Introduction:
Chris Martenson is the former Vice President of Pfizer and SAIC. He’s the developer of the educational video seminar series, “The Crash Course,” and author of “THE CRASH COURSE: The Unsustainable Future Of Our Economy, Energy, And Environment.”
Martenson discusses whether the central banks are to blame for the coming bond collapse.
He shares his thoughts on whether our fiat money system of exponential credit market growth is sustainable or if there is a breakdown on the horizon. He then explains the “eye drop of water in the middle of the stadium” analogy that his Crash Course outlines and how this relates to the current financial and political climate in the United States. Martenson finishes the talk with his thoughts on gold and energy and how they’re manipulated.
Key Takeaways:
(4:10) Jason shares a few news items from USA Today
(7:23) Economic comparison between 2008 and 2014
(12:02) Introducing Chris Martenson
(12:58) The economy, the junk bond market, the bond market in general, the repeating bubble mania cycle
(24:19) The story about peak oil
(31:02) The fiat money system and the exponential credit problem
(43:10) How to be on the receiving end of the inflation-induced wealth transfer
(48:13) Russia
(57:38) Closing comments
Links:
Find out more about Chris Martenson at www.PeakProsperity.com.
Bio:
Dr. Chris Martenson is an economic researcher & futurist specializing in energy and resource depletion. He is the founder and editor of the website ChrisMartenson.com, as well as its popular video seminar, The Crash Course.
Chris is in the dot-connecting business. A former scientist and Fortune 300 executive, he studies macro trends through his proprietary analytical framework based on the interdependence of the “Three Es” – the Economy, Energy & the Environment – and uses this lens to assess the probable impact of current developments in the marketplace. All in order to help his readers and clients mitigate and control risk.
Audio Transcription:
ANNOUNCER: Welcome to Creating Wealth with Jason Hartman! During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before, and a new slant on investing: fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self-made multi-millionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it! And now, here’s your host, Jason Hartman, with the complete solution for real estate investors.
JASON HARTMAN: Welcome to the Creating Wealth Show. This is your host, Jason Hartman, and we are at episode #414. And our guest today is a returning guest; I had him on several years ago, and that is Chris Martenson. Yes, Chris Martenson, who’s the author of The Crash Course. Really like Chris’ work. It’s well thought out, it’s well done; I don’t agree with him on everything. He’s a bit of a Malthusian. I’m not that much of a Malthusian, and the reason I’m not is because if you look at the history, and you look at Malthus, they’ve always predicted scarcity and you know, resources going away and so forth, and overpopulation, and as I talked about on a prior episode with Sonya Erickson, people are not just a cost to the earth. People are actually a resource. People come up with ideas. They make contributions. They solve problems. Look, I don’t know. At some point, maybe the whole thing will end. And civilization will decay, and die, if people can’t keep solving problems. Maybe some of the problems society faces either now, or at some point in the future, really are insurmountable. Nobody knows, obviously. And there have long been theories about this.
But in either case, Chris’ work is really phenomenal. I agree with a lot of things he talks about. Not every one of them. But his work is certainly commendable, and he’s a super, super interesting guy. We’ll be with him in just a moment here. You know, I’m traveling, and I’ve been in my second Mastermind here, in Tampa, Florida now. It is just so great to spend time with all of these people who are always trying to better their lives, and go to the next level, and take on more challenges, and solve more problems, and just get more juice out of life, you know? That’s kind of what it’s all about, is just doing more, being more, having more, all of that kind of stuff. And the ideas and innovation that they come up with—it’s just amazing. And so, I spent last weekend in Dallas with a bunch of doctors and dentists. I talked about that on the last show. And now I’m with a bunch of real estate people.
And it’s really interesting, when you look at the sort of supply chain of the real estate business, there are so many different parts of it. There are people that just do every little angle of it. You know, some do flipping, some do short sales, some do portfolio stuff, working with asset managers, and getting REO properties, real estate owned by banks, from them. Or from hedge funds, or private equity groups. Others do wholesaling. And then there’s all these little spins and angles on it. Others do cash flow properties. You know, that’s really my specialty, is the cash flow properties. And there’s all these little twists on it, though. We had a presentation yesterday from a developer who has one off development, and that was very interesting. And it’s just amazing how much ingenuity and innovation there is in the human mind when faced with problems and potential rewards, those being monetary rewards. People will come up with amazing solutions. And that’s why capitalism works so well, obviously.
Jason shares a few news items from USA Today
And speaking of which, you know, I almost never read the newspaper. Yes, newspapers do still exist. I get most of my news online. But when I travel, I do read the newspaper, because it’s at my hotel room door every morning when I step out. And in USA Today, today—USA Today today—there were some interesting things I thought I’d just share with you. First of all, we’ve all heard these celebrities in Hollywood make these idiotic remarks. I mean, just idiotic. Or hypocritical. One or the other. Which I guess could also be considered idiotic. Whether it’s Gwyneth Paltrow saying that her life is harder than that of a struggling single mom—complete absurdity of course—or Barbara Streisand with all of her massive hypocrisy about how, you know, nobody can photograph her house. You know, she doesn’t want them to build any oil wells in front of her house. God, I can’t even start with Barbara Streisand, she’s such a hypocrite, it’s ridiculous. Or Julia Roberts saying that republicans are right near reptiles in the dictionary. Or, let me see what else—how about Alec Baldwin and his, you know, massive temper tantrums on the Tonight Show, or calling and abusing his poor daughter—did you ever hear that phone message? I mean, these people are just like absurd sometimes, you know?
And this great quote in USA Today talking about how celebrities who Tweet could be trolling for trouble, right? Opinionated stars who weigh in on headlines should brace for blowback. And this awesome quote by a crisis management expert, he says—I just had to share this with you, because it’s great. Couldn’t have said it better myself. He says, entertainers have the right to free speech, but they don’t have the right to be taken seriously. I love that. Entertainers have the right to free speech, but they don’t have the right to be taken seriously. Pretty darn good.
The other thing from USA Today that I thought was pretty interesting is a comparison between the really ugly time in the financial crisis in 2008, and 2014, and you know, what the Fed is going to do. Well, you know, we certainly know, from Alan Greenspan, and Ben Bernanke, to a lesser degree, and now Janet Yellen to a lesser degree, at least than Greenspan. I’m not sure if it’s to a lesser degree than Bernanke. But we know how important that policy is to the economy. What it means to real estate investors is obviously very, very significant. All of these Fed chairs, they always talk in code. And you’ve gotta always read between the lines, and try and interpret what they’re saying. And this is one of the things that’s just ridiculous about even having a Federal Reserve, or even having a Federal Reserve at least that is a private corporation. I’m not—you know me, I’m not a fan of big government, but I would much rather see the government run the central bank. I know, you might think I’m nuts for saying that. But I think it’s better than a private, secretive corporation owned by—who knows who owns it, really?
What they have to do is they have to talk in code, so that the market doesn’t completely react. Everybody reacts and hangs on every word that the Fed chair says. But it has to be all secret, because if it weren’t secret, people would say, everybody would go out and make decisions, and that would mess up the economy. I don’t know about you, but I just think that generally speaking, in almost every case, transparency is the right way to go. It just works to be transparent.
Economic comparison between 2008 and 2014
2008 and 2014 comparison: kind of interesting. October to December of 2008, here are some metrics that you’ll find interesting. Change from previous quarter, seasonally adjusted annual rate: average monthly job gains or losses. In that period in 2008, -645,000 jobs. And June to August 2014, +207,000 jobs. Now, we know, all too well, we had John Williams, the founder of ShadowStats, on before, and we all know that these numbers are massively manipulated. However, they’re better than not having any numbers at all. We just take everything with a grain of salt. It’s like when you’re trying to comp out a property and see what it’s worth, and you look on Zillow. And of course Zillow, and Trulia, and all these websites, are notoriously inaccurate. But you know what? They’re better than nothing. Which is what we had before. That’s just something to consider. And the reason the unemployment numbers—one of the big reasons they’re so manipulated, is people fall off the roles, they’ve become a discouraged worker, and then they’re not counted anymore. They’re considered permanently, structurally unemployed, I guess. Yeah, well, these things—you have independent contractors, you have underemployed people, just a zillion different little factors that really influence this. Existing home sales—now this one’s kind of interesting, because I don’t think we’ve ever talked about manipulation of home sales stats. And I don’t know—I’m sure it’s going on. But I don’t know how they would manipulate those, or you know, just kind of haven’t thought about that a lot. Maybe we should have John Williams come back on and address some of these other stats.
So, 2008, 3.9 million, in terms of existing home sales. 2014, 5.03 million, okay? And let me give you the exact months, okay? This is the seasonally adjusted annual rate, and that’s the average from October to December of 2008. That was a pretty bad time. For now, for 2014, it’s May to July. So, you can see that home sales are up basically over one million, in that period. So, that’s a fairly significant gain, for sure. Unemployment rates, a 6.9% back in 2008, a 6.1%, 2014. What does this tell us? Well, I think it has a lot to say about contrarian investing, because you know, if you’ve ever been to one of those hypey real estate seminars—no, that’s not my seminar. I don’t do the hypey stuff. Or at least I like to think I don’t. And you’ve heard the speaker; they say, it’s always like the same line. There’s never been a better time to invest in real estate. I would have to take issue with that, because certainly, you know, if you bought real estate in 1971, right after we went off the gold standard, and you financed it with long term 30 year debt—you know, as the example I give, actually, it’s a 1972 example that I give in my seminars, where I talk about inflation-induced debt destruction, and tell you how that has literally, literally, made tens of millions of people very wealthy. People who might have thought they became wealthy because the real estate appreciated. What really happened is the debt depreciated.
That’s one of the things with some of the sort of prepper, and doom and gloom community—they would say, get out of debt. But I would say, be in debt. Against assets. Because the way you have to really look at is, is that it’s not you that’s in debt; it’s the asset that’s in debt. And you can acquire a lot more of those assets if you use prudent, good debt to do this. Investment grade debt. As long as it’s fixed rate, and it’s attached to those packaged commodities I always talk about. Just kind of an interesting comparison there. I thought you’d like it. I don’t have time to talk about it today, but I do want to address one other thing from the good old newspaper here. Yes, newspapers, what a concept. And that is the wellness—what do they call it here? The global wellbeing index, and how the USA was #12. Okay? So, I’m gonna try to talk about that on the next episode, because our Chris Martenson interview is pretty long. But it’s really interesting. So you’re gonna like this one.
Anyway, check out JasonHartman.com/properties if you want to look at any specific properties that you can purchase. Let’s just get to Chris Martenson right away.
[MUSIC]
Introducing Chris Martenson
JASON HARTMAN: It’s my pleasure to welcome Chris Martenson back to the show!
He was on a few years ago, and I’ve followed his work for many years. He’s the former Vice President of Pfizer and SAIC. He’s developer of a very well known educational course entitled The Crash Course, and author of The Crash Course: The Unsustainable Future Of Our Economy, Energy, And Environment. And it’s a pleasure to have him back on the show. Chris, welcome. How are you?
CHRIS MARTENSON: I’m doing very well, Jason. Thanks for having me back.
JASON HARTMAN: Yeah, good to have you back. Where are you located? Just to give our listeners a sense of geography.
CHRIS MARTENSON: I am in Massachusetts, but not in the Boston part; I’m in the rural part, just north of about five colleges in the Connecticut River Valley, that’s half rural, half suburban.
JASON HARTMAN: You’re likely to be okay if the crap hits the fan.
CHRIS MARTENSON: Well, we chose this place with a number of criteria in mind, and that was one of them.
The economy, the junk bond market, the bond market in general, the repeating bubble mania cycle
JASON HARTMAN: Yeah, and we’re gonna talk about that possibility, which is somewhat real, for sure. Let’s first lead with the economy, the junk bond market, the bond market in general, the bubble mania that seems to be just a repeating cycle in our culture. 100 years ago when the Federal Reserve came along, they said—one of their charters was to eliminate this roller coaster ride in the economy, but so far it seems like it’s gotten worse, if not engineered.
CHRIS MARTENSON: The way I look at this, you know, we have to start—a little history here is important. The United States and most of the developing world started an experiment that actually began in the early 1980s, and that experiment was this. We’re gonna start borrowing money at both the private and the public levels at roughly twice the rate that our overall income is growing. And we ran that experiment for a number of decades, and it started to fall apart in 2008. And that would have been a great time for the central banks to say, huh, maybe that was a bad idea, right? Maybe you can’t borrow at twice the rate that your income is growing. Instead of looking at that, they’ve doubled down and said, no no, we have to get the credit markets repaired, we need to get borrowing back on track. The public side, that’s the sovereign entities—the United States, Greece, Spain, all of Europe, Japan—stepped into the breach, because the households were no longer borrowing—and said, we’ll borrow. And look what’s happened to United States debt ever since, at the federal level. Or even at the municipal levels, and state levels, or corporate levels. Debts are just taking off again, in a very, very big way. So, the Fed can say, mission accomplished. The problem in this story, Jason, is that it’s not possible to borrow your way to prosperity, and the Fed has printed trillions and trillions of dollars. The ECB has printed not quite as many, but they’ve just started with their own new package of printing where they’re gonna buy asset-backed securities. Japan’s been printing like crazy. All of them printing with this one idea: that you can print your way to prosperity. Well, what they’ve done is they’ve created enormous bubbles in both the equity markets and in the bond market. So, the financial markets sort of writ large are now at extraordinarily inflated territorial levels, and the central banks are terrified of what will happen if, or I should say, when, those financial assets come back down to earth, which they always do. There’s not one example in all of history where a bubble has done anything other than burst.
JASON HARTMAN: Let me ask you about that. I’ve got a theory here that’s kind of weird, and I just want to throw it out. I’ve never mentioned it on the show. At least not that I can think of. There’s a few schools here. There’s sort of the Malthusian school, says, resources are scarce, and they’re limited, and we’ve gotta ration them. And then there’s the school of people mostly on the economic only side, of course, Malthus was related to that too. There’s just the pure like economists that do the math, and the math looks really bad. I mean, trillions of dollars in terms of debt, and deficits, and massive entitlement bubble coming in the future that has been estimated, you know, over the next 15, 20 years of anywhere between $60 and $220 trillion with a ‘t’ dollars. No one can even fathom a number like that, it’s insane. You’ve got an economy that just can’t pay for that. You know? If you do the math, it’s a bubble waiting to happen. It’s a total collapse. I sometimes wonder, Chris, if maybe—I mean, look at the amazing stuff that is happening in the world of technology. Maybe technology will just solve all our problems and save us all. Maybe the price of everything will get so cheap—robotics will come along, and people can work less, and still pay for things, and you know…thoughts on that?
CHRIS MARTENSON: I would really hope there would be a way to work this out, but if we were just talking just in the economic sphere, you mentioned the things that tell me that sphere alone is broken. And so, when we look at the entitlements plus other forms of debt, and you come up with silly numbers between $70 and several hundred trillion dollars, which are presented on a net present value basis, which means, somebody’s calculated this number back and said, well, how much money is it gonna cost in the future, but what are our revenues, and what’s the likely amount of growth that we’re gonna get—calculates it all and says, oh my gosh, we would need $70 to $220 trillion in the bank today, earning a certain rate of interest, in order for us to be solvent. So, we’re not solvent on a macro basis. We know this. And what we’ve done as a society is just to kick the can down the road, assuming that the road is infinite. Well, here’s the problem with that story. When we wander away just from the pure economics—and by the way, I don’t think even economic roads are infinite. I think there are always bumps. I think that we are well past solvency on a purely economic basis. But when we go and look at resources, we discover that they are finite, and technology can do some wonderful things, but it can’t create energy, particularly.
It can help us use it more efficiently, it can help us find it, but it can’t create it. So when we look at the world of resources with oil at the top of that—but we could look at other things. Silver, just absolutely valuable industrial metal. Known reserves of that are gonna be completely exhausted within 12-15 years. We’re looking at a variety of substances like that. Basic minerals and elements that all the known deposits have been ripped through. And so we’re going after more dilute, more distant, deeper sort of finds, to get things out of marginal quality—well, guess what? The cost is a lot higher. The cost in terms of money and energy is a lot higher. Not just a lot higher, but exponentially higher as we chase these ever increasing dilute elements. And, oh, by the way, we’re at 7.1 billion, going to 9 billion by 2050 in terms of population worldwide. So, this is an easy, easy—this is not a prediction. This is an extrapolation. Very simply, we can say that the amount of oil energy, the amount of other resources on a per capita basis, is gonna be going down as we go forward.
JASON HARTMAN: Let me just play devil’s advocate with you for a moment. So you said, energy, technology cannot create energy. Are you sure about that? I mean, we can split the atom. We can do all kinds of things. I mean, we can harvest energy. You know, and maybe that is a different definition than create it. We can harvest it from sun and wind and tides.
CHRIS MARTENSON: Let’s say we split the atom. So we’re taking uranium, uranium 235, right, in particular. We isolate it out from the uranium ore, and then we split it, and we get all this energy that comes out of it. But once you’ve done that, you’ve split that atom, it’s split, and there’s no more energy to be had out of that process. In fact, you’ve got some nuclear waste you’ve gotta deal with. And so, as we look at that, the amount of uranium ore that we know about in the world, that we can put into nuclear reactors, is really, actually, probably insufficient for the ones that already exist, plus the ones that China’s already been building. If we wanted to say, oh we’re going to quadruple the amount of energy we get from nuclear reactors, the first thing somebody has to say is, please show me the quadrupling of the uranium reserves.
JASON HARTMAN: Are we on the verge of a breakthrough there? You know, there’s nuclear fission, and nuclear fusion, and I can’t remember which one we do now, but the other one is like waste-free, massively efficient. If we can learn how to manage the atom a different way, it becomes this like unlimited source of free energy, with no waste.
CHRIS MARTENSON: Fusion would be great—
JASON HARTMAN: So we have fission now? We split it?
CHRIS MARTENSON: We have fission now. Fission means to split the atom. Fusion’s the exact opposite process—
JASON HARTMAN: I always get those two mixed up, yeah, sorry.
CHRIS MARTENSON: You fuse them—you combine them. So that’s where the fusion comes from. You’re fusing two atoms. That story, every year for literally 20 years now I’ve been hearing this story, and the story is this: very soon we’re going to hit unity in fusion, meaning, as much energy goes into the process comes back out of the process. And then once you can go past unity, now you’ve got something you can work with. That always seems to be a steadily receding goal. I’ll be the biggest cheerleader of that when it comes. But, it’s always in the future. And has been, and still remains, to this day, pretty far in the future. I like to look at where we are right now, and look at the cards that we actually have on the table, and can tell you that we today have all the technology we need to build a very resilient, wonderful future for ourselves, but first we have to decide that we’re gonna use it that way. Here’s my one complaint about technology, is that sometimes people use it as an excuse for not doing the right things today, because they say, oh, but we don’t really have to, you know, be more careful in how we use energy—
JASON HARTMAN: We’ll solve that problem tomorrow.
CHRIS MARTENSON: Because we’ll get to it tomorrow. When technology is used that way, as an excuse, I’m not a fan of it at all. I look at the world of technology right now and I’m looking for the next big breakthrough that I could look at and say, that’s what’s gonna drive economic growth going forward. You mentioned robotics. I think robotics—it’s here, and it’s a very, very large trend, but it’s not gonna work very positively for a lot of people, because it displaces workers, it displaces labor with capital, and the capital is much more efficient. But what you don’t get out of that are workers going home with a paycheck they can spend. It’s kind of like the anti-Henry Ford sort of a model, right?
JASON HARTMAN: I’m almost wondering—yeah. And Henry Ford, basically, what Chris is referring to is, he raised the wages of his workers, so they could afford to become his customers.
CHRIS MARTENSON: Correct.
JASON HARTMAN: It’s really interesting, but I’m almost wondering, Chris—and I know people could easily use this as a crutch. If the robotics revolution, and the 3D printing, and all the other nanotech—you know, all these technologies—at every point in history, whenever a new technology came along, people were worried that it would displace people. And it did displace people. Temporarily. But in most cases, they found a way to create different jobs. When Elias Howe invested the sewing machine, women were wondering what they would do with all their spare time. You know? And they seem to have found something to do. It always in the past just gives us more stuff, and more resources, and people adapt, and do other things. Robotics, though—I mean, the new robotics that we’re coming into, are particularly worrisome, in a way, because about 45% of the workforce is in these really delicate displaceable jobs, like transportation, you know, we’ve got the driverless car, maybe two years away, where we’re gonna see that really start to come into the consumer market. And I don’t know! You know, there are robots that can—they just can watch you do something and learn it in like, a minute.
CHRIS MARTENSON: I can’t think of a single job that’s not at risk. Literally.
JASON HARTMAN: Right, but is it risk—I mean, there’s always a transition time, okay, when people do become unemployed, and then they become reemployed, and they do something, you know—maybe this is really an issue of highest and best use. Maybe humans—their highest and best use isn’t to do these jobs. I mean, certainly I don’t think it’s driving a taxicab, or a bus, or a truck.
CHRIS MARTENSON: I look at the robotics trend, and I think for anybody who’s interested in investing, or is wondering about what kind of jobs they would like to approach in the future, it’s an area that anybody who’s got the aptitude really should look at, because there’s all sorts of features around that from the building to the designing to the software that runs them, the adaptive software that needs to be written, all that. It’s a great area. Now, if I back up one step though, to really run things on robotics, you have to have a functioning, very complex economy to deliver all of the parts, all of the subcomponents, and to keep all of that working. To get back to the energy story for a bit, there’s a lot that really concerns me about where we are in the petroleum story. Peak oil—United States, you could find hundreds or articles in the past two years that have proclaimed peak oil to be dead, but Jason, nothing could be further from the truth.
The story about peak oil
JASON HARTMAN: Tell us about that.
CHRIS MARTENSON: Peak oil is just the idea that you find a field, and you start pumping oil from it, and for a number of years you can experience increasing oil flows out of that field, but at some magic point, the pressure in the field drops, you’ve drawn it down far enough, you’ve gotten to the marginal edges of it, and no matter what you do, your output from that field drops. And what’s true for a field is true for a collection of fields, it’s true for an entire region, it’s actually true for the whole world. We’re at the point now where all of the cheap oil is gone.
JASON HARTMAN: Right, right.
CHRIS MARTENSON: Nobody can find cheap oil anymore. Cheap oil is a euphemism for, it’s light and clean and close to the surface and it’s on land and it’s easy to get. Saudi Arabia’s cost to get a barrel out of the ground? $1-$5, depending on who you believe. Chump change, right? But new oil—if you want to find new oil, all of the world’s oil majors are scouring the globe, and they’re doing crazy stuff like tar sands, ultra deep water, shale oils, all of these things where the minimum that it costs to get these barrels to market is around $80 a barrel. There’s no more $1 a barrel stuff out there.
JASON HARTMAN: Yeah, that’s right up there with the near cost. So, maybe the price of oil—I mean, the last barrel of oil, as my friend likes to say, will never come out of the earth, because it will cost trillions of dollars. The supply and demand curve is always in place, but you know, maybe that’s the—there are jumping off points to the next form of energy. Certainly there are other options. You know, maybe it’ll just hasten the move to other sources of energy, and when those sources get more business and more demand, they will drop in price. I mean, that naturally is what happens with most things.
CHRIS MARTENSON: I don’t see any other sources. There’s no other sources on the horizon at this point.
JASON HARTMAN: I’m surprised; I would think you’d be a believer in tidal energy, solar, wind.
CHRIS MARTENSON: I’m a believer in them for what they do. So, you can’t mix energy types up. Different types of energy do different things for us. So, one example would be, like, if I can eat ice cream and get calories from it that will fuel me, there’s a caloric equivalent in batteries that I might have in my drawer, but those batteries, I can’t eat them, so they’re a form of energy that’s not useful to me. Petroleum is a liquid fuel, and it’s extraordinarily valuable as a liquid fuel for a whole variety of reasons. Solar, wind, tidal, geothermal, all of that stuff gives us electricity. That’s fine, but electricity doesn’t run anything for us in terms of transportation. It accounts for a fraction of a percent of things that move from point A to point B. 95+% of everything that goes from point A to point B does so because petroleum’s involved. When I look at this, what we really care about for petroleum is its ability to move things. Because what do we have in our economy? Everybody says, well, it’s a global economy, what do you mean?
I mean, my computer might have a motherboard that was assembled in Taiwan from chips that were made in Texas that were shipped to China, on and on and on. I might have a 50,000 mile supply chain in my computer sitting there that costs a few hundred bucks to buy from Staples, or something. All of that happens. All of that motion happened because things were flown, shipped, trucked, otherwise moved with oil involved. Now, people say, Chris, you know, Tesla’s coming out with these great all-electric cars, and I’ve been to the Tesla plant, and it’s all robotics, by the way, and I’ve driven in Tesla’s fantastic cars. But the idea that every single year the United States purchases another 15 million vehicles, and out of those, maybe, you know, less than 100,000 are all-electric. What would it take to produce 15 million all-electric cars? Well, it would take a lot. We’d have to retool all our plants. Could we do it? Maybe. Is there enough lithium in the world to run all the batteries? We don’t know. There’s a lot of issues to scaling all of that up. And so, if we were, as a nation, scaling up, and investing—and I’m gonna use this word carefully—the trillions required to move our transportation infrastructure away from petroleum and towards electricity—I would be singing a very different tune. But we’re not. Obama made some noises about electric cars and alternative energy.
But the truth of the matter is, when you look at where the money is being spent, and as that demonstrates our priorities, we have a zero priority weighting for moving away from petroleum and towards electricity as our primary carrier of electricity. How that electricity gets generated, we could talk about that, and I will tell you that to move from oil to electricity, if that electricity is generated from alternatives—wind, solar, and stuff like that—is gonna be the first time in human history people have gone from a superior fuel source to an inferior fuel source.
JASON HARTMAN: Yeah, that’s a really interesting point. Yeah.
CHRIS MARTENSON: A high density fuel source to a diffuse fuel source. And I think there’s some learnings we’re gonna have in there, and every country that’s tried it—Germany, I’ll pick on them, has discovered that it’s very, very expensive to try and move down the density curve. Of course it is! It’s less dense!
JASON HARTMAN: I completely agree with you. And you know, certainly electricity is not as efficient for that purpose, at least, as petroleum. But, we all just keep thinking that it’ll get cheaper, it will become more effective, that’s the natural progression of technology, and it makes it kind of a great time to be alive. It’s darn interesting to watch all this stuff. That’s not a fixed thing. All things are dynamic. So, you know, the economy, and the price of oil, and all of the stuff you mentioned is dynamic, but maybe, hopefully, so is the technology. The new technology. You know, it’ll get better. Cheaper. Right?
CHRIS MARTENSON: Absolutely it will. And the race, however, that I’m looking at right now, is, you know—if we look at really what’s going on with oil across the globe—since 2005 to 2014, the world has produced roughly about the same amount of oil coming out of the ground on a daily or a yearly basis. And that’s with the collective oil industry having invested almost $2½ trillion into getting more oil and keeping the oil flows up. So if you were looking at an industry—let’s say it was farming, or car manufacturing—and you said, here’s an industry that has spent $2½ trillion in an attempt to increase its production, and its production was basically flat, I think that would hopefully tell you something very important, which is, wow, this industry is struggling to figure out how to boost production at this point in time. And there’s not that many ways to skin that cat, as far as I’m concerned. It’s just, I trust that these industries, in particular the oil industry, are staffed with some very highly motivated, very intelligent people who have been doing absolutely the best they possibly can to try and increase production, and they haven’t been able to do it on a global basis, and that tells me a lot about where we are in this story.
The fiat money system and the exponential credit problem
JASON HARTMAN: There’s so much I want to talk to you about. You’re such an interesting guy. Let’s talk about the fiat money system, and the exponential credit problem, and then maybe we can talk about that, and hopefully touch on Russia, because I know that’s an important issue, and you’ve been really following it. We’ve got this massive expansion of credit. You talk about something called the eye drop of water in the middle of the stadium analogy that you use in The Crash Course. Maybe you can explain that, and kind of weave these two together.
CHRIS MARTENSON: Absolutely. This is a really important concept. When I said that our debt has been growing at twice the rate of our underlying income, or our economy, what I was saying is that from 1970 to 2008, the United States had been experiencing credit growth that was pretty close to 8% per annum. We’re gonna talk about the miracle of compounding, right? 8% per annum—a lot of people would hear 8%, it’s not a frightening number to them like ahh, what’s 8%? If somebody gave me an 8% raise, that’s nice, but it’s not gonna make me, you know, go change my whole lifestyle. 8% is really a big number when we’re talking about something that’s growing by 8% per year. Because what it means is that that thing is gonna be doubling roughly every nine or ten years. Doubling in size. So when you say China’s economy is growing at 8%—7½ is what they like to target—that means that it’s gonna be twice as big in nine years as it was today. This is a really hard concept for people to get their minds around, because we’re humans; all humans are wired for linear thinking, but exponential thinking—that’s hard. And when something is growing by some percentage over a unit of time, it’s growing exponentially. So, here’s a thought experiment I like to use that really helps to, I think, drive home what exponential growth really means. So, the experiment is that I have a magic eyedropper, and when I put a drop of water into your hand, that drop of water’s gonna double every minute. So, we put a drop of water in; after one minute you have two drops worth of water. After another minute passes you have four drops. And then eight drops. So, after about five or six minutes in, you have enough water to fill a thimble, right? So, that’s the magic water. Now, here’s what we’re gonna do. What’s the biggest stadium you’ve ever been in that you can imagine?
JASON HARTMAN: The LA Coliseum’s pretty big. I remember I saw a concert there; there were like 90 some odd thousand people. I’ve been to football games there and so forth.
CHRIS MARTENSON: LA Coliseum. So, great. So, two things. we’re gonna do two things with the LA Coliseum. We’re gonna make it watertight, for our experiment, and then we’re gonna put you in the highest row of bleacher seats, right?
JASON HARTMAN: The nosebleed seats.
CHRIS MARTENSON: You’re in the last row, right, up there. Now I’ve handcuffed you to one of those seats. There you are. And—
JASON HARTMAN: I have a feeling I’m gonna drown in this thought experiment.
CHRIS MARTENSON: Well, it could be a risky thought experiment. So, we’ll start that at 12:00 today. So we’re gonna start that at 12 noon. You’re handcuffed to this bleacher seat. I walked down, all the way down to the floor down there, you know, maybe the 50 yard line, and I’m gonna put a drop of this magic water down. The question is, how long do you have to escape from your seat?
JASON HARTMAN: And how often are you dropping the water?
CHRIS MARTENSON: I just put one drop of water down there, right at 12:00.
JASON HARTMAN: Right, but how often is it doubling?
CHRIS MARTENSON: It’s doubling once a minute.
JASON HARTMAN: Oh, once a minute. Wow. It would seem like I would have a darn long time. I have a feeling that’s not gonna be true though. You know, I’ve heard the thought experiment about double the penny every day for 30 days and you’ve got over a million bucks, or something. So, you know, I don’t know, am I gonna last till sunset?
CHRIS MARTENSON: Alright, you know, that’s five or six hours…you have 50 minutes to escape.
JASON HARTMAN: Wow.
CHRIS MARTENSON: Now, here’s the thing. I haven’t even—I haven’t calculated this for the LA Coliseum. So, let’s imagine that I’ve underestimated the volume of the LA Coliseum by 100%. Right? I’ve just done a ridiculously poor job. I’m off by 100%. That means that actually you have until 12:51.
JASON HARTMAN: Wow. That’s just amazing.
CHRIS MARTENSON: Because in one more minute it’s going to double again.
JASON HARTMAN: Right.
CHRIS MARTENSON: Now, so, okay. So 50 minutes is the usual answer for the average gigantic Coliseum for this experiment. But here’s the important experiment. At what time was this Coliseum still 97% empty space? And—
JASON HARTMAN: Interesting question. I don’t know the answer off hand, but you know, I know you can do the math on this stuff. So, tell the audience the answer.
CHRIS MARTENSON: At 12:45 there’s still 97% empty space, it’s only 3% full.
JASON HARTMAN: Okay. So, this is the metaphor you’re making for our current fiat money situation, with exponential growth. Right?
CHRIS MARTENSON: Right.
JASON HARTMAN: Because we’re—you know, you’re saying, we’re five minutes before what? In this metaphor?
CHRIS MARTENSON: Here’s where this metaphor becomes important. It took all of our country’s history, until the year 2000, to develop a credit market that was $26 trillion in size. By 2008, when this credit market started to fall apart, it was $52 trillion in size. It had doubled in those eight years. Okay? So, people go, well, you know what? Our economy was growing, and maybe we can keep this moving. So, here’s where the thought experiment collides with reality around debt forming. If we want the next 10 years, or the next 20 years, the next 30 years, to look like the last 10, 20, 30 years, which is what the Fed’s trying to do, we are by default harnessing ourselves to this idea that we want our debt markets to grow at 8% per year, and the Fed is doing everything they can to create that. Fine. So let’s imagine this. Current credit market debt stands at $59 trillion. That means that in the next 8 years we need that to go around up to $60 trillion, because this is radio, we’ll keep it easy. That means in the next 8 years we need our credit market to grow from $60 trillion to $120 trillion. So, in 8 years, we’re gonna borrow another $60 trillion. Oh my goodness! $60 trillion! That is six complete entire new real estate markets. The collective total of all mortgages outstanding.
JASON HARTMAN: That’s insane. Wow. This reminds me of Zimbabwe, these kind of discussions, you know?
CHRIS MARTENSON: So, what would we borrow all that money for, is the first question. And the Fed doesn’t care. They’re agnostic, but they’re gonna do everything they can to create that level of growth. Not because you need it, not because I need it, not even because our economy needs it, but because the financial system—the Citis, the Chases, the JPMs—our financial system—if those companies do not have access to credit that is growing at around these historical rates, they can’t all survive.
JASON HARTMAN: Here’s the funny thing that like you know you talked about the thought experiment concept, right? Funny thing about this is, when you looked out into the Wall Street world, which is, you know, the world of the banksters and Wall Street, you know, the modern version of organized crime, as I call it, and you know, the central banking system around the world. I call that the smoke and mirrors economy. It’s just—it’s built on bullshit, okay? You know, there’s—it is not built on reality. However, when you look at the world, the world is built on reality. Real hard goods, real commodities that have legitimate utility to real people that matter in their lives. And so, you know, we had the crash in 2008, and you know, really in 2007 was part of it too. So, we had the financial crisis. And if you woke up before the financial crisis, and you thought, okay, you know, the Dow’s at, I don’t know, 14,000, or whatever it was, and then you woke up slightly afterwards and it was down to 6500—the world, Chris, didn’t actually change in any fundamental way. The world still had pretty much the same amount of oil, the same amount of water, the same number of houses, the same amount of agriculture. In some way, it’s like, so, you add or subtract a zero—what’s the difference?
CHRIS MARTENSON: That’s a great question, because this gets to the heart of what I like to teach about, which is this idea, which is that when you have credit markets that are growing exponentially, or you have derivative markets that are growing, literally hyper-exponentially, or you’ve got equity markets that themselves are like—oh, we want a nice 10% return from the S&P every year. That’s still growing exponentially. Each one of those things, including, let me put cash, or cash equivalents in there. Money, debt, derivatives, equities—those are all actually claims on things. They’re not real wealth. They’re claims on wealth.
JASON HARTMAN: Right.
CHRIS MARTENSON: People say oh, he’s very wealthy, he has a lot of money. I would submit to you that whether I have a dollar or a million dollars in my wallet, I don’t have any wealth in my wallet unless I can exchange that dollar, or that million dollars, for something I want.
JASON HARTMAN: You have a symbol of wealth, a derivative.
CHRIS MARTENSON: Correct. I have a marker for wealth. A claim, potentially. Right?
JASON HARTMAN: A claim, exactly.
CHRIS MARTENSON: It’s a claim. So, what I’m looking at in the way I analyze things, I see that the claims are growing exponentially, but if we just back up a second and say, has the world’s expression of wealth, has that been growing exponentially? Are there exponentially more houses? Is there exponentially more land? Is there exponentially more commerce going on? And the answer is no. The world economy is pretty much almost dead flat over the past ten years, in terms of its growth. It’s growing like 1.5% per annum over those ten years. And it’s getting lower. And the explanation for why world growth is no longer working—just wander with me over to $100 a barrel oil, give me enough time, and I’ve got an explanation for that. But for the moment, it’s sufficient to say, wow, our claims on the economy have been going through the roof, but the actual underlying economy has not been going through the roof, and worse, the actual real pieces of wealth, which is tangible wealth, as you so well put it—you know, real wealth is something you want, something you need, something that’s tangible. It’s food, it’s water, it’s things like that. It’s the actual means of production. And so, all the markers for wealth—I call that tertiary wealth.
Secondary wealth are the means of productions. Those are active farms, and factories, and things like that. Primary wealth is the actual stuff from the earth. When you’ve got fresh water, you’ve got oil in the ground, you’ve got thick seams of coal, you have primary wealth. And what we’ve seen historically, time and time again, is that countries that have gotten out of control with their markers for wealth, when they’ve printed too much money, when they’ve printed too much credit, and put that into the markets—they’ve always experienced—first these things get out of control, and there is way too much money in credit, and then it all comes crashing back to earth. And a recent historical example: Weimar, Germany. Read any book you want about it, and they will all say, oh, it was this great wealth destruction, all these middle class and upper middle class and poor people were just wiped out, as if there was this mysterious disease that suddenly happened. What we’ll notice is that it wasn’t a wealth destruction that happened; it was a wealth transfer.
Because before and after the printing episode, say, from 1917 to 1924 in Weimar, Germany, this extraordinary destruction happened, but, let’s take a snapshot. In 1924, there were just as many houses, hectares of farmland, factories, people that were willing to work, essentially the same amount of resources. The real wealth was still all there. Now, who owned it—that changed. The theme that I’m working on, that I think is gonna play out in the next, who knows, 20 minutes to 20 years, is this idea. we’re—we, the Federal Reserve, other central banks, governments—are going to do everything they can to keep the system working, which in their minds is just to keep inflating, pumping money, creating credit, you know, creating all these fancy financial products. They’re gonna keep that game going, but it’s gonna come crashing back down to earth, and they are going to talk about it in the popular press as a great wealth destruction.
People are gonna wake up and find that bonds are worth 10 cents on the dollar, the stock market’s at a fraction of where it was, or we have this explosion in inflation, the stock market actually goes to the moon, but it takes a million dollars to buy a cup of coffee. Doesn’t matter. Whichever way this goes, people are gonna find that their general living circumstances have gotten badly abused and diminished. And my work in the world is to help people, if you can see that coming, then you can actually avoid that. Here’s how you get rich if you follow me, part of the story; it’s simply saying, there’s a dividing line between people. When the wealth transfer happens, you are either on this side of the line, or you’re on that side. You’re either on the side that donates, or you’re on the side that receives. But it’s a transfer, not a destruction.
JASON HARTMAN: Right, right. That’s a very good point. Yeah. You’re on the side that donates, or the side that receives the donation. You know?
CHRIS MARTENSON: Hey. If you get to choose, I’m gonna be on the receive side. I don’t know.
JASON HARTMAN: Okay. So, who will be on the receiving side? I mean, inflation, I’ve long said, is a transfer of wealth from old to young, from lenders to borrowers, it definitely transfers wealth that way, there’s no question about it. It’s done that historically, many, many times. But in your eyes, give the listeners some advice about being on the receiving end. How do they position themselves to do that?
How to be on the receiving end of the inflation-induced wealth transfer
CHRIS MARTENSON: Take this model we’ve got where you’ve got primary wealth, secondary wealth, and then tertiary wealth is everything you can think of—stocks, bonds, currency, derivatives—it’s just all paper. The goal here is to get as much of your wealth as you’re comfortable doing, away from that tertiary side, into primary and secondary sources of wealth.
JASON HARTMAN: Great point. I completely agree. You’ve gotta control real things, not paper.
CHRIS MARTENSON: Real things. I mean, the easiest thing for an average person who says listen, I work hard, I don’t really have a lot of time to look at this, I don’t have time to buy a piece of land and manage it, I don’t want to become a landlord—there’s a lot of people in that circumstance. Great. Then buy something tangible. That could be gold, it could be silver, it could be something like that. That’s easy. Slightly harder is to figure out, what are the actual means of production? Where are things gonna go? So I’ll give an example from my region. I live in New England. A lot of people still heat with oil. It’s a historical artifact. We don’t have a lot of natural gas pipelines. So, people heat with oil. Alternatively, they heat with wood, right? Because if the price of oil really goes up, but the price of core wood stays really low, people who have wood stoves, either, or don’t, they can install them, will then switch. So I’m looking at the area around me, and I’ve calculated—this take a little bit of work, but—that there are certain tracts of forest land I can buy around here where there are trees on the hoof, standing there growing, where the BTUs that I can buy at today’s prices are at a discount to where oil currently is. And that discount is gonna close, that gap will close, I believe at some point.
And secondarily, because of the model I have in my head, that oil is gonna become more and more expensive. But regardless of whether oil goes up or down in price, if I own woodland, I own something that the people around me are gonna want. Rather oil is at $50 a barrel, and nobody has any money at all, because this whole thing sort of blew up in a deflationary spiral, or, oil’s at $500 a barrel, and you know, inflation has happened—it doesn’t—I’m—I don’t care where the scenario goes. I’m gonna have something that people want, that will be valuable to me and to them, and that’s the basis of preserving wealth. And if the wealth transfer goes the way that I think it’s gonna go, everybody who’s in possession of primary and secondary wealth—the people who own the land, the people who own the mineral resources, the people who own the energy sources, people who own the gold, the silver, and other forms of monetary wealth that are easily transferrable across borders—those are the people who are going to find that they own the wealth when the system resets.
And how we count it is the dollars—in this part of the story, instead of people saying, how many dollars per—is an ounce of gold cost? People will ask, what’s the gram equivalent that dollars are worth? Right? You’ve flipped the equation. Like, the dollars don’t matter anymore, when you get into the wealth destruction. How many billions of dollars of treasury bonds you own doesn’t matter when the wealth destruction happens. People are desperate to get away from that tertiary stuff, and into the real stuff. And those doorways are tiny! So, my advice to people is, start moving some of your wealth away from tertiary into primary, secondary, and part of that process is to begin knowing what you would actually do. So, it might be a planning process, where you say, well, I gotta understand where I live, and what the opportunities are. I need to start figuring this stuff out. It’s harder than sending your money to Wall Street and hoping that it grows, right? This is work. But when you get down to it, this is the only work that has ever helped people get truly wealthy over time, and this is the only work I think that’s gonna help protect people when the wealth transfer starts to happen, because most people are gonna be shocked and confused. It takes having a plan, and understanding what real value is, and where it exists in your area where you can control it, touch it, see it, understand it.
JASON HARTMAN: I agree. Control it, touch it, see it, understand it. You know, it’s gotta be real, and you know, you mentioned the trees, and so forth, and you know, one investment—it starts with the word real—it’s called real estate. So, I think there must be something to that. You know, certainly having a reasonable, you don’t have to become a survivalist freak, okay, but you know, that may—those people may turn out to be right, okay? But certainly having a supply of resources, so that you can sustain your life and your family’s life for a period of time, is obviously just a prudent idea, and it’s very easy, and inexpensive to do. Russia. You wanted to talk about Russia. You’ve been following that, I know. It’s a weird thing going on there. I mean, you know, what do you make of it?
Russia
CHRIS MARTENSON: Well, you know, there’s some sort of a giant push by the west, which generally is Europe, UK, and the United States, to box Russia in, and force them to do something. And I’m unclear on why we would do that, and risk that. So, if you talk to people who are in the business of state craft, and you ask them fundamentally, what is the United States’ compelling interest in whether Ukraine is governed by this party or that party, or exists in three pieces or four—there is no compelling interest. We have no overt strategic interest in Ukraine itself. We’re using Ukraine as a pawn to get something different that we want out of Russia, but I’m unclear on what that is, or why that’s being pursued at this point in time. Because let’s face it. Ukraine has been a corrupt country for decades. It’s run by oligarchs, it has a little bit of coal in the east, it’s got a little bit of farmland in the middle, and that’s about it. It’s just got a tiny economy, and has no strategic resources, and it’s not on the way to anything we care about. But still the United States for many years has been carefully pushing Ukraine to become part of NATO, and Russia finally said, you can’t do that. Stop. You know? We need the Crimean warm water port for our navy, and these are Russian speaking people in the east, and stop. And here’s where I really grew concerned about this. Normally, and I think quite rightly, you look at a publication like the New York Times, is normally extremely allergic to anything that smacks of anti-Semitism, and the people that we’re supporting in Kiev right now include this Svoboda party, it includes the Fatherland party, these are overt ultranationalists who said horrible things on the anti-Semitic front, and the New York Times hasn’t written a single word about that.
JASON HARTMAN: Isn’t that interesting, they just ignored it. Yeah.
CHRIS MARTENSON: It is interesting. It tells me the fix is in, right? Because, you know, somebody had to tell the New York Times, listen, don’t—it wouldn’t be useful to us at this point to be running with that part of the story. Let’s run with other stuff, like what a bad guy Putin is. Here’s what concerns me. We, the west, collectively, are poking a very sharp stick at a nuclear superpower. I mean, Russia may be past its USSR glory days, but let’s be clear—they have a lot of good military capabilities, and so, the question is, what is worth that risk? You know? What is it that’s worth that risk, and nothing compelling is showing up. So, it tells me, I don’t understand what’s driving this thing. But I didn’t really understand what was driving the last Iraq war either. You know, it was clearly the intelligence was fixed around the outcome they wanted, and it turned out to be false. They’re doing the same thing again. So, I look at that, and I say, well, there’s a big risk here, and particularly for anybody in Europe who’s listening, and for my European readers, I’ve covered this a lot.
The chance the Europe is gonna get its natural gas cut off by Russia is very high at this point in time, and I can’t understand why Europe would risk that. But, they are. So, that’s a done deal. If Europe loses its natural gas, it’s gonna have a very bad winter, its already teetering economy is gonna be pushed over the brink, it’s not entirely unthinkable that we have a couple of defaults that fall long with that. Maybe another bank—we had one in Portugal, but maybe Santander in Spain goes down. Ries is in horrible shape. They would do extremely poorly if their gas supplies were cut off. They would do worse than they are. I would be looking for Europe to actually be thrown into a tailspin, as a consequence of losing natural gas, and if that happens, you know, the world’s all interconnected.
People say, well, the S&P is a US stock equity index, but eh, 42% of its revenues come from overseas, so, it’s not really a US-only market. Nothing is. So, I’m very concerned that what’s happening in Ukraine is escalating, not deescalating, that the west has drawn a very firm line for reasons that, as I mentioned, escape me at this point in time. It looks like a strategic blunder. Putin’s playing a pretty smart game in terms of what he needs. But he’s now pivoted firmly and fully to China, and to India, and to the other sort of—he’s pivoted east, as you will, and this is a very large geopolitical realignment of power. Those are always concerning moments in history.
JASON HARTMAN: Do you make anything—I mean, this may be just far-fetched, but, do you make anything of that accidental open mic comment that Obama said during his last term? When he was meeting with—I can’t remember which Russian official, but he thought the mic was off, and he said, wait until after the election, and I can push this through—you know, what—I just almost think there might be some connection.
CHRIS MARTENSON: It’s possible. You know, maybe they’re burning up the vat lines, and having very different conversations. Oh, it’s possible. But, you know, from everything that I’ve seen so far, it seems like there’s been a full blown effort to just demonize and chase Russia away, and you know, I could pick probably—it’s never one thing. I’m sure there are multiple competing reasons. I’m looking at this in terms of whether we, the west, are leaving any sort of room for negotiations, and the answer doesn’t seem to be yes at this point in time. It’s just, there’s so much we could go into. Here’s just one quick example. MH17, the Malaysian airliner that got shot down over Ukraine.
JASON HARTMAN: Right.
CHRIS MARTENSON: Right? Within hours of that, we had our UN delegate asking the security council to post sanctions on Russia, because Russia was clearly at fault, this was a separatist missile that was fired, and as evidence, we had a couple of social media things that allegedly, were separatists saying they took credit for this. Social media—really? Russia meanwhile comes out and says, hey United States, you had one of your best birds right over that theater at the point and time, a satellite that could have easily detected the missile launch, and should have, so we want all of the telemetry data, we want any images you took, we think that you should release those. So, for Russia to call for that tells me that they knew perfectly well, full well, they knew where that missile came from, and that it didn’t come from the separatists, and that Russia wasn’t involved. And Russia has consistently provided evidence to show that—here’s—I’ll tell you what my analysis—I am 95% sure at this point in time, the missile was shot by the Ukrainian army. I don’t know if they did it by purpose—
JASON HARTMAN: As a false flag?
CHRIS MARTENSON: Possibly. Or maybe they did it accidentally. I don’t know. Maybe they thought it was a—they mistook the airline somehow, thought it was a Russian jet. I don’t know. I’m 95% sure it was fired by those people, not the other people. Well, if the United States knows that, I duly think that they really ought to come right out and said, that’s what the case was. But they didn’t. They hid that, and instead, chose to really ramp up the demonization of Putin particularly, Russia generally. That tells me that there’s some game afoot here, where truth doesn’t matter, where lives don’t matter, where the risks don’t matter, there’s something being played out here. And again, we don’t know. We might never find out. But your listeners should be paying close attention to this, because the risks here are very, very high.
JASON HARTMAN: The problem with this whole thing is, as you so rightfully pointed out in the first edition of The Crash Course, is that, as long as war is profitable, it’s just, the incentives are all wrong! I mean, the central banks profit so much off of war! And then, you know, we’re not even talking about the military industrial complex yet. It’s just sick! It’s just a disgusting, sick thing that this should enrich so many people, and at the same time, impoverish and kill so many people. It’s awful.
CHRIS MARTENSON: It is. And there’s a—you know, there was this really awful article in the New York Times a couple months ago, a trial balloon, I think, which basically said—asked the question, is our global economy doing poorly because there haven’t been any big wars?
JASON HARTMAN: Can you imagine that thinking? That’s insane.
CHRIS MARTENSON: And the thesis is that wars are stimulative, because you know, you break a lot of stuff, but then you get to rebuild it. The mistake in that model is that World War I and World War II happened at a time when we had rising net energy per capita, meaning we had more oil available to us. You cannot rebuild without energy. Like, if you destroy a 20 year old person’s farm, they have the energy to rebuild. You destroy an 80 year old person’s farm, they probably don’t have the energy to rebuild. So, in this story, this next war, if we have a big one, and we destroy a lot of stuff, I think a lot of very disappointed Keynesian economists are gonna discover that war is actually just destructive.
JASON HARTMAN: Yeah, it is. It’s never been stimulative, that’s only a fool would think that. It’s just—it’s a terrible, gross thing that reflects poorly on humanity, and we should avoid it at all costs.
CHRIS MARTENSON: Absolutely. And let’s take the energy, the brainpower—there’s so much that needs doing that we should be building towards, and war just is not even remotely on my list of things that make sense right now.
JASON HARTMAN: Of course it’s not. Sometimes there are just wars. One has to defend themselves, and there are evil forces in the world that need to be taken out occasionally. I would submit that the media makes them look a lot more evil than they really are sometimes too, so.
CHRIS MARTENSON: My final sort of common complaint on this is that the United States has done a whole lot of supporting somebody and then, when it doesn’t serve us, deciding that’s our new enemy.
JASON HARTMAN: 20 years later. It’s always 20 years later, they become our enemy.
CHRIS MARTENSON: Yeah. Now they have all that training and hardware, and then we have to—you know, that’s what happened with all these ISIS rebels, and everybody’s all concerned—those were Syrian rebels that the United States trained and gave arms to, and now we’re—now we’ve decided they’re a problem. Well, they are.
Closing comments
JASON HARTMAN: This is a bad business plan. On our part. It’s really bad. Well, Chris, very enlightening and interesting discussion, of course. Give out your website, and tell people where they can find out more about you.
CHRIS MARTENSON: It’s PeakProsperity.com. And I want to direct listeners specifically to—we’re redoing the entire Crash Course. New graphics, updated charts, all of that, and we’ve condensed the whole thing down to something called the accelerated crash course. You can Google that up, find it quick, you can find it on the website, it’s on YouTube, it’s around, it’s free. It’s as concise a description of putting economy, energy, environment into one spot, as I knew how to do, so, that’s a really nice offering out there. And so, that’s worth watching and sharing, and if anybody wants to do that, really would support that.
JASON HARTMAN: Alright. Chris Martenson, thank you for joining us today.
CHRIS MARTENSON: Jason, it’s been my pleasure.
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ANNOUNCER (FEMALE): I’ve never really thought of Jason as subversive, but I just found that’s what Wall Street considers him to be!
ANNOUNCER (MALE): Really? How is that possible at all?
ANNOUNCER (FEMALE): Simple. Wall Street believes that real estate investors are dangerous to their schemes, because the dirty truth about income property is that it actually works in real life.
ANNOUNCER (MALE): I know! I mean, how many people do you know, not including insiders, who created wealth with stocks, bonds, and mutual funds? Those options are for people who only want to pretend they’re getting ahead.
ANNOUNCER (FEMALE): Stocks, and other non-direct traded assets, are losing game for most people. The typical scenario is: you make a little, you lose a little, and spin your wheels for decades.
ANNOUNCER (MALE): That’s because the corporate crooks running the stock and bond investing game will always see to it that they win! Which means, unless you’re one of them, you will not win.
ANNOUNCER (FEMALE): And, unluckily for Wall Street, Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing.
ANNOUNCER (MALE): Yep, and that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times, and exploit the incredible opportunities this present economy has afforded us.
ANNOUNCER (FEMALE): We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing, and achieve exceptional returns safely and securely.
ANNOUNCER (MALE): I like how he teaches you to protect the equity in your home before it disappears, and how to outsource your debt obligations to the government.
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ANNOUNCER (MALE): To get your creating wealth encyclopedia, book one, complete with over 20 hours of audio, go to www.jasonhartman.com/store.
ANNOUNCER (FEMALE): If you want to be able to sit back and collect checks every month, just like a banker, Jason’s creating wealth encyclopedia series is for you.
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ANNOUNCER: This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com, or email [email protected]. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, or business professional for any individualized advice. Opinions of guests are their own, and the host is acting on behalf of Empowered Investor, LLC. exclusively.
