WEBVTT NOTE Wreckonomics: While the People Sleep 1 00:00:00.000 --> 00:00:04.000 Look at all the people who believe in liberty. 2 00:00:09.000 --> 00:00:13.000 Actually, the dollar meltdown was called Reconomics. 3 00:00:13.000 --> 00:00:16.000 And I submitted the manuscript under that title. 4 00:00:16.000 --> 00:00:19.000 And people in the industry loved it. 5 00:00:19.000 --> 00:00:21.000 They go, Reconomics, that's a brilliant name. 6 00:00:21.000 --> 00:00:25.000 And so as soon as one of the major publishers bought it, they changed the name. 7 00:00:25.000 --> 00:00:28.000 So that's the way that works. 8 00:00:28.000 --> 00:00:29.000 Works. 9 00:00:29.000 --> 00:00:36.120 Anyway, thank you very much for having me here today, it is a joy to be in your presence. 10 00:00:36.120 --> 00:00:42.760 It is, I guess, the 50th anniversary of the inauguration of President Kennedy, and that's 11 00:00:42.760 --> 00:00:47.200 been on television lately, and it reminded me of that great line that Kennedy had at 12 00:00:47.200 --> 00:00:53.120 a state dinner when he had gathered together Nobel Prize winners from all over the Northern 13 00:00:53.120 --> 00:00:58.120 in Hemisphere. 14 00:00:58.120 --> 00:01:06.440 There has not been so much talent and knowledge in this room since Thomas Jefferson dined 15 00:01:06.440 --> 00:01:14.480 here alone. 16 00:01:14.480 --> 00:01:18.600 Speaking for myself, and I'm sure you will agree, it's so great to be in the presence 17 00:01:18.600 --> 00:01:27.000 this afternoon of Congressman Ron Paul and Lew Rockwell, of whom there are no more effective 18 00:01:27.000 --> 00:01:42.280 champions of liberty together in a room than since Thomas Jefferson died alone as well. 19 00:01:42.280 --> 00:01:50.980 So Doug French did a wonderful introduction or review for my book, and it was very thorough 20 00:01:50.980 --> 00:01:54.920 and very generous, and I treasured it a great deal, but then I got one I treasured even 21 00:01:54.920 --> 00:01:56.740 more the other day. 22 00:01:56.740 --> 00:02:01.340 Somebody sent to me from Indonesia, in the native language of Indonesia, so I flipped 23 00:02:01.340 --> 00:02:07.220 on that wonderful thing that blesses all our lives, Google Translator, and the final paragraphs 24 00:02:07.220 --> 00:02:20.220 Who would want to ride on a train called the Dollar Dead Express to a place called the Crack-Up Boom? 25 00:02:20.220 --> 00:02:23.220 Nobody I know! 26 00:02:23.220 --> 00:02:26.220 Which I thought pretty well summed up the entire book. 27 00:02:26.220 --> 00:02:35.220 Many of you know, maybe not all of you know, that the Crack-Up Boom is Ludwig von Mises' very evocative phrase 28 00:02:35.220 --> 00:02:51.220 The Money no longer has value. It's not that there was a freeze in Florida overnight and the price of oranges went up. It's money itself that's being destroyed and people become absolutely desperate to dis-hoard themselves of anything resembling cash. 29 00:02:51.220 --> 00:02:57.540 and so what do you have you have a garden rake I'll take it a broken fax machine sure I want that you know it's a 30 00:02:58.540 --> 00:03:04.560 Friend of mine many years ago a writer for a National Geographic magazine told me a horrifying story in 31 00:03:06.020 --> 00:03:12.300 1975 during the the Marxist-Iendez inflation of being caught up in the middle of a riot 32 00:03:13.100 --> 00:03:15.100 over a tube of toothpaste 33 00:03:15.100 --> 00:03:22.100 The price of gold is a wonderful indicator to us. It always sets up shop at the crossroads of history. The price of gold is a referendum on the quantity and the quality of the money. 34 00:03:45.100 --> 00:03:49.660 of the U.S. Dollar, it's clearly telling us something, and yet the people persist 35 00:03:49.660 --> 00:03:50.660 in sleeping. 36 00:03:50.660 --> 00:03:54.540 Well, you know, the political classes, the governing classes are totally pleased to have 37 00:03:54.540 --> 00:03:57.140 the people sleeping, and the media are as well. 38 00:03:57.140 --> 00:04:04.820 Now, I spoke at the Mises event in April in Phoenix, and I brought to illustrate one of 39 00:04:04.820 --> 00:04:09.260 my points, I brought something that I had saved since my student years, and I wasn't 40 00:04:39.260 --> 00:04:43.260 We'd send off to the White House for one of these win buttons and then we'd whip inflation now. 41 00:04:44.260 --> 00:04:49.260 So I shoved it away in the garage and I brought it out for the Mises event in April in Phoenix for the Mises circle there. 42 00:04:50.260 --> 00:04:52.260 I didn't want to come to Houston empty handed. 43 00:04:53.260 --> 00:04:56.260 So now what do I have that is equally imbecilic? 44 00:04:57.260 --> 00:05:02.260 What do I have that's moronic or at least struck me so at the time and would be a collector's item a few years down the road? 45 00:05:03.260 --> 00:05:07.260 And I do not want to disappoint, so I brought you this. 46 00:05:09.260 --> 00:05:28.620 This is Time Magazine. 12 years ago, February 15th, 1999. And on here you have Robert Rubin, 47 00:05:28.620 --> 00:05:48.620 Murray Summers and Alan Greenspan. And the title of this puff piece is The Committee to Save the World, which, you know, brings to mind that old expression, who's going to save us from our committees that are saving us, right? 48 00:05:48.620 --> 00:05:56.420 So, you talk about, you know, how the government destroys wealth, how private wealth is destroyed, 49 00:05:56.420 --> 00:06:01.340 how the people are plundered, you could do a whole weekend seminar on each one of these 50 00:06:01.340 --> 00:06:06.220 guys one by one, and I don't have that much time, so I'll just say something quick and 51 00:06:06.220 --> 00:06:09.500 passing about each one of them. 52 00:06:09.500 --> 00:06:16.780 This is Robert Rubin, who was a former co-chairman of Goldman Sachs and a former Secretary of 53 00:06:16.780 --> 00:06:19.900 of the Treasury during the Clinton administration. 54 00:06:19.900 --> 00:06:25.540 And he did the dry run on what became the mortgage meltdown, bailouts, the Bush $700 55 00:06:25.540 --> 00:06:27.300 billion bailout. 56 00:06:27.300 --> 00:06:30.620 He did the dry run on that in 1995. 57 00:06:30.620 --> 00:06:34.600 And the story went something like this. 58 00:06:34.600 --> 00:06:37.940 Mexico was on the verge of default. 59 00:06:37.940 --> 00:06:43.100 Now, Secretary Rubin couldn't let that happen, and so he got together with a bunch of other 60 00:06:43.100 --> 00:06:47.000 to figure out how can we stop Mexico from defaulting. 61 00:06:47.000 --> 00:06:49.960 What a terrible catastrophe for Mexico. 62 00:06:49.960 --> 00:06:51.940 Forget Mexico. 63 00:06:51.940 --> 00:06:54.440 What a terrible catastrophe for Goldman Sachs 64 00:06:54.440 --> 00:06:57.100 that we're up to their eyeballs in Mexican bonds. 65 00:06:57.100 --> 00:07:02.100 So collaborating, by the way, with the other man 66 00:07:03.300 --> 00:07:06.560 who would be president, Newt Gingrich, 67 00:07:06.560 --> 00:07:07.960 they came up with the idea of, 68 00:07:07.960 --> 00:07:09.120 they couldn't get it through Congress. 69 00:07:09.120 --> 00:07:11.680 They couldn't get a bailout through Congress at the time. 70 00:07:11.680 --> 00:07:17.720 So they came up with the idea of using the exchange stabilization fund to bail out Mexico, 71 00:07:17.720 --> 00:07:24.200 forget Mexico, to bail out all those bondholders, chief among them Goldman Sachs. 72 00:07:24.200 --> 00:07:28.800 So this is my way, a few months later as I'm pouring through the financial press, I notice 73 00:07:28.800 --> 00:07:34.960 that Goldman Sachs turned in its best quarter in the company's history a couple of months 74 00:07:34.960 --> 00:07:36.420 later. 75 00:07:36.420 --> 00:07:39.840 So that, now, I won't spend any more time on him because he's part of the committee 76 00:07:39.840 --> 00:07:40.840 to Save the World. 77 00:07:40.840 --> 00:07:49.080 But this is Larry Summers, also a former treasury secretary, just left, as I recall, the Obama 78 00:07:49.080 --> 00:07:50.840 administration fairly recently. 79 00:07:50.840 --> 00:07:52.600 He's kind of a mixed bag. 80 00:07:52.600 --> 00:07:57.560 But here's what's really, really interesting to me about Larry Summers. 81 00:07:57.560 --> 00:08:06.640 He is the nephew of the man who has sucked the life, the vitality out of the study of 82 00:08:06.640 --> 00:08:12.480 of Economics for Generations of American University Students. 83 00:08:12.480 --> 00:08:16.120 I know I didn't choose a major in economics 84 00:08:16.120 --> 00:08:20.360 after being confronted with his uncle. 85 00:08:20.360 --> 00:08:24.040 His uncle obsessed with this quantophrenia 86 00:08:24.040 --> 00:08:29.440 that passes for economics for so many university curricula, 87 00:08:29.440 --> 00:08:32.320 obsessed with the superior planning 88 00:08:32.320 --> 00:08:39.920 Power and Management Skills of the Soviet Union. 89 00:08:39.920 --> 00:08:47.660 His uncle is a great economist and textbook author, Paul Samuelson, who has plagued generations 90 00:08:47.660 --> 00:08:49.560 of students. 91 00:08:49.560 --> 00:08:55.240 And then, save the best for last, this is the maestro, part of the committee to save 92 00:08:55.240 --> 00:08:57.400 the world, right? 93 00:08:57.400 --> 00:09:00.920 So what can I tell you about the maestro that you don't already know? 94 00:09:00.920 --> 00:09:15.920 I don't want to retread old ground. He didn't see anything coming. He didn't see the recession of the early 90s. He didn't see the dot com bubble. He didn't see the housing bubble. 95 00:09:15.920 --> 00:09:27.920 Now, mortgage debt in this country under his chairmanship went from $1.8 trillion to $8 trillion. But he didn't see anything funny about that. 96 00:09:27.920 --> 00:09:31.600 So, oh, but this is what I wanted to tell you about. 97 00:09:31.600 --> 00:09:37.320 This last week's story came out from some staff economist, I guess, at the Federal Reserve, 98 00:09:37.320 --> 00:09:41.840 who was trying to call the chairmen's, the maestro's attention to the fact that there 99 00:09:41.840 --> 00:09:47.060 might be something brewing in the housing market in 2005. 100 00:09:47.060 --> 00:09:53.600 He said at a meeting, he said, you know, there's a show on cable television on the Discovery 101 00:09:53.600 --> 00:10:02.320 channel called flip this house but of course it was another warning that went went absolutely 102 00:10:02.320 --> 00:10:09.800 unheeded and and unnoted the committee to save the world what am i going to do next 103 00:10:09.800 --> 00:10:19.860 time i don't know it is it is it is my view that the severity of the calamity on whose 104 00:10:19.860 --> 00:10:27.500 The new doorstep we are upon is measurable in advance in a sense. 105 00:10:27.500 --> 00:10:35.420 We can tell how bad this thing will be by the cluelessness of the authorities as it 106 00:10:35.420 --> 00:10:37.460 approaches. 107 00:10:37.460 --> 00:10:42.060 And so if it's the dollar debt express, let me talk about the twin rails of that express, 108 00:10:42.060 --> 00:10:47.780 both fiscal policy, you know, what Congress and the executive do, the spending bills that 109 00:10:47.780 --> 00:11:04.520 What was so different just a year ago from our virtual insolvency today that they could 110 00:11:04.520 --> 00:11:11.020 pass an enormous new entitlement program? 111 00:11:11.020 --> 00:11:16.820 Was there something so different nine months ago when Obamacare passed? 112 00:11:16.820 --> 00:11:21.620 What we are going through in this country is not evident was the compounding of the debt 113 00:11:21.620 --> 00:11:28.540 not visible nine months ago and yet they passed it anyway and they passed it with the line 114 00:11:28.540 --> 00:11:34.300 that this program will pay for itself and of course you know the last big federal program 115 00:11:34.300 --> 00:11:41.120 that was going to pay for itself was the Iraq War so how has that worked out for us so far? 116 00:11:41.120 --> 00:11:46.500 But the reason I mention it is because the Republicans at the time, if you watch the 117 00:11:46.500 --> 00:11:50.700 How were the ads on television? The Republican National Committee was fighting Obamacare. 118 00:11:50.700 --> 00:11:55.860 How were they fighting it? Where were they staking their ground? Well, this is what the 119 00:11:55.860 --> 00:12:04.860 ads were about. They wanted a more effective health care program. They wanted to rethink 120 00:12:04.860 --> 00:12:12.900 the mechanics of the health care program. They wanted a bipartisan health care program. 121 00:12:12.900 --> 00:12:19.900 And virtually none of them, with the obvious exception, could even articulate an argument 122 00:12:19.900 --> 00:12:23.460 for a free market economy and a free market in healthcare. 123 00:12:23.460 --> 00:12:25.120 None of them could. 124 00:12:25.120 --> 00:12:30.220 And so now we look to these same people in our current circumstances and hope that they'll 125 00:12:30.220 --> 00:12:32.900 be capable of doing something different. 126 00:12:32.900 --> 00:12:40.800 But I will tell you that during the campaign, Congressman Boehner came out with a program 127 00:12:40.800 --> 00:12:44.800 The Pledge to America 128 00:12:44.800 --> 00:12:48.800 The Pledge to America 129 00:13:10.800 --> 00:13:15.880 And I think it was September 22nd or 23rd. So I booked, I went to the treasury website 130 00:13:15.880 --> 00:13:21.440 and I bookmarked where we were, what the size of the visible federal debt was on that date. 131 00:13:21.440 --> 00:13:26.200 And I said, let's just see how many days pass before they roll up another $100 billion in 132 00:13:26.200 --> 00:13:30.520 debt. This is because this is the monumental cut the Republicans are going to make. Ladies 133 00:13:30.520 --> 00:13:36.480 and gentlemen, it was one week later. It was September 30th. It had taken seven days to 134 00:13:36.480 --> 00:13:40.760 move up $100 billion and that's where they were going to cut. And then the Heritage Foundation, 135 00:13:40.760 --> 00:13:57.760 The cost of the empire, right? The entire, not even, they didn't even touch it. Now, you're spending, you're spending a trillion dollars a year on this thing, between the war and, you know, all of these, this foreign meddling and foreign operations, right? 136 00:13:57.760 --> 00:14:06.440 Now, you're spending, you're spending a trillion dollars a year on this thing. 137 00:14:06.440 --> 00:14:11.320 Between the war and, you know, all of these foreign meddling and foreign operations and 138 00:14:11.320 --> 00:14:15.800 foreign aid and, you know, Hillary Clinton out there trying to steal the frequent flyer 139 00:14:15.800 --> 00:14:22.200 miles of diplomats at the U.N. and, you know, or seeking people to spy, apparently, if you 140 00:14:22.200 --> 00:14:25.760 read between the lines, spy on the sex life of some woman who's president of a country 141 00:14:25.760 --> 00:14:26.760 in South America. 142 00:14:26.760 --> 00:14:31.760 And I said, why doesn't she just get Linda Tripp if that's what she wants to do? 143 00:14:31.760 --> 00:14:37.260 So, but there's a trillion dollars a year. 144 00:14:37.260 --> 00:14:38.260 Can they cut it? 145 00:14:38.260 --> 00:14:40.800 And then you saw the Republicans said the other day, you know, oh, here's what we're 146 00:14:40.800 --> 00:14:41.800 going to do. 147 00:14:41.800 --> 00:14:44.720 We're going to do $250 billion over a whole bunch of different years. 148 00:14:44.720 --> 00:14:48.480 And they left the empire intact. 149 00:14:48.480 --> 00:14:53.600 But they did decide to come together to read the Constitution. 150 00:14:53.600 --> 00:15:01.600 Oh, I know, I know some of you think that shining the light on the Constitution is a good thing. 151 00:15:01.600 --> 00:15:07.600 But I tell you, it just, I thought it was painful for me. 152 00:15:07.600 --> 00:15:13.600 You know, it reminds me, really, you know what it is, it's words and not deeds. 153 00:15:13.600 --> 00:15:19.600 It's paper money instead of gold. It's all substitutes. 154 00:15:19.600 --> 00:15:30.600 It reminded me of the Christian admonition about the hypocrites that pray out in the streets to be seen and noted by other men. 155 00:15:30.600 --> 00:15:35.600 And they were advised to retreat into their closets and pull the door closed instead. 156 00:15:35.600 --> 00:15:47.600 And so no sooner had they finished reading the Constitution that they came out then with new initiatives and descriptions of what they were going to do that continued to ignore the Constitution. 157 00:15:47.600 --> 00:16:06.600 So, I tell you, this newfound dedication of the Republicans to the Constitution and fiscal conservatism is a very fleeting thing, it's very ephemeral, and the best example that I can give you about that begins in March of 1999. 158 00:16:06.600 --> 00:16:15.600 You had President Clinton announce a unilateral war on Yugoslavia, and he said, you know, with the bomb, we're going to start bombing, we're going to be bombing with NATO, 159 00:16:15.600 --> 00:16:37.160 In March, in April, Congress voted on a declaration of war on Yugoslavia, and it was defeated 427-2. 160 00:16:37.160 --> 00:16:40.200 The war continued, of course. 161 00:16:40.200 --> 00:16:45.120 There were 17 members of Congress that were miffed by this, and they decided to go to 162 00:16:45.120 --> 00:16:46.400 to the Federal Court about it. 163 00:16:46.400 --> 00:16:50.280 And so they sued the President of the United States in U.S. Federal Court and District 164 00:16:50.280 --> 00:16:56.160 Court for violation of Article 1, Section 8, Clause 11 about going to war without a declaration 165 00:16:56.160 --> 00:16:57.160 of war. 166 00:16:57.160 --> 00:17:00.760 That's the responsibility of the people's representatives. 167 00:17:00.760 --> 00:17:02.180 This is clearly a war. 168 00:17:02.180 --> 00:17:06.820 And so the U.S. District Court said that these members of Congress didn't have standing 169 00:17:06.820 --> 00:17:09.040 to sue. 170 00:17:09.040 --> 00:17:12.680 And the Appellate Court agreed, and the Supreme Court, of course, washed its hands of the 171 00:17:12.680 --> 00:17:13.680 whole issue. 172 00:17:13.680 --> 00:17:22.680 The point, though, is that three years later, of those seventeen congressmen, fifteen of them were Republicans, two were Democrats. 173 00:17:22.680 --> 00:17:27.680 So of the fifteen Republicans, there were twelve of them still left in Congress. 174 00:17:27.680 --> 00:17:40.680 And of those twelve, with one obvious exception, they all voted to hand off presidential responsibility, or congressional responsibility to declare war, 175 00:17:40.680 --> 00:17:46.280 Declare War to hand it off to President Bush so he could have the elective war in Iraq. 176 00:17:46.280 --> 00:17:53.940 So what happened to their dedication to Article 1, Section 8, Clause 11? It was certainly 177 00:17:53.940 --> 00:17:59.240 there when the Democrat was in office and what happened when the President was a Republican. 178 00:17:59.240 --> 00:18:07.440 So if you look at the fiscal rail on which the Dollar Debt Express is racing, there is 179 00:18:07.440 --> 00:18:13.080 is not frankly, there's not much hope. Now, let's look at the monetary rail, and things 180 00:18:13.080 --> 00:18:21.080 are really grim there. You had QE1. I mean, these euphemisms, aren't they great? You've 181 00:18:21.080 --> 00:18:29.520 got liquidity operations, tarping, deficit accommodating, quantitative easing. So you 182 00:18:29.520 --> 00:18:37.040 had QE1, which was a $1.7 trillion affair. Now, think about this. You had the money center 183 00:18:37.040 --> 00:18:41.740 The major banks, the big investment banks of America, had dazzled the American people 184 00:18:41.740 --> 00:18:47.080 for years with their fancy financial footwork and they'd earned themselves billions of dollars 185 00:18:47.080 --> 00:18:51.720 in fees and bonuses and stuff for all the profits they'd made. 186 00:18:51.720 --> 00:18:56.600 And then when they took a loss, wait a minute, wait a minute, did you ever get a dividend 187 00:18:56.600 --> 00:19:00.280 check for all the profits they were making those years? 188 00:19:00.280 --> 00:19:07.880 But when things went amiss, they shuffled all of that toxic paper onto the balance sheet 189 00:19:07.880 --> 00:19:12.160 of the Federal Reserve so that it could effectively be assimilated in time by the destruction 190 00:19:12.160 --> 00:19:14.640 of the purchasing power of the US dollar. 191 00:19:14.640 --> 00:19:19.300 So you've got all this stuff, I call it mystery meat because nobody really knows what it is 192 00:19:19.300 --> 00:19:24.220 but it's not worth anything, it's been moved off of their books, right, onto the books 193 00:19:24.220 --> 00:19:25.960 of the Federal Reserve. 194 00:19:25.960 --> 00:19:33.160 You know how that process works. The Fed creates the money that they buy those things with. 195 00:19:33.160 --> 00:19:40.960 They just create it in the morning. When they buy bonds, just trade your bonds, they just pay for it with money that didn't even exist. 196 00:19:40.960 --> 00:19:46.160 I mean, you think of China buying our bonds. At least China, when China buys our bonds, they give us real money. 197 00:19:46.160 --> 00:19:54.160 You know, they made things, real things, and they sold them to us and we paid them, and so they buy our bonds with that real money that they earned doing things. 198 00:19:54.160 --> 00:20:01.160 The Federal Reserve buys U.S. Treasury bonds or mystery meat off the books of the money 199 00:20:01.200 --> 00:20:07.780 center banks. They buy it with money that they just made up in the morning. They add 200 00:20:07.780 --> 00:20:13.080 these things as an asset to the balance sheet of the Federal Reserve. There's an offsetting 201 00:20:13.080 --> 00:20:19.360 liability and the liability, of course, is a deposit on the account of the financial 202 00:20:49.360 --> 00:20:53.640 System and in commercial activity. 203 00:20:53.640 --> 00:21:01.960 So before QE1 had even been assimilated in price increases, there are signs of commodity 204 00:21:01.960 --> 00:21:07.360 prices going up, you know about petroleum and you know about what's happened with gold, 205 00:21:07.360 --> 00:21:11.040 food riots elsewhere in the world, you know about food prices and all the things that 206 00:21:11.040 --> 00:21:16.160 I've recommended in the dollar meltdown, you know that all these things are starting to 207 00:21:16.160 --> 00:21:22.920 to Move, but before, before QE1 had even been digested, and that's going to be swallowing 208 00:21:22.920 --> 00:21:29.200 a pig, before that's done, they decided to double down with QE2. 209 00:21:29.200 --> 00:21:35.520 Now let me tell you something, the American people may be asleep, but they realized that 210 00:21:35.520 --> 00:21:41.400 there was something funny going on with these wealth transfers of $786 billion from Obama 211 00:22:11.400 --> 00:22:21.400 They had come together and in their activity they had kicked out of office 30, Senate and House, 30 members of Congress who had voted for Bush's $700 billion bailout. 212 00:22:21.400 --> 00:22:28.400 Not a bad Tuesday, right? Oh, they had expressed themselves. That was on Tuesday. 213 00:22:28.400 --> 00:22:35.400 On Wednesday, the Federal Reserve unilaterally announced QE2. 214 00:22:35.400 --> 00:22:43.400 The next day, just so you don't suffer any illusions about who's really in charge here. 215 00:22:43.400 --> 00:22:48.400 And QE2 is bigger than Obama's 786 and bigger than Bush's 700. 216 00:22:48.400 --> 00:22:59.400 It's effectively all together a $900 billion Wall Street bonanza, a bailout program. 217 00:22:59.400 --> 00:23:07.400 Debate? No. Referendum? No. Vote? No. Just so you know who's in charge. 218 00:23:07.400 --> 00:23:18.400 So, the signs are all about, if you look at the twin rails of the dollar debt express, there is nothing to slow the express train down as it nears the precipice. 219 00:23:18.400 --> 00:23:28.400 And we are seeing, the signals are apparent to us, I believe everywhere, we are seeing the end of the dollar's reserve standard around the world. 220 00:23:28.400 --> 00:23:36.000 We are seeing further criminal destruction, criminal scale destruction in the purchasing power of the U.S. dollar 221 00:23:36.000 --> 00:23:43.280 and probably the destruction of the entire capital markets in this country by the time they're done with this thing. 222 00:23:43.280 --> 00:23:49.920 So it really reminds me of the three little pigs in reverse. 223 00:23:49.920 --> 00:23:55.440 Here we were living with a sound gold monetary system. 224 00:23:55.440 --> 00:24:02.440 The American people in 1933 moved out of their brick house, their gold based monetary system, and they moved into a house of sticks, the gold exchange standard, and in 1971 the gold exchange standard closed. 225 00:24:25.440 --> 00:24:55.440 The dollar reserve standard 226 00:24:55.440 --> 00:25:10.360 10 years ago, I was at the Watergate Hotel in Washington for the inauguration of President 227 00:25:10.360 --> 00:25:14.600 George W. Bush and doing my radio show there. 228 00:25:14.600 --> 00:25:18.360 I wasn't there because I was a fanboy. 229 00:25:18.360 --> 00:25:21.640 But the price of gasoline at the time was $1.47. 230 00:25:21.640 --> 00:25:24.040 I paid $3.19 in Scottsdale yesterday. 231 00:25:24.040 --> 00:25:29.360 The national debt was $5.7 trillion. Silver was $4.80 an ounce and gold was $2.77 ten 232 00:25:29.360 --> 00:25:34.360 years ago. In the intervening ten years we had seven increases of the national debt on 233 00:25:34.360 --> 00:25:41.360 Bush's watch and three on Obama's. Ten years, ten increases in the national debt. And some 234 00:25:41.360 --> 00:25:45.120 time back I put up a chart showing how you could correlate these increases in the national 235 00:25:45.120 --> 00:25:51.720 debt with the increase of the world price of gold. So I thought I'd take at least one 236 00:25:51.720 --> 00:26:21.640 In this room, everybody in this room holds dollars, not everybody in the world owns gold, 237 00:26:21.640 --> 00:26:26.640 But they missed the big ones, right? And they want to know, is gold in a bubble? 238 00:26:26.640 --> 00:26:31.640 Okay, let me explain it to you this way, in my view. 239 00:26:31.640 --> 00:26:36.640 During the dot-com bubble, you couldn't walk into a Starbucks, right? 240 00:26:36.640 --> 00:26:40.640 Without hearing people who had quit their jobs to become day traders, 241 00:26:40.640 --> 00:26:43.640 you know, were sharing their, you know, their penny stock tips and stuff. 242 00:26:43.640 --> 00:26:46.640 I mean, it was everywhere. That was a bubble. 243 00:26:46.640 --> 00:26:54.640 In the real estate bubble, Discovery Channel has a show called Flip This House. 244 00:26:54.640 --> 00:27:04.640 In Scottsdale where I live, every cocktail waitress in town was doing that, buying apartments that had been converted into condos in hopes of owning it for a month and then flipping it. 245 00:27:04.640 --> 00:27:08.640 I mean, that's a bubble. Is gold in a bubble? 246 00:27:08.640 --> 00:27:15.640 Let me tell you, gold is real money everywhere around the world and from time to time, governments go off if the real world doesn't. 247 00:27:45.640 --> 00:28:00.640 The largest producer now of gold. They encourage their people to own gold. Last week they launched a new international fund for their people to buy gold in places like American ETFs for the first time. 248 00:28:00.640 --> 00:28:10.640 They are the largest producer of gold. India, oh, they're very serious about growing their foreign exchange reserves, their gold-based foreign exchange reserves. 249 00:28:10.640 --> 00:28:16.120 India is the world's largest gold buyer. Somebody that is involved in that trade the other day 250 00:28:16.120 --> 00:28:21.600 said the demand from India is insatiable. The World Gold Council said price is no longer 251 00:28:21.600 --> 00:28:27.680 an object to the Indian gold market. So this is the metric that I want to leave you with 252 00:28:27.680 --> 00:28:32.160 as the dollar exchange standard breaks down. What replaces it? Well, it's already beginning 253 00:28:32.160 --> 00:28:39.160 to take place. India has just over 8% of its foreign exchange reserves. Actually, it's 254 00:28:39.160 --> 00:28:45.640 0.2 percent of its foreign exchange reserves in gold. China has less than 2 percent. They 255 00:28:45.640 --> 00:28:54.640 have 1.7 percent. So I want you to understand the leverage that is involved in this thing. 256 00:28:54.640 --> 00:29:02.040 If China were to restore or to institute the same level of gold in its foreign exchange 257 00:29:02.040 --> 00:29:05.960 reserves, which now they're up to their eyeballs in things like U.S. dollars, if they were 258 00:29:05.960 --> 00:29:11.120 If they were to try to get to India's level of gold in their foreign exchange reserves, 259 00:29:11.120 --> 00:29:19.560 it would require all of the gold produced in the entire world for about two years. 260 00:29:19.560 --> 00:29:28.920 If Americans, on the brink of a currency breakdown, if Americans were to buy one ounce of gold 261 00:29:28.920 --> 00:29:31.320 per American citizen. 262 00:29:31.320 --> 00:29:36.320 One gold coin for every American when the currency breaks down. 263 00:29:36.320 --> 00:29:42.480 That would require all of the world's gold production, all of the new mining of gold 264 00:29:42.480 --> 00:29:46.960 from the globe for four years. 265 00:29:46.960 --> 00:29:53.080 So when somebody says there is a bubble, you know, you can say, fine, thanks very much. 266 00:29:53.080 --> 00:29:55.080 Glad to hear about it. 267 00:29:55.080 --> 00:29:59.080 Anyway, one more quick point and then I'll leave the podium. 268 00:29:59.080 --> 00:30:07.080 Time Magazine is a symbol of the big media and only the big media could do something like the committee to save the world. 269 00:30:07.080 --> 00:30:13.080 But I had an experience here in the last couple of months that was frankly astonishing to me. 270 00:30:13.080 --> 00:30:21.080 I did a couple of months, from the end of October, all of November, and December up until Christmastime, 271 00:30:21.080 --> 00:30:32.080 I did a national radio tour of doing interviews and stuff on national talk shows and local talk shows around the country for the release of the paperback version of my book, The Dollar Meltdown. 272 00:30:32.080 --> 00:30:38.080 And it was a virtual duplicate of the tour that I had done one year before with the release of The Hardback. 273 00:30:38.080 --> 00:30:46.080 But this time, something had changed, and I was astonished to see it. 274 00:30:46.080 --> 00:30:52.400 I went on a radio show in Oregon and I mentioned something in the course of describing the economy 275 00:30:52.400 --> 00:30:53.400 and paper money. 276 00:30:53.400 --> 00:30:58.520 I mentioned something about Professor Mises and the talk show host, mainstream station, 277 00:30:58.520 --> 00:31:04.080 big market in Oregon, the talk show host said, that Mises, he sure knew what he was talking 278 00:31:04.080 --> 00:31:06.760 about, didn't he? 279 00:31:06.760 --> 00:31:12.480 North Carolina, big radio station, big market, big audience in North Carolina. 280 00:31:12.480 --> 00:31:19.020 And the talk show host says to me, you know, Charles, I read your article on lewrockwell.com 281 00:31:19.020 --> 00:31:20.020 this morning. 282 00:31:20.020 --> 00:31:26.940 I did some neocon warmonger whack job in New York. 283 00:31:26.940 --> 00:31:33.020 And he graciously admitted that Congressman Paul has been dead on about everything he 284 00:31:33.020 --> 00:31:35.780 said about the economy and the Federal Reserve. 285 00:31:35.780 --> 00:31:40.960 I did a national, big national talk show host, a talk show in the middle of the night. 286 00:31:40.960 --> 00:31:43.820 The host said, you know, we're hearing a lot about Austrian economics. 287 00:31:43.820 --> 00:31:46.320 Tell me about Austrian economics. 288 00:31:46.320 --> 00:31:49.280 Now we've had a couple of friends in the media over the years that you could count, you'd 289 00:31:49.280 --> 00:31:51.360 go on their show and they'd want to talk about this stuff. 290 00:31:51.360 --> 00:31:53.000 These were all new people. 291 00:31:53.000 --> 00:31:57.140 And it was happening over and over and over again. 292 00:31:57.140 --> 00:32:03.100 So this is the result, I think, of the reach of this circle of friends, the Mises circle 293 00:32:03.100 --> 00:32:06.040 and all of those in this circle. 294 00:32:06.040 --> 00:32:12.360 It has been quite an incredible experience, and it is in my view time to press our advantage. 295 00:32:12.360 --> 00:32:16.440 There has never been a time like this in which we can take advantage of things beginning 296 00:32:16.440 --> 00:32:17.440 to break our way. 297 00:32:17.440 --> 00:32:21.840 Now, I'm not saying that we can stop it from getting any darker before the dawn. 298 00:32:21.840 --> 00:32:27.120 But we can press our advantage now to see that we emerge from this thing with a sound 299 00:32:27.120 --> 00:32:32.880 monetary system, that we don't move now into a house of paper that's painted to look like 300 00:33:02.880 --> 00:33:06.680 The blessings of liberty by helping this institution. 301 00:33:06.680 --> 00:33:19.680 The blessings of liberty which are prosperity, peace, opportunity, human dignity. 302 00:33:19.680 --> 00:33:22.480 There is no higher calling than that. 303 00:33:22.480 --> 00:33:23.680 Thank you very much. 304 00:33:32.880 --> 00:33:34.880 Thank you very much.