 I thought I would start with one, you know, sort of thought or theme which I would describe is the enemy of our enemy can be our tactical friend under circumstances like we have today. And of course our enemy is the deep state, the empire abroad, this crazy interventionist policy that we've had over the last 20 or 30 years, but especially what is being driven now by a neocon view of the world which is really just insane and we can talk a little more about that later. And the Leviathan state we have at home, this gigantic government, but particularly as it has been enabled and driven by a central bank that is totally out of control and it has basically taken the sting out of deficit finance. And I make this point because when I started as a congressman in 1976 and then Ron Paul came in 1978 and I can remember conversations about how bad the deficit was then and you can't imagine, it was 45 billion and we were scared to death. But the one thing that's different today and that goes to the heart of what one of the things we're up against is that at least back then you had a quasi on a central bank as you can remember Paul Volcker was the chairman. He was not about to indulge or enable massive speculation in bubbles and when inflation got out of hand after the 1978 oil crisis, he put his foot to the break pretty dramatically and did not allow the Federal Reserve and the central bank to monetize the big deficits that Jimmy Carter had generated and left on Reagan's doorstep. Now the reason I say that is because in the days that you had quasi honest monetary policy. And of course after Nixon closed the gold window in 1971 it really wasn't honest anymore. You were on a quasi fiat standard but at least in the early years the people at the central bank kind of believed in sound money. They didn't know how much power they really had. They didn't know how far they could go and they had beliefs instilled over decades and decades during an era that we were actually on the Bretton Woods gold exchange standard or some of them could even remember life in the 1920s and before 1914 when we didn't even have a central bank. The point is they were not willing to just open up the spigot and buy in government debt hand over fist and as a result of that you did tend to get what I call the crowding out effect. The bigger the deficit got the higher interest rates rose, interest rates rose. When we went into office in early 1981 the 10 year bond was at 16 percent if you can imagine anything like that today. That had the effect of crowding out private investment in the housing market for households but especially in the banking market and the business market and it created a counter veiling political interest. Small businessmen, big corporations, people that wanted to take out a mortgage and buy a home. All were on the side of let's get those interest rates down. Let's get that deficit under control. Let's get Uncle Sam out of the financial market so that we can compete fairly for the dollars. That's how it was then. The other thing then in 1987 unfortunately people around Ronald Reagan and he had supported by the way Volcker all the way through, people around Ronald Reagan convinced him that Volcker really was out to undermine the administration and he needed to go. What they really didn't like was that he was totally independent and that he was determined to keep the dollar reasonably sound, inflation low and let the private economy go where it wanted to go based on what was happening in the real market for capitalism all around the country. They basically forced him out and they had the wonderful idea let's put in Alan Greenspan. After all, he was part of Anne Rand's crowd in New York. He had written some fabulous pieces. Some of you have read it, this great thing he wrote in 1966 about the virtues of the gold standard and that was the only thing that basically kept government from expanding to the kind of girth that it has today and the only thing that really kept deficit finance under control. It turns out that over the years Alan Greenspan had become a somewhat defrocked gold bug and Reagan didn't understand that but the reason I'm mentioning all this is that once Greenspan got in office we had the big 20% meltdown in October 1987 as some of you can remember. It was off to the races because he discovered the printing press in the basement of the Eccles building where the Fed is housed. Now obviously Greenspan knew all about the printing press but in the panic of a 20% drop in the stock market literally overnight they opened up the spigot, the crisis was relieved fairly quickly and suddenly we were into a new era of what I call monetary central planning. They simply moved the Keynesian model, the Keynesian policy idea from the fiscal side which was difficult to implement because you had all of these difficult congressmen not ever wanting to agree on anything to the to the monetary side to the central bank where 12 members of an unelected Politburo could decide when, where, how and how much to do and you know at that point they were off to the races and you began this process of massive monetization of the federal debt that again that had the effect of removing the crowding out effect the rising interest effect the interest rate signaling to the political system and the Capitol Hill that you needed to manage your fiscal accounts all that was removed and so you've had 30 years basically of a runaway fiscal process on Capitol Hill because there was no longer that restraint from the bond market and you've had this enormous engorgement of the central banks now I bring this up because in 1987 when Greenspan leapt off into this crazy new direction the balance sheet of the Federal Reserve was 200 billion and it had taken 78 years more or less from when the Fed opened for business in 1914 you know by year by year a little bit by little bit this kind of Ohio State offense two yards in a cloud of dust the Fed's balance sheet had crept forward because during that period for the most part you had reasonably good stewards running a central bank that had the interrent potential to get out of control when it was linked to the gold that held them back when they had kind of human directors who were nearly as good as gold like Volcker or William McChesney Martin for the most part that held them back so it took 78 years to build the first 200 billion by the time Alan Greenspan left his term 19 years later it was nearly 800 billion then we have the great financial crisis of 208 and some of you can remember that period pretty well it is very much like today and that's why I'm bringing it up there was a presidential campaign on and all the Republicans were running around in this primary saying don't we have a glorious economy we are in the midst of this Goldilocks perfection because we and the fiscal side and the Fed over with Greenspan and then his successor Bernanke have done such a wonderful job of implementing the great moderation everything is perfect the business cycle has been extinguished and you know it's onward and upward full employment Nirvana as far as the eye can see there was only one candidate who said this isn't reality this is a bubble he happens to be sitting right here run ball he was right then and we're kind of there now and we'll get to some of that in a moment where you have Donald Trump who ran against the failure of the Obama and predecessor economies who called the Wall Street at that time when the stock market was about 2100 a big fat ugly bubble waiting to collapse who's now in office has embraced the whole thing singing the glories of the greatest economy since 208 and we're roughly in the same point but the the point that I want to get across is that Trump is essentially merely the enemy of our enemy all of that that I've just described and we haven't even gone into this you know how to control interventions foreign policy that is basically destroyed the Middle East is bankrupting the country and is basically sully the good name of America all around the globe the point is he's the enemy of our enemy that has done all that and he has no redeeming qualities that I can think of but there are is a silver lining in what's happening in this whole crazy Trump era upside down world that we are living in at the moment and I want to tick off a couple of those and then you know we can open it up for any discussion you would like to have but the first point is that he's discredited discredited enormously the imperial presidency and I think that is a wonderful thing because partly the partly the reason why our foreign policy has been so interventionist has been so destructive been so costly has been such a big failure is that in unelected group around the presidency in what we now call the deep state the National Security Council all of the 17 different intelligence agencies deep in the balls of the State Department and the National Endowment for Democracy to say nothing to the Pentagon and you know the military industrial complex and all the NGOs and all the think tanks I mean there's literally dozens and dozens of think tanks who live one way or another off government money through the backdoor or foundation money that's in the business of promoting the Empire promoting the neocon view of the world promoting our intervention everywhere from the Idlib Idlib province in Syria to we're still you know in North Korea 68 years after the war shouldn't have started in 1950 so the point is that the imperial presidency is at the heart of that I mean as a lot of you know and as we all write about in our different publications all the time we haven't had a proper war declared since you know Pearl Harbor and the fact is that if presidents had to go to Congress to get funding for the war and get a declaration of war half of these interventions that were we've been involved in I wouldn't say half I'd say 98% of them never would have happened and you know we had a good example of that not too long ago which kind of set up the mess that we're in with Russia and Putin today so I want to digress a little bit and mention that because in that particular case the imperial presidency was occupied at that point by Barack Obama he had put out this stupid red line which said you know we don't really know what's going on in Syria but if somebody uses chemical weapons that's the red line we're coming in you know whether you had any proof that Assad did it or some of our so-called allies and free rebels did it or the jihadists that the Saudis were supporting it didn't matter he drew the red line they attack happened in Goda I think I believe it was in August 2013 and the next thing you knew he was Obama was called on his red line and he hesitated first when the British refused to join and then secondly he kind of decided to throw the ball to Congress asked them for a resolution of support and never happened and that gave Putin a wonderful opportunity to step in and say we can we can cool down this situation by convincing Assad to give up his chemical weapons remove the cause for war remove the cause for the red line and hopefully bring some sanity back to the situation well that's exactly what happened and as a result we we had a more sensible policy for the moment except the neocons in the whole military foreign policy establishment were outraged that they were on the verge of regime change in Syria which they desperately wanted that was on the list we'd already had it by that point in time obviously in Iraq we had had it in Libya Syria was next and Putin definitely stepped in and removed the cause for a war so six months later the coup the uprising begins on the streets of Kiev the so-called maiden uprising and the next thing we know all the neocon politicians from McCain and all the rest of them to the State Department and the local ambassador and the National Endowment for Democracy and operatives of the CIA posing as State Department personnel and so forth were all over the place fomenting the coup financing the coup and recognizing immediately within hours a government that was formed out of a lot of nationalist Ukrainians and even some neo-nazi elements that was as illegitimate as you can possibly imagine but it was recognized and that set off this whole demonization of Russia and Putin because obviously they had to respond and the reason they had to respond is it's on their doorstep it's like if there was some kind of uprising that occurred you know on the border of Arizona or New Mexico and particularly I just want to mention the craziness that developed on with regard to the so-called annexation of Crimea because that is what has triggered this whole range of sanctions and this whole rapidly escalating Cold War 2.0 between Russia and the United States and you know when you listen to the Washington polls and policymakers and the neocons it's as if you know Putin were some kind of latter-day Hitler on the move taking territory and here's the ironic part there is nary a Ukrainian speaking person in Crimea because Crimea was never part of the Ukraine Crimea was always Russian it was purchased for good money in 1783 by Catherine the Great from the Turks who were always bankrupt and always needed needing money it became an integral part of the mother Russia in the era of the Tsars their great fleet Black Sea fleet was home ported in Sevastopol right on the peninsula in fact everybody here has probably read the charge of the light brigade the great tennis and poet poem that occurred on Crimea when the invaders were coming well who were the invaders what was the English the French and the Turks and who were the defenders the Russians that was the great patriotic moment in Russian history so the point is it never was part of Russia until 1954 the Soviet Union was in its midlife this the succession struggle happened after Stalin fortunately passed from this life and Khrushchev won the struggle as all of you remember liquidated his enemies and by the way there's this great funny movie out now that you might want to look at with making fun of the Russian succession at that time I'll think of the name in a moment and pass it on to you but anyway as a reward for his allies who helped him liquidate his two opponents Berea who ran the KGB and a second opponent he awarded the Ukrainian comrades who had helped him by having the Presidium pass a decree moving Crimea from the Soviet Socialist Republic of Russia to the Soviet Socialist Republic of the Ukraine so you know that's how it became part of the Ukraine the Presidium ordered it and so here we are 70 years later saying the essence of our foreign policy is to enforce the debt the writ of the dead hand of the Soviet Presidium from 1954 okay so that that just gives you some feel for how far this whole empire has gotten out of control and it's all happened all of this policy maneuvering this all happened because of the imperial presidency and too much power in the Oval Office and for whatever you know you may say about Trump's characteristics and his character is bombastic and uncouth and unpleasant and so forth as he is he is making the imperial presidency look bad around the world and frankly I think that's a good thing because next time we declare a war maybe no one will come because who wants to be part of that and really that's a little bit facetious but it's actually true people are now starting to think around the world about their own interest rather than being just you know robotic adherence to the Western Alliance or the NATO or whatever clearly the Germans are going their own way there's several countries in Eastern Europe particularly Hungary and now Italy and others and this is all a good thing because we don't need an empire we are not appointed to be the policeman of the world we can't afford it we're going bankrupt doing it and everything we've tried has failed and has been a shambles anyway you know from one side of the Middle East to the other so that's the first thing he's doing second thing he's discrediting the spy state and I think that's a good thing because the Republicans were so in the tank for that whole apparatus of 17 so-called intelligence agencies and had given them so much money that they really were out of control here's a statistic that I think is pretty shocking but indicates sort of the magnitude of why this is a problem the combined budget of the 17 so-called intelligence agencies and that includes the CIA the DIA the FBI and all the other acronyms every department has some kind of intelligence operation or more more than one is 75 billion now that's a pretty staggering number because it actually exceeds the entire defense budget of Russia which is 60 billion and when you think about it that 60 billion has to pay for the fuel the set of the pay of the their armed forces the boots the ammunition the planes the ships the whole ball of wax they spend 60 billion on we of course spend 720 billion but we spend more on our intelligence agencies than the entire budget of the alleged reason why we have to have such a massive national defense program anyway so what has happened here is that the intelligence community got over its skis led by Brennan right in the cusp of former CIA director right in the cusp of the 2016 election when Trump I don't think Trump really has any foreign policy views I mean you know I've I wrote a book you some of you had my book and I said Trump's better than the alternative and we can all appreciate that and he did have sort of a notion that maybe we were overextended maybe we didn't need to be meddling and intervening everywhere but it was a pretty superficial top-of-the-head view but at least he had enough strategic sense to say we don't why are we having this confrontation with Russia with Putin I mean I think Trump up there in you know had an epiphany up there in Trump Tower as he looked out he said my god I can see Russia from here and unlike Sarah Palin who could see the landmass of Eurasia from Anchorage or somewhere he actually could because what I'm talking about is the GDP of New York metro area which you can see from his lair in Trump Tower is 1.6 trillion and the GDP of Russia is 1.4 trillion in other words the GDP of New York is bigger and we're supposed to be shivering in our boots that Russia is some kind of existential threat to national security that we need this massive defense budget number one but more importantly this confrontation you know Trump the real estate developer and con artists said hey maybe that doesn't sound that doesn't sound right to me maybe I and he has you know overweening confidence in his ability to convince people things thought well maybe I can convince Putin that we can settle differences and work together and reduce you know the conflict in the world in the cost of all this he was right about that in the whole deep state went nuts and that's why they unleashed this whole FBI based CIA Brennan top office driven you know meddling in the campaign so it's turning out I think it's absolutely clear now and all these great documents are now going to finally be declassified and everybody's going to see them that the only meddling that occurred in the 2016 election was the meddling by our own deep state top-level national security operations designed to do whatever they could to undermine Trump's candidacy and promote the establishment it does a knee and this is all going to come out and the reason I think this is so important and so good is that it's big it's become a partisan issue so now all of these Republican robots who would always line up and say how much more do you need CIA how much more do you need DIA are suddenly realizing that these are dangerous vast mechanisms with great resources that can be turned against them politically to say nothing of the larger issue of how do you run a constitutional democracy if the government is undermining its own election so I think this is a huge thing I don't know exactly how it'll come out I'm really confident now that molar is going to be a total big nothing burger in embarrassment I write about this stuff a lot in my blog but and without getting bogged down in it too much it's just the the level of trivia that the other side has come up with in order to support it's increasingly thin case is undermining the whole idea that we need seventy five billion and this massive shield of secrecy and all this classification and so forth when you find out what they're doing behind the screens it's sort of like the Wizard of Oz you find out that there's some little wheezing guy back there that isn't scary at all and you know you're going to find out now that this meeting at Trump Tower you know this was really you know some kind of seminal event as the other side is claiming that shows the nefarious intention of the Russians and operations of trying to collude with the Trump campaign well you know just look at the facts the person that Putin allegedly sent was you know a 29 year old lawyer who didn't speak English okay and you're gonna send that kind of agent that kind of secret agent to Trump Tower right then and there in the heat of a presidential campaign to make a deal on how we're it had nothing to do with the election she was there for a good mission which was lobbying against this Magnitsky Act which is another old story if we sometimes we ever have time you know go into that that's a real crock that is partly behind all this tension that's been created but anyway the so-called Trump Tower meeting is a joke alright and the people in the Trump campaign who were allegedly being recruited by the Russians were such low-level wannabe volunteers in the campaign that they never even met met Trump you know Carter Page never met him Carter Page was just a guy trying to make a living and get a little visibility for himself in here after all this time he's still not indicted because one there wasn't any collusion and second still that they were able to get FISA warrants from this system that we say has been so well honed and so carefully structured to protect the Constitution while you know enabling security operations that need to be done if that is true and that's the image you know that Washington wants you to believe the deep deep state keeps raising up if it was that well choreographed and that well crafted how in the world did they come up with his nonsense that they put before the FISA judge and get a warrant to surveil a low-level guy in a presidential campaign where they had you know zero probable cause in any reasonable reading of the information now that is an alarming thing and the reason I'm bringing this up is not to you know get us all worked up about how dangerous the deep state is we already know that it what it's done is open the eyes of Republican politicians on Capitol Hill to how far this thing has gotten out of hand and we're just beginning to see the beginning of it now I think they're going to be hearings there's going to be exposure hopefully there'll be some reform hopefully there'll be some curtailment of this great spy state we call it surveillance state and some reduction in these massive resources they have but the biggest thing going on is I think bubble finance is being discredited and that's because you know you can look at Trump's program and this goes from bad to awful okay you can start with the idea that we have a big trade problem which we do and it's caused by bad trade deals which it isn't it's caused by bad money and if you want to solve the problem he would go after the course source of it few blocks down the street in the Eccles building but so the first thing is we're going to have a trade war which is going to really devastate the whole international system based on central banking and that will actually be painful in the short run but positive in the longer run the second thing is if I had to boil it down to two words his policy is fiscal debauchery I mean I haven't seen any we've never seen anything like this even from Democrats in terms of you know this massive tax bill I know everybody likes it but in the tenth year of a recovery when you already have a built-in deficit that's running at three or four percent of GDP you don't lay on top of that a tax cut that is poorly designed is basically going to go to stock buybacks anyway without offsetting cuts and spending in order to bring this deficit under control you know we can spend a huge amount of time on where we're going but I'll tell you it isn't a very bad place because built in when Trump started for the next ten years was about ten trillion worth of deficits he's already added four trillion more through the tax bill and through all of these huge increases for the Pentagon and then to get the Pentagon increases they had to give all the pork bell barrel politicians their side so they got eighty billion for defense cost them sixty billion more for domestic pork barrel of one type or another in all the while there was a conspiracy not to say boo about the entitlements you know which are two and a half trillion dollars a year and nothing is being done so the reason I bring this up is no one has abolished the business cycle you know they didn't pass a law saying the business cycle is hereby you know extinguished we are now in month a hundred and eleven of this so-called expansion is the law second longest in history the weakest the longest was a hundred nineteen months that was in the nineteen nineties when there's a lot more tailwinds and far fewer headwinds than we face today so the idea and this is the core of why there's a you know fantastic fiscal calamity coming the idea that's built into the CBO projections and all the other ten-year budget projections you look at is that we're going to go to twenty twenty eight without another recession which would mean that totally there would be two hundred and thirty two months of consecutive expansion between now and then and has never happened in human history it's three times the normal business cycle is double the longest one in history and it doesn't take into account all the things that are going on around the world that are difficult and to say nothing of the size of our deficit now why that's important is that if you actually take the CBO economic forecast and strip out the rosy scenario and that is interest rates that are way too low because we're going to get a yield shock in the market and you factor in a reasonable business cycle you know you're going to have a recession sometime in the nineteen twenties that adds another five trillion because you have the revenue loss and all the other impacts to the budget so to boil it down without getting lost in numbers here I'm absolutely convinced that we're going into the next ten years the twenty twenties with built-in twenty trillion of new deficits ten years twenty trillion two year two trillion a year average that'll take the national debt from twenty one today to forty one some by twenty twenty eight hundred and forty five percent of GDP a non viable situation in a in an economy that's gotten old the baby boom will be entirely retired by then are nearly retired there's fifty million people over sixty five today of which some of us here are part of that group I'll volunteer to be part of that but there will be a hundred million people over sixty five three decades from now so you have this massive demographic wave coming that will suck the wealth fair straight dry and that's what you're heading into and the worst thing you could possibly do is sort of add to the structural deficit right now and expect to get through that period you won't I mean there the whole thing is going to come on done now in the short run the Keynesians who are still in charge of the Fed are patting themselves on the back because just like in 208 when Ron Paul said this is a bubble this isn't prosperity they think they've created you know the be all and end all of prosperity 3.8 percent unemployment one quarter of 4% GDP growth so what those have they come and go the average has been terrible but they think they've created a strong solid nearly perfect economy and so therefore now they're ready to plow ahead and normalize interest rates as they call it and shrink the balance sheet of the Fed now we know how crazy this was as I said it went from 200 billion to 4.5 trillion in less than 30 years so that's a 22 fold increase they're now finally going to roll that back the reason I bring this up is that I believe they will do that until finally the whole system comes on done something big and nasty bursts on Wall Street and by then it will be too late so think about what's going to be coming down the pike then in the year ahead to thanks to the fiscal debauchery out of Washington from the Trump Republicans and what was already built in from both parties in the welfare state in the warfare state and so on and lay that against what the Fed is doing and there you have the collision the mother of all financial collisions because the US Treasury starting October 1 which isn't that far from now will have to borrow 1.2 trillion next year and that's about the biggest ever but it's in year 11 of a recovery not year one or at the bottom of a recession when private credit demand is at low levels and so forth nothing like it has ever happened you know when we were in year 11 of the only other business expansion of this length which was as I say the 1990s it was the spring of 2000 the budget was in 2% of GDP surplus the Federal Reserve still had basically an untapped balance sheet it was a totally different environment here we are today and we're going to be borrowing 6% of GDP 1.2 trillion but here's the punchline the Federal Reserve finally is going to be shrinking its balance sheet under what they call QT quantitative tightening by 600 billion per year annual rate so if you do kind of the elementary math the elementary addition you're going to have 1.8 trillion of new or existing debt that the Fed and the Treasury will be dumping into the bond pits to see where it's all going to be absorbed and it will be absorbed the market's always clear but it's going to clear in my view at a much higher rate than the rates that exist today and they're already moving up quite strongly at the front end of the curve and they will be towards the middle and back very soon you know the 10 years already pushing 3.1% and it'll be over that shortly but more importantly the front end of the curve is just soaring you know the the 90-day Treasury bill during this whole period of massive money printing and so-called financial repression was down on the zero bound as they call it pinned to the floor on Wall Street at about 20 basis points for eight years you can look at a chart it's like a big soup bowl and it goes down at the time of the crisis from a reasonable rate to 20 basis points stays there for eight years and now it's shot back up to 220 in other words just in less than a year the front end of the curve is starting to lift as the Fed has taken his foot off the neck of the money market and just add that together and you're going to have one huge yield shock in the bond market and that will ricochet into the entire financial system because remember the 10-year bond yield which has been kept so artificially low is the benchmark that drives the entire financial system every other kind of security is priced off from that including other governments around the world including investment grade US corporates and then from there to lesser grades and to junk and so forth everything prices off the 10-year and the level the cost of debt of course drives the level of price level of risk assets equities and the others because the cheaper the debt the more you can leverage risk asset positions and thereby drive up the price anyway i think this whole thing is coming to a big conflagration and it would have happened anyway but the silver lining of donald trump is that the fed is filled full of all kinds of proper establishment terrians and they're not about to be pushed around by this wild man interloper uncouth liar as the establishment press wants you to believe and you know it's mainly correct and so they're going to dig in they're going to dig in and do what they think their canesian lights are telling them to do which is to rate keep ratcheting up rates and keep shrinking their balance sheet until some furniture breaks all over the floor of wall street and then it will be too late and that uh in combination with the massive expansion of the fiscal requirements is really finally going to bring the system to some kind of crashing halt now what that means is if you happen to be an investor i wouldn't be anywhere near wall street the bond or the stock market at least for the next couple years because there truly is going to be a monumental collision and you will have i will tell you a government that is totally non-functional now that's my last point we all celebrate our madisonian democracy in other words the founding fathers were skeptical enough about the temptations of political power that they designed a mousetrap that basically couldn't work so many checks and balances and two houses and vetoes and so forth and so on normally that's a wonderful thing it's the one structural feature of our democracy that keeps the leviathan from getting is you know enormous as it is in socialist europe but we are now imposed a runaway fiscal train on the system that cannot be stopped unless somebody cuts spending through a majority act of both houses that then has to be signed or reforms entitlements in the same way or god forbid raises taxes in the same way what i'm telling you is the welfare state is so out of control the warfare state is now so dug in and we're so exposed everywhere around the world that there is not a snowball's chance of getting a majority in congress to act to stop the fiscal freight train it's left the station it's out of control we're going into two trillion plus deficits that will smash up against a federal reserve that's finally decided to stop monetizing the debt that's really what qt is they finally decided they've done such a wonderful job that they don't have to engage in financial fraud after 30 years and and continue to monetize the debt that will create the mother of all yield shocks that will send the market into a tailspin that can't be retrieved because unlike 208 when george bush was sitting there and you know dazed and suddenly got convinced that to save the free market he would you know suspend the free market uh are you remember his famous phrase if we don't do something this sucker is going down well uh what's happening this time is that the sucker is going down and the political system is in such bad bad shape it's so afraid it is caught up in such intense nasty partisan warfare that this uh spectacle going on right now on tv as we're all sitting here uh is emblematic of that when the crunch comes when uh it's september 208 again there's going to be no unified response they will not be able to put it together i think we've had the last bailout and then suddenly all that's built up over the last 30 years this massive debt government that's expanded everywhere a warfare state in a foreign policy that we can't afford a uh central bank that is basically destroyed honest free market capitalism uh in the financial system which is the heart of capitalist prosperity all of this will finally be exposed now my last point is what where does that lead us and my answer is i do not know but at least it is better than what would have been the case had hillary been elected and we would have continued to drift down the road of you know more and more debt of fed that uh thinks it needs to run the world a foreign policy uh that was failing by the day i think at least all of that is going to come to a grinding halt and maybe there'll be a chance for some gigantic reeducation of the american public and the american electorate when they see what a mess the political class in washington and the deep state uh that uh they serve uh has finally brought all of this too so those are some comments that took a little longer than i thought but i hope that was useful thank you i was always perplexed why there wasn't hyperinflation or more inflation after all the queue uh quantitative yeah and i'm still perplexed by that because you know inflation is just printing money yeah and so if you have any comments yeah i appreciate it oh that's a great question and actually i write about it almost every day in my blog and the thing is when we say hyperinflation we think of germany 1923 but if you look at 1923 the price level in the united states was flat it was inflation in one country because they massively expanded their currency but uh people had alternatives and there was an enormous flight uh from the d mark at the time into anything else gold uh the pounds uh guilders etc and that's what caused the whole thing to soar we're in a different world where the money printing has been global it's been planet-wide and as the fed printed all this money it didn't cause inflation because it created excess balances in our accounts with the rest of the world but rather than do what old good old Milton Friedman thought you know he's the one that basically convinced nixon to shut uh the gold window and destroy brettan woods he said we'll just have uh you will have a free market in currency and the exchange rates will be set on the free market and that's what we should do we don't need this rigid gold-based system well he was in theory right except there never was a free market in exchange rates it was a dirty float from day one and central banks everywhere decided that if there's too many dollars coming at us they no longer had the option of going to the gold window for gold and turning in the dollars that they would basically uh buy in the dollars through exchange rate interventions stuff them in their central banks and print their own currency in lieu there are and that's why if you look at things it's crazy china had foreign exchange reserves of maybe a hundred million dollars in 1993 when they decided to go the capitalist route and mr. dang said it's glorious to be rich and all that uh and by the peak they had four trillion well in a natural world in a free exchange market nobody would build a four trillion dollars worth of reserves that's proved positive that they were intervening consistently massively to buy in dollars and so therefore basically the inflation never happened in the dollar economy but it caused a you know bloating of the entire financial system of the world which in places like china led to massive capital investment and shiny new factories and you know apartment buildings and infrastructure and you know high speed rail and all the rest of it but it was really a deflationary and i have to keep telling people it was a deflationary phenomena on a global basis because it created so much capital investment because capital and debt was cheap you know and china's a house of cards that enormous capacity to build things and dig things and construct things and ship things and so forth enormous over capacity mall investment was created and that had an initial deflationary effect on the world that's why manufactured goods today the index price levels no higher than it was say in 1999 on a lot of things so unfortunately a lot of people on our side were looking making the wrong warning looking in the wrong place it still was massive monetary inflation but it was global and it led to deflation of goods and services even as it cost an enormous inflation of financial assets and so they were looking in the wrong place they got discredited or at least you know the establishment people the the mainstream media constantly beats over the head where's the inflation where's the hyperinflation and frankly we said or you know some of us anyway said it's not going to be inflation in one country because everybody's doing it and they're doing it to protect their export industries and the whole world is going to be infected with this thing and that's where we are today now the reason this is important this is my blog this morning the reason this is important is that now that trump has figured out that we did actually lose a large part of our productive economy and in the idea that we have you know 530 billion of imports from China we only export 130 that's not natural that's crazy in the old gold standard that would have been cleared because we would have had a loss of gold and you know interest rates would have gone up and deflation would have happened here and so forth but there is no clearance mechanism in this world and the Chinese just kept buying up our debt and this crazy imbalance continued year after year and got worse after and worse finally trump comes along who's totally and ignoramus utterly uneducated about anything economically and especially about trade I mean he's been basically a 17th century mercantilist for his whole life and didn't know it but he came along and said I'm going to fix this and the one thing a president can do in our system unfortunately is raised tariffs under phony section 232 and 301 investigations he doesn't need congress to approve I mean you know we couldn't even repeal Obamacare because you couldn't get the votes on the margin but suddenly he's like the kid in the candy shop he's discovered he has these authorities in year two of his administration and now they're going nuts I mean we get so used to the news day after day but the point is 250 billion of Chinese goods are already tariffed and they've tariffed 110 billion of theirs 85 percent and it's now going to the next level this is nuts it's going to blow up the system but most importantly it's going to blow up the red Ponzi as I call it and it's the red Ponzi that is the ultimate answer to your question that's where all of these excess dollars came to roost and if you go to china you can see it today in highways that nobody's on and 65 million empty apartment units and so forth that's where it all came to roost and so I guess my final point on this is another silver lining of the donald's you know unlikely arrival in the oval office and discover discovery of these trade authorities he's going to blow up the red Ponzi and that will be a good thing too because it will force the whole world economy to start a writing itself well actually what you just commented on was kind of exactly what I was going to ask and you made the exact points I wanted to hear but I was going to ask you maybe a personal question you might not be able to answer and that's on alan greenspan I was wondering if you could answer what might be his personal motivations for what he did at the federal reserve I was wondering if maybe like my personal idea is maybe that he's like Francisco dean connor and atlas shrugged where he's kind of like a playboy that intentionally wanted to wreck the economy well actually he was the opposite it's a great analogy but actually uh alan greenspan was the nerd who could never get the girls okay uh you remember he's a clarinet player and he was kind of the speckled economist and so forth and uh that's a little facetious but what i'm saying is he craved adulation i've known greenspan my whole life and you know he's not completely bad just mostly uh as it has turned out but uh you know i i knew him in the 70s uh when he was c a director and then when i became budget director and he was uh running his private uh advisory firm i saw him all the time he had you know he had decent ideas but he wanted to be in the circle of power he wanted to be he craved being needed and important and listened to and as i started out early today uh he you know got appointed to that job because they were they wanted to desperately get rid of vulgar and and um reagan said ronald reagan uh a blessed memory said well you got to get somebody better and they didn't because uh greenspan basically had um you know uh become a pragmatist and had walked away from his prior views long ago but then when he became fed chairman in the one and a half months after he took power there's a 23 percent decline in one day in the stock market some of you i a lot of you here i could see remember it but just think of what it would mean today let's say by the time we got done with this meeting the stock market was down 6 000 points from where you came in to uh this breakfast this morning i happened to know that because i was giving a speech on october 19th uh 1987 and i was in a room like this and i'm kind of gassing away talking about all these things and it was before cell phones but the next thing i knew one by one the people were getting up and then there was a murmur in the crowd and i'm still talking faster you know and i'm trying to get my point across and by the time i got done the room was half empty because the word was spreading that the market is crashing in a way that none of us can imagine today literally 6 000 points and it happened in two or three hours and so he stepped into the breach and quickly stabilized the system in some ways that i've written about at length and the great deformation that were not appropriate but opened up the spigots and manhandled the wall street trading firms and investment banks to do business with each other even if they knew the other side was a bad credit but he he uh he stemmed the slide quickly and turned around the economy everybody thought he's a great hero and that's the real answer and he uh suddenly found all of this attention and all of this glorification so amenable that he spent the rest of his 19 years doing the same thing and we got remember the committee to save the world and the cover of time magazine with green span and the other two standing there so that's really what it was and as we've always said power corrupts and that's kind of the bottom line that everybody should remember about what's so evil about the federal reserve it's an unelected uh pilot bureau and uh it creates people like green span it creates fanatics like Bernanke he was nuts it creates school marms like Janet Yellen i mean she was worse and we'll see where paul goes but until we get in ron paul has always been right about this until we get the fed corralled and defanged if not abolished i don't think we'll ever get there but uh there's one reform that would save the whole thing when it was created in 1914 there was not a fomc there was no uh open market committee you could not own government debt not a shred of it not bills not bonds not notes it was not legitimate the fed was only there to liquefy the banking system by buying real bills which were you know trade receivables uh or finished inventory and if you went back to that role as a way station to solving the problem abolish the fomc get them out of the government bond market get them out of the business of interest rate pegging and gdp management and so forth it would be a huge step in the right direction but until we do that you're going to have the green span syndrome problem time after time in one form or another so one more question unfortunately i i have to head head out uh do you do you still think trump will be will resign or be impeached yeah yeah uh you know trump he made like such a catastrophic mistake and i wrote about this in my blog yesterday he should have taken a page from ronald reagan's playbook and reagan came in we inherited a mess and he basically said one we're going to puncture uh the bubble uh quickly early so we can move on and so he empowered uh voker to do everything that was necessary that's what trump should have done he should have called yelling in day one january 20 you're fired put in an anti-canes you know like somebody like me or ron paul that would have scared the hell out of the financial markets uh there you know there would have been a complete uh collapse of the bubble and then we could have dug ourselves out and secondly reagan never stopped blaming jimmy carter even as the economy began to recover and turn up it was this mess inherited from jimmy carter now ron uh trump has done the he's such an egomaniac that he gets a couple of good economic numbers which are kind of random we don't even have to go into that and he embraces the whole thing and now the big fat ugly bubble is the trump uh triumph uh in the stock market in an economy that's really on its last legs in terms of the aging and tired business expansion is the greatest economy ever or in modern times so he's embraced the whole thing and when this goes down he will go down with it because he has you know he's put his jaw right out there his glass jaw right out there to be smashed hard by all the political opposition and who's the opposition it's not just the democrats it's all of washington it's most of the republican party okay and uh as a result of that uh i think he will end up because i believe the stock market will crash in the next year uh and the republicans will panic about 2020 and total loss of congress after they lose the house uh in these uh november elections uh and he will be put on what i call the dick nixon memorial helicopter uh to his final ride to gonsville so that's my thought for the day thank you