 Welcome back to Mises Weekends. I'm your host Jeff Deist and our guest this weekend is Bill Bonner who's perhaps best known for founding way back in the 1970s Agora Financial which in the intervening decades has turned into a publishing juggernaut. Now Bill has spent his career living and traveling around the world to understand global markets and he's an absolute expert on central banking and debt. As a matter of fact he wrote the book on it called Empire of Debt way back in 2005 which later became a documentary movie. So Bill and I have a great conversation about this sort of bizarro world of debt and fed machinations that we find ourselves living in today. Now one quick caveat, we caught Bill on a cell phone from one of his second homes in Paris, France and so the sound quality is not optimal but we think you'll enjoy this interview anyway so stay tuned for a great conversation with Bill Bonner from Agora Financial. Hard to believe but it's been 10 years roughly since Empire of Debt was written and I remember Addison Wiggin coming down to Washington DC meeting with Ron Paul and talking about the book and Ron ultimately ended up I believe in the documentary movie about the book. Could you have imagined at that time when you wrote it everything that would have happened since you know the layman brothers crash of 2008 and the feds reaction and quantitative easing it's it almost sounds quaint now but at about that time when the book came out total federal debt was 8 trillion. Of course now it's about 18 trillion so it's really it's been an amazing ride. It has been an amazing ride. No I have been I have been wrong consistently wrong. I'd like to say that I'm consistent. I'm consistently wrong for the last 40 years because I remember talking to Murray Rothbard back in like 1973 and we were sitting around you know at the time I didn't really know what was going on but he said well this can't last you know this can't last because they had just set up this new currency system that eliminated the international the international exchangeability you know the ballot from previous to 1971 you could change your money into the foreigners could take their money to the US and change the goal so when when we had a pure paper money system nobody you know I didn't think it would last for more than a few years and here we are 40 years later and still still going I wouldn't say it's going strong but it's still going. No it is amazing and and when you think about it there's there are millions of people working in in financial markets and financial industries and Wall Street private equity funds etc who don't even remember the Greenspan era much less Paul Volcker right I mean 1973 might as well be 1873. No exactly right I mean it's amazing what's happened and it's happened over such a long period of time that most people most people alive today or at least most people who are making important decisions in the financial world have no experience of anything other than a bull market because we had a bull market since 1982 and no experience of real money because we haven't had that since 1971 and 1968 domestically so this has been a very very strange period in history one that that shouldn't exist the way it does it's theoretically mathematically can't go on for much longer but it's gone on it's improved remarkably robust and remarkably durable and part of the reason for this is that so many people can't imagine anything else and they can't imagine anything could go very wrong with it yes they now they've lived through the crisis of 2008-200 so they know there are there are setbacks and now they're puzzled about why the economy hasn't rebounded but they assume that it's just a matter of time until the authorities get their ducks lined up and everything will work well Jim. Well you wrote in an article a week or two back that Yellen's announcement last week which turned out to be an announcement that the Fed was not going to do anything was the most anticipated central bank action in history I mean isn't this kind of bizarre can you ever recall the I won't say the general public but certainly the financial press being this fixated on a central bank action it's it almost seems bizarre to me. Well it's totally bizarre and it's bizarre because it never before made so much difference that they the Fed I mean central banks up until recently up until recently until Greenspan and Greenspan was the the decisive pivot in the whole central banking world often tell him nobody knew the names of the central bankers and you know that you can take that all the way back to the head of the mint in England in the 11th century nobody knew who these people were because they were supposed to not do anything their role was just to not do anything to not not to use any innovative techniques not to use imagination not to come up with new plans not to pull on levers not to turn knobs their job was simply to make sure they didn't do anything that would ruin the the the monetary stability of the country now we have all these innovators these activists these people with ideas and it's amazing every the paper every day and you're a new economist coming up with new ideas to how we can put the new new thing there but it's amazing now we're just everything we're improvising we're making it up as we go along that's not something you're supposed to do in central banking but now that we are everybody dies a turn to the central bank if they're going to do something nobody knows what they're going to do they don't know what they're going to do but they're making it up as they go along and it's sure to be a disaster that's not the way central banking is supposed to work well when you're talking about making it up as they go along everybody who thinks like we do surmises that there's going to be some kind of end game to all this debt there's going to be some sort of global currency reset so Jim Rickards in his newsletter recently said something I thought was so interesting he's talking about decisions that are being made by elites that are going to impact global capital markets and he says this I'm quoting him he says they do not announce radical changes overnight they prefer to make small moves year after year through boring technical changes that few notice or understand I'd like to get your thought on this because we tend to think that there's going to be some big calamity or there's going to be another Bretton Woods type summit or the IMF is going to do something very publicly and SDRs are going to come to the fore but in fact maybe this is just happening and we're not aware of it because it's it's happening through through as Rickard says sort of small technical changes well yes I think they're making small changes all the time because they dare not make big ones they don't know that really I think they're given far too much credit when I read what they have done but what they say you know you hope they're like politicians and you hope that behind that stuff that they say publicly they have some private talks it makes some sense but I doubt it's true you know they have done a lot of work that their whole lives doing mostly academic kind of work in in economics but that academic school that they're in is just doesn't make any sense in the end of the day so they don't really have a firm idea of what they're doing or how they're going to do it they really are improvising and improvising now is taking place by middle increments because they don't really trust what they're doing they don't know what they're doing they kind of wait to see what happens but when the whole thing falls apart which it will then they will improvise on a much much grander scale and then we'll get some I think what we'll get is the first they'll make cash which probably at the depths of the next crisis and then we'll see some much more heavy handed innovation well the idea that they don't know what they're doing surely that uncertainty is not priced into markets today would you agree that that markets today reflect at least a subconscious belief that somewhere someone has their hand on the wheel and they know what the hell they're doing well yeah I think so it may not be that they know what they're doing but maybe a lot of people think they don't need to know what they're doing that that the system works well and just a lot of them look it up too badly it'll be fine but but what's happened is that they have their misactivism with the Fed requires them to know what they're doing and at least in the theoretical way it requires them to know things they couldn't possibly know anyway so it's really hopeless and eventually it'll become clear just about everybody that it doesn't work you know when we get a few days of stock market sell-off it won't take very much get a few days a thousand points down day after day for a few days and everybody is going to look at Janet Yellen in the Fed say what are you doing one is going wrong why didn't we stop this and then of course they'll come out with some new program but what's different here as opposed to let's say Argentina in 99-2000 I know you've spent a lot of time down there is that we're talking about people tinkering with the world's reserve currency we've never had a collapse of a worldwide reserve currency I mean this is uncharted territory no it's totally uncharted no Argentina with small potatoes small potatoes and Argentina also is full of Argentine the Argentines are very different from American in that they already suspected that the system didn't work nobody in Argentina trusted the Central Bank it was only the foreign the foreign lenders who thought that they were telling the truth but the Argentines themselves you know they have big wads of cash in their pockets they have they don't they don't save money in banks they typically if they're going to try to preserve some wealth in Argentina they buy an apartment or buy a farm or something I mean they are used to this kind of stuff so they knew what they were doing but on the world stage as a whole the US the reserve currency the United States dollar that nothing like this has ever happened and it is you know many many times the scale not to mention the fact that in in America today there are a few people who are prepared for any kind of monetary disaster I mean there are people walk around with no money in their pockets they have a credit card or a line of credit and they go to an ATM machine get some cash that they need to spend but they're not at all prepared for the kind of disaster that's headed their way well if you had to tell the average guy or gal one thing they should do today you know a person of of ordinary means an American let's say what what would you say what would you say that an average person could do to protect themselves even if what we're talking about is a remote or outside possibility a lot it's very easy and doesn't look off they think just make sure you have some cash cash is going to be you know where the rubber meets the road and then next crisis the ATM machine they're not gonna work so you got to make sure you have some cash on hand just to pay for ordinary living expenses during this crisis period of course nobody knows how to work or how long it'll take but the other thing you should have is some gold coins just simple simple bullion coins you should have some of your savings in bullion coins because they tend to resist the crisis and all sorts and the crisis could come in many different forms and nobody knows there's a lot of argument about whether it'll be just a pure classic deflation or a hyperinflation or just high levels of inflation sustained over many years nobody knows and you can't know those things but we do know that over time gold coins just simple bullion coins tend to hold their value and so when you you go through a crisis and the crisis could take a year could take five years could take 10 years but you come out of it and you still got the gold coins you know and they're still like something whereas your bun stocks and everything else in brackets they may or may not be worth something well what about the idea that a little bit of something can be good and a lot of something can be bad like alcohol for instance you know marks i'm sure this is misquoting it but it's paraphrasing marks that somehow as we get too rich and too prosperous we're going to hang ourselves on our own luxury vices is this something is a person who's traveled a lot who's studied a lot of other economies are americans just really dumb and really clueless about what makes us rich and and what it's going to take to sustain this well you know this idea of warm basis is this phenomenon that people have observed in in medicine where you give a little dose of something somebody makes it better and you give a big dose and they die but that's the fundamental idea of the of that book which is that public policy works the same way that a public policy and not just public policy but something like government you can argue that a little bit of government it really is a good thing because it kind of stabilizes things and it makes it easier for people to make long-term plans and so on but a lot of government and you reach that point very fast by the way a lot of government is obviously not a good thing because then the instability increases and more government you have or more people you have making decisions and more people who have making decisions that affect your life and so now you can't make a decision because somebody else is making a decision that runs right into it but that phenomenon is a phenomenon that we see in almost everything where a little bit of something can be good a lot of it tends to be disastrous and in the financial world that's the idea of that book really is that in the financial world we have a policy a public policy and the public policy is kind of changing the manipulation of the economy in order to provide more what they call aggregate demand the aggregate demand means just printing money basically just printing money so the person go takes the money goes into the store he has demand you buy something and there's a whole generation maybe two generations of economists who believe that this is the way to improve an economy where in fact there's no evidence whatever that any economist has ever improved any economy I mean it's just not it's not true and while a little bit of aggregate demand or a little bit of credit little bit of even money printing might stimulate the economy in some way it is certainly true that you put a lot of this stuff to work and then you get a lot of people who depend on it and those people then insist on more of it because they need it in order to sustain the kind of advantages and benefits and property that they've come to to require so when you get more and more people in support of a policy like that you necessarily get more and more of that policy and then you get so many people in favor of the policy that it's unstoppable and then it has to run its course to the inevitable destruction to form again to the point where it all blows up and just can't go on anymore and that's where I think our public financial policies are headed Bill Bonner thanks so much for your time today and a really fascinating interview ladies and gentlemen have a great weekend