Introduction:
Charles Goyette is the Host of “Ron Paul’s America” radio show. He joins the podcast to give his dramatic solution to prevent the coming financial ruin. Goyette believes the longstanding practice of crony capitalism strangles our economy. He thinks we need to reign in overseas spending and end American interventionism. Goyette then explains whether it is fair for younger people to subsidize older people.
Key Takeaways:
(2:11) Jason discusses an LA Times article
(9:12) Introducing Charles Goyette to the show
(15:17) On foreign policy
(18:50) The biggest wealth transfer scheme in the history of mankind
(24:33) Predictions for inflation
(39:52) On Bitcoin & cryptocurrencies
(44:55) Closing comments
Links:
Listen to “Ron Paul’s America” at www.ronpaulsamerica.info.
CharlesGoyette.com
Bio:
New York Times bestselling author Charles Goyette spent many years as an award-winning and popular Phoenix radio personality. Admired for his “Fearless Talk Radio,” Charles was named Best Phoenix Talk Show Host by the New Times. Because of his insistence on holding all politicians – regardless of party – accountable to the same strict standards, Charles was widely known as “America’s Most Independent Talk Show Host.” His years of experience as a financial professional have served his listeners well as he sounded the alarm about the mortgage bubble well in advance of the calamity and described the consequences of the governments reckless economic behavior in his clear, easy to understand manner.
Charles is no newcomer to the national economic debate. In fact, more than 25 years ago Charles arranged for a then little-known Texas Congressman named Ron Paul to be the keynote speaker at a series of monetary conferences he hosted.
Goyette has often been called on to share his views with television audiences nationally on Fox News, CNN, MSNBC, PBS, CNBC and Fox Business Channel, including on the Glenn Beck Show and The O’Reilly Factor with Bill O’Reilly on Fox News; NOW with Bill Moyers on PBS; and on Lou Dobbs Tonight on CNN, where he repeatedly warned before the current turmoil the “economic calamity the Republicans and Democrats” were creating. He has written for a number of magazines including The American Conservative and Gannett magazines, and for LewRockwell.com, CNBC.com, WorldNetDaily.com, and TheStreet.com. Adding to the nationally recognized broadcasts is the Creating Wealth show with Charles Goyette talking about Restoring America’s Free Economy.
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, and thank you so much for joining me today; this is Jason Hartman, and this is episode #416, 416. And I’m coming to you still from Peru, today. I’m actually at Machu Picchu. You know, it is amazing when we look at history, and we travel around the world, and we see these great civilizations, and great empires, lot of people have likened the United States, although I think somewhat wrongly, to Rome, and how it was certainly the most powerful empire on earth, and then it eventually crumbled and collapsed. Of course, we have a very different set of circumstances, although, at the same time, we have some parallels, and being at Machu Picchu and looking at the Inca civilization, it’s really interesting too. So, more on that, I don’t have a whole lot of time to talk to you about it today.
Actually, not because I don’t have time. It’s because it will take so much time to upload this file to the Cloud so that my podcast editor can grab the intro. That is what the problem is. It’s the internet connection, which is of course, as you would imagine, very slow here. So, I’m going to make this intro somewhat brief, and we’ll get to our guest, which is Charles Goyette, you’ve probably heard his name. He’s been on the show in the past. Quite a while ago, actually. He’s a New York Times bestselling author; he’s got some interesting insights, and we’ll hear from him in just a moment.
Jason discusses an LA Times article
But before we do that, I wanted to talk to you about an LA Times article. It’s rather interesting, and it’s also rather interesting to note how the media just gets it wrong. You know, there’s a famous old book that I purchased years ago, and read part of, never finished. It’s called How to Lie with Statistics. I’m not saying this is a lie in the article, but I’m saying, there certainly are omissions. You know, these reporters in the media—they don’t necessarily understand statistics. They don’t understand markets, necessarily. You know, they’re reporting on news, but they don’t show the reader the big picture, a lot of times. And I think this is a great example. This is an article by Tim Logan. Sorry, Tim, to pick on you here. It’s entitled, Divide Between Homeowners and Renters is Growing. And there’s an interesting chart here where the uninformed mind would not understand what’s going on. I’ll get to the chart in just a moment.
Let me just paraphrase a little bit of the article here. It says: for homeowners in Southern California, the housing recovery has been pretty kind. For renters, not so much. New figures highlight the growing gap between owners and renters in the southland. Many homeowners are capitalizing on low interest rates to push down their monthly payment, while renters are shelling out larger shares of their income to stay afloat. Certainly some of this is true. But I’ll get to the point. It’s not true in the way the article skews it. And the ranks of renters are growing. Well, that’s true, and that’s great for us investors. Of course, we wouldn’t invest in Southern California, because it just doesn’t make sense, but this is an interesting parallel, okay?
So, just going on here. The data release Thursday by the census bureau show that the median monthly mortgage payment for a homeowner in metro Los Angeles—LA and Orange Counties—was $2241 last year. Adjusted for inflation. Wow, I gotta give him a pat on the back for that; at least they’re talking in inflation-adjusted numbers. Of course, those aren’t accurate, because the inflation numbers are wrong, but it’s better than not adjusting for inflation at all. That figure has fallen 17.7% since 2007. Well, let’s call that the first potential fallacy there, okay? The first potential fallacy is, since the subprime mortgage meltdown, maybe they’re not
letting people do stupid borrowing anymore. Thankfully, that’s the right thing to do. The lenders have, you know, in many cases, I believe, overcorrected, and they’re being too cautious, and we’ve seen that, and that’s made it difficult for investors, but investors who are willing to jump through these hoops—you know, work harder to get mortgages on their investment properties—heck, they’ve scored! Because a lot of the renters won’t, or can’t, just through the hoops.
In other words, what they’re saying is that the median mortgage payment for homeowners has fallen. Well, the other thing there that they didn’t discuss, is the fact that in 2007, you know, we were just moving in to the collapse of the market, and Los Angeles and Orange Counties, of course being very cyclical markets, have those roller coaster highs and lows, those peaks and valleys that we try to avoid in our investing, because we like investing in linear markets with good, sensible rent-to-value ratios, which Los Angeles, and the entire state of California, do not offer.
It says, in the share of homeowners spending at least 35% of their income on housing,, a common barometer for affordability, has fallen sharply in the last few years to 30%. Now, here’s the comparison. Meanwhile, rent in the area has outpaced inflation by 2.3% since 2007. That’s good for investors. And that’s even better in areas that make sense. Of course it doesn’t work in Los Angeles. And the share of renters who spend 35% or more of their income on housing has climbed to just above half. That large burden is partly a function of higher prices for apartments, housing watchers say, and partly of incomes that have been stagnant for years. Now, that I’ll give you. Incomes are stagnant.
So when you look at the chart here in this article, well, it’s interesting. It says, housing divide—homeowners in the southland have benefited from the recovery; Meanwhile, more renters struggle. Share of homeowners spending at least 35% of their income on housing—and it’s now over 50%. It’s 50.1%, actually. Just over the tipping point, for renters. But homeowners, as we said before—it’s declined to now 30.1%.
Guess what is the glaring omission here? Can you see it already? What is missing? It doesn’t talk about the incomes of the homeowner group or the renter group. In most cases, homeowners have higher incomes in proportion. So, a fallacy—they’ve just missed the point—it just reminds me of this article I saw probably in around 2006 or 2007, and it was so inept, you know, the reporter just knew nothing. You could tell by reading it. And this article, you know, hearkens back 7 years or so, but basically said, that if you were a landlord, in Los Angeles, you were laughing all the way to the bank, essentially. And if you were a landlord in Oklahoma City, it was a
terrible deal. But of course, it never discussed the price you paid to acquire the property in the first place. A glaring, glaring omission. There you go, that’s the newsmedia for us.
So, as the old saying goes, when you’re reading stories in the media, when you’re watching television, you know, when you’re watching CNBC, the mouthpiece for the vast Wall Street conspiracies, as I like to say—take everything with a grain of salt. Read between the lines. Things are not always as they appear. That’s the moral of the story. You gotta think through this stuff, and really drill down to understand what is truly going on in the marketplace. And that’s what I‘m trying to help you do on the show here, and with our investment counselors and so forth. So, we will continue to do that, but again, I promise, without rambling on, because I’d love to talk about this for another 15-20 minutes, believe me, but I gotta upload my file here from Peru, and we’ve gotta get to our guest Charles Goyette.
Let’s just go ahead and do that, but check out JasonHartman.com for more, and you know, if you are a new listener, be sure to go back and check out all of the great past episodes, and all of the great past guests that we’ve had. We’ve just got so much information there for you, and I know many of you regular listeners, and I so much appreciate this, listen to the episodes—you go back and listen to the entire back catalog, and then you listen again, which is awesome. You know this material better than I do. Feel free to do that. Listen more than once, because it’s all there for you, and it’s all completely free. Of course we’ve got some great properties at JasonHartman.com as well, so, check those out, and let’s get to our guest, Charles Goyette.
Introducing Charles Goyette to the show
JASON HARTMAN: It’s my pleasure to welcome Charles Goyette back to the show! He is the host of Ron Paul’s America radio show and podcast. And he’s got a great background with a whole bunch of other awesome things on his resume, and I’ll let him maybe tell you about a few of those. Charles, welcome. How are you?
CHARLES GOYETTE: It’s great to speak with you. Please don’t make me talk about them all.
JASON HARTMAN: Okay. Well, you can give a reader’s digest version then, how’s that sound?
CHARLES GOYETTE: Well, I’m the author of a couple of, I think, timely books, one
called The Dollar Meltdown, which was an international bestseller, and my latest book is called Red and Blue and Broke All Over: How to restore America’s free economy. And the main impact, I suppose, of the book, is that I’m not sure that anybody really wants to restore American prosperity, or to restore the American dream. Oh you, individually, and your listeners individually, and many other people, individually, if you asked them, yes, we would like to restore our prosperity, yes we would like to restore the American dream. These are the sorts of things that we would need to do to do so. If you ask the people in this country on a corporate or collective level, through their elected representative, to do the things that need to be done to restore American prosperity, to make sure that the American dream is alive for not only ourselves and our golden years, as they call them, and our retirements, and our kids, and their aspirations to own homes and have a long lifetime, and their kids to have a better future than they themselves had, and so on—I’m not sure that collectively, or in the political body, we’re really willing to do the things necessary. So, that’s that book. But the main thing I’m really proud of now, because it reaches so many people—the Ron Paul radio show. We’re on about 125 radio stations across the country, twice a day with commentaries of things going on in the news. And the big one is a long form podcast that anybody can avail themselves of; you can simply download it at podcastone.com, or at my website CharlesGoyette.com, but it’s a chance to hear Ron at length on the big issues of the day that are affecting people’s lives in America, their prosperity in America, their futures in America.
JASON HARTMAN: I’ll tell you something, Charles. If our electorate listened to podcasts rather than the lamestream media, we would have a much better government, because what you’re saying when—you mentioned it a couple times, you said long form podcasts, long form podcasts. Television is truly the idiot’s medium. Because it’s always a sound byte. And it’s like, we have elections that are won or lost on these dumb sound bytes! It is absurd! Are the American people really this shallow, that they’re gonna let a thing like, you know, read my lips no new taxes, determine the next president? I mean, there’s a lot more complexity to it than that. Or open change, binders of women—these are just silly! This is silliness!
CHARLES GOYETTE: I agree with you, yeah. And it is a lot more complex. But you know, the political debate has been dumbed down by the two parties. They have turned it into a, you know, an advanced auction on stolen goods. They have turned American into what I call the American piñata, in which all they do—the political parties, and their chosen candidates, are involved in passing the big stick around, and making sure everybody in their demographic group, and their ethnic group, and their regional group—whatever groups they may be members of—make sure they get a crack at the American piñata with a stick, and they hope, of course, to bust
loose some goodies for each other. And the real reason that we never solve it is that the republicans don’t think that they do it, and the democrats think it’s all the republicans that fortify the military industrial complex, or whatever it may be. Each party wants to blame the other one, and both are certainly deserving the blame, but until they clean up their own house, the democrats clean up their house, and the republicans clean up their house, then this situation will go on until—you know what happens at the end of the piñata party.
The piñata itself is busted up beyond repair, and unrecognizable. And they’ve turned America, this great, noble idea, into a piñata, and all they do is pass the big stick around, and you’re right too, the media plays the part of like the mariachi band. They’re there just to keep the festive spirits high, and persuade everybody that this party is the normal sorts of things. Here, take a whack at the American piñata, get yourself some goodies, vote for the candidate that promises you the most—oh, you get more goodies from the Rs, or more goodies from the Ds, why would you vote for the Ds if you’re gonna get more from the Rs, why would you vote for the Rs when you get more from the Ds, yadda yadda yadda. It’s all absolute nonsense. It leaves America poorer, and in the course of doing this, you’re right; they make slogans out of these issues that certainly divide the people; there’s no question that people can be divided about these headline or bumper sticker issues, but the fundamental things that impact America’s freedom and prosperity going forward—the things that I care about, and I suspect you care about too, are the things they never talk about. They never talk about the American military empire, and the reach of it, and the way that it’s bankrupting the country—they never talk about the destruction of the monetary system by the central bank. You can go through an entire presidential campaign and we just did, a year or so ago, and you never hear, for example, the Federal Reserve even mentioned. Isn’t that peculiar, Jason? Money is—
JASON HARTMAN: Except by Ron Paul, let’s audit the Fed, which is like this crazy idea. Mainstream candidates are owned by the Fed and the Rothschild family, you know? Everybody else. But we don’t need to go there, and get too far afield, because—
CHARLES GOYETTE: Well, you don’t even have to go far afield. I think it’s all right there in the open.
JASON HARTMAN: It is.
CHARLES GOYETTE: You know, since 2008, the Fed has created—think about this—the Fed has created well over $3 trillion out of thin air, and where did the money go? The money went to reliquify the money in their banks, the crony banks, the
influential banksters. It went to take toxic mortgages and broken down securities off of their books, and put them on the books of the Federal Reserve, and effectively the books of the American dollar or the American people, as a proxy, so they transferred—they transferred bad risk toxic assets onto the books of the people, and they bail out influential cronies with, you know, $3 trillion in money printing that nobody ever voted for, that never gets audited, that nobody really understands how this is happening, and how it works.
On foreign policy
JASON HARTMAN: You know, no need to comment on that. We all know it’s ridiculous. It’s crazy. It’s absurd. And it really gets us all hot under the collar. I want to ask you about something a little more current though, Charles. There’s a lot going on in foreign policy right now. And it has wide ranging effects for us economically. You know, one of the things I was discussing with you—we talked for like two minutes off air before we started today. I said hey, foreign policy—that’s interesting. But unless you can bring it back to how it’s gonna hit someone in the pocketbook, it’s more like a big theory instead of something that’s real. But it is real, isn’t it?
CHARLES GOYETTE: It is so real, that—let me give you an example of just how real it is. If you peel the onion back, the thing starts to look a little bit like the product of an insane asylum. John Kerry arrived in Kiev the other day with all the problems in the Kiev—in Ukraine, and he’s waving around a taxpayer guarantee, effectively a check from the American people, of a billion dollars, to throw into the mix to help them out in whatever, for whatever purposes. Now wait a minute! Wait a minute! The United States is virtually insolvent. We have, you know, a $17 trillion plus invisible national debt. Well over $100 trillion in international debt. So for us to give a billion dollars away—where do we get it? Money being fungible, effectively, we have to go out and borrow it. We don’t have an excess.
We don’t have a reserve account, so we have to go out and borrow it. So when we borrow a billion dollars to give to Ukraine, where do we get it? Well, we borrow it from foreign lenders like—well, let me surprise everybody—like Russia. Do people know that Russia is a major creditor of the United States Treasury? Just the same way that, say, China is? Yes, Russia is. So, the little children of the future that are out on the playgrounds of the schools today having a good time are being loaded down with additional debt by the United States government. Additional treasury debt that will burden them the rest of their lives, so that the established parties, the governing classes in America, can go deliver a billion dollar check—and by the way, they promised that Obama would have more money where that came from for Ukraine—so, you give a billion dollars to Ukraine. But wait a minute. When the money shows up in Ukraine, what does Ukraine do with it? Well, the billion dollars, it doesn’t go to the Ukrainian people. It doesn’t make them richer. The billion dollars is used to pay Gazprom, which is the major Russian gas company, which is owed $2 billion by Ukraine, so wait a minute.
Let’s think this thing through now, step by step. The American people borrow money from places like Russia, so we can give it to places like Ukraine, so that they can pay back places like Russia, and the bankers that have provided loans to Ukraine, risky loans that they didn’t have to worry about being defaulted upon by Ukraine, even though Ukraine has defaulted twice in the last 10 years—they didn’t have to worry about those defaults, because they know that they can get a better interest rate of return than Americans can by investing in crazy places like Ukraine, and then, if something goes wrong, and the debts can’t be repaid, like the Greek debt, that somebody like the IMF or the United States government and the European Union will step in and make them whole. So, this is a little bit—a little bit of insanity, but if you peel the onion back another layer, you see that it’s all the business of the banksters.
JASON HARTMAN: I really don’t quite understand why you’re complaining. Now, this is a sarcastic comment. I want you to know—
CHARLES GOYETTE: Sure it is. I can tell by the sound of your voice.
JASON HARTMAN: Okay, good. I just want to make sure you caught my tone here. Because isn’t this just increasing the velocity of money?
CHARLES GOYETTE: Yeah. Well, there you go. That’s good. We’re gonna increase our velocity of money right into national bankruptcy, is what we’re gonna do. It’s actually the biggest—it’s the biggest wealth transfer scheme in the history of mankind. I mean—
The biggest wealth transfer scheme in the history of mankind
JASON HARTMAN: So, go into that a little bit more. So, what specifically is the biggest wealth transfer scheme in the history of mankind? Central banking?
CHARLES GOYETTE: Well, sure. Central banking and fiat money. The central banks depreciate the value of the currency that people hold in their piggy banks and their wallets and their banks. They get their retirement income paid in, anything denominated in dollars, the central bank depreciates that, by inflating the currency, by destroying the purchasing power of the dollar over time. I guess to describe it in a different way is to say, in America, the founders set up a perfectly reasonable system for the government to pay for things that it wants, and the system is, you know, appropriations, money bills, we have a congress, we have a legislature, we have money bills they have to originate in congress, the constitution says money bills have to originate in the House, that is, the people’s representatives. People closest to the people that are up for election every two years. So, spending bill have to originate there.
They come from there, and then they go through the process, and they have to pass both bodies of the legislature, and then they go to the president, and then he executes them, or carries out the intention of the legislature. But, you have this huge, massive monetary operation that runs to trillions, nay, tens of trillions of dollars, to pay for things, to buy things, to enable things, to transfer wealth, to benefit cronies, that never sees the legislative process. It never sees a vote of appropriations. The Federal Reserve extended $16 trillion during the 2008-2009 meltdown. $16 trillion to foreign companies, domestic banks, foreign banks, foreign governments. At the risk of the insolvency, or the value of the United States paper dollar, $16 trillion, without so much as a single vote! Not so much as exposure to public debate! And all of this, of course, is done at the expense of the American people. Because look, the Fed doesn’t create any wealth. The people listening to your show right now create wealth. A waitress that delivers a sandwich and pours coffee—that’s creating wealth. Somebody puts tires on your car, that’s creating wealth. Somebody grows food—that’s creating wealth. Somebody delivers a package, that’s creating wealth. All of the things that people do are creating wealth, and they earn money. Nothing the Federal Reserve does creates wealth. They don’t have any money. The only money they have is the money that they take from the people. Yet they do it by subterfuge. They do it, rather than through legislative process, so at least we know how we’re being fleeced, they just do it on the QT. It’s not compatible with the nature of a free people.
JASON HARTMAN: So, are you saying that because of all this massively destructive spending, that we have an inflationary future? That’s the only way out, right?
CHARLES GOYETTE: It’s clearly the only way out. It means the destruction of the currency. Somebody asked me one time, how many paper currencies like ours have been destroyed over the course of history? And the answer to that is, all of them. Ours, it hasn’t quite happened yet, so the people are impoverished in these things. People that save, people that—you know, all the things that make capitalism work. All the savings and investing and prudence and so on that makes capitalism work, and created the remarkable prosperity that America created to display to the world—all of those values are undermined in this process. It’s true that the Fed has gotten away with increasing its balance sheet with made up money, by printing money from about $800 billion in the mortgage meltdown when the recession started, let’s say 2008. But about $800—it was about $800 billion. There it was, it rolled along, if you looked at the chart, it’s about $800 billion, $800 billion, $800 billion, shazam! Straight up like a hockey stick! And it goes from $800 billion to $1.6 trillion. And then shazam! It doubles again, from $1.6 trillion to $3.2 trillion. And shazam, now it’s over $4 trillion. This represents money that they just made up to buy things off of the hands of the banks, as we talked about earlier, or to by the downgraded debt of the United States. Yes, to enable to reckless spending of members of Congress who are there to do nothing more than to give things away—American piñata—to give things away, to buy the votes of their constituents, so that they could get reelected.
So, we’ve got the balance sheet of the Fed has grown by well over $3 trillion in a couple years of money they just printed. Everybody says, well, what are the consequences of that? We don’t see any consequences. And the answer to that story is that the consequences aren’t apparent yet, because the money has yet to enter the commercial loaning activity of the banks. And when it does, then it starts getting multiplied many times over in the fractional reserve banking system. So, to make all of this understandable in one little burrito, let me wrap the thought up. The Fed has printed a lot of money, but it’s kind of just like it’s been sitting there, and it’s been humming like a—I don’t know, like a nuclear reactor, you know, it’s just humming, and it’s wobbling, and you know there’s something there. And all of a sudden it starts to leak, this fissionable material. Well, that money is starting to leak out now into the commercial banking system, and we want a recovery, but a recovery means that the banks are going to begin making loans. They make loans to businesses that hire people, and so on and so forth. Those loans are what really, not only injects that money into the currency and the circulating currency and monetary system of the country, but it’s multiplied many times over by a process, I’m sure you’ve discussed many times, called fractional reserve lending, and that’s when our trouble starts.
JASON HARTMAN: Oh yes. The magic of money creation: fractional reserve lending. Otherwise known as—
CHARLES GOYETTE: And that process is starting right now. It’s starting right now with 2014, the amount of commercial bank leasing and loan activity is starting to turn up.
JASON HARTMAN: Yep, no question about it. So, Charles, the question is, is all this bad? I mean, logically, empirically, it would seem like it’s bad. So, the answer to my question about inflation—yes, we’ve got inflation coming. Is that your answer?
CHARLES GOYETTE: Massive.
Predictions for inflation
JASON HARTMAN: Okay. Massive inflation. Can you define massive? I mean, I know there’s—nobody knows. Of course you don’t know. Nobody knows. It’s all a prediction. But what do you think? Just take a gander.
CHARLES GOYETTE: So, it’s destructive enough at 2% or 5% or 10%. As it approaches double digits, and we’ve been in double digits many times, in the lives of most Baby Boomers—
JASON HARTMAN: Yeah, yeah. In the 70s we were in double digits, sure.
CHARLES GOYETTE: Four or five times. So, when it starts to get to that level, the problem is bad for any country, but it’s much worse for the United States, because we’ve persuaded the rest of the world to use our dollars, and when our dollars start losing value at that rate, the rest of the world will reject them. They will not finance our debt—in other words, why should they loan money to the United States government when if they loan a dollar they know they’re gonna get paid back 90 cents in value?
JASON HARTMAN: Because we inflate away the value of the debt, which is the exact strategy—
CHARLES GOYETTE: Exactly—
JASON HARTMAN: That’s exactly the strategy I recommend that our investors use—
CHARLES GOYETTE: And they know this—
JASON HARTMAN: Yes—but they—look, here’s the problem. You’re right about all of this. I mean, I agree. The only thing is though, you know, we’ve been inflating the value of our debt away for a long time! They’re still buying it! What—you know, what’s going on behind the scenes? What—what really makes you think that in the future, our treasury auctions are suddenly going to be boycotted, and nobody’s going to buy them, when they’ve been buying them all along? It’s not like we weren’t doing this 10 years ago, it’s not like we weren’t doing it 20, 30 years ago. It’s not new. We’ve been doing this for decades.
CHARLES GOYETTE: You’re right, we’ve been doing it for decades, and there’s never been a real viable alternative. The problem is that at some point—
JASON HARTMAN: A viable alternative for other countries to invest in? Is that what you’re saying?
CHARLES GOYETTE: More or less. And I’m maybe not even clear about that. Let me put the dollar in different terms, for your listeners. To say that in the case of—when you’re going through a crisis, and the value of the dollar comes up, and people start clamoring to buy more dollars, and dollar denominated assets, dollar bonds, and so on and so forth—I think of it like, you take your employees, you have a company picnic, and you go to the park, and you play some volleyball, or softball, and have a big picnic, and then all of a sudden it starts to sprinkle. And everybody runs under the Ramada for cover for a few minutes. You get out of the rain, and you still have a good time, you’re still having hot dogs and stuff, but you’re out of the rain, and if it continues to rain at some point people start to suddenly go home. United States is like the Ramada, and it’s a good place for people to bail out of problems in foreign countries elsewhere in the world when there’s a crisis, and come to the United States, where they know at least when push comes to shove the money will be printed to pay back the money that they loaned to the US Treasury—
JASON HARTMAN: The United States has always had the reputation—maybe not always, but as long as we can remember or care about—of being the Brinks truck of the world. The safe place to put your money. Because, you know, it’s a stable government, theoretically—
CHARLES GOYETTE: But that Ramada I’m talking about is becoming a short term instrument rather than a long term. In other words, it’s fine to get out of the sprinkler, the rain, when you’re at the ballpark, fine to get under the cover of the Ramada. Nobody wants to live there. Nobody wants to weather a hurricane in a place like that.
JASON HARTMAN: Okay, so, where—
CHARLES GOYETTE: It’s not sound.
JASON HARTMAN: Where else are they going to go to weather is though?
CHARLES GOYETTE: Here is the brilliance of markets. The brilliance of markets is
that necessity is the mother of invention. And when people reach the point of being fleeced, and they don’t want to be fleeced any longer, they start developing alternatives, looking for alternatives, coming up with new novel things that cannot be imagined today—
JASON HARTMAN: Charles, I just want to understand something. When you say fleeced, you’re talking about the investors in US Treasuries being fleeced because the value of the debt that they’re essentially buying from us, loaning us the money to finance our drunken sailor spending habits—they are fleeced through inflation, because they get paid back in cheaper dollars. That’s the fleecing you’re talking about.
CHARLES GOYETTE: Right.
JASON HARTMAN: And so far, they’ve been willing to get fleeced, because there’s no other Ramada, as you put it. There’s no other place to run.
CHARLES GOYETTE: We’re seeing these alternatives begin to develop now before our very eyes. Like me, that watches this all the time—it seems to be happening at breakneck speed. But it’s not just cryptocurrencies. It’s the remarkable move we’ve had this millennium in the price of gold. It’s these multilateral and bilateral relationships that are being created all over the world. You saw one the other day; it was kind of the outcropping of the sanctions we imposed on Russia, that Russia and Iran are firming up their trading relationship. It’s been—let’s see, Turkey’s been trading gold for oil from Iran, and now Russia and Iran have created a non-dollar denominated trading structure to settle deals instead of in dollars, the reserve currency of the world, to settle deals in their own currencies. Russia and China are doing this. The Gulf Cooperation Council is doing this, this is going on all over the world. People are arranging bilateral multinational deals to create trading structures that will insulate them from the dollar. So, it actually might be happening very fast.
JASON HARTMAN: So you know my theory on that? Is it’s kind of like—and look, I’m not a parent, but I did have a parent, okay? So, I understand the concept here. When you’re doing something bad, maybe you’re, you know, you’re in high school, and you go out drinking, and of course, you shouldn’t be drinking in high school. Mom kind of knows about it, but she sort of looks the other way so as not to put maybe too much parental pressure on you. But you know, she’s gonna watch it, and monitor it, and if it gets to be a problem, she’s gonna come down on you like a ton of bricks. Maybe this is just sort of the US just sort of looks at this like okay, we got our
little rebellious teenagers, and they’re doing some stuff. They got their little club going with Gulf Cooperation and you know, Iran and Russia, and if any of this stuff starts to really take hold, the US is going to use its extremely huge advantage. And it’s unfair. It’s a bully pulpit, no question, of having the largest economy, having the largest military, most importantly. Having the economic hit men all over the world. The dollar is probably the most valuable power the US exerts over the world, having reserve currency status. We’re not gonna give that up!
CHARLES GOYETTE: It’s not for us to decide whether we give that up or not.
JASON HARTMAN: You sure about that?
CHARLES GOYETTE: Yeah, actually I’m quite sure about it. We’re in the unfortunate situation of being dependent upon the kindness of strangers. We have to have foreigners willing to buy our debt. They have to be willing to buy our debt.
JASON HARTMAN: Hey, if you put a gun to somebody’s head, they will do what you say. And that’s what we do. I think—my theory is, a lot of these wars are really fake. You know? They’re fake wars to exert power in other domains. And I don’t understand it well enough. I’ve just had, you know, a bunch of people on my shows talking about it. It’s something I’ve listened to, and read about, and learned. You know, I’ve heard the theory about, the only two countries that really don’t participate in the global central banking cartel are Iran and North Korea, and that’s why we hate them. Maybe you have some comment, or you can educate me further on that. But these kinds of things, like, the war isn’t necessarily—we didn’t go there for what the media told us. You know? There were other things going on. Like, maybe pulling away from our reserve currency power.
CHARLES GOYETTE: There are certainly a lot of components of that to figure in. In fact, you know, to get a war, you’ve gotta get a coalition of a lot of different—I’m not talking about a coalition of the willing, or coalition of other countries, but you have to get a lot of interest groups in the United States, for example, to—the War in Iraq is a good example. You had to have a lot of different interest groups. There were people that thought it would be good for the stock market, there were people that thought it would be good for the defense industry, there were people that thought it would be good for the republicans in the mid term election, there were people that thought it would be good for banking, there were people that thought it would be good for oil, there were people that thought it would be good for their geopolitical interests overseas. And all of these coalitions came together. They all thought it would be good for their own reasons. So sure, when you get a war, there are reasons like that, and of course, you know, maintaining the dollar standard is one of them.
But if you look between the pages of the government’s behavior, we are a government that has spent beyond our means, and we’re beginning to have to live beneath our means, and you see almost the capitulation of the federal government revealing how weak it is now. Not only domestically, and things that it resisted with a fervor before about marijuana laws in the several states, medical marijuana—the standoff, the [indiscernible] standoff the other day, and you’re seeing this all over the place, the reluctance of the United States to push its advantage, because it knows it doesn’t have what it had to back it up. I mean, we were talking about geopolitics. You have forces clamoring for us to do something in Ukraine. You have senators McCain and Lindsey Graham, you know, that want us to start arming these people, you have people, I think I saw a guy at the American Enterprise Institute wants more permanent forces in Central Asia. Oh my God, does he realize how big Central Asia is? You have all kinds of people want to get in. At the same time, we have issued security guarantees around the world. Look. Issuing guarantees is no cost for the politicians. When they guarantee your mortgage, when they guarantee your education loan, they’re heroes.
They get applauded, oh, you’ve made home affordable, you’ve made college affordable to my kids, we’re going to reelect—there’s no cost. When those loans are defaulted upon, there’s a huge cost to the nation and to the people, as we experienced for example in the savings and loan crisis. There’s a huge cost to people; by then the politicians are gone, it’s long since forgotten that they gave away these guarantees. Well, they do this in foreign affairs as well. They’ve given away guarantees all over the world that act as a tripwire to make sure that the United States is deeply involved in future conflagrations that have nothing to do with our interest in protecting the liberty and prosperity of the American people.
So while we’re watching Ukraine, the current government of China is growing more and more belligerent, more and more outspoken about places like the Senkaku Islands, and just this past weekend they were shaking their fist, warning Japan and the Philippines and others that any provocation is gonna be met with severe force, and so on. You know, when Deng Xiaoping, the great reformer of China, was running things, his advice was, stay low in the geopolitics of the world. Maintain a low profile, and build our own prosperity. Transform China into a rich country. That advice now has gone out the window. Maybe they think they’re rich enough. But it was their prevailing advice for a long time. This current premier, Li, is more militant than anything that we’ve seen there. So you see the United States making security guarantees all over the world. People clamoring for us to get involved in things everywhere, including the treaties that date back to before the Cold War, that obligate us to protect some rocky outcropping in the South China Sea with a couple of goats on it! This is the sort of thing that bankrupts a nation, and that’s one of the reasons that we’re indebted to the extent that we are.
So at some point, once you become dependent on the kindness of others to fund your spending, you’re no longer your own master.
JASON HARTMAN: That is certainly a scary truth, no question about it. And my only claim, with all of that, Charles, is that the US finds itself in a unique position with its military power that can bully its way into forcing other countries to buy its debt, and to do its bidding. It’s not fair. It’s not right. I’m just saying it is.
CHARLES GOYETTE: Dr. Paul has a thought about this, that I think is actually very profound. And that is that yes, we have been successful in doing a lot of things like that for a very long time. And the consequences of that are that when we do have a problem, and there’s gonna be a lot of piling on—
JASON HARTMAN: Yep.
CHARLES GOYETTE: We’ve developed a great deal of enmity, and there’s a lot of resentment now for our having done that for a long time. And so, when we are in a moment of peril and so on—
JASON HARTMAN: We may find we don’t have so many friends.
CHARLES GOYETTE: You are exactly right.
JASON HARTMAN: Yeah, no question about it. Well, very interesting. So, on your inflation thoughts there, you know, double digits, maybe worse, you think? And, any time frame ideas?
CHARLES GOYETTE: Yeah, I think it’s clear, it’s certainly gonna be double digits. And of course the future can’t be told entirely, because the decision—it depends on decisions that are yet to be made. There will be decisions made as we move into the crisis. The cake is baked to the extent that we will have a crisis. The money has already been spent, the debts are very real, the resources to pay them are not there, so somebody will eat those debts, and the most time honored way for governments is to try to inflate them or devalue them through inflation in one manner or another. That’s a very real prospect; and certainly double digits are no high barrier for the extent of the crisis that we’ve got in.
JASON HARTMAN: Historically, you know, when you look at the entire world, I mean—double digits are nothing. I had Martin Armstrong on the show the other day, from Armstrong Economics—you may know of him. He said that his definition for
hyperinflation is—get this, you’re gonna just—I hope you’re sitting down. 400% per month or more.
CHARLES GOYETTE: Well, let me give you a different one.
JASON HARTMAN: Ouch.
CHARLES GOYETTE: Let me give you a different one. Because you’re right, it’s very subjective. The great economist Ludwig von Mises said, it results at some point in what he calls the crackup boom, and that’s more descriptive than numerical, but the crackup boom is when suddenly a realization comes upon the people seemingly all at once, like you see the flock of birds turn at once, or if you’ve ever scuba dived around the tropical fish, you know, they’re going in one direction, suddenly they all turn simultaneously. He said it’s a moment at which suddenly the consciousness is clear to everybody in the country that it’s not just a question of prices going up, but that the currency is losing value and when that realization dawns on them, as seemingly at some moment, it’s what he calls the crackup boom, and people become desperate to exchange the currency for anything of value. What have you got? Oh, you’ve got a fax machine that doesn’t work anymore? I’ll take it. You’ve got a hairbrush? I’ll buy your hairbrush. I mean literally anything to get rid of the paper money that is losing value, and turn it into something real, something tangible. That’s—so, to me, that’s hyperinflation, when you reach the crackup boom, and certainly if bad enough decisions are made in the future, and we have a cast and crew of characters that are capable of making a lot more bad decisions.
JASON HARTMAN: Yeah, we do. well, they’re all beholden to their constituents of, you know, dependent vote buyers, basically. Is what the whole thing has become this iron triangle. It’s ridiculous, of course.
CHARLES GOYETTE: It’s pretty bad. And there are, I suppose, a few that know better, but they think that, you know, the most important objective is to get themselves reelected, to retain their hold on power. And there are others that really don’t know. They’re really not that bright. You know, I suppose you saw Congressman Jim Rand the other day complaining that American members of Congress are paid too little money.
JASON HARTMAN: The troops in the trenches make like $22,000, or something.
CHARLES GOYETTE: Yeah! And the Congressman Paul said, well, if you think they’re paid too little money, let them go out in the free markets. Very few of them can do that well in the free market, because they’re not as bright. My old friend was a libertarian—well, a republican, but a real libertarian Congressman named Sam Steiger, for many years, and Sam Steiger used to say, in fact, got himself in trouble with his colleagues when he said on national TV, that most of these people that he serves, he wouldn’t hire them to push a wheelbarrow.
JASON HARTMAN: Oh, of course you wouldn’t. They’re just lazy, they’re just on the take, you know. We should tell this poor Congressman, look. With all your kickbacks and perks and illegal influence from the lobbyists and so forth, you really make about triple that, so, you should be okay.
CHARLES GOYETTE: I think they do alright.
JASON HARTMAN: Yeah, yeah, they sure do. one last thing I wanted to just ask you before you go, Charles, and I appreciate you staying on a little longer.
CHARLES GOYETTE: Oh, sure.
On Bitcoin & cryptocurrencies
JASON HARTMAN: You alluded to it earlier, and we talked about cryptocurrencies, cybercurrencies, Bitcoin. What do you make of all these? Do you think these things are gonna last? Or are these just, you know, an interesting anomaly?
CHARLES GOYETTE: I’m in favor of the experiment. I mean, I agree with the Nobel Prize winner economist Friedrich Hayek who said that, you know, we should have competing currencies, and let people separate the wheat from the chaff, and decide which ones are of value, and which ones they want to use. So, I’m glad that this experiment is taking place. It is an experiment, and so, I’m happy that people are experimenting, for example, with Bitcoin, with their money, and not with mine. I don’t understand the architecture of it, but if it proves to last for a couple of thousand years like gold has, then it will capture my attention. In the mean time, a number of its proponents are making fewer and fewer claims for it that it’s a payment system. Well, if it’s a payment system, I can pay on my computer, I can pay PayPal, I can pay with MasterCard and VISA—I’ve got a lot of other payment alternatives. So, Bitcoin is—if that’s all it is, it’s not—
JASON HARTMAN: It’s not a currency. Yeah. It’s just a payment system.
CHARLES GOYETTE: Yeah. If it were money? If it were money, and a store of value,
and so on and so forth, that might be something else, but it would take time to prove that, and in the mean time, I’m not sure what advantage that has over gold, because gold insulates—to the extent you own physical gold, you’re insulated from counterparty risk. We know from the Mt. Gox experiment and from many others, when you have exchanges that you have to deal with, and they hold this, and you hold that, and you hope to redeem it here and there, there’s a great deal of counterparty risk, the risk of fraud, embezzlement, and so on and so forth. So, I don’t see what advantage it has really over gold, for my needs.
JASON HARTMAN: And I think it’s got huge disadvantages over gold. At least gold’s something real. All of these cryptocurrencies, including Kanye Coin. Let’s not forget, Kanye West has his own cryptocurrency too. I mean, do people really fall for this stupidity?
CHARLES GOYETTE: They started circulating the Ron Paul Bitcoin, and I asked Dr. Paul, I said, do you think they’re honoring you by naming this coin in your name, or are they just exploiting your name and hoping they can lure people to trust you and what you represent? And using your coin? He says, probably a little of both. As long as they don’t defraud anybody, and they operate honestly, he wasn’t gonna raise a problem about it.
JASON HARTMAN: Yeah, no, I know. But I’ll tell you something. The central banking cartels, and the governments that are in cahoots with them—there’s no way they’re gonna let any cryptocurrency or competing currency gain any real traction. The stupid argument I hear from the—I’m, you know, instead of calling them gold bugs, I’m gonna call them Bitcoin bugs. From the Bitcoin bugs are, well, the government can’t control it. It’s decentralized. No! They can control it! Listen. Cocaine is decentralized, and we’re not allowed to trade in cocaine, right? That’s not a currency. It’s just silly. The stuff is gonna be attacked, it’s gonna be destroyed, it’s gonna be squashed by the powers that be. People will use it for illicit things like prostitution, drugs, and terrorism, and then there will be scams, and the government will make the case, and then they will just come down on it.
CHARLES GOYETTE: There will be all the same things that there are with US dollars. Yeah. But you know, I take your point very seriously, that you know, they will not let it persist if it becomes a threat to the government’s money monopoly. They simply will not.
JASON HARTMAN: You know, alternative currencies outside of the world reserve currency, the dollar—it’s kind of like the same argument, in a slightly different way.
CHARLES GOYETTE: They will certainly come down with both feet. They’ve already done that; we have legal tender laws here in this country, that make it—the courts won’t enforce your contracts, denominated in gold, the same way they will one denominated in dollars, and they will charge you—and this is what they’ve done with Bitcoins too, you know. You buy Bitcoins—well, who ever heard of taxing money? You change your quarters for dollars, or dollars for dimes, they don’t tax you, but if you change your dollars for gold, they tax the transaction. Or they want to when you trade your gold back for dollars. The same with Bitcoin, they want to treat it as property, in the same manner, so they have all of the apparatus of the tax structure to use in their benefit. But when they get really desperate, the more they crack down, the more heavy handed they become, the more severe the restrictions are, the penalties, the greater the police state grows to investigate your every financial transaction, then, you know that we’re kind of in the end days, because they grow very, very desperate when they’re losing their grip on power.
JASON HARTMAN: That is true. We see police departments around the country arming themselves with insane military tools. Like, who are they fighting? We’ve got sheriff departments with tanks. Why do they need tanks?
CHARLES GOYETTE: In my county where I live, Maricopa County, Arizona, Phoenix, world’s toughest sheriff, Sheriff Joe Arpaio—
JASON HARTMAN: Yeah, I know, I live there too, I didn’t know you lived there—
CHARLES GOYETTE: He used a tank to serve a warrant on somebody for cockfighting.
JASON HARTMAN: This is insane.
CHARLES GOYETTE: He used a tank!
JASON HARTMAN: I mean, this is insane.
CHARLES GOYETTE: It’s insanity!
JASON HARTMAN: Yeah, it is. It really is. So. America the police state, here we are. It’s the—we gotta do another show on that, Charles.
CHARLES GOYETTE: Anytime.
Closing comments
JASON HARTMAN: Hey, but it’s always good to have you back, my friend. Give out any websites you want people to know about, tell them where they can find you, talking with Ron Paul.
CHARLES GOYETTE: Sure. By all means, the Ron Paul podcast is worth downloading and listening to. It’s become enormously popular. We’re really proud of it. And it covers the topics in depth that you’re interested in. Not only Dr. Paul on every issue, but also interesting people with unique insights and experiences. It’s available at podcastone.com. It’s called Ron Paul and Charles Goyette: The Weekly Podcast. Ron Paul and Charles Goyette: The Weekly Podcast. It’s available at the podcast site podcastone.com, or on my webpage at CharlesGoyette.com, and that’s about it!
JASON HARTMAN: Charles, I bet that show is going to continue to grow in popularity. And I tell you something that is so amazing, is, much as the mainstream media tried to push Ron Paul out and not cover him—you know, malign him—the people spoke, and you can’t deny the man’s popularity. It is truly incredible. Even—
CHARLES GOYETTE: It is really something.
JASON HARTMAN: —without the pulls of the mainstream establishment.
CHARLES GOYETTE: It is really something that I, having worked with him, I’m still amazed, where I’m driving to work, or having a recording session, I’m driving him back to the airport, some guy pulls up in a car alongside of us, practically going berserk rolling down his window, taking cell phone cameras, because he just happened in traffic to see Ron sitting in the passenger side of my car, and he’s waving, and thumbs up—I’m one of your supporters! And stuff. And we see this everywhere. And it’s just—especially among young people, college age and older. It’s really amazing.
JASON HARTMAN: Yeah. Well, Charles Goyette, keep getting the word out there, and letting people know about this very, very important stuff.
CHARLES GOYETTE: Sounds good. I thank you Jason, so much.
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