In this episode of The Joe Rogan Experience, Joe talks about the winners of our website contest, and how the internet is going to change the way we think about money. Joe also talks about his new book, and Peter Schiff joins him on the show to talk about how he thinks about economics and why it's not smart to be a mathematical retard. Joe also gives us a discount code: "ROGAN" to get 10% off of any and all supplements, and we give you the chance to win a free year of Squarespace! Use the code: ROGAN10 at checkout to save 10% on all of your favorite supplements. Joe is a comedian, writer, podcaster, and podcaster. He's also the host of the podcast Joe Rogans Experience, which is a podcast where he talks about all things internet related. This episode is brought to you by Squarepace and is sponsored by O2N-Naturals, a company that makes supplements and other health and wellness products. Use the promo code WORDROGAN to get $10 off your first box of O2-NUTRIpsprite! Use code WORDSALEATTRACTIVE to save $10 and get $20 off your entire box of supplements! Joe talks to Peter Shipp, who is a financial genius, and explains how you can make money on the internet, and why you should be selling you stuff you don't need to pay for it. Thanks to Peter Schiff, who does not need a college degree to make money, but you can do it anyway. Thank you, Peter, you're a genius, so you can be smart, and you're smart, right? and you can have it all, right, and it's cool, right here, right in your own house, no matter where you're at it, right at home, right on the other end of the internet? Thanks, Peter Schiff is a smart, thank you, and he's smart, no need to do it, and so much more, and that's cool and you'll get it, too, and your money back, too cool, too much money, you can use it, you'll have it, it's amazing, and more money, too good, and everything you need it, enough of it's good enough to help you're not even better than that, you get it's better than you're good enough, right right, you know what you're going to get it?
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00:04:33.000I'm a mathematical retard, and I really appreciate people like you out there that can spell things out and explain what's wrong with this ridiculous system that we operate under and what's right.
00:04:46.000Yeah, you know, don't sell yourself short, though.
00:04:49.000Just your common sense might mean you know more about economics than people who actually have Nobel Prizes in economics.
00:04:55.000Well, I would disagree with you, but I saw that movie Inside Job and I saw how the whole system works where they essentially set these financial limitations and then wind up getting jobs after the economics professors set these limitations and then wind up getting jobs and wind up profiting off of the fact that they've made it so that these things go through.
00:05:15.000You and your video from Occupy Wall Street is one of my all-time favorites.
00:05:37.000This wanting to understand and explain why our economy is in such a mess.
00:05:43.000But having this very distorted perception of the actual facts themselves.
00:05:46.000Yeah, and my purpose of going down there was to call attention to – I think they misdiagnosed or misunderstood what was really going on, and they bought into this idea that it's capitalism or the free market that is the problem.
00:06:03.000And so they were blaming maybe Wall Street because they looked at Wall Street as somehow epitomizing American capitalism.
00:06:11.000And I wanted to point out that what they were really upset at was not capitalism.
00:06:30.000And so I wanted to go there and explain to the people in that park But more importantly, if people watch the interactions between me and the occupiers to try to really expose how ridiculous the things that they're saying are, I understood that they were upset and they were frustrated,
00:06:48.000but the source of their frustration was misplaced.
00:06:51.000I mean, they should be protesting Washington.
00:06:57.000I mean, what's going on in Wall Street is a symptom of the problem, and it's not capitalism, because when you have the government and Wall Street working together, that's not the free market.
00:07:07.000And it's government that is at the source of it.
00:07:10.000It's not necessarily the bank's fault.
00:07:13.000Sure, everybody wants something from government, but the government should deny When somebody wants a bailout or somebody wants something for nothing, the government should not supply it.
00:07:24.000I can't necessarily blame Wall Street for wanting something for nothing, but I blame the government for supplying it.
00:07:59.000They get the real estate market to go up.
00:08:01.000And somehow they pretend that that means that the economy is getting better just because asset prices are rising.
00:08:07.000But that's not really economic growth just because the price of some asset goes up.
00:08:12.000I mean, what's economic growth is when your economy produces more stuff, when you have more output of the goods and services that make people's lives better.
00:08:21.000You want to grow your standard of living.
00:08:24.000If people are poor, they're poor because they don't have enough stuff.
00:08:27.000So we have to produce more stuff for people to consume and that's not what's happening in the US economy.
00:08:32.000It's not like we've got more factories turning out more stuff.
00:08:35.000All that they do is they get asset prices to rise so that people can borrow more money against those inflated asset values and then spend it.
00:08:43.000But we're buying things that are made in other countries.
00:08:47.000It evidences the economic growth in the countries who are able to produce all the things that we have to borrow money to consume.
00:08:53.000But it doesn't benefit the average American.
00:08:56.000That's why the average American is suffering as a result of this massive transfer of wealth that is emanating from government, from the Federal Reserve and from what's happening in Congress and the White House.
00:09:10.000They point to these asset markets as evidence that their policies are a success.
00:09:15.000Meanwhile, their policies are a complete failure if you judge it by what's actually going on in the economy.
00:09:21.000Of course, everything they're doing now is just setting the stage for an economic disaster that is going to be much worse than what we had in 2008. Well, you predicted the one in 2008. You saw it coming.
00:09:33.000You talked about it on multiple occasions that we're eventually going to have some large real estate collapse.
00:09:39.000When that happens, this is where I get confused.
00:09:43.000So that happens, and then when there's a real situation like that where banks are in jeopardy, What transpires there?
00:10:15.000If you're overweight, is it easier to go on a diet and exercise or just keep on picking out?
00:10:22.000It's always difficult to do the right thing in the short run, but it pays off in the long run.
00:10:27.000If you want to go back to the origin of the 2008 financial crisis, you go look to the stock market bubble that burst in 2008. And the recession that began in 2001, a lot of it, you know, you had this September 11th tragedy, and we were going into a recession.
00:10:44.000And so instead of allowing the pain of a recession to play out, and of course nobody enjoys a recession, But recessions are actually necessary.
00:10:54.000That's the process where all the mistakes that were made during the boom are corrected.
00:10:59.000And of course, we made a lot of mistakes during the tech boom.
00:11:01.000A lot of companies were funded, hired people, rented office space that never should have started because they had no real business plans.
00:12:09.000And during that time, I knew this was a mania.
00:12:11.000I knew that the big crisis, though, for the real estate market...
00:12:16.000was not going to be the buyer of real estate because in the stock market bubble when the stock market bubble burst it was the people who bought stocks who lost because they were buying gambling with their own money but when people were buying houses they were gambling with the bank's money but in fact it was taxpayer money because the banks were all guaranteed by the government and so I knew when the real estate bubble burst and prices went down that the banks would be insolvent and that the banks would fail Now,
00:12:41.000had the government allowed real estate prices to fall, which was a good thing.
00:12:46.000Coming back down was reality coming back.
00:12:49.000Had the government allowed the banks to fail and real estate prices to keep falling, it would have been more painful in the short run.
00:12:57.000But it would have been necessary pain.
00:12:59.000It would have been constructive pain because we would have laid the foundation for a legitimate economic recovery, which is what we should have done in 2001. We shouldn't have had all that monetary stimulus.
00:13:09.000We shouldn't have created a housing bubble.
00:13:11.000We should have just endured the pain, and then we would have been in better shape.
00:13:15.000So they blew up this housing bubble, and now when it bursts...
00:13:58.000Ben Bernanke has set the stage for a much greater economic crisis than the one from 2008. It's going to blow up on Janet Yellen, just like the Greenspan bubble blew up on Bernanke.
00:14:10.000The Bernanke bubble is going to blow up on Yellen.
00:14:13.000And I'm afraid that Yellen is going to do more of the same, only worse when she gets in.
00:14:19.000And we're in for a much worse economic crisis because this one, I think, is going to be where the dollar collapses.
00:14:25.000And that's going to usher in a lot more pain for ordinary Americans than the bursting of the stock market bubble or the housing bubble.
00:14:32.000Let's go back to that word pain, because this is what I really was confused about.
00:14:35.000When you say that it would have caused a lot more pain if the banks had failed, but ultimately it would have been better because we figured out what was wrong and then not allowed it to go.
00:14:42.000What kind of pain would that have been?
00:14:44.000When you're dealing with federally insured banks, so if the average person...
00:14:49.000How much of their money would be insured by the government if banks collapse?
00:14:53.000And then where does that money come from if they have to insure all the people who had money in the bank accounts?
00:15:15.000We shouldn't have any government insured deposits.
00:15:18.000I mean, it's a huge moral hazard because, you know, people now will put their money into banks and no one cares what the bank does with their money because the government insures the account.
00:15:27.000So the banks can be as reckless as they want and there's no free market penalty.
00:15:31.000If we had a free market in banking like we had at one point, Banks couldn't be reckless because they wouldn't have any depositors.
00:15:38.000Depositors would care about what the bank does with their money.
00:15:41.000And so in order to get depositors, banks would have to be cautious and they would advertise how safe their portfolios were.
00:15:48.000And you would have companies that would rate them and say, this is a good bank to put your money.
00:16:20.000There's not enough money in the FDIC to bail out the depositors.
00:16:25.000So the government would have to create it.
00:16:27.000The Federal Reserve would have to print it into existence.
00:16:30.000And so what's ultimately going to happen is, sure, we've got all these insured bank accounts, but if a couple of big banks fail and the government has to print all the money to reimburse the depositors, you have massive inflation and you get your money back, but you can't buy anything with it or you can't buy nearly as much.
00:16:46.000What would actually happen if the government had done the right thing?
00:16:50.000and allowed banks to fail then some depositors would have lost money some depositors would have not got back a hundred cents on the dollar but in the long run that'd be better off than getting back all your money and have it not buy anything and you know there would have been pain for some people right the government would have been forced to cut a lot of spending the government would have had to lay people off and so that would be good for the economy it wouldn't be good in the short run for the guy who got laid off now he has to go get a real job but the government would have to start cutting spending Real estate prices would have fallen,
00:17:19.000so some people would lose that home equity.
00:17:22.000But if you don't have a house, falling real estate prices is a good thing for you.
00:17:27.000I mean, the government always talks about trying to make home ownership affordable.
00:17:30.000Well, the best way to do that is let prices come down.
00:17:33.000Why is the government trying to stop real estate prices from coming down when they say they want houses to be affordable?
00:17:38.000What the government wants is to prop up real estate prices at artificial levels so you have to borrow a fortune to buy a house, but then they want to subsidize the debt.
00:17:48.000They want everyone to go to college but they don't want college tuition to come down because the government guarantees all the student loans and so that's why college is so expensive because the students take all that government money and they bid up tuition and the colleges know that it doesn't matter how high the prices are because the kids are going to get the money from the government to pay the price but meanwhile they graduate,
00:18:09.000they've got these worthless degrees and they got a pile of debt.
00:18:12.000If the government just got out of the way And they didn't give out all this money to students, then the universities would have to slash tuition or they'd have no customers.
00:18:19.000And now you can get a college degree without taking on a mortgage.
00:18:23.000Are you aware of that famous Putin quote before the crash about the economy?
00:18:39.000But we have this service sector economy now that is completely unviable because it's the result of our ability to borrow indefinitely from abroad to pay for the products that are manufactured in other countries.
00:18:54.000But this bubble is going to burst because we can't keep borrowing.
00:18:59.000The world can't keep lending us money.
00:19:01.000It's like a giant vendor financing scheme where other countries produce products and then they lend us the money to buy those products.
00:19:08.000But we can't pay back any of the money we've already borrowed, yet they keep lending us more because they don't want to deal with the reality of how much money they've lost.
00:19:16.000What kind of an epic change would be involved in getting away from this trend?
00:19:20.000What kind of an epic change would be involved in making sure that the government doesn't subsidize universities, making sure that housing costs do go down, making sure that banks aren't government protected?
00:19:33.000That seems like it would take an epic change in our culture.
00:19:37.000I think it's going to take a crisis, and I think, fortunately or unfortunately, that crisis is coming.
00:19:43.000There's going to be a crisis that we can't print our way out of, that we can't bail our way out of, and I think that's where we are.
00:19:49.000I mean, I think the bubble that we have now is just so big, and I think the Fed knows that it's so big, it's too big to pop, forgetting about too big to fail, that there is no more bubbles.
00:20:00.000This is the last hurrah for our phony economy, because there's nothing left to do once this I think the way the collapse is going to come is going to be in the value of our currency,
00:20:18.000It's actually risen recently against some currencies, although not all currencies.
00:20:23.000But I think that the Fed is going to keep on printing money.
00:20:26.000There's an expectation right now that there's a real economic recovery and that the Fed is going to be able to remove the monetary props There is no real recovery and the Fed can't remove the props.
00:20:38.000It should, but the minute it did, the whole economy would implode.
00:20:41.000I think as people begin to realize that, to appreciate what the Fed has created, not a sustainable recovery, but a bubble.
00:20:51.000The world is not going to want our dollars anymore because the Fed has to keep printing dollars to buy bonds so that we can keep borrowing money.
00:20:59.000The government can keep borrowing money.
00:21:01.000But when people don't want the dollars that the Fed is creating, now the value of the dollar starts to go down.
00:21:06.000And that's when you start to see a real acceleration in prices for consumer goods.
00:21:11.000I mean, and the government tries to deny...
00:21:13.000That there's inflation, but there's massive inflation.
00:21:16.000It's not all showing up yet in consumer prices, although a lot of prices, look, you know, since 2009, milk prices have more than doubled.
00:21:25.000I think beef prices, chopped meat prices are up 80%, 90%.
00:21:28.000I mean, look at gasoline prices at record highs.
00:21:30.000The government tells us there's no inflation, but there's plenty of it, but it's going to get a lot worse.
00:21:37.000Now, the government is actually trying to lay the foundation for higher inflation now by trying to tell us that it's a good thing.
00:21:44.000If you listen to The Economist today, they'll tell you that the scariest thing, the worst thing that can happen is that we don't have enough inflation, that we have to make sure that prices are rising fast enough to have economic growth.
00:21:57.000They used to say that we want stable prices.
00:21:59.000Now they tell us that that's dangerous.
00:22:00.000That's a bad thing because if prices are stable they might actually go down a little bit and that would be horrible.
00:22:06.000So the government wants us to be thankful when the cost of living goes up when obviously a good strong economy has falling consumer prices.
00:22:35.000But there are a lot of incentives to keep it going, to keep the party going as long as possible.
00:22:40.000The politicians want to keep it going.
00:22:42.000I mean, they love phony prosperity because it's better than reality because if the public knew how screwed they were, they might not re-elect the guys that are there.
00:23:09.000They want to just keep making hay while the sun shines.
00:23:13.000And the academics, the media, I think these guys are just clueless.
00:23:17.000So nobody really either understands or has a vested interest to understand the truth.
00:23:22.000Everybody wants to keep the party going.
00:23:24.000That was exactly what was going on in 2003 and 4 and 5 and 6. I mean, when I was going around, going on TV shows, giving lectures...
00:23:34.000Explaining all the problems in the housing market and how the Fed was creating it and how bad it was going to be when the bubble burst, nobody wanted to hear it.
00:23:41.000I mean, everybody either laughed at me, ridiculed me, and this stuff should have been obvious.
00:23:46.000This should have been crystal clear, yet people couldn't see it.
00:23:50.000And then everybody was blindsided by what happened.
00:23:53.000They said, well, nobody could have possibly predicted this, right?
00:23:57.000But, you know, and then instead of, you know, Learning from the mistakes or instead of listening to people like me, and I wasn't the only guy that was out there talking about it.
00:24:05.000I just did it maybe more publicly than a lot of people.
00:24:08.000But instead of saying, hey, let's talk to Peter Schiff.
00:24:19.000Right after it happened, it was an investigation of why there was a financial crisis.
00:24:22.000And you would have thought, gee, I wrote a book predicting the financial crisis, Crash Proof, had a profit for the coming economic collapse, that described exactly what happened.
00:24:50.000In fact, I did testify twice in front of Congress later on, and you can see those testimonies are on YouTube.
00:24:56.000And I was actually surprised that they invited me back a second time after I testified the first time.
00:25:00.000I think maybe some people didn't really realize who I was, and so they haven't invited me back a third time.
00:25:05.000But, you know, I tell them the truth and I treat these guys like they ought to be treated.
00:25:09.000I don't really show any respect for people that are destroying our country.
00:25:12.000And so I put them in their place when I testify.
00:25:14.000But they didn't really want anybody testifying who knew why there was a crisis because they already had a preconceived conclusion.
00:25:23.000They wanted to blame it on capitalism.
00:25:25.000They wanted to say we had a crisis because we didn't have enough regulation, because we didn't have enough government, which, of course, was the opposite of why we had the crisis.
00:25:31.000We had too much regulation and too much government.
00:25:33.000The free market would have prevented that crisis.
00:25:35.000Now, you say that you don't believe in regulation, but do you agree with, when it comes to regulation, when it comes to environmental protections, when it comes to things like the EPA, or when it comes to situations like, what do you do about when you have this massive Gulf oil spill?
00:25:53.000Do you believe the government should intervene then?
00:25:55.000Well, first of all, there are market regulations.
00:25:58.000Markets, in many cases, regulate themselves because of the self-interest of the party.
00:26:04.000So, for example, when I talk about banks, if there was no government guaranteeing the safety of bank accounts, We're good to go.
00:26:29.000And so there is market-based regulation from competition, and you get that every place.
00:26:34.000I mean, people say, well, you know, don't we need the government to make sure that the airlines are safe?
00:26:38.000Well, who's got a better vested interest in a safe airline than the owner of that airline?
00:26:43.000I mean, the last thing an airline wants is a crash, and the most important thing...
00:26:49.000The most important thing to me is that it's a safe flight.
00:26:51.000And so I'm not going to go on an airline that says they cut corners to save a couple of bucks.
00:26:58.000So there's going to be a lot of regulation in the market.
00:27:01.000Unfortunately, what happens is the government comes in, and now they create a moral hazard that undermines the normal market regulation and replaces it with a government regulation that's nowhere near as good.
00:27:15.000Yeah, well moral hazard, well, in the bank account, again, in the bank account example, without government interference, I care about what the banks do with my money.
00:27:25.000I'm not just going to dump my money in the bank and not worry about it.
00:27:29.000I'm going to do some research before I open my bank account.
00:27:31.000I want to make sure that the bank is sound.
00:27:34.000The bank knows that in order to attract customers, It has to be safe.
00:27:39.000It can't just be gambling with depositors' money.
00:27:42.000But when the government steps in, now no one cares about safety because the government says, don't worry, we'll make sure the bank is safe.
00:27:49.000So now the depositors say, we don't give a damn.
00:28:07.000The only thing the banks have to do is convince the regulators to give them a pass, but then you've got all kinds of corruption, and you've got the government has all kinds of corrupt incentives.
00:28:15.000So market-based regulation is much better, but certainly I do believe in some types of regulation when it comes to externalities like pollution and things like that.
00:28:25.000But a lot of that is best done at a local level, not at a federal level, and a lot of it is done through courts because people are still liable in a free market.
00:28:33.000So if I damage you in some way, then I'm responsible for your damage and you can sue me.
00:28:41.000And so businesses don't want to be sued.
00:28:43.000They don't want to harm other people, and so they're going to guard against that.
00:28:47.000I think if you look at all of the money that society loses when you buy government protection and government regulation, more money is lost to the cost of regulation than would be lost through fraud or even scrupulous actors that might steal somebody's money.
00:29:07.000Yeah, but that money is not coming directly from victims.
00:29:10.000The idea being that if you're spending all this money on regulation, that that money is not coming...
00:29:16.000The amount of money that you would lose if they weren't regulated would directly affect them.
00:29:42.000I don't know exactly what it is, over a million dollars a year, much more that I have to spend to stay in business.
00:29:49.000And of course, I have to pass on those costs to my clients.
00:29:52.000And of course, because the costs are so big, there's less competition than there would be if the government didn't create all these barriers to entry.
00:30:01.000Because if you want to compete with me, you just can't do it.
00:30:04.000You've got to have enough money to set up the compliance apparatus that the government requires.
00:30:10.000There's a lot less competition in my industry and so I think that investors suffer because they don't have as much choices and everybody has to pay higher prices for their services because the government requires us to spend all this money supposedly to protect my customers.
00:30:25.000But the government doesn't really give a damn about my customers.
00:30:55.000I mean, you have all this stuff going on on top of it.
00:30:58.000But if we didn't have any of this regulation, if we have a free market, yes, there would still be some fools that would lose money.
00:31:05.000But the losses would pale in comparison to how much everybody is losing now because of the cost of government.
00:31:11.000And at least the people who lose money would have to accept responsibility for their own bad decisions Why do my clients have to spend all this extra money because somebody else is foolish with their money?
00:31:21.000Because now if you're responsible, you get punished.
00:31:24.000Well, this rant started when I was asking you about the BP spill, the idea that the government should possibly regulate that.
00:31:32.000You feel that the market should regulate in situations like that, where they should be responsible and be sued, and that the government shouldn't step in and enforce it?
00:31:40.000Because it seems like when you're dealing with something like BP, you've got this massive corporation that has untold billions of dollars that they can funnel and move and adjust and spend to combat anything that would cost them money.
00:31:55.000But, you know, one of the ironies of the whole BP situation is why are we drilling in such deep water in the first place?
00:32:01.000And it has to do with government environmental regulation that made it, you know, very expensive to drill in shallower water that would be, you know, less of an environmental threat.
00:32:12.000But the government, you know, with all that regulation, actually helped bring that situation about and also with insurance.
00:32:19.000Well, that situation was because they cut costs on the way the well was constructed.
00:32:23.000But also what happened is the government came in and the government capped liability, which was a mistake.
00:32:30.000The government basically told companies that your liability is capped at a certain amount.
00:32:35.000And that was the government, not the free market.
00:32:37.000And so because there was a liability cap imposed by government, corporations were riskier So they would have been.
00:32:43.000And then, of course, then BP said, okay, we're going to pay even beyond these caps.
00:32:48.000But a lot of this was a byproduct of other government regulation and moral hazard that resulted in drilling in deep water when we should have been drilling in shallower water.
00:32:58.000We should be developing – what if we were developing more up in Alaska?
00:33:02.000But the government will let you do that.
00:33:04.000Well, the people of Alaska don't want it either.
00:33:15.000When you talk to the average person in Alaska about drilling, there's some people there that want jobs that might say yes, but most people who don't have a vested interest in that, they don't want any drilling up there.
00:33:25.000They don't want to leave that place alone.
00:34:35.000But let's say we have an oil company that's like BP. That cuts corners precisely to save money and in doing so they cause a massive, massive environmental damage that I believe personally you can't put a dollar value on.
00:34:56.000And in doing that intentionally and making money, they made sure That they made as much money as possible in the shortest amount of time as possible, which led them to cut corners in the construction of the well, which makes them ultimately responsible 100% for the damage, and the damage is massive.
00:36:06.000I'm talking about you're raising the cost throughout the entire, you're going to have less people exploring for oil, less people, you know, less money going in.
00:36:14.000In fact, right now, if you look at some of the oil companies, they're barely even making money at $100 oil.
00:36:24.000So people in Southern California have got to get ready for $10 gallon gasoline or higher.
00:36:29.000Couldn't someone listen to this conversation, listen to you saying this and say, well, this guy does, he thinks that banks should fail, but oil companies shouldn't?
00:36:41.000Well, then how do you assess liability in something like BP? Because in BP, I think that there's not enough money in the world to make up for what they've done.
00:36:49.000Look, well, a lot of people that are filing claims against BP, they don't have it.
00:37:00.000There's maybe a few of those, but you can't doubt that there's a lot of people affected by that, the fishermen, the people that work there.
00:37:08.000But how about the actual impact on the Earth itself?
00:37:11.000Shouldn't they be responsible for that?
00:37:12.000They are responsible, but you can't overlook how are people's lives improved by the fact that we have oil, by the fact that we can drive cars around.
00:37:19.000BP didn't invent oil, BP didn't invent cars.
00:37:22.000They didn't invent it, but they're out there producing the oil.
00:37:26.000But because of that, they should be able to do such a colossal fuck-up and then still do business as usual and make billions of dollars?
00:37:31.000The government shouldn't have removed the liability restrictions that said how much you can sue if you have real damages.
00:37:38.000I want real market forces to be able to— So you think that those real market forces would have influenced them to spend more money in the construction of the well, not cut corners in order to reach it?
00:37:46.000In fact, they might not have even been drilling there.
00:37:49.000I mean, if it was a free market energy, they might have been drilling in areas that were generally safer, but the government won't let them drill there.
00:37:56.000But don't you think that most people would vote against that if given the opportunity?
00:37:58.000Do you want to have a giant oil rig 50, 100 yards offshore where you could see it?
00:38:05.000Most people are going to think that if there is a mistake, which there are quite often, I mean, it's not all the time, but we can think of several in our lifetimes.
00:38:12.000We know about big oil disasters, whether it's Exxon Valdez or whether it's this more recent one.
00:38:27.000But the big risks that we face, I mean, you could talk about an oil spill.
00:38:31.000I mean, the economic catastrophe that the government is in the process of creating is going to have such a profound impact across this economy.
00:38:40.000These things, while they're bad, are tiny compared to what's coming, compared to the economic...
00:38:46.000This is California, so we're going to get a 10-plus on the Richter scale, and the things that we're talking about really don't even register on it at all compared to what we're going to go through in the United States.
00:38:58.000Because of government, you can look at, hey, we think we want government to protect us from this, but meanwhile you've got this huge, enormous government that is creating a massive catastrophe that's coming.
00:39:09.000And then we're probably going to end up with a lot more pollution when we're a lot poorer nation and we can't even afford to do the things that would keep the environment clean.
00:39:18.000Or we're going to be chopping wood to stay warm and there'll be no pollution.
00:39:23.000We'll go all the way the other way and start trading metals that we find on the street.
00:39:27.000Well look, initially there will probably be some cleaner air here in Southern California when no one can afford to drive.
00:39:34.000The next crisis that's going to come is going to kill the dollar and then prices are going to go way up.
00:39:41.000They might end up with shortages because they might have price controls.
00:39:47.000I think there's going to be big power blackouts because when energy costs really soar, because when the dollar tanks, even though we're producing a lot of oil in the U.S. right now, none of it's going to be consumed here.
00:39:57.000It's all going to be shipped over to Asia because their currencies are going to be stronger.
00:40:01.000Imagine you've got all these people in China.
00:42:05.000It hasn't always been the case, but you're right to the extent that if we allow corporations to buy government influence, that's a problem.
00:42:11.000Okay, so corporations shouldn't be able to donate to political parties.
00:42:15.000Well, that might be a good reform because let individuals do it.
00:42:18.000But if we allow corporations to buy influence, then that's bad.
00:42:26.000But the problem isn't that the corporations are buying it.
00:42:28.000The problem is that we allow the government to sell it or to peddle it.
00:42:31.000So if we were to go back to the Constitution and force it.
00:42:35.000Yeah, but if we force the government to obey the law, then there is no influence to sell.
00:42:40.000If all we get from government is freedom and liberty, which means we have laws that protect private property, but we don't create special privileges for some people, then there's no power to lobby for.
00:42:52.000But right now we allow our politicians to sell power to the highest bidder.
00:42:56.000That's not the fault of the bidders, the fault of the bidders, because if I'm a business and I don't try to get a favor from government, what if my competition gets a favor and then uses government power to squash me?
00:43:06.000So everybody is forced to bid for that power, but the problem is government.
00:43:10.000We have to take the power away from government and then there's no more lobbying because there's nothing to lobby for.
00:43:15.000Right, but okay, so how about a situation where like in the movie Inside Job, we have these economics professors that they Set these standards and give advice and then they wind up getting jobs with banks.
00:43:27.000You clearly need economic advisors though.
00:45:37.000Look at 1920. I mean, if you look at the rate of economic growth in the United States in the 19th century, take the end of the Civil War to the beginning of the First World War.
00:45:47.000So forget about all the destruction in Europe.
00:45:48.000You look at 1865 to 1913. You look at the change in wealth.
00:46:32.000Poor people from all over the world came to America You know, to pursue whatever they couldn't pursue in their own countries because they didn't have the freedom.
00:48:09.000By 1913, right now you had a lot of people living in cities, but they had indoor plumbing, they had electric lights, they had a telephone, they had all kinds of gadgets that made their lives better that didn't exist in 1865. I mean,
00:48:26.000Yeah, but isn't that a symptom of just technological innovation and the constant improvement of devices and things that we've always gone through?
00:49:04.000We had a standard of living unparalleled.
00:49:06.000Poor people in America were wealthy in other countries.
00:49:09.000That's where the whole expression, ugly American, came from, and somebody, an American, would go to Europe.
00:49:15.000And they were just a school teacher or a plumber and they got there and they thought they were king because everything was so cheap compared to, you know, things here.
00:49:22.000We had so much that people didn't have it.
00:49:24.000That's not where the term ugly American came from us being assholes.
00:49:35.000The attitude that we had when we got there of superiority and how rich we were and how everybody didn't have any of the things that we had, that was really where it came from.
00:50:24.000To have freedom certainly is going to enhance the ability to create and the ability to put out new inventions and new things that are going to make life easier.
00:51:03.000Because you don't want some crazy asshole who doesn't know how to use a pair of scissors, just open up a shop, and you're the first guy he works on.
00:51:21.000Well, so if there's a mechanic, right, that doesn't know how to put on a tire, and a couple of people have an accident, he's out of business.
00:51:59.000Your idea that everyone who starts a business is going to know exactly what they're doing because they're going to have to or they're going to go under, that's preposterous.
00:52:05.000The ones that don't know what they're doing will go out of business.
00:52:07.000But shouldn't you stop that if it's a case of something being safe?
00:52:11.000If someone's a doctor, if someone's a dentist, if someone's working on your health or working on your car or working on your house, they put your...
00:52:18.000Pipes in incorrectly and your fucking house catches on fire.
00:52:21.000You don't think they should have to be certified by at least, but hold on a second, by at least some sort of a standard in their industry.
00:52:27.000That their industry agrees upon a standard.
00:52:29.000Yeah, but why does it have to come from government?
00:52:31.000What they used to have before government is you would join a society, right?
00:52:35.000A voluntary society which would give you like a good housekeeping seal of approval.
00:52:40.000So you would say, hey, I'm a mechanic and look, I'm a member of this organization.
00:52:45.000And they come and they periodically examine my business and they certify that I have all the safety.
00:52:49.000I mean the free market will find solutions so that companies can say, you know, yes, like a better business bureau kind of seal of approval.
00:52:57.000But when the government does it, I think it's not nearly as effective and I think it does create a moral hazard.
00:53:48.000The real issue I have is with things like construction or things like electrical, things that involve safety.
00:53:56.000And I think you and I are both not in favor of the government regulating these things because I don't necessarily think they're going to do the best job.
00:54:04.000If the industry could prove some sort of a very efficient, very competent, and very educated regulatory system, then the government should just step down and say, hey, we're not going to do this anymore.
00:54:14.000We're going to let the Haircutters Association of America license people.
00:54:18.000Most of these organizations started out in the private sector, but the reason they got government involved is they wanted protection from competition.
00:54:51.000But once you have this group, they say, you know what?
00:54:53.000If we can simply require everybody to be a member of our group and make it illegal for them to sell any baskets if they're not a member of our group, then we can charge a lot more money because we won't have competition.
00:55:05.000So they go to Washington and they say, hey, why don't you require anybody who weaves baskets to join our organization and force them into it, right?
00:55:12.000That's what I'm in, in the brokerage industry.
00:55:14.000I'm only allowed to be a stockbroker because I'm a member of FINRA, right?
00:55:18.000Now, I don't want to be a member of FINRA. I'd rather just be a stockbroker and not be a member of FINRA, but I can't.
00:55:25.000So in order for me to be a stockbroker, I have to be in this organization, and I have to spend millions of dollars a year to comply with all these ridiculous rules and regulations.
00:55:33.000But the net effect of it is that there's a lot fewer brokers than there would be if we didn't have FINRA. Now, if FINRA was voluntary, if it was private, then I could just say, hey, I'm a broker and I'm not a member of FINRA, so caveat emptor.
00:55:47.000I would much rather have that than have to be.
00:55:50.000But all these organizations, they always want it.
00:55:54.000They always want the government to force people to join so that they can charge more money and have less competition.
00:56:01.000Well, I think also the idea is that the government is going to be the one that's impartial.
00:56:04.000The government's going to be standing outside, looking at this industry, having no vested interest in you profiting over you or you over you, and say, hey, these are the rules, and this is how we can make this fair and ethical.
00:56:15.000That's the idea that most people have about the government.
00:56:17.000But they do have a vested interest because now this organization, right, that got the government to force everybody to join it, now they're going to give donations to the government to continue.
00:56:36.000If we step in and stop that, no one is allowed to give any more money to the government, no campaigns, no nothing.
00:56:41.000Well, that's actually not even going to stop it.
00:56:43.000What has to stop it is you have to take away the government's power to do all these things, because as long as they have the power, people will get around those requirements and there will be ways to do it.
00:56:52.000You have to limit the power of government, which is what we did so successfully for our first 100, 150 years as a republic.
00:57:00.000We were very successful at limiting the power of government, and that's why we achieved so much.
00:57:04.000The problem is, you know, We lost that advantage.
00:57:07.000The government was chained up by the Constitution, but it freed itself from those chains.
00:57:12.000And so now it does whatever it wants, and we're suffering as a result because we've lost a lot of freedom.
00:57:17.000And by losing the freedom, we lost all the opportunity and economic growth that went along with it.
00:57:21.000Yeah, but someone has got to keep these corrupt evil fucks that have billions of dollars from running amok.
00:57:27.000At this situation, where we are right now, who's going to run amok?
00:58:05.000You're going to be a lot more cautious with what you're doing.
00:58:08.000I agree that you would be more cautious, but I think that people are assholes.
00:58:11.000And I think that people who have a lot of money and a lot of hubris and a lot of ego, and they're probably on pills, they're going to do some wild, wacky shit.
00:58:18.000And they always have, and they always will.
00:58:48.000That's what was going on in Wall Street.
00:58:50.000With all this cheap money, they make it a lot less expensive for everybody to lever up and go out and borrow and speculate.
00:58:56.000And all this wealth that is being generated for a small number of people, this is not...
00:59:01.000You know, the way it used to be when you would get rich by helping everybody, by providing people with goods and services and creating jobs.
00:59:09.000That's how people got rich 100 years ago.
00:59:11.000That's not how they're getting rich now.
00:59:13.000They're getting rich off the government.
00:59:15.000They're getting rich by they get the money first.
01:01:25.000About a businessman, an entrepreneur, because I know that all of my associations with him, absent government, are voluntary.
01:01:32.000All he can do is try to offer me a good deal, and I can turn it down.
01:01:36.000But when they go to government and say, we're going to force you to buy this product, like here with Obamacare, okay, you've got to buy insurance.
01:02:15.000I see what you're saying and I agree with you for the most part.
01:02:18.000I think the only problem that I'm having with what you're saying is the idea that the government would regulate environmental protection or that rather industry or business would regulate environmental protection.
01:02:29.000I don't think they would and I think that if they were in a situation where They're making billions of dollars and they had some sort of a catastrophic oil spill or chemical spill or some sort of a disaster.
01:02:38.000Just like it's been proven that it's been done with fracking.
01:02:40.000I mean, there's a real issue with fracking right now in America.
01:02:43.000And if you've watched any of the documentaries or read any of the articles that are written about people's areas, farms, water supplies destroyed, oxygen level in the atmosphere changes.
01:02:54.000Well, you know, I'm involved, I mean, pretty heavy with fracking myself because we have a lot of wells.
01:03:07.000I started there about three years ago.
01:03:09.000And look, I mean, there's tremendous wealth that's been created up in that region in North Dakota, and it's one of the bright spots of the U.S. economy.
01:03:18.000I mean, fortunately, the energy industry domestically is doing something.
01:03:24.000It's a pocket of strength or an island of strength in a sea of weakness.
01:03:28.000I mean, most of what's going on is bad, but that's one of the one things that we got going.
01:03:32.000And we're going to need to develop our energy resources even more effectively, especially once the dollar collapses.
01:03:38.000What are the actual, since you know then, all I'm doing is reading about it online.
01:03:42.000What are the actual environmental effects?
01:03:43.000I don't think there are any environmental problems with fracking.
01:03:46.000I think you have a lot of people on the left They're really socialists, but they don't want to come out and just say we're communists or whatever.
01:03:56.000So they want to clothe everything in an environmentalist language.
01:04:01.000They really want to take away private property, but they don't want to come out and say it.
01:04:15.000They're not ruining the drinking water.
01:04:16.000Why have these companies that have been fracking come in and shipped fresh water to these people that have lost their drinking water where they can fucking light it on fire now?
01:04:39.000I think they overplay, you know, what's going on.
01:04:42.000And, you know, the same thing, look, they've been doing this with various, you know, we've got to say this species, this subspecies, that subspecies, we can't go here, we can't go there.
01:05:01.000Yes, there was an environmental disaster.
01:05:02.000So people should probably be concerned that that could take place almost anywhere in the country because the systems that we have in place are not foolproof.
01:05:08.000And this is a new thing that is not just...
01:05:10.000Not just is it a new thing, but most people are not even aware of it.
01:05:29.000Yeah, but the accident with BP, and it wasn't just BP, there's other companies involved, but the accident there happened with all the regulation that we have.
01:05:47.000Just because of the fact that you can do it and make wealth out of it, if you are causing massive environmental disaster, should that be okay just because you're making money?
01:06:18.000It has to get shipped here on a big ship that comes across from China, and it takes a lot of gasoline to get it over here.
01:06:25.000So every single thing that we buy in America, there's a lot of energy that goes into getting it here.
01:06:31.000And so if we're going to make energy much more expensive because we want to make sure that we can't have another environmental accident, then we better be prepared to accept the lower standard of living that comes with that.
01:06:43.000But you see what you're doing here that's problematic?
01:06:45.000You are automatically leaning towards the profit side over the environment side.
01:06:50.000This is what makes people really nervous about people that are really into the market.
01:06:54.000What your concern is, is not about the earth itself.
01:06:57.000The very place where your children are going to grow up.
01:06:59.000That's not what you're concerned about.
01:07:01.000You're concerned about the devastation to the market by regulating these businesses and forcing them to raise the price of gasoline.
01:07:08.000And everyone's going to suffer because we didn't let everybody take this fucking wacky chance and pump fluid into the ground and pull out oil or whatever.
01:07:15.000But do you see that argument is a very callous argument.
01:07:18.000But I'm not saying that a business shouldn't be held responsible for the damages it causes.
01:08:05.000Hasn't the government allowed people, the frackers, to use all that water in fracking?
01:08:10.000They're taking millions of gallons of fresh water.
01:08:12.000Small farmers come on my radio show and they tell me about all the problems that the government has created for them, putting them out of business and the things that they're doing to regulate them out of existence.
01:08:21.000I'm sure the government is evil, but that doesn't have anything to do with fracking.
01:08:25.000The dangers of fracking are very real.
01:08:28.000Well, I think the dangers are way overblown.
01:08:31.000And I think that maybe you've read some things and you've seen some of this stuff, and I think it is distorting the reality of fracking.
01:08:38.000It is not as dangerous as some people would like everybody to believe.
01:08:45.000I think things are more significant to me than they are to you if there's an environmental disaster.
01:09:12.000The sky is going to fall anyway because we've got bigger problems than fracking.
01:09:18.000But the fact that we have been able to generate more energy That's something that we've done that's been a net positive that's been helping us.
01:09:27.000If we didn't have that, things would be a lot worse.
01:09:29.000If you think the economy is bad right now, it would be a lot worse if we weren't generating that energy.
01:09:35.000If instead we had to borrow money to buy that from Saudi Arabia or wherever we're importing it, it would be even worse.
01:09:42.000But, you know, there's nothing wrong with people.
01:09:44.000A lot of times people have a bad view of profits.
01:09:47.000I mean, you know, profits are some kind of evil, bad thing.
01:09:50.000But that's not what we're saying here.
01:09:51.000What we're talking about is environmental concern over profits.
01:09:55.000And that you have this profits over environmental concern.
01:09:58.000When you keep going to the, oh, there's a few little things might happen here and there.
01:10:01.000But look at how much money we're going to save if we do this.
01:10:04.000Look at how much money is being generated.
01:10:06.000Joe, if you look around the world and you look at which countries have the most pollution, generally it's the countries that have the most government.
01:10:12.000And the countries that have less pollution will have less government.
01:10:16.000I mean a clean environment is a valuable asset that the market will preserve.
01:10:21.000Am I saying that there should be no regulation?
01:10:24.000How's the market going to preserve it?
01:10:27.000You're extracting money out of an area by consuming its natural resources.
01:10:32.000Once that area is ruined and polluted, it's ruined.
01:10:34.000Well, you can look at some of the areas of Africa where a lot of private money has come in and tried to create wildlife reserves where there's now, instead of hunting elephants now for their ivory, there's a lot of people now that are spending money preserving them because they want to come and take a safari there and they want to see them in their habitat.
01:10:54.000So you have entrepreneurs seeing a profit in preserving an environment in a way that they can profit from it.
01:11:00.000If there was no way to profit from it, people wouldn't be expending the money to do that.
01:11:03.000Well, that's actually a really good example because you know how they really profit off of elephants?
01:11:20.000We're talking about regulating hunting.
01:11:21.000They have regulated hunting expeditions for elephants.
01:11:24.000Well, I mean, look, I know there's some big game hunting, and I'm sure that to the extent that there's hunting, they're not hunting them to extinction.
01:11:32.000I don't know what it costs to shoot an elephant.
01:11:58.000It's a million dollars in profit is generated if you shoot a person.
01:12:01.000Do you know how much gas would cost if you didn't shoot people?
01:12:03.000You take one person, you shoot them, and you keep everybody else healthy and well-fed.
01:12:06.000If we had a Hunger Games type scenario where we had to kill a couple of people every year but everybody else lived great, I think I know what side you'd be on.
01:12:13.000That's got nothing to do with my argument.
01:12:26.000To the extent that we need regulation for externalities that result from pollution, it can be done at a more local level than having it done in Washington.
01:14:32.000The problem that we have in this country with lawyers is it's too easy to sue people.
01:14:36.000I mean, there's so much lawsuits here because, you know, if you sue somebody, you basically can extort money out of them because it costs so much to defend yourself.
01:14:43.000I agree with you that there are frivolous lawsuits.
01:16:08.000I mean most people who work for government, not only don't they produce anything, they get in the way of other people who would produce stuff but the government won't let them.
01:16:15.000So we're all poor because we have to pay the salaries of all these government workers.
01:16:19.000And now if you actually look at how much government workers make relative to private sector workers, you throw in all the benefits, the average person working for government is making twice as much as the average person working in the private sector.
01:16:29.000Why do you think all the wealthiest counties in America are all surrounding Washington, D.C.? I mean, they're sucking the life out of the rest of the country.
01:16:37.000And they're all getting rich, the lobbyists and the politicians and the lawyers, because that's where all the power is.
01:16:42.000That's where, you know, as Washington gets wealthier, everybody else gets poorer.
01:17:13.000Which ones do you have a problem with you don't think should be there?
01:17:16.000Because I've heard you say that you think the EPA shouldn't be there.
01:17:19.000I don't have the environmental codebook in front of me.
01:17:21.000I understand, but I'm sure as a fracker, someone who has a vested interest in fracking, there must be a few concerns you have.
01:17:26.000I just know that I think there's more laws on the books than we should have, certainly for the federal government.
01:17:31.000But I'm saying, my point is, even if I'd be fine leaving them all there, because...
01:17:36.000The problem that we are creating from excess environmental regulation is small compared to all the other problems.
01:17:43.000I mean, you know, there is a regulation.
01:17:44.000You always talk about, what about drugs, right?
01:17:46.000What about, oh, the government needs to make sure that the drugs are safe.
01:17:51.000But I'm pretty sure that more people die because drugs that might have helped them are kept off the market.
01:17:57.000Than people who die because a drug killed them.
01:18:00.000And I think the reason that pharmaceuticals and drugs are so expensive in America is because it's so expensive to get something approved by the FDA. I think we had a much better and much healthier system before the FDA existed.
01:18:13.000And at least initially, the FDA only made you prove that your drugs weren't harmful.
01:18:19.000Now you have to prove that they're not harmful and that they work.
01:18:23.000That they're efficacious and that is extremely expensive.
01:18:41.000And I'm convinced, based on my examination, I looked at their own studies, I'm convinced it's a good drug and I think it's going to help you.
01:18:48.000Right, but companies doctor studies all the time.
01:19:01.000Or some bureaucrat you've never met who doesn't even know who you are?
01:19:04.000Well, I don't think my doctor has enough time to review all of the medication in the world and all the studies that have been done, all the different...
01:19:12.000Different tests that have been done on different types of people.
01:19:14.000Okay, let's forget about the harm part, because that's a little bit, maybe...
01:19:18.000Well, the harm part's probably the most important.
01:19:20.000Efficacy is important, but the harm part is probably the most important.
01:19:22.000But the efficacy is the more expensive.
01:19:24.000Okay, but the efficacy should also be in place when you're dealing with things like cancer drugs, and dealing with things that devastate the immune system, and may or may not be even effective.
01:19:57.000And I know that there are a lot of drugs that work that they don't let on the market.
01:20:01.000You're talking about, what if I'm a big pharmaceutical company and I have a lot of money, and here's some small company that comes out with a new pill that's better than mine, that has no side effects, I don't want it on the market.
01:20:14.000I give money to my politician in my pit pocket and I say, you kill that drug because that's better than my drug, it has less side effects, and I don't want the competition.
01:20:53.000But don't you think that that would always take place, those kind of crimes?
01:20:55.000Yes, because of the FDA. So you think that if there was no regulatory commissions or no governing bodies when it comes to drugs, that what we would do is just put it all on the market and we would all figure out what was effective, what was not, and the market would decide.
01:21:07.000Look, at a minimum, you just say, show that it doesn't hurt you.
01:21:11.000But the minute you have to prove that it works...
01:21:13.000It's so easy for them to say, ah, the proof is inconclusive.
01:21:24.000Yeah, but what if there's drugs out there that actually do work and you're taking a drug that doesn't work because the company lied.
01:21:30.000And then it takes you years to find out because it's a new product.
01:21:32.000But now you're assuming that your doctor's an idiot who's prescribed it to you.
01:21:35.000How would the doctor know if he prescribed Fen-Fen or Vioxx or all these different drugs that have been pulled off the market after they have been prescribed by people who went to medical school?
01:21:44.000Right, but if your doctor doesn't know who went to medical school and is a doctor, how does some bureaucrat in the FDA know who maybe didn't go to medical school and isn't competent enough to be a doctor?
01:21:53.000Because they force these companies to show a tremendous amount of work showing the efficacy and safety of their product.
01:22:24.000They come up with cures for baldness because that they can mass market or they want to deal with erectile dysfunction.
01:22:30.000But if you've got a disease that might kill you but it's only affecting a small percent of the population, nobody can afford to spend the R&D on it.
01:22:39.000The government makes it so expensive for companies to do this.
01:23:33.000The difference between that and environmental protection, there's a huge difference between that and regulating environmental disasters or the potential for environmental disasters.
01:23:41.000I'm just very consistent in my view of the world.
01:24:04.000The minute you involve government, the minute you have laws and regulations, what that does is diminish our freedom because the government tells us what we can't do, right?
01:24:11.000If the government doesn't say we can't do it, then we can do it.
01:24:14.000And so that's why government laws should be about protecting Private property and life and liberty.
01:24:21.000Look, I can do whatever I want as long as I don't infringe upon you.
01:24:25.000I have a right to pursue my own happiness, but I can't steal from you to do it.
01:24:55.000If you're doing something like fracking that's generating billions of dollars and you have to pay off a million here or a million there because you fuck up some guy's farm...
01:25:53.000I don't think the Earth is going to, obviously it can't care, but I don't think we're going to destroy the planet whether or not we frack or not.
01:26:02.000I don't think it's going to, in the scheme of things, make a difference in our ecosystem or our environment.
01:26:08.000But it will make a difference in our standard of living, that's for sure.
01:26:14.000If there was something that you could do that would guarantee kill every fish in Lake Michigan forever, but provide massive economic prosperity to everyone else in the country, lift us out of a recession, would you be in favor of doing it?
01:26:28.000Well, what kind of prosperity are you talking about?
01:26:30.000Just like the fucking best it's ever been times 10. So you're telling me...
01:26:34.000Kills off everything in Lake Michigan.
01:28:02.000One of the great wonders of North America.
01:28:03.000Yeah, I know, but you told us that everybody else would all be better off, including the people who used to live by the lake.
01:28:08.000Because now they can live by a different lake.
01:28:09.000Because just because everybody would be better off doesn't mean that's the only way we could do it.
01:28:14.000I think there could be a way to do that without doing that, and that should be pursued above all else, the idea of figuring out a way to make this world better without polluting it.
01:28:24.000Well, we already know how to make the world better.
01:28:27.000It's the freer we are, the more prosperous we're going to be, and the enemy of freedom is government, right?
01:28:31.000Now, if you have a little bit of government, that's a good thing.
01:28:33.000If you have just enough government to secure your freedoms and secure your liberties, then you have prosperity.
01:28:38.000But if you have too much government, then it's an impediment to liberty and prosperity.
01:28:43.000But what we should really be talking about is what's going to happen.
01:28:46.000And you've got all this propaganda out there by the government that is being spread by Wall Street as well, that what Ben Bernanke has done has worked, that we've got a real economic recovery, that the jobs are on their way.
01:29:52.000Look at all the student loans we have.
01:29:53.000Look at the mortgage debt, credit card debt.
01:29:56.000We are leveraged up to the hilt, and the only way we keep this thing going is because we can borrow more because the people loaning us the money don't realize that we're too broke to pay it back.
01:30:04.000What about a company like Apple that has billions of dollars in cash?
01:31:07.000What about your property taxes, your sales taxes, all the other taxes you pay?
01:31:12.000I mean, the government's taking 57%, and then out of the 43% you got left, I was listening to one of your other podcasts, and you were talking, and you said something like, look, I don't want the government to take half, more than half, or something like that.
01:31:27.000Do you know a medieval serf, and this is feudal system of serfdom, which was considered very repressive in the Middle Ages, If you were a serf, you had to give the Lord 25% of what you produced.
01:31:40.000So you were in the 25% tax bracket, and you got to keep 75 cents on the dollar, and that was considered exploitation.
01:31:47.000What I would give to be a serf, I would love to be able to be as free as a serf.
01:31:51.000If the government just treated me like a Lord treated the serf, I'd be awesome.
01:31:56.000They'd have to cut my taxes in half to get my tax bracket down to just 25% so I could be a serf.
01:32:01.000But at one point in America, the government took nothing.
01:32:28.000But what Congress told the average American is that if we can tax the very wealthy, a tiny bit, You won't have to pay any taxes at all.
01:32:37.000We'll get rid of all of the duties and the import taxes and all of the federal government, because the federal government was tiny back then.
01:32:44.000They said, we'll pay for everything just by a tiny little tax on the rich.
01:32:48.000Now the income tax taxes the average guy.
01:32:52.000At rates far in excess of anything contemplated for the Rockefellers, the Vanderbilts, I mean, you know, we got caught.
01:32:58.000That was the original, you know, 99% versus the 1%, right?
01:33:02.000Because the 99% wanted the income tax on the 1%, and now they're clobbered with tax rates that nobody would have even considered.
01:33:10.000Because the top tax bracket initially was 7%.
01:36:16.000See, I think if the Chinese weren't obsessed with selling stuff to Americans who can't afford to pay for it, If they simply let their currency go up in value, their own citizens would be able to consume those products and they'd have a lot more wealth to take care of their environment.
01:36:30.000I think they're sacrificing to keep our economy propped up.
01:36:34.000What are they going to do for a living?
01:36:36.000If so many of these people are actually making things for Americans, they're going to stop and just concentrate on their economy?
01:36:43.000I'll go back to World War II. So during the Second World War, Americans were employed either, if you were a man, you were in the army.
01:36:52.000If you were A1, I mean, if you were 4F, you were working for a factory that made bombs.
01:36:56.000Women, right, who were formerly housewives, were now in factories working, making bombs.
01:37:02.000Everybody was making stuff for the war.
01:37:04.000Meanwhile, everything that you needed was rationed at home.
01:37:07.000It was very tough being in the U.S. during the war because we had nothing, because everything was used to supply the war.
01:37:15.000As the war was nearing an end, there were a lot of economists who were advising the president, President Truman, we can't end the war because there's going to be massive unemployment, because all the soldiers are going to be unemployed, the people making bombs are going to be unemployed.
01:38:01.000We started to make military airplanes.
01:38:03.000So the factories came for a civilian purpose and then they were retrofitted for military purpose when the government started ordering all this stuff.
01:38:10.000But didn't the government give the economy a bump by buying all this stuff from all these people?
01:38:27.000Well, I'm talking about the things – you could say that we're better off in the long run because we got rid of Adolf Hitler.
01:38:34.000But in the short run, the fact that we had to divert all those resources out of peacetime production to military production – was a burden on the economy.
01:39:07.000Now, if they let their own currency go up, because the Chinese government is actively suppressing the value of their currency.
01:39:12.000That's why they have $4 trillion in foreign reserves.
01:39:15.000That's why China is the biggest owner of U.S. Treasuries other than the Federal Reserve, because they keep buying them up in order to keep their currency from going up.
01:39:22.000But when they keep their currency from going up they keep their own citizens from buying their own products.
01:39:27.000But if the Chinese let their currency go up The idea is that, well, if Americans now can't afford to buy Chinese products, all those Chinese workers are going to lose their jobs.
01:41:52.000And when the Chinese cut the cord from the United States, when they stop subsidizing our economy, when they let their currency go up, they will be able to deal with their pollution.
01:42:02.000And they're also going to enjoy a greater benefit from their effort.
01:42:06.000Nobody knows how to deal with that kind of pollution.
01:42:08.000But if somebody in China moves from a farm into a city and gets a job at a factory...
01:42:50.000You certainly couldn't buy anything that plugs in.
01:42:53.000You couldn't buy anything that was electronic or that had an on-off switch or something.
01:42:57.000But you couldn't buy much in the way of furniture or clothing.
01:43:01.000Wouldn't you just assume that just like the regular market itself, like you feel, if government regulations stepped out, if we had less imports, we would pick up the slack with American construction and innovation and designing of new materials.
01:43:14.000Well, not with the regulatory and tax system we have now.
01:43:19.000And so what would happen is, yes, we would have to produce it ourselves, but we would produce a lot less of it at a much, much higher cost.
01:43:25.000Because manufacturing would be impeded by government.
01:43:27.000It would be much more expensive, and so you wouldn't have middle-class people walking out of Walmart with a shopping cart full of stuff.
01:43:36.000But, you know, you can't say things like the reason why people go from farms to cities is because they make a choice.
01:45:16.000If that's the best job you can get, then you should be thankful that Walmart is there offering it because they outbid everybody else.
01:45:21.000They're offering you a better deal than you can get someplace else.
01:45:24.000Well, the idea is to keep away from some sort of a Foxconn-type scenario where one group has a gigantic amount of money and they take advantage of these incredibly poor people, paying them a tiny, tiny, tiny amount of money and forcing them to work ungodly hours to the point where they have to put nets all around their building.
01:45:48.000If I advertise a job at a particular rate of pay and somebody shows up, when Walmart runs an ad, they get like, I don't know, 50 applicants per position.
01:45:57.000So obviously they're not exploiting people.
01:46:01.000I mean, 50 people wouldn't apply for the job.
01:46:04.000If Walmart was out there netting people and they had people with guns standing around the workers making sure that they didn't leave, then you'd have a point.
01:46:12.000But nobody is forcing anybody to take these jobs.
01:46:15.000They're taking them because it's the best job they can get.
01:46:17.000And why is Walmart bad for offering somebody the best job they can get?
01:46:21.000Now some people will say, well they should offer even more money.
01:46:28.000And a lot of people, and this is what I did with Occupy Wall Street, but a lot of people who want to criticize people who hire people, and they say, look, you don't pay your workers enough money.
01:46:42.000So how does something like Foxconn happen?
01:46:45.000How do you have a gigantic business that makes billions of dollars and pays people pennies and makes them work 16 hours a day, takes advantage of these people that don't have any other opportunity?
01:46:53.000Nobody makes anybody work 16 hours a day.
01:48:29.000Well, then they got something right over there.
01:48:31.000It throws all my arguments right out the window.
01:48:35.000But the government not only does that infringe upon your liberties and your freedoms, But it actually creates a lot of problems, and the biggest problems in America is not drugs, but the war on drugs.
01:48:49.000That's what does much more harm to the economy.
01:48:52.000In fact, I actually think that more people do drugs because they're illegal than probably if they were legal, but certainly they would be safer if they were legal.
01:49:01.000We wouldn't be dealing with criminals.
01:49:03.000I'd rather buy drugs from a company, a pharmaceutical company, than from a gang in South Central LA. I think they're going to be more concerned about their brand and the purity of their products than the Crips or the Bloods or wherever you have to go to buy your heroin down here.
01:49:23.000Johnson& Johnson, we have the best heroin.
01:49:26.000I don't want, look, nobody, people here, you know, you get your car ripped off, someone steals, you know, your radio or they break into your house.
01:50:03.000But you've got – in fact, the people who would be most against legalizing drugs is organized crime because that takes away all their money.
01:50:12.000Well, here's their argument against that.
01:50:13.000Do you know the situation in Florida where Florida for the longest time didn't have a database?
01:50:19.000They had these things called pain management centers where people would go in and they would say, oh, my head hurts.
01:51:00.000It's because they weren't forced to have a database where they made sure that people weren't doing something unethical and just prescribing pain pills all willy-nilly.
01:51:08.000That kind of goes against your theory.
01:51:10.000Well, I don't know that it goes against it.
01:51:12.000I'm not really familiar with it because I'm hearing about it for the first time from you, so I don't know.
01:51:16.000But I know it's not that there's no regulation down there because obviously these are doctors or if they're writing prescriptions, there is a lot of regulation involved in that process.
01:51:24.000So I'm not familiar with it to really comment on it.
01:51:41.000It's screwed up police south of the border.
01:51:44.000And now you have a situation too where you're an inner city kid.
01:51:47.000And, you know, you've got minimum wage laws and you've got occupational licensing laws that make it almost impossible for a young kid to get a legitimate job, yet you've got the gangbangers flashing around, you know, a wad of cash.
01:51:58.000Hey, just deal drugs and you can make a lot of money.
01:52:48.000The real benefit is acquiring skills on-the-job training that will enable you to earn more money as you get older and take on more responsibilities.
01:52:57.000You're not getting any skills when you're working on a fucking hamburger What skills am I getting working at Newport Creamery?
01:53:03.000I'll give you an example of gas stations, because gas stations are a good example.
01:55:48.000Legal costs that increase the cost of hiring.
01:55:50.000So maybe, even though the minimum wage is $7.25 an hour, maybe it costs you $10 to hire the guy an hour, even though you only give him $7.25.
01:56:06.000I mean, you know, there are a lot of people, these success stories, you know, people go from the mailroom to the boardroom.
01:56:11.000You know, it's harder to start, you know, at the bottom because it's hard to get your foot on the bottom, right?
01:56:15.000Because, you know, you have to be at a much higher level and it disproportionately impacts people.
01:56:20.000Poor kids, inner city kids, you know, and it favors, these minimum wage laws will favor skilled workers over unskilled workers.
01:56:28.000Because if I have to pay a certain wage, well then maybe I'll hire somebody that has more skill.
01:56:32.000In fact, it was the skilled workers, the labor unions, that lobbied for the minimum wage.
01:56:36.000Not because it benefited them, because they made much more than minimum wage.
01:56:39.000What they wanted to do is make it expensive to hire unskilled labor, so you wouldn't hire the unskilled labor, you would just hire the union labor.
01:56:47.000So what you're saying essentially is that minimum wage is just more government intrusion and the more freedom that you have the government take away from you, whether it's minimum wage freedom, whether it's tax freedom, whatever it is, the worse you're going to be.
01:57:02.000You're going to have more regulations, you're going to have more people involved, more red tape, more bullshit, more waste, more corruption.
01:57:47.000But then that was even worse because what would happen sometimes in order to keep themselves safe because the employers didn't want to run afoul of the employment law.
01:57:55.000So they would only give you the internship if you got it through a college, right?
01:57:58.000So now what would happen is you'd actually have to pay to be an intern.
01:58:01.000Because you'd go and pay tuition to a college just so you can go and work for free.
01:58:05.000I mean, wouldn't it be better not to pay the tuition and go into debt and just work for a low wage than to pay to work for no wage?
01:58:11.000I mean, this is what happens when you have all these government regulations.
01:58:23.000A lot of times it's the best thing that can happen to them is they get a job and, you know, people say, well, you know, you can't raise a family on the minimum wage.
01:59:14.000And there are people – I think the guy who's about to be the new CEO of Walmart, his first job was working on a loading dock in one of the distribution centers.
01:59:22.000And now he's going to be the CEO. He worked his way up to the very top of the company.
02:00:37.000And you can't expect to get paid a lot of money when you first start out.
02:00:41.000You've got to make yourself more valuable.
02:00:43.000Because what you are, when individuals, we sell our labor to the highest bidder.
02:00:48.000And so what you have to do is you've got to figure out how can I increase my value to a potential employer so that he'll pay me more money.
02:00:55.000But isn't the idea of minimum wage just to keep it from being gross?
02:01:18.000There might be one guy there that made sure that the robots didn't break down, but there would be machines making the hamburgers, making the french fries.
02:01:45.000Look, believe me, if these people had better skills, would they be working at McDonald's?
02:01:48.000Now, part of the problem is, and this isn't, you know, that there are some people that really could be working better jobs, but they're not because we have this phony economy that is preventing those better jobs from being created.
02:02:01.000There are a lot of people now that are working at McDonald's because that's all they can get.
02:02:05.000And, you know, it's not like, you know, at least they got that to fall back on.
02:02:09.000But the problem is, why aren't there better jobs?
02:02:11.000Why aren't the jobs that would normally be there for you to work up, right?
02:02:14.000The jobs that are higher up on the ladder, where are those jobs?
02:02:17.000And those jobs are being destroyed by the government because we need more savings, we need more capital investment, we need higher interest rates for that to happen, and the government is so busy inflating this bubble economy...
02:02:28.000That they're sucking all the air out of the real economy.
02:02:30.000They're diverting resources from Main Street to Wall Street, and they are preventing these jobs from being created.
02:02:36.000In fact, they're destroying a lot of the jobs that exist.
02:03:10.000He's got to start repealing rules and regulations and shrinking government and closing down agencies and departments and laying off government workers.
02:04:32.000If they were useless, that would be an improvement.
02:04:34.000So, obviously, the world has changed drastically since the time when we imported 50%, and maybe our needs are greatly disproportionate to back then as well.
02:05:31.000The worse you do your job, the more you're rewarded.
02:05:36.000And so you don't want to have government doing all these things.
02:05:39.000You want to let the market, you want individuals that have a vested interest, you want the profit incentive, the invisible hand, all the benefits of capitalism.
02:05:48.000You don't want to get it screwed up by government.
02:05:51.000The thing that we have to understand is we can't have this phony service sector economy.
02:05:56.000We can't have everybody working in healthcare and education.
02:06:31.000And I was walking down Bourbon Street and I was interviewing people and asking them, you know, if they graduated from college and what their major was and when they graduated.
02:06:41.000And they all did and some of them had two or three degrees and they were all, you know, bartenders or bouncers at strip clubs or pedicab drivers or screen in the street.
02:06:52.000Nobody needed it, but they all had debt that they were working off.
02:06:55.000I mean, the idea that we have to send every kid to college, regardless of their aptitude, regardless of whether or not they're going to have any real benefit, who benefits from this?
02:07:03.000It's the colleges, the universities, the administrators that make a fortune off of all this money.
02:07:08.000And the kids graduate with a worthless degree because everybody else has one, so who cares?
02:07:12.000You don't know anything, but you've got all this debt.
02:07:15.000And are the kids better off spending the first six years of adulthood in college?
02:07:20.000A lot of them, they move out of their parents' house because they can borrow all this money to live off campus or frat or live in the dorms.
02:07:34.000I mean, I'd rather have the kids stay at home after they graduate high school, get a low-paying job, don't take on any debt, maybe get some skills, and then when they're 20 or 23, then they can move out.
02:07:47.000Instead, now they've got no options because they follow the government's advice.
02:07:53.000Well, obviously some have options, and obviously some people go from college to get jobs.
02:07:57.000I don't know what the percentage is of people that have successful careers after college, but I assume we're not dealing with a nation of constantly advancing homeless people, where every year the homeless population goes up 3 million.
02:08:10.000Most people on college campuses, there's no reason for them to be there, and they will not benefit from being there.
02:08:17.000Well, I think there's a growing process going on, and I agree with you that if you look at the end result, yeah, most of them didn't benefit from it.
02:08:24.000But they probably did anyway, because they benefited from knowing that this is not how to get through in life.
02:08:29.000They benefited from knowing that, you know, some people that they went to college with, I'm sure did.
02:09:35.000The idea that you can go to school for X amount of years, come out, and be more in debt than you're gonna make in a decade of working every fucking day in your life.
02:09:43.000And we also have to let young kids off the hook for Social Security.
02:09:47.000I mean, they didn't vote for this Ponzi scheme.
02:09:52.000Explain it to people who don't understand because I've seen your explanation of the Social Security system and it's very enlightening because it's disgusting.
02:09:58.000Yeah, they ought to erect a statue of Ponzi right in the lobby of the Social Security Administration.
02:10:04.000But, you know, Social Security was conceived and sold to the American public as a complete fraud, right?
02:10:09.000The idea initially, and the government deliberately used this kind of language, was that it was like insurance because the taxes that you pay are called premiums and you're a beneficiary and they have a trust fund, right?
02:10:20.000All this is what an insurance company does.
02:10:22.000But Social Security doesn't have a real trust fund.
02:13:30.000Now, to play devil's advocate, the benefits of Social Security are that some people that made a decent wage their whole life but lived check to check would someday be able to stop working.
02:14:10.000But the reason that pyramid schemes are illegal is because they don't work.
02:14:15.000They benefit the people that get in at the beginning at the expense of people that get in at the end.
02:14:20.000Well, if a pyramid doesn't work, the government can't make it work.
02:14:24.000If the government runs it, they're not going to be more successful than the private sector.
02:14:28.000The only difference is when people in the private sector figure out it's a Ponzi scheme.
02:14:33.000Why did Bernie Madoff's Ponzi scheme fall apart?
02:14:36.000Because when people realized it was a Ponzi scheme, they wanted their money back.
02:14:39.000Social Security is the Ponzi scheme you can't get out of.
02:14:42.000The government requires you to participate at gunpoint, and even if you know it's a Ponzi scheme, I'm paying Social Security taxes, even though I know it's a Ponzi scheme.
02:14:50.000If it was a free market, I wouldn't be paying.
02:14:52.000And you would have to be able to say whether or not you wanted to contribute and benefit from it.
02:15:18.000Where does most of the money go when you do but when you buy insurance?
02:15:20.000Well, if you buy legitimate insurance, the money is invested, and it grows so that it could pay off, whether you're buying life insurance, fire insurance, auto insurance.
02:15:30.000The insurance companies invest the money, and some people put in claims, other people don't.
02:15:34.000But for retirement, a funded pension system, a legitimate system, you take money as you work, and you invest it.
02:15:42.000And over time, compounding interest or the investment returns, eventually, based on your contributions and the gains and the reinvestment of the interest and the dividends, you accumulate a portfolio of stocks and bonds or whatever, real estate, whatever you bought, that you can live on.
02:15:58.000You can live off of your income from your investments.
02:16:01.000Now how is that different than how Social Security handles it?
02:16:03.000What happens when your money goes into Social Security?
02:16:42.000They're loaded up with debt themselves.
02:16:44.000If you've got a bunch of college debt, not only do you have to pay that, but you've got to pay somebody Social Security and their Medicare.
02:17:21.000And then let's figure out how to deal with the people who unfortunately now, because of this program, now depend on this program, but who would have been self-sufficient if the government had let them plan for their own retirement.
02:17:32.000And also deal with the unemployment of all the people that worked in the various organizations.
02:17:39.000Yes, because if we get rid of all these government rules and regulations, there will be jobs for them.
02:17:44.000I don't want them working in government because now I have to pay their salary.
02:17:47.000If they work in the private sector, I don't.
02:17:49.000I don't want to employ all these bureaucrats, especially when the average bureaucrat is making more than the average person who's paying the taxes that pay the bureaucrats.
02:17:57.000And they just gave everybody in Washington a 1% pay raise.
02:18:43.000In fact, all we're doing is instigating.
02:18:46.000If we just mind our own business and protected our own borders, right, who's going to be dumb enough to attack America, I mean, in a real way?
02:18:55.000I mean, a terrorist, okay, but what nation is going to launch a war Nobody.
02:20:06.000But right now the government is doing all these things that it shouldn't do, that it can't even do the things that it's supposed to do effectively.
02:20:13.000Now, when you hear the Eisenhower speech when he was leaving office and he warned of the military industrial complex, that's essentially what he was warning us about.
02:20:21.000The fact that this business has arisen that profits off of war, and once it becomes big, like any bureaucratic institution, like any gigantic corporation, like anything that has too much power and influence, Yeah, look, we're the warfare state, we're the welfare state,
02:20:58.000At the turn of the 19th century, so 1900, 1901, The government, federal government, state government, local government, collectively, all the government was 5% of our GDP. What year was this?
02:21:45.000The government, we set up that we're going to get rid of energy, we're going to get rid of education, we're going to get rid of change, alter the way we deal with defense, make it actually defense, not offense.
02:21:56.000We're down to how many, what percentage of the economy?
02:21:59.000How much should we eliminate about the government?
02:22:01.000We've got to eliminate most of the federal government.
02:23:45.000We're digging ourselves into a deeper hole every day.
02:23:48.000The sooner that the phony economy collapses, the sooner we can start replacing it and building a legitimate economy.
02:23:55.000I know this huge economic crash is coming.
02:23:59.000It's way worse than 2008. If it happens in 2014, it won't be as bad as if it happens in 2015. And if it happens in 2016, well, that's even worse than 2015 because we're going to have that much more debt.
02:24:10.000It's going to be that much bigger a bubble.
02:24:13.000The bigger the bubble, the bigger the fallout when it bursts.
02:24:15.000So the sooner we can stop doing the wrong thing, the sooner we can start doing the right things.
02:24:20.000So explain to me how it does collapse.
02:24:21.000So let's say, worst case scenario, it goes to shit in 2016. It survives another couple of years limping along with band-aids on, then one day it implodes.
02:25:20.000I was saying that from the beginning, that there was no exit strategy, that it was a lie, that they had checked into a monetary roach motel, that once they had committed to this, that they couldn't stop.
02:25:31.000And if you live by QE, you die by QE. And so the Fed is going to come in, and they're going to do more quantitative easing.
02:25:37.000They're going to print more money to try to bring interest rates back down, to try to artificially stimulate the economy.
02:25:42.000But the market is expecting the reverse to happen.
02:25:45.000And as a result, the dollar has risen a little bit.
02:25:49.000Markets come up because people are optimistic about a legitimate recovery.
02:25:52.000When they realize that it was false optimism and that the Fed is going to do even more monetary stimulus because none of the other stimulus worked, right?
02:25:59.000And that's what they do in Washington.
02:26:00.000If something doesn't work, you don't reevaluate.
02:26:03.000You just do more of it and just assume it will work if you do it bigger.
02:26:06.000So I think when that happens, you're going to see a lot of downward pressure on the dollar.
02:26:11.000It's going to really start to fall on foreign exchange markets.
02:26:14.000And that's going to have a profound impact on consumer prices.
02:26:17.000Price of gasoline, price of food, stuff like that.
02:26:20.000And now the Fed is going to be looking at CPI inflation which is much higher than it should tolerate.
02:26:34.000And all the big banks that we bailed out are going to fail again.
02:26:36.000Only now they're going to have even more debt.
02:26:38.000So we'll be at an even worse financial crisis than 2008. So the Fed can't let that happen.
02:26:42.000So they've got to print even more money.
02:26:44.000But now the dollar goes down even more and now inflation is even bigger.
02:26:48.000And maybe for a while the government will try to convince us that inflation is good for us and that we should be happy because at least we're not suffering deflation.
02:26:55.000But at some point you're going to reach a critical point where the Fed is going to have to either dramatically raise interest rates to protect the dollar and stop hyperinflation and allow the markets to implode and allow a much worse financial crisis in 2008 or They're going to keep printing the dollar until they print it into oblivion,
02:27:13.000and then it's worthless, and then everybody is wiped out because no matter how much money you have, you don't even have enough money to buy a cup of coffee because the currency has been wiped out.
02:27:23.000Now, when you deal with currency, this is where it gets really weird with people.
02:27:26.000Most people don't even understand what a dollar bill actually is.
02:27:29.000And they think somehow or another, a lot of people think that it's based on something.
02:27:33.000That there's like a pound of gold waiting somewhere for your $100 bill or whatever.
02:27:41.000If you go back to the beginning, if you look at the Constitution and you read Article 1, Section 8 and Article 1, Section 10, you read them.
02:27:49.000But it says that money is gold and silver.
02:27:53.000And that's what's legal tender in the United States.
02:27:55.000And up until 1971, that's, you know, we were on a gold standard.
02:28:01.000I mean, we were on a more pure gold standard before the Federal Reserve came in in 1913. But we were always on some kind of standard.
02:28:09.000So the first dollars, right, were receipts for gold and silver.
02:28:12.000If you go in back and you get an old dollar from before, you know, let's say you had a $10 bill.
02:28:19.000It would say on the bill, pay to the bearer on demand, $10.
02:28:36.000And you could take your $10 To the US Treasury and you can say, give me my dollars.
02:28:42.000This is my receipt because it actually was an IOU. It was a Federal Reserve note, even when it was a note, but it was a note payable in lawful money.
02:28:49.000The lawful money was the gold or silver because there were some silver certificates, there were some gold certificates, but there was real money backing the notes, backing the currency.
02:28:59.000And that money varied depending upon the price of gold and silver?
02:29:01.000Well, the price of gold and silver was the same.
02:29:17.000What happened in 1971 when we went off the gold standard, right?
02:29:21.000The government basically repudiated its promises.
02:29:24.000So instead of the $10 bill saying we'll pay to the bearer on demand $10, it just says $10.
02:29:33.000It's kind of like if I go to a coat check and I give them my coat and they give me a little claim check and it says, I owe you one coat, right?
02:29:41.000The claim check is just a receipt for the coat that the coat check has.
02:29:47.000And you gave them your claim check, and they just crossed out the, you know, IOU one quote, and they just gave you back your receipt that said one quote.
02:31:04.000And now we have the exact kind of fiat money that the founding fathers wanted to make sure we never had because they knew what a disaster it would be.
02:31:12.000And we are We're going to have a disaster because we don't have real money.
02:31:16.000We have, you know, this phony money, fiat money, and it is, you know, the root cause of a lot of our economic problems.
02:31:22.000If we had honest money, we wouldn't have these problems.
02:31:24.000We wouldn't have this enormous government.
02:31:26.000We wouldn't have all this debt because it would be impossible for the government to have all this debt if they had to borrow gold.
02:31:32.000It is quite impressive when you look back at what the Founding Fathers predicted and what they were trying to ward against and protect us against.
02:31:39.000What an amazing job they did at predicting it.
02:31:51.000With all the population we have now, I mean, there's no way that Congress today can come even close.
02:31:56.000I mean, maybe there's a couple of guys, but I mean, nothing like – because we only had 3 million people back then, and we had such an intelligent group of men in Congress compared to now we're drawing off a 250 million, and we have a bunch of idiots.
02:32:18.000We claim that there is a bunch of gold there, but it's interesting that Germany, which the United States, in addition to our own gold, we also store gold on behalf of a lot of other countries.
02:32:28.000So Germany, a year ago, asked for half of their gold back.
02:32:32.000They told the United States government, look, we want half our gold.
02:32:35.000And we basically told Germany, okay, but it's going to take us eight years to give it to you.
02:34:05.000But as a gold investor, certainly if it's not there, the price of gold is going to go a lot higher because eventually the world is going back to a gold standard.
02:34:13.000I mean, there is no question in my mind that we will be back on a gold standard, not because we want it.
02:34:18.000The politicians will never want it, but they're going to be forced to adopt it because it's going to be the only way to end the chaos.
02:34:24.000But, you know, it's like a chaperone at a high school prom, right?
02:34:28.000I mean, the kids don't want the chaperone there.
02:34:54.000If I thought that they should own something else, I mean, oftentimes, you know, It's easier to sell people what they want than what you think that they need.
02:35:02.000I actually built my brokerage business really in the late 1990s when everybody I talked to wanted tech stocks.
02:35:10.000And I used to spend all day and all night trying to talk people out of those stocks, saying, look, this is a bubble.
02:35:22.000A lot of my friends were making a lot more money than I was back then because they were just selling their clients what they wanted.
02:35:27.000But I make a lot more money than they do now because I took a long-term approach.
02:35:32.000I wanted to do what was right for my clients, not what made me the money in the short run.
02:35:35.000I was concerned about my reputation and building a lasting business beyond the tech bubble.
02:35:41.000It made it hard for me in 98, 99, and 2000. But now I'm getting the same kind of thing again, where now a lot of people are buying these social media stocks, and they're succumbing to the hype again.
02:35:55.000There's a lot of similarities between what's going on now in the markets and what was going on in the late 1990s.
02:36:00.000People forget the past, they keep reliving it, even if it's recent.
02:36:04.000It shows you how worthless our schools are.
02:36:07.000I mean, not only don't they know history of 50 or 100 years ago, people don't even know history from 5 or 10 years ago.
02:41:12.000I mean, because look, there's already, you go to this website called, you know, it's coinvalue.com or some cryptocurrencies.
02:41:21.000There's like 60 or 70 digital currencies that have already been created.
02:41:26.000People talk about the fact that, well, you know, There's only 21 million potential Bitcoins that can be mined into existence.
02:41:34.000But what they don't say is there's an unlimited number of alternative digital currencies that can be created that are identical to Bitcoin.
02:42:13.000Look, to me, I see a lot of similarities in the people who are irrationally defending the Bitcoin to what I saw in the dot-com bubble or the real estate bubble.
02:44:20.000Well, the ones that are backed by nothing started in 1971. Isn't that like looking at a baby and going, this little motherfucker is not going to be shit.
02:44:31.000He's never going to amount to anything.
02:44:32.000But the only reason the dollar worked for a while, not backed by gold, and it hasn't worked very well, is because it had a history of being backed by something.
02:44:45.000So as this little baby, this Bitcoin baby grows up, he's going to realize this dollar that everybody's been holding over my head as being superior is just older.
02:44:53.000It's like some old asshole that just happens to be your dad but doesn't know fucking jack shit about the way the world runs.
02:44:58.000And he's telling you how to live your life.
02:45:31.000And why is a quarter even silver in color?
02:45:33.000Because it's mostly made of copper, and it's coated with a little bit of zinc.
02:45:39.000But why does the government go through the process of binding zinc to copper, and why do they go through the expense of making all these little ridges on the sides of the coin?
02:45:49.000Well, it's because the coins were originally made of silver.
02:45:52.000And the ridges were there, so you couldn't clip the coin because when it was valuable silver, people would try to take some of the silver off the coin and then spend it.
02:46:03.000But when the government, nobody is going to clip the copper coin.
02:46:06.000Is that why those old coins are always fucked up and they're never totally circular?
02:46:13.000Most likely if it's a Roman coin, it's worn out.
02:46:17.000But when the government originally made quarters, when they took the silver out, they made it look like the old silver coins even though there was no silver in there.
02:46:27.000It was like people were used to silver coins, and so when the government debased them, that's where the word debase comes from.
02:46:33.000It's when the Romans debased their currency by putting base metal into the currency instead of gold.
02:46:44.000We don't have any real money, and we have fiat, we have counterfeit paper, we have tokens for coins, we have this monetary system that is the root cause of all these problems that we have, and I think it's all coming to a head.
02:46:57.000We're at the end of the game now, and it's about to blow up.
02:47:01.0002008, that financial crisis, that was the beginning of the end.
02:47:09.000That's why, if you go and look at my book, the book that I wrote, Crash Proof, that came out in February of 2007, the crash that I was writing about isn't the one that happened in 2008, even though I predicted that crash.
02:47:20.000The crash that I was worried about was the one that's coming, the one that was going to be a consequence of what I knew the government was going to do to artificially stimulate the economy after the 2008 financial crisis.
02:47:31.000I was against the government bailouts and the stimulus before the government even knew they were going to do it, because I knew exactly what they were going to do.
02:47:39.000And unfortunately, I was right about that, and that's my book that's out now, my most recent book, other than the one I just gave you on how an economy grows and why it crashes.
02:47:47.000The real crash, that's out, that's coming.
02:48:15.000Okay, the Department of Public Education, or Department of Education, rather, Department of Energy, the government itself needs to shrink down.
02:51:02.000But he wrote a series of books deciphering the Sumerian text.
02:51:08.000You know, the oldest written language that we're aware of, and one of the things that he believes the Sumerian text depicts is that the Anunnaki, or this race of beings that created human beings, and they live on a planet that's in an elliptical orbit that comes around near Earth every 3,600 years, and they need gold to sustain their atmosphere.
02:51:25.000They suspend particles, reflective particles, because they've ruined their atmosphere, sort of like the way we've ruined ours, like the way China's fucking up.
02:51:33.000Well, they created a bunch of computers over there, and they fucked up their atmosphere, too.
02:52:14.000Well, you know, but just because they've been around longer doesn't mean that they've advanced more.
02:52:18.000But if they have advanced more, chances are they do have sound money.
02:52:23.000Because I do think that if you have free markets and sound money, you're going to achieve a lot more.
02:52:27.000And I can only imagine how much more we would have achieved in America had we had more freedom and sound money for the past several decades.
02:52:36.000I mean, I think it would be night and day.
02:52:39.000I love how you go from aliens to free market.
02:53:13.000I mean, I'm not going to be naive to think that out of all of the billions of stars and the billions of planets that may be orbiting those stars, that we are the only one that evolved intelligent life.
02:54:16.000I mean, isn't that like a more efficient and more natural way to live than the way we're living now with these propped up ridiculous economies and percentage rates.
02:54:25.000Well, that now is not natural because we have all this government that we don't need.
02:54:28.000But we were talking about a primitive society.
02:54:30.000I mean, the only way, and that's why this How an Economy Grows and Why It Crashes, I start this book off, three guys living on an island, and they've got nothing.
02:55:22.000But the reason that we have an advanced society is because we have tools, because we were able to improve upon our hand.
02:55:30.000If all we had as humans was what we can do with our bare hands, if that's all we could do, I mean, we can only eat what we can kill with our bare hands.
02:55:40.000Well, it's an interesting example because a lot of indigenous cultures have tools they've actually created.
02:55:43.000They teach each other how to create those tools, but they still don't have money.
02:55:46.000Well, money was an invention, just like anything else.
02:55:49.000There was a purpose to me asking you this question.
02:55:51.000The purpose was, if you were going to go to a culture, say like the Native Americans when the Europeans arrived, and say you weren't an asshole, you didn't give them polio and diseases, you didn't kill them all.
02:56:01.000If you were going to try to create an economy from scratch based on people who were essentially living off the land, how would you go about doing that?
02:56:07.000First of all, remember, the Native Americans, they had money.
02:57:18.000Just like, you know, just like, you know, Plumbing was an advancement, or electricity was an advancement, or the wheel was a great investment, all these things.
02:57:25.000Money was a great invention of mankind that allowed for a more efficient allocation of resources, a better distribution of labor.
02:57:34.000So if you say, if you take money away from a society, you're going to make that society less efficient and less productive, and so the people are going to have a lower standard of living.
02:57:42.000Peter Schiff, you're a bad motherfucker, but we're out of time.
02:57:44.000You could do this for about a thousand hours, couldn't you?
02:58:03.000I think that this is a fascinating episode for a lot of people because a lot of people like me are very uneducated when it comes to finances, don't really understand it, and never really have the opportunity to sit down with a guy who knows as much as you do.
02:58:15.000So I really thank you very much for that.
02:59:09.000Educate yourself, ladies and gentlemen.
02:59:11.000Understand how you've been fucked and then live the rest of your life in a paranoid frenzy trying to prepare yourself for the imminent demise that Peter Schiff has described.