All right, y'all.
Welcome back to the show.
It's Anti-War Radio, ChaosRadioAustin.org, LRN.
FM.
And my next guest is Thomas E.
Woods.
Tomwoods.com is his website.
He's a senior fellow at the Ludwig von Mises Institute, home of the Austrian economists.
He's the author of a bunch of books, a whole giant slew of them.
Who Killed the Constitution, co-written with Kevin Gutzman, the politically incorrect guide to American history, The Church Confronts Modernity, The Church and the Market, Sacred Then and Sacred Now, 33 Questions About American History You're Not Supposed to Ask, How the Catholic Church Built Western Civilization, We Who Dared Say No to War, that's co-edited with Murray Polner, American anti-war writing from 1812 to now, which is so important.
It's such a great book.
Meltdown, a free market look, and then we got into this financial crisis.
Nullification, How the States Ought to Stand Between You and the Feds.
And the brand new book just out is Rollback.
Welcome back to the show, Tom.
How are you doing?
Scott, I'm always happy to be on your show.
Well, thanks.
I'm always happy to have you here.
So I was doing some reading, shock and audit at motherjones.com.
Also was reading the great Robert Higgs, author of Crisis and Leviathan over there at independent.org, the Independent Institute.
And then I saw a website called Politifact that did a fact check on Congressman Dr.
Ron Paul's assertion that the American empire costs the American people a trillion dollars a year.
And they said, yeah, that's about right.
So it seems to me these these three sources all seem to agree when you add up the cost of maintaining the hydrogen bombs at the Department of Energy and you look at the cost of the Veterans Administration for former and current wars, et cetera.
The American people spent a trillion dollars a year on militarism.
So here's my question to you, Tom Woods.
How much is a trillion?
Because, you know, it's just a word, you know, it's a number to me.
I don't know.
It's a it's another decimal place with a zero there in a space on a page that is revealing the very fact that we can't even fathom this figure.
And yet this is not the figure, of course, that we're even officially given.
As you say, you have to really dig around in order to sum up all the military related expenditures all throughout the budget to arrive at a trillion in the first place.
So this information in the first place is suppressed.
But, yeah, I don't know how to get my head around the idea of a trillion dollars either.
But you're right that this is not just some figure that Ron Paul threw out, you know, just to make things interesting.
I mean, I think you've had a guy named Winslow Wheeler on your show.
He's a different expert.
He arrives also at the trillion dollar figure.
And what is funny to me is how the well, you know, funny in a macabre sense, but it is how these people are still are still in this dream world, this empire, imperial dream world in which they continue to speak as if the U.S. is some really robust economy and society.
And this can just be perpetuated forever when, in fact, and the purpose of rollback is to at least the first chapter is to talk about the absolute train wreck that's coming.
We've got an aging population that we have not prepared for.
We've made promises that can't be kept.
According to some estimates, we're a hundred trillion dollars short of what the entitlement programs are going to need.
And then Lawrence Kotlikoff at Boston University, who's a Democrat, he's not some right wing free market guy, is he estimates that the fiscal gap is two hundred trillion dollars.
I mean, and yet they're still talking about being the indispensable nation and all the bases they're going to open.
It's like it's like we're living in a giant lunatic asylum.
You know, it's funny, I was just talking with Gareth Porter about the interests of the generals and just getting ribbons and little shiny things to put on their shirts and the CIA agents and the NSA people and just all the bureaucrats who need the permanent national security state to exist.
And then, of course, there's the Israel lobby and the arms manufacturers themselves and how these narrow pressure groups get to completely control the policy at the expense of the rest of the nation.
And, you know, on one hand, I wonder whether the people in power look at America just like, you know, a mob store and they're just here to liquidate everything and burn the place down and turn their back on it.
But then again, I think, no, it's all just accident because there's nobody who really even is trying to seek some sort of national interest, certainly not the president or the Congress.
They all serve very narrow interests.
And at the expense of the rest of us to such a degree, like you're talking about, how many trillion dollar fiscal gap and how can that be made up of what are we supposed to do about that?
And I think you're hitting the nail on the head of this idea that they are acting in accordance with their interests, but they always do this beneath the veneer of public interest rhetoric.
You know, it's all just for you and me, Scott.
You know, they're just looking out for you and me.
They're allocating resources to the ends that are best suited to providing for our security.
And I mean, it's all the things that we hear all the time.
But one of the things that we might note is that in the couple of trillion dollar increase that the Pentagon has seen since 9-11, half of that has gone to the wars and the other half, nobody knows where it went because the Air Force is much smaller than it was.
The Army is marginally larger.
It's about 7 percent larger after a 53 percent budget increase.
And the Navy is much smaller.
So the question that some military analysts are asking is, well, you know, I mean, normally when you spend a trillion bucks, you wind up with more at the end than you started with.
So it's somebody is making out pretty darn well throughout all this.
Well, meanwhile, going on MSNBC and Fox News and all these other outlets and solemnly informing us of the critical mission of the Pentagon and they must be laughing hysterically at the conservatives who think that if you talk about the military budget, you must be some kind of commie.
That's just the way these people want it.
Right.
Yeah, exactly true.
And fiscal conservatism is to be completely trumped by national security conservatism.
Yeah.
And fiscal conservatism.
Right.
That means, you know, let's cut out bacon and eggs for in the morning for poor kids.
But, you know, make sure that Lockheed gets an implied bailout and Boeing is taken care of.
I mean, I mean, I guess I just don't take the fiscal conservatives seriously as long as they won't face the 800 pound gorilla.
Right.
Yeah.
And it might even weigh more than that.
Yeah, yeah, yeah.
I know at this point, how many zeros has it got?
Yeah.
Well, you know, I never had anything to lose.
So, you know, I noticed that it was going on, but, you know, my I didn't have a big stock portfolio that vanished or, you know, I'm not upside down in a house that I own or anything like that.
But I was reminded because I was watching this thing on 60 Minutes the other night of just how badly millions and millions of individuals and families and businesses have been just horribly devastated by this.
People who worked their whole lives had lost everything because of the giant housing bubble and the subprime derivatives scandal crash thingamajig.
And I like to make the case, Tom, but I'm not nearly as much of Austrian economist as you trained at Harvard and Columbia and the Mises Institute as you are.
But it seems to me that going through looking at the federal funds rate and things like that, that a major it's pretty easy for me, I think, to imply or see an implied causation in the correlation between the wars being launched by the Bush administration and the lowering of the interest rate by the central bank in order to make the war seem free or to seem like it wasn't going to cost us when we were already in a recession at the beginning of Bush's term in office before September 11th ever even happened.
And so then I get to make the case that, you know, the empire and the war, particularly the war against Iraq, was the reason that they inflated the housing bubble, really, that all these people are hurt, that this is why they're unemployed now is because they cheered for that war then.
Do you think that my case is solid, Tom Woods?
Yeah, I think there's a lot to that.
And I think that's partly why the central bank is there.
Again, there's a lot of public interest hoo-ha about why we have the institutions we have.
Oh, the Federal Reserve is there to provide stability and to give us a flexible currency and to maximize employment while minimizing inflation.
Blah, blah, blah, blah, blah, blah, blah.
Well, look, if you don't believe in all the Pentagon press releases you read, why are you believing the Federal Reserve press releases?
These two institutions are totally in bed with each other.
And yeah, if the U.S. government had just simply borrowed all the money that would have driven interest rates up, people would have noticed that.
We can't have people noticing that.
So we need the central bank to push those interest rates down.
That's why, you know, I love progressives who are anti-war.
But as soon as they turn around and say, oh, my gosh, what would we do without the Fed?
They're missing half the picture.
Right.
Hey, follow the money, right?
If it's all about evil and corruption and money, then follow it to its source.
That's what I say.
Alan Greenspan.
All right.
Hold on one second.
We'll be back, everybody, with Tom Woods, author of Rollback, Repealing Big Government Before the Coming Fiscal Collapse.
Brand new out.
All right, y'all, welcome back to the show, it's Anti-War Radio.
No wonder I couldn't get the guy from Human Rights Watch on the show to talk about the new Egypt Torture Report.
Apparently, at least one of them has been detained by the Egyptian secret police.
It's hard to do an interview with Anti-War Radio from an Egyptian torture cell.
I hope that they're OK.
All right.
So let's get started.
I hope that they're OK.
All right.
So we're talking with Tom Woods about how broke America is.
Hey, Tom, how broke is America?
Help me really get my head around this, because, you know, on TV, they basically say everything's going to be all right.
And, you know, this complicated stuff, all this money, I don't know, maybe maybe, you know, they stimulate enough and the stock market go up and everything will be fine.
Well, the problem is that the bills that are going to be coming due for a lot of these programs exceed the entire net worth of the U.S.
So that's that's what you mean when you say somebody is bankrupt, like it's just impossible to pay it.
So now you get to a point where, you know, I mentioned Kotlikoff from Boston University, when somebody like that, who's as mainstream as can be, comes out and says, look, you know, the game is up, then, you know, the game really is up.
And it's and more than that, I mean, you think about the different ways they could they could tackle this, you know, one people, you know, you could just raise taxes.
OK, well, I mean, that's not impossible.
You could indeed raise taxes.
The one problem is that you'd have to raise taxes so much that presumably, you know, even even skeptics of the free market would have to admit at some level it's going to have a further depressing effect.
But more than that, since the Korean War, what we've seen is that no matter what the tax rate is, basically federal revenues tend to amount somewhere, give or take a couple percentage points to 20 percent of GDP.
So that's quite a remarkable thing that regardless of what the actual rate is, still the chunk that the government can expect to get from us is largely unchanged.
It basically hovers somewhere around 20 percent.
That's not going to be nearly enough to solve the problem, even if there were no moral objections to big tax tax like we could keep on borrowing that assumes that they're going to continue to be lenders.
And there are people who say, well, of course, I mean, you know, everybody has an interest in lending to the US.
It's great.
It's super.
But even if they did, the problem is so much of the developed world, including China and Japan, are going to be facing their own demographic problems with their own aging populations.
They're going to need a lot of their own money to meet their own needs.
They're not going to have a whole lot of cash lying around to say, let's throw this into some treasuries that are yielding us zero percent.
And then finally, there's the inflation route.
And nobody can we can't even imagine how horrific that would be.
So, yeah, that's the definition of broke.
So, in other words, a few years back, even it was at least conceivable that the debt could be paid off eventually or that if interest rates were to go up at all, that still the government could afford to pay the interest on the debt.
But now, if the interest rate goes up, then just the annual interest on the debt is enough to break the bank right there.
And so we're completely stuck between the rock and the hard place.
It's already too late.
We're already crammed in there.
Yeah, exactly right.
Yeah, the interest payment thing is an issue, because even if interest rates stay where they are, even if they stay at historically low levels, the Congressional Budget Office, which is not known for, you know, for dire warnings, nevertheless, says that by the year 2020, just the interest on the national debt, that's not even counting all these unfunded obligations, just the interest on the national debt alone is going to approach a trillion dollars a year in the rosiest of scenarios.
That's the rosiest scenario.
Now, if you think that the health, the economic health of the U.S. and the sanity of its leaders are sufficient to keep interest rates low, then maybe we could get to that and still have only a trillion dollars a year.
But my view is that investors in the U.S. are going to want a little bit of a risk premium built into their investment.
They're going to want a higher yield to compensate them for the fact that the American political class is more obviously remote from reality and insane with every passing year.
I mean, they're all living in a dream world.
And again, investors are going to want a little bit of a risk premium to compensate them for the risk involved in investing in a country that thinks the best choice we could possibly have in 2012 is Barack Obama or Mitt Romney.
Oh, man, so that's not a rosy scenario, but let's pretend for a minute that Mitt Romney is apparently crushing everybody in fundraising and the early polling.
You know, Gingrich is doing well in some states.
Well, you know, honestly, honestly, I think that's only to the good.
I just think it's hilarious.
The absolute dearth of leadership on the Republican side right now.
I mean, they're just absolutely doomed and that's to the better.
But so wait a minute now.
So let's pretend that Ron Paul becomes the president and he appoints you, I don't know, the PR guy who has to go out and explain to the people, here's what we're going to do to try to fix this.
What's the program?
Well, part of the program would be the Ron Paul program of looking for the areas where people's lives are going to be disrupted the least and start there.
Well, you abolish the empire.
That's going to be really problematic for all the towns that are built up around the military bases and so forth.
Yeah, I know that Colleen, Texas would be a ghost town then, right?
Before we closed.
It's true.
It's absolutely true.
But they have, you know, some base closings have occurred.
I mean, at the end of the Cold War, there were indeed some base closings.
But, you know, look, some decisions are going to have to be made.
And when it's up, you know, when it's when when the choice comes down to do we unplug granny or do we, you know, do we do we lower the expenditures on the empire?
I mean, I think more and more people are going to be willing to opt for the latter.
So I do that.
And then, you know, in the book, I've got some kind of suggestions toward the end.
But really, right now, right now, the most important thing is to alert people to the extent of the problem, because you can't you can't properly evaluate any solution.
Any solution is going to seem way out there and extreme unless you understand the extent of the problem.
Otherwise, it'll just look like we're just mean people and we don't like sick people or whatever.
No, it's not that at all.
It's I mean, I would love all the sick people to be cared for.
We're all going to have to try and do that as Americans.
We're going to have to help each other out.
But my my concern is don't rely on this bankrupt institution to take care of you.
But look for alternative means of us all helping each other as human beings before this collapse comes.
So the educational thing is the key thing right now, because most people are really in la la land.
They think the experts are in charge and they make mistakes once in a while.
But ultimately, they have our interests at heart and everything will be put right in the long run.
It's not going to be and people got to see that as quickly as possible so they can prepare themselves rationally for what's coming.
That's basically what rollback is about.
It's spelling out the extent of the problem and then going through and hacking away with a machete at all the rationale for government intervention that we've been given, whether it's abroad or at home and we'd all be dead and in a pit somewhere if it weren't for the government.
That's falling for this BS is what got us in this trouble in the first place.
And that's the first step to reversing it is admitting we have a problem, admitting we've been duped, we've been lied to.
We believed a lot of propaganda and committing ourselves to live as free people once again.
Well, so if I understand our dilemma correctly, it seems like the the major piece of information that's got to be explained that people have got to get their head around is that is why it is.
When the prices start rising and that they don't blame the shopkeeper for raising his price, that they understand that government has devalued the money, that the shopkeeper has no choice in the matter.
It's the state.
That's the problem, because at least from what I'm hearing from Austrian economists, you guys over at the Mises Institute, that's the problem that we're facing is not just rising prices in the stock market or the housing market or some other, you know, bubble of malinvestment, beanie babies or some nonsense, but skyrocketing prices across the board as the government creates all this money to devalue the debt.
And I wonder, has there ever been a population in history that got it through their head what inflation really meant?
What was at the root of it and what needed to be done?
Or do they all just turn to the state for more inflation?
Well, I do know that right around the time that the major hyperinflation was about to hit Germany, it didn't hit Austria.
And it was in part because of Ludwig von Mises' intervention to stop it.
And people realized, OK, yes, this is the wrong thing to do, so we better not do it.
Right.
The government's in there saying, oh, the prices keep going up.
We better print more money so that we can afford to pay them.
I know that we just have to hope, you know, that the educational potential of YouTube can reach people, you know, when the liars on MSNBC or wherever else are teaching the wrong thing.
We have to directly appeal to them.
So, again, it's another reason in the short run people have got to understand who the bad guys in this situation are.
The bad guy is not the shopkeeper who's just doing the best he can to provide for himself.
That's not the bad guy.
Some little guy with a dinky store who is trying to figure out what the value of the dollar is, so he's tinkering with his prices to figure out where they belong.
That's not the problem.
That's not the problem.
It's the problem is the guys in the expensive suits who go on television with their phony smiles and tell you about how deeply they care all about you.
And meanwhile, their portfolio is entirely in foreign stocks and gold.
Yeah.
All right.
Well, so now on the big questions.
OK, everybody agrees.
Just abolish the Pentagon.
Have I dream a genie.
Just blink that thing out of existence.
We'll save a trillion dollars a year.
We'll start right there.
But now left over still is Medicare and Medicaid and all these major entitlements that these obligations, Social Security that stretch for decades into the future.
Tom, what's to be done about them?
OK, so the quick sort of quick answer to this is one way to deal with it.
And one of the proposals I've gotten there is when people reach 65, you give them a choice and you say you can you can get all the money you have coming from you from the major federal transfer programs.
And that's fine.
Or you can forswear these benefits entirely.
And in exchange, get complete exemption from income and various other kinds of taxation for the rest of your life.
Now, that is a I would I would certainly take that because, I mean, I don't want to retire at 65 and play golf.
I suck at golf.
I mean, I want to do something productive the rest of my life.
I would take that deal in a second.
So you ease the burden on the system that way.
But things like that, I mean, we have to think creatively.
We have to think of ways to get out of it.
That's right.
So it's not that the problem is insurmountable.
It's just that our current situation doesn't doesn't seem to indicate that these changes are going to come soon.
That's that's really where we're hung up.
But it's not that there's nothing that could be done.
Yeah, there are things that could be done, but they have to be done pretty darn soon.
And people would have to understand why we're doing them and what we're likely to face if we don't.
And, you know, you know, you talk to Scott Horton and good, decent people on the radio.
Then you go to the shopping mall and you're surrounded by airheaded idiots.
And you think, well, gee, for a minute there, I thought maybe people were kind of getting a clue of what's going on.
And then you realize that most people are just living in a total freaking dream world of video games, alcohol and pornography.
You know, that's not going to last after the hyperinflation either.
I don't guess they'll start paying attention one day.
The day after it's too late, I guess.
That's right.
Well, look, I got my publisher put up a free chapter of this rollback book.
No way.
Yeah, the website is rollbackbook.com rollbackbook.com.
Great.
And there's a great review of it by Benjamin Tucker.
I think it is.
Oh, Jeff Tucker.
Oh, Jeff Tucker.
Benjamin Tucker's the historical anarchist.
Jeff Tucker is the contemporary one.
Yeah, that's right.
I knew that.
Ripping the disguise off government, it's called.
It's a great review of the book Rollback by Tom Woods.
Repealing big government before the coming fiscal collapse.
Thanks very much for your time.
Really appreciate it.
Thank you, Scott.
