destroyed most of the purchasing power of the United States dollar on their watch.
We've had the worst depressions, the worst bank failures, some of the worst economic cataclysms during their watch.
So what has changed?
Has the trend in force changed?
No, the dollar may be up tomorrow, but the long term trend is accelerating an accelerating decline of the purchasing power of the United States dollar.
There are people all over the world that are holding these dollars that are very, very nervous about our propensity to just print more and more and more and devalue accordingly, devalue the ones that they're holding.
So the long term trend is accelerating, and all of this is coming to a culmination.
I mean, we got the Bretton Woods Agreement, which was a dollar gold exchange standard after World War II, and it didn't really work.
Frankly, the United States didn't manage it very honestly because we continued to print money even back then.
So it lasted for 25 years or so until 1971, and that standard had to change to the dollar exchange standard, which foreigners hold dollars as reserves, and they could exchange a dollar not for gold because it's a dollar exchange standard, but for another dollar.
That system is breaking down before our very eyes.
All of these things are signaled to us clearly in the market.
In 2008, gold broke $1,000 an ounce.
Again, recently, gold broke $1,000 an ounce.
Oil went to $147 a barrel in July of 2008.
Oil's roared up to $80 a barrel now.
All of these things are signaling to us the breakdown of the dollar exchange standard.
It's not something I'm wishing for.
It's not something I'm hoping for.
It's not something I made up.
It's going on before our very eyes.
A lot of it was hastened by the Bush administration making strange bedfellows of people all over the world that were concerned about this so-called unipolar world, this fantasy of the neoconservatives, and they began linking arms with one another and talking about a way to insulate themselves from the instability of a unipolar world in which the dollar was irresponsibly and dishonestly managed.
They began looking for trading opportunities.
They began looking at commercial opportunities, at currency exchange opportunities that left the U.S. dollar behind.
All of this is unfolding before our eyes, and I make great pains to detail this for people in the book so they don't think that this is just something made up or a science fiction scenario.
It is going on now.
I mean, the Secretary General of OPEC said a year or so ago, he said, this time, when we leave the dollar, it won't take us as long to do it as it did take us when we abandoned the British pound sterling.
None of this is a fantasy or a fiction.
The signs are all about us that this is taking place.
So I try to provide historical parallels.
What sort of havens can people find during a period like this?
Well, obviously, if the paper currency, the measuring unit, the yardstick for economic calculations is shrinking, that means that if you buy a yard of silk this week, it's 36 inches.
Next week, it's 26.
The next week, it's 16.
The next week, it's 6.
Then the yardstick is shrinking.
The dollar is the yardstick that's shrinking.
If you're a dressmaker, buy the silk now because you'll be buying less of it for the same amount of money because the unit of measurement, the unit of accounting is dishonest.
The dollar is a dishonest, irresponsible unit of accounting.
So the haven, the opportunity for people is to begin now to move their money into real forms of money.
And of course, it starts with gold and silver.
These are tangible, durable forms of money.
The world's most long-lasting commodity monies are gold and silver.
But there are other things that the world is absolutely dependent on, and of course, one of them is oil.
Well, how can the average American participate in the petroleum market without frankly getting had in the futures markets, without a lot of leverage, without having gut-wrenching experiences with each uptick or downtick of the oil market?
How can they do something about it?
Well, they can, and I show them in the book how they can.
How in the face of an Obama administration that on the campaign trail was pushing a windfall profit tax, how can you invest in oil without being exposed to the prospects of oil companies being nationalized?
Companies have been nationalized in this country all the time in the face of a crisis, and oil companies can be nationalized too.
So what can you do?
How can you participate in the oil market without the dangerous leverage of the futures market and the other things that some people have learned through bitter experience are only for financial professionals?
There are things that I recommend in the book that people can do, and it extends them from the world's most long-lasting, durable forms of money like gold and silver.
It extends them to energy, and from energy I move on down the line to other things that are essentials to life like agricultural products to other natural resources.
So I walk people through these things, and I show them a way that a non-professional can participate in those markets, the upside in those markets during a period of inflation, a way to protect themselves from the destruction of the dollar by buying real things that real people need for real life.
Well, you know, I learned when I was a kid that during the Great Depression, two extremely solid investments were cosmetics and alcohol.
Yeah, I'm sure.
Depression-proof industries there.
Oh, and security companies.
It's a good thing to go install security systems.
Now's a good time for that as unemployment and crime rates are going to begin to really start climbing here.
Right.
A period like this, a currency crisis, really tests the fabric of a culture in every way, and this is actually encouraged by the monetary and the fiscal authorities with their deceit.
Invest in the companies that make the equipment for the riot police.
Yeah.
That's where the dollars are at, and concrete and iron bars.
Yeah.
That's the growth industry of the future here.
Yeah.
Awesome.
Charles Goyette, man, I can't tell you how much I appreciate this book and your time on the show today.
Scott, it's always really, really good to talk to you.
I admire you greatly for what you've done all these years and the work you do at AntiWar.com, and I admire all the people at AntiWar.com.
Oh, by the way, a matter of fact, in the appendix of the book, I list absolutely essential resources for investors, newsletters and websites and so on, and right up there, chief among my recommendations, is AntiWar.com.
I don't know how anybody can even pretend to be fully informed about war, about the cost of war and the configuration of the world, without having bookmarked AntiWar.com.
I don't even know how anybody can pretend to be informed without that resource.
Well, thanks a lot for that, and we really miss you being one of us and having you at AntiWar.
It's been worth it to have you off this time to write this book.
It's incredible, and it's funny.
It's great.
You can read it in a couple of afternoons or so.
No problem at all.
Get home from work.
Instead of watching Seinfeld reruns or whatever, knock it right out.
You'll be able to find it at the bookstore real easy because it's bright yellow and it's got a melting Federal Reserve note on the front.
It's called The Dollar Meltdown, Surviving the Impending Currency Crisis with Gold, Oil and Other Unconventional Investments, Charles Goyette.
The websites are charlesgoyette.com and thedollarmeltdown.com.
Please come back to AntiWar Radio, Charles.
We miss you.
Anytime, Scott.
Thank you, buddy.
Thanks, man.
Okay, speak to you again.
