Doug Wead has served along side some of the greats in modern American politics. Doug has been close with and written books about several “First Families.” Doug’s work has been praised by everyone from Ladybird Johnson (wife of LBJ) to former Congressman and Presidential Candidate Ron Paul, whom he served as a senior adviser in the 2012 Republican Presidential Primary.
Doug was an adviser for both Ronald Reagan and George H.W. Bush. Wead also worked with George W. Bush for years leading up to his Presidency. Wead has authored more than thirty books, which are known for their primary sources. He has interviewed six presidents and first ladies, nineteen of the president’s children and twelve presidential siblings.
During the 2008 Presidential Debates, then Congressman, Dr. Ron Paul impressed Doug Wead with his non-interventionist foreign policy platform and caused him to deviate from the “old right wing” which he had served and written about dutifully for decades. As a senior adviser to Dr. Paul during the 2012 campaign for President, he was regularly featured on CNN, MSNBC and Fox News where he defended Paul’s foreign policy and monetary policy, among others.
Since the end of the 2012 election cycle, Doug Wead and Ronnie Paul Jr., eldest son of Dr. Paul, have teamed up to form The Liberty Networking Project. They are dedicated to providing those in the self-dubbed “Liberty Movement” with an opportunity to profit from the unprecedented level of net-based enthusiasm and connectedness generated during the 2008 and 2012 grassroots Presidential campaigns of Congressman Paul.
Female Voice: 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 then 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 twenty years and currently owns properties in eleven states and seventeen 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 this is episode number 315. I’ve got our investment counselor, Sarah here. You’ve heard her on this show before and we just got back from our Memphis distress property tour and creating wealth boot camp there. We did last weekend. Sarah, how are you?
Sarah: Good. Thanks for having me.
Jason Hartman: Well, my pleasure. And boy, today’s going to be an interesting show. Doug Wead is our guest today, when we get to him in a few minutes. He’s a presidential historian; philanthropist; public speaker, a really interesting guy. He worked as a special assistant to U.S. President George H.W. Bush, and he’s an author of more than thirty books. So, he’s got a lot to say about economics and the political environment, how it influences economics and — and history and it will just be an interesting guest today. So, stay tuned for that. We’ll be back with Doug in a few minutes here, but first I wanted to just debrief on a couple of things. Number one, the tour, number two, talk about that old malady that affects myself a lot. I have this malady and I — I am trying to overcome it and recover from it.
I get once in a while, acutely sometimes, and it’s costly to me, and that malady is called the paralysis of analysis. And — so, I want to hope our listeners overcome that one, if at all possible.
But first, let’s kind of talk about the tour and just get your impressions. Sarah.
Sarah: Yeah, it was a great tour, and a lot of familiar faces, one of our repeat clients —
Jason Hartman: We love our repeat guests.
Sarah: — they’re so fun. You know we had a great night on the town, Saturday night. Got to see some good old Memphis culture, had a great dinner. Of course we had a boot camp Saturday, all day which was great.
Jason Hartman: And the big surprise was, we went to one of your favorite restaurants which is Benihena’s, and that was a — that was a great dinner, you know very entertaining. I’m always afraid those chiefs will drop the knife as they’re twirling it around in the air and — and then when we got there we heard that there was actually another Benihena’s right around the corner that burnt down. So, I know — those Szechwan grills where there’s a lot of flames and knives and food being tossed around. It’s maybe a little bit risky, I don’t know but we feared okay. It was a great dinner.
Sarah: It let’s you live on the edge.
Jason Hartman: Well, you’re not very risky yet. You don’t take too many risks when it comes to your investments. I think all of us as at the company are pretty conservative about things, at least money wise. Conservative good but you’ve got to make sure you don’t become so conservative that you miss opportunities.
Here’s an example. I was kind of thinking about this paralysis of analysis thing and you now I see it in my life how over — over the past years it’s — it’s cost me so much money. And the listeners may know that one book that I really like is by Michael Masterson, that’s a pen name, it’s not his real name, but it’s called Ready, Fire, Aim and I’ve mentioned it before on the show and I — I think it’s a really good concept. And there’s some really interesting things in that book that talks about how people that follow kind a traditional path in life and how they usually get left behind, where people that just kind of just jump in and — and do things and make stuff happen, more happens for them. And you know if you look at it from an investment standpoint, when you look at income property as the investment, of course I talk a lot about the concept of inflation induced debt destruction, and how inflation destroys the value of our savings, our stocks, our bonds and our equity in real estate actually is attacked by inflation as well because it’s denominated in dollars, but when — when you look at what’s going on right now — I mean it’s a great example Sarah, because we all pretty much agree that property in all of our markets is appreciating in price, and as it appreciates that represents an urgency issue, a reason that people really need to treat their investments with some degree of urgency because of the lost opportunity and the fact that they will just have to pay more later. That’s the likelihood and no one could predict the future with certainty, but the likelihood is they will have to pay more, later.
And as such, it’s not just that, if they have money in the bank or in stock accounts or bond funds or any of that stuff, it’s being attacked by inflation. So, let’s take an example here. Let’s say that an investor has, and depending on where you are in life, you can add a zero or remove a zero, I’ll just use a number to give you an example, but say you have a million dollars in liquid tradable assets, whether that be the bank, stocks, bonds, mutual funds, whatever, anything that’s relatively liquid. So you’ve got a million dollars and most of us would agree that the inflation right now is about ten percent annually and as such, if it’s ten percent annually, then let’s just round it off for round number’s sake. A million dollars loses one hundred thousand dollars annually to inflation that that money has debased and you’re losing one hundred thousand dollars a year, okay. And that’s about eight thousand dollars per month.
Now, let’s combine that with the fact that the property prices are increasing and the numbers are all over the board, but just to use round numbers and it may not be this high in the market you’re looking at it may be higher, it just depends and this might be sustained, but I’m just giving an example. Understand it that the numbers can change but the math and the concept is the same. So, let’s say that the property is increasing in price by ten percent annually. Well, even — even if you make a mistake and jump into a not so good property, and say the property — you buy ten properties for that one million dollars, well say that the overall debt service on those ten properties is one thousand dollars a month, for example, well that means that you would lose ten thousand dollars per month but when you combine the inflation rate causing the prices to increase and the value of the money that is in your stocks, bonds, mutual funds or bank account to decrease, it’s a double hit.
You’re basically losing twenty percent annually or about — what is that about sixteen thousand dollars per month in — in the fact that you missed the op — you have the opportunity cost of the money that is being attacked by inflation and the opportunity cost of the property that you didn’t buy, versus a terrible mistake where you buy ten properties and they’re all vacant. I mean that’s like a worse case scenario.
So as such, I mean it really makes sense — sometimes there is real wisdom in action, and that’s my point of saying that. Your thoughts Sarah?
Sarah: Yeah, I know I never knew — I definitely agree. I mean there’s — there’s definitely a cost to waiting and some investors have a — a target number, you know for example I have to get fifteen percent cash-on-cash, but if it takes you a year to find that property, I mean the — you could have gone with something at twelve prevent cash-on-cash investments as well.
Jason Hartman: Yeah, absolutely. And — and — and the — the — the — the scary thing is, at — at the point — and look at, I’ve been doing this a long time, longer than I want to admit. But the scary thing is, that — that the inflection point we’re in now with this government spending starting to create significant inflation with a fake recovery, and I agree with some people that this is a fake recovery. Some people think it’s a real recovery, I don’t. I think it’s an inflation induced recovery, and that — we are in an inflection point right now, in my opinion, and as such it only gets worse. I mean look folks, the RV ratios have been declining for two years. The cap rates have been declining for two years. The cash-on-cash return has been declining for two years. The overall ROI, return on investment, has been declining for two years, now. It — it was better two years ago.
Don’t you love these promoters that say, oh there’s never been a better time to invest in real estate? Sure there was, two years ago was better but the likelihood is it’s only going to get worse and — you know, Jim Rohn, one of my favorite speakers — the late Jim Rohn, and business philosophers is he says something about discipline and it really applies the same way because when we’re investing, we’ve got to discipline ourselves to be willing to take a risk and as we’re doing this, Jim Rohn’s statement applies. He says that the pain of discipline weighs ounces and the pain of regret weighs tons. And I — I really fear that a lot of people that don’t act now, are going to have serious regrets.
And you know, I was saying this two years ago. I was much less confident about it myself, but now I — I — I think it’s pretty clear what’s going on. So, the Michael Masterson book, if you have — if you suffer from the malady of paralysis of analysis, I would recommend you read Ready, Fire, Aim by Michael Masterson. I’d love to get him on the show because I really did enjoy that book. And another thing is, way back on podcast number 43, I shared one of my favorite poems by Aug Mandino, and it’s called Seeds of Success in the book Mission Success, which is an out-of-print, fantastic book. If you can grab a copy on Amizon.com and read it, it’s very short. It’s very good. It’s just an excellent book. You’ll love it.
But one of the things he — he took — he says in the poem, and I’ll just read a couple of passages, he says I will live as all good actors do when they’re on stage only in the moment. I cannot perform at my best today by regretting my previous acts, mistakes, or worrying about the scene to come. I will embrace today’s difficult task, take off my coat and make dust in the world. I will remember that the busier I am, the less harm I am apt to suffer, the tastier will be my food, the sweeter my sleep and the better satisfied I will be with my place in the world.
And folks, at some point — this is not an exact science, it’s a bit of an art. You got to just jump in and do it and that’s the message for today. It’s not the message of our guest. We’re going to talk about something completely different when we get to our guest, but I just wanted to say that to people because you are losing money every single day. You’re losing in three ways. You’re losing the return on investment of the property’s performance. You’re losing because the money that you have that is sitting on the sidelines, even if it’s in stocks or bonds — I say that’s the sidelines, certainly in the bank, is being debased and attacked by inflation. It’s diminishing in value and the property prices are increasing. So you’re getting a triple whammy whereas if you invest, even if it doesn’t go well, you’re probably going to do better than that.
Sarah: Let’s – let’s just real quickly Jason, on — on equity, because you know I get emails from people stating or asking for properties with instant equity and you know we’ve talked about this before and I think you know now is a good time to — to you know take advantage of that. However, we believe that the property is worth you know what you pay for it.
Jason Hartman: Yeah, right.
Sarah: So you know, instant equity – what are — what are your thoughts?
Jason Hartman: We — we don’t look at — there’s — there’s a lot of — that’s a great question, Sarah. There’s a lot of promoters out there who are promoting properties that are below marketed, that have instant equity. We don’t do that, even though I have no doubt that many of our properties do really have instant equity. We have many cases where properties have appraised — and not that the appraise is right because the appraisers come in low, they come in high, they’re all over the board, but I’m just mentioning it, that if appraised for more than our clients are buying it, that’s pretty rare because the appraiser knows what they’re buying it for. So they rarely go above that. Why take a risk and say it’s worth more? That’s just not prudent from the appraiser’s prospective.
But certainly we’ve have many times where the insurance company who’s insuring the property says it’s worth more than it is, where they’ll make the — the buyer insure it for a lot more than the purchase price. But we — we just won’t advertise that way. We won’t say that a property has instant equity. We just — we just won’t do it.
Sarah: I mean, and even if it does, that — it doesn’t mean that you’re going to get that equity right away. You know, there’s a cost to doing it cash out refinance. If you’re going to sell the property, there’s a cost to sell the property. So usually you have access to that equity, you know after a period of time and you don’t —
Jason Hartman: Yeah, yeah. It usually doesn’t work, but what I can certainly say is – is if, if you’re buying a property and it depends on the market because it does vary because construction cost varies from market to market, but if you’re buying the property below the cost of construction, which generally is seventy five dollars per square foot in you know most of our markets. It’s somewhere around there. It might be eighty five dollars a square foot, it might be seventy dollars a square foot, it might be sixty five, even. But if you’re buying the property below the cost of construction, then you have the sum built in upside for sure in my opinion, because you have what we call regression to replacement cost, and that’s not really the same as appreciation. We coin to that term, regression to replacement cost.
So, just when the property is — is able to sell for the cost of constructing it, that’s not the same thing as appreciation. Appreciation is a different element. So right there, I would say you have built in equity.
Sarah: Sure, sure. And — and I honestly think that cost — you know buying below the cost of construction is — is going away as we see new construction you know popping up at some of these markets.
Jason Hartman: That’s — that’s one of the things I didn’t mention. I said that the RV ratios are worse than they used to be. The overall return is worse, the cap rates are worse, the cash-on-cash is worse. Everything is less desirable than it was two years ago, okay. The deals are just — they just cannot be produced today like they were two years ago and the same is true of being able to buy below construction cost. That is fading quickly.
If you can do it, hey — and you don’t take action, I — I bet you’re going to have some serious regrets later. The world belongs to those who take action. It’s been said that life is not a spectator sport. You got to jump in, you got to do stuff or stuff doesn’t happen.
Hey, we’ve got to get to our guest, Sarah and I know we’ve both got to run to various conference calls here, but let’s talk about one property real quickly and then let’s — let’s get to our guest today.
Sarah: Good deal. I’ll give it to you right now. I know you have it in front of you as well. So this property is in the Austin market — Austin, Texas.
Jason Hartman: You mean awesome Texas?
Sarah: Awesome Texas yes.
Jason Hartman: I love that place, yeah.
Sarah: And it’s — it’s a beautiful little property. It’s got a great [inaudible] appeal. If you’re interested you know you can email me and we’ll send you the — the link to the performer that it’s got a great [inaudible] appeal, built in 2010. The purchase price is one fifty five thousand, estimated rent, fourteen seventy five a month. Now, the cost per square foot on this and we were just talking about that, ninety bucks a square foot. So you know, it’s still less than one hundred bucks a square foot —
Jason Hartman: Well, you’re in Austin. I mean, Austin is a premium market. It’s a creative class city. It’s like Denver, it’s expensive. You’re not going to achieve the — the kind of numbers in Austin that you would in say, in Memphis or St. Louis or Indianapolis or many of our other lower priced markets. But this is a market with serious appreciation potential. Aus — Austin is a very desirable city. No one will deny that.
And look at the positive cash flow here projected at almost twenty one hundred dollars annually and Sarah, let’s look at the overall return on investment here, thirty percent annually is the performer.
Sarah: Yep.
Jason Hartman: And it would take you about forty four thousand five hundred to buy this property and folks, I mean look like I always say, if it only goes half as well as expected and you make fifteen percent annually, are you going to be disappointed? I mean you know — that’s — that’s still great. It’s a lot better than what you’re going to get probably anywhere else.
Sarah: Yeah, and — and one thing to think about in this particular property is that it’s newer construction too [inaudible] and that wasn’t very long ago. So, you’re probably not going to have a lot in the way of maintenance on this property, which is one of the things I love about my Houston property that — that we bought brand new. I had like six hundred dollars in maintenance in six years. Now, I probably got a little lucky there but it’s a — it’s a nice passive investment. Not totally passive but you know it’s not very hands-on like some of the older construction deals we see sometimes.
Jason Hartman: Yeah, and — and I submit to everybody, there’s no such thing — such thing as a passive investment. Okay. You got to pay attention to everything you do with your money. That’s the bottom line. But some are more passive than others and we try to make it as passive as possible when you’re a direct investor and you retain control so you can’t get ripped off by a bunch of crooked CEOs, investment bankers, boards and directors and all the middle men on Wall Street that are taking their — their cut off the top.
Okay Sarah, thanks. Let’s wrap up and let’s get to our guest and we will be back with our guest in just less than sixty seconds.
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Jason Hartman: It’s my pleasure to welcome Doug Wead to the show. He’s a presidential historian, philanthropist, public speaker and he was special assistant to U.S. President George H.W. Bush and an author of more than thirty books, including New York Times best seller, All the President’s Children Triumph and Tragedy in the Lives of the First Families. Just a — a guy with a wealth of knowledge and involvement and very engaged in the liberty movement, and it’s a great pleasure to have him on the show. Doug, how are you today?
Doug Wead: I’m doing great, thank you Jason. Thank you for having me on your great show.
Jason Hartman: Well, the pleasure is all mine and I always like to give our listeners a sense of geography. Where are you located today?
Doug Wead: Ha, ha, ha, ha. I’m seated in my library in my home, outside Washington, D.C. in the Virginia fox country.
Jason Hartman: Fantastic. Well, good. Good stuff. Well, tell us a little bit about your background and all — all the stuff you’ve done. I mean, working with George H. W. Bush, and I — I think you were closely with Ron Paul and Rand Paul, as well? And just want to hear more.
Doug Wead: Well ha, ha, ha, I — I got involved in philanthropy and — and helping the hungry and trying to feed starving people, and launched a couple of programs, helped co-start the charity awards in Washington, D.C. and in the process, met a number of presidents, ended up writing a book for Ronald Reagan, his campaign biography. Nobody thought Reagan had much of a chance of — of winning the nomination back then, so no major New York publisher would take it, but a publisher across the —
Jason Hartman: That’s — that’s amazing looking back. Someone would think it would be tough for Reagan when he was one of the most — one of the most revered presidents in modern history, evidentially.
Doug Wead: Yeah, that — in 1979 my agent took it to all the major New York publishers and — and he got back to me and he — he said, they don’t think he’s going to survive the Iowa caucus. I said, what do you mean? I mean, you know George Bush was — Ambassador Bush then was contesting and eventually won the Iowa caucus. I said, I think he’s got a great organization there. They said, no, no, no, no, no. You don’t understand what we mean by survive. We don’t think he’s going to live for the Iowa caucus. He’s an old man.
So, when I wrote the book Jason, it was the only one available. He was President of the United States and there was no book available but mine. So by default, it — it sold real well and I got a start. But that’s how I began to meet these people through the work I was doing — the charities I started. I co-founded mercy core and they’ve now given away two billion dollars in food and medicine around the world and so through that, I met the Bushes after the Reagans and that’s how I got involved in public life.
Jason Hartman: Fantastic. And what have you noticed and learned over the years in doing that? I’m sure there are so many things, it’s like what a broad question. You know, how can — how can you even answer that easily, but you know just some of the major ah huhs in — in political life and — and public policy too? What we should be doing? Where’s we’re going? I want to dive into all this stuff today with you?
Doug Wead: Well my major ah huh was in watching Ron Paul, Dr. Ron Paul in the debates, when he was burning up the whole issue after 9/11 of why there was 9/11 in the first place and how America’s perceived around the world? And it isn’t very good. And I felt like I was the only person in the world that felt that way.
I told my wife in 1998 when a poll came out showing George W. Bush as the front runner for the presidential nomination. I said to my wife, if he wins the republican nomination, we will go to war with Iraq and we will kill Saddam Hussein and we will kill Saddam Hussein’s two sons. And I — because Saddam Hussein had tried to kill his father and ordered the assassination of his father in Kuwait at the — commemorate the celebration of the victory there. And I concluded — I don’t think that’s a good reason to go to war. I don’t want my nephew dying. I think it’s awful they tried to assassinate former President Bush, but I don’t want my nephew dying for war about that.
So, when I saw Dr. Paul challenge the war in his — in that debate, I spit the cheerios through my nose. I was watching it the morning after the retake, eating a bowl of cereal for breakfast, and I though who is this guy? Boy, he’s got guts. And until then I thought I was all alone in the world. So that was my ah huh moment.
Jason Hartman: So — so, you’re really referring to the blow back issue then, right?
Doug Wead: Yeah. I — I am but once — Dr. Paul is a great provocateur. He — he says these odd, weird things. Like once I heard him say, the federal reserve spends more money than the U.S. congress and I though, huh? What is he talking about? What is he mean? And when I finally figured it out, it drove me to Google, which is — that’s what Dr. Paul does, he drives you to Google. And then — and then you discover it for yourself that you have the pride of authorship and the pride of self-discovery and that’s why his followers are so fanatical. When I studied it myself I realized what he was talking about and I thought wow, this is pretty amazing. I — I know most of the members of congress and I followed their ups and downs politically, and their election with bated breath on election night and I don’t even know who the members of the federal reserve are, and they’re spending more money than the U.S. congress.
So, it was — the whole process has been an education for me.
Jason Hartman: Yeah well the federal reserve is, in my opinion, a — a scam, central banks in general. All they do is ultimately impoverish people. They do it slowly through inflation by basically just chipping away at their wealth. Sometimes they do it very quickly through inflation. It depends to which central bank you’re talking about, but it’s just crazy that Ron Paul couldn’t get an audit of the Fed. That’s — that’s just non-sensible in — in today’s world that something so big and so powerful can be just hidden from view, and we don’t know it’s real motivations. It’s obviously a private corporation. The Rothschilds are the wealthiest family on the planet by far. I mean when we look at the — you know, Bill Gates and Warren Buffet and Carlos Sims, those multi, multi billionaires, that’s nothing compared to the central banking cartel, is it?
Doug Wead: Well, it’s — it’s more than astonishing, it’s tragic. I mean George W. Bush went to kind of right the wrongs and complete some of the leftover business of his father. One of those was read my lips, no new taxes and then taxes were raised. And so for George W. it was very important that he reduce taxes and he was able to drive home the — this idea of the Bush tax cuts. We still talk about the Bush tax cuts and it’s so ironic and so tragic because the — the word Iraq we now knowledge somewhere around one point seven trillion dollars now and it keeps climbing.
It wiped out the wealth of the nation. He — so he didn’t raise taxes, but he took away the value of our homes. We — we — it was wiped out the net worth of — millions of Americans was lost. Their IRAs were ruined. We talk about the destruction of the middle class and now we’re beginning to understand how all this impacts the poor, how the poor are devastated by inflation and by these hidden taxes of monetary manipulation. But I also point out that a lot of the rich got wiped out. I mean there were a lot of people that were wealthy that had their retirement in place and real estate, all of that working for them, and they’re broke. They’re living off their kids and it was all wiped out. So, the wealth of the nation really was just wiped out.
Jason Hartman: Here’s the question though, first really. Maybe if we just back up from that a little bit, maybe the real thing to consider and I’m — and this is open to debate, is was the wealth really there in the first place? Was it — or was it just really a — a smoking mirror’s wealth? I — I’d like try — to try to make the distinction between what I call the real economy and the fake economy, which is the — the Wall Street economy and the — the financial services economy, which is just smoking mirrors.
So I — I — I always kind of question, how do you define wealth? The same amount of goods were in the world before and after the financial crisis. That didn’t change. There’s the same amount of gold, the same amount of oil, the same amount of real estate. It’s all there, it’s just what we — how we count it and how we value it. So, I — I — I don’t know. It’s just sort of an interesting thing to ponder. You know, maybe it’s a little too theoretical and esoteric, but — but you know I don’t know. It’s kind of — kind of interesting.
Doug Wead: Yeah. No, I think it’s — it’s very, very central. The wealth of course is what is in demand. That’s what wealth is and that’s why wealth has often been gold because it was in demand as an exchange and wood was in demand in the middle ages in Europe and especially in England, and so a man who stole from another person’s wood pile was hung. In the American west, a man who stole another person’s horse was hung.
Jason Hartman: Whatever’s most in demand, yeah.
Doug Wead: It’s what’s in demand that drives — and the British Empire became extremely wealthy because it used its colonial labor to extract God’s wealth from the soil, from the ground, lumber, timber, tea — tea and exchange it on the way. Those ships came from all over the world and brought that raw — those raw materials, that wealth to Great Britain and for a long period of time it was — for one hundred years anyway, it was economically dominant in the world because of what you just described, real wealth as opposed to the illusions of markets.
Jason Hartman: Yeah, yeah, absolutely. You know, I just — I — I — I wonder if America was really ever as prosperous as anybody thought it was? I think it’s definitely prosperous when you could look at real things, when you look at hard assets, but so much of it is just kind of fiction. I — I — I love it when — when people in the Wall Street world they talk about financial innovation. Every time I hear that Doug, it scares me because you know, another — God, all we need is another financial innovation, you know, and —
Doug Wead: Well, America — America’s wealthy because it has power and if you’re in the neighborhood and you’re the only person in the neighborhood with a gun and it’s a time of anarchy you have power and we have the gun. We — we may lose it, but right now we have the guns, so — and — and we account from what was it, forty three percent of the world’s military expenditures. We have fifty thousand jets. I think our nearest competitor is China with five thousand jets. It — it is a — a real scam of — of the pentagon contractors who are making a lot of money.
Jason Hartman: Yeah. Well isn’t it unfortunate though that as long as central banks and the military industrial complex is profiting off war, we’re just — we’re just unlikely to ever have peace, aren’t we?
Doug Wead: Yep. There’s a motive for it, isn’t there?
Jason Hartman: I remember a great book that I read a long time ago called the Greatest Management Principle in the World and it did say some of all of life pretty much in — in this statement he said, what gets rewarded, gets repeated and then that’s the problem with our — our social welfare systems and the problem with the — the peace problem in the military. I mean, what do you think of what’s going on geo-politically now days with Iraq and — and North Korea? Are — are — are “enemies” are — are they sort of almost produced by us potentially, or you know or are they real? I just got to almost question myself about that.
Doug Wead: You know I love history so I read a lot of history and life is too short. You — you can’t — you don’t have enough years to live to read all of history. So, it’s — it’s a — at times it can be a frustrating pur — pursuit, but it’s so shocking to see us repeat — if you go back to the Nuremberg Trials, Larry Jackson our prosecutor who was Jewish was a very talented attorney and prosecutor and supreme court justice and — so he goes back to argue at the Nuremberg Trials and he spends the whole day on the blood purge on June 30th when Hitler took out the terrorists. The — the SA, the — the — the fear that the military in Germany was a — this would be a — a second revolution and the SA would cease power from — from Hitler. And so Hitler put them down and actually fired the gun and killed one of the SA leaders and the rest were arrested, and approximately three hundred of them were killed. And it’s called the Night of the Long Knives and/or the Blood Purge, June 30th.
And so at the Nuremberg Trials, he brought this up to show that — that Hitler had — had violated his own constitution, his own laws to kill a person and the nation applauded it, and even many people around the world applauded it because he was putting down possible terrorists and another revolution, in Germany. And that’s what comes to mind when we are now – we have authorized our president, our — we — we haven’t authorized him, but — but —
Jason Hartman: But he’s — he’s taking the power. You’re going to mention the drone killings, right?
Doug Wead: Yeah, he’s taking the power to kill people. I mean, just a few years ago you had to have a judge’s signature before he could bug your phones, now he can kill you. It’s stunning. It is stunning.
Jason Hartman: It’s amazing how quickly the freedom and — and due process has — and it’s just evaporating, isn’t it?
Doug Wead: Yeah. And Larry Johnson’s [inaudible] the Nuremberg Trial. He spent a whole day saying, this was the slippery slope when — when – when — when Hitler, without a trial, executed someone and the whole country applauded it. This was the slippery slope and I think of that now, I think good Lord, where are we?
Jason Hartman: Right. Now, where do you think we’re going with all — well, before we get there, let — let me just ask you economically — I want to talk about an economic issue and — and maybe just share with you a little bit of an — an — an email that I — I sent to a — to a friend a couple of days ago. I had a couple of friends arguing over on an email thread, they’re always debating these economic issues. They’re pretty fun to watch it on — sometimes they get a little bit nasty with each other, but they’re good friends. They — they — they are very scared of debates and they posted the article from zero hedge about Obama saying that three million was all anybody needs to retire and two hundred five thousand dollars per year in nominal dollars.
It’s interesting that they pointed out nominal dollars. It’s very interesting they define that so specifically and — and really scary, not just interesting. But they’re going back and forth about how you know, America’s in decline and I’d rather live in China. I remember Jim Rodgers talking about how — I’ve had him on the show, talking about how China is more free and capitalistic than the United States now days. And you know honestly Doug, I — I really disagree with that. I think the U.S. is headed in many wrong directions, but when people look at the math and say, oh my gosh, we’ve got sixteen trillion dollars in debt. We’ve got sixty to you know one hundred twenty trillion or maybe even more in unfounded entitlements and future expenditures that we can never possibly pay for in — in real dollars. So the likelihood is we’re going to inflate our way out of the mess as has been done, and I hate to say this, successfully, historically so many times.
Doug Wead: Yeah, and recently. And recently.
Jason Hartman: And recently. Yeah, it seems to be a good business plan ultimately, and I want you to comment on that recently thing, but let me just tell you what I said. It’s a really quick thing. It says, it seems illogical but math doesn’t matter much when you have the world’s reserve currency, the largest economy and the most powerful military to keep it that way. Massive natural resources, exceptional geography, the international language and the two hundred thirty plus year “brand” that is synonymous, with freedom, innovation, stability and opportunity for seven billion people.
Yes, America is in decline but it’s going to take a very, very long time to dislodge those valuable assets. Am I being too optimistic? You were chuckling at me.
Doug Wead: I just think that’s just a brilliant synopsis.
Jason Hartman: Yeah.
Doug Wead: And it’s our problem. But — but — but yeah, I think you summed it up really well. I mean, I — I look at — I mean we torture people and we just applaud it and we think it’s just great. We go to movies and cheer it. Now, if there’s scary music and the people torturing in them are n black shirts and they’re Nazis, we are just outraged and we wonder how would people put up with that?
Jason Hartman: How — how could they be so cruel, you know?
Doug Wead: But — but we just love it when it’s us torturing them. We got good reason. Well now you know how the German’s felt.
Jason Hartman: We — we claim to have the moral high ground.
Doug Wead: Yeah, but boy you summed it up well when you described the brand which is endured and — and the currency and it’s — you’re right. That — that seems like it would take time. The only thing is some things can happen very quickly when the economy is in trouble. You look at the last depression, not this one but the one before, and that saw the rise of communism, the rise of fascism. The world was — it was a cataclysmic time. That’s what a great depression can do and we’re going through a de — great depression now, so my hope is that we’ll have — have cataclysmic events that will take us back to — to authentic constitutional government. So, I’m hoping that maybe — maybe the dramatic can happen.
Jason Hartman: Is there any chance to get back? I mean, how would — how would that work? I mean, how would it happen? I — I think it would happen with strong succession movements probably, but what are your thoughts? How would we go back?
Doug Wead: Well, I think we — in — in a sense we are going to start going back. What we have to keep in mind is — it — it — it’s not the federal reserve as — as — as much as it’s human nature and we — we can add systems and change the systems and end corruption in one place. It will just pop up somewhere else. So, we’re not going to change human nature, and there will always be people who will take the trillions and let everybody else starve. You’re — you’re going to have that. You’re going to have capital cronyism where the market place and people in that are cheated, but at least we can make a move. We can force them to close down this part of corruption and open it up somewhere else.
I think that’s happening. I mean, when you’ve got eighty percent of the country now favoring an audit of the federal reserve, you watch, it won’t be long until Obama and — and all the republican nominees are going to call for it and Biden and it won’t be a real audit, but it — it — it is —
Jason Hartman: It’ll be the window dressing version of it, right?
Doug Wead: That’s right.
Jason Hartman: Yeah. At least it’s something, yeah.
Doug Wead: So, we’re seeing some — we’re seeing some movement now. You look at the way they treated Rand Paul compared to the way they treat their dad and it lets you know two things are going on. One, the country has moved pretty dramatically. Dr. Paul was able to move it in that last election and there are more people sympathetic to these ideals of liberty. That’s one thing, and the second thing is, some of the pundits who went out on a limb attacking Dr. Ron Paul are pulling their punches with Rand Paul because the fact that it’s Rand, it’s giving them a chance to revisit these principles and change their mind, and they’re doing it.
I’m — I’m talking about people like Bill Crystal and others who are publicly saying more respectful things of Rand than they did of his dad. It’s kind of like they’re able to save face and yet adjust some of their views.
Jason Hartman: So why are they being — so you — what you’re — what you’re saying is, they’re being kinder to Rand than they were to Ron, right? Am I interpreting that correctly?
Doug Wead: Yes. And I think part of it is because they sense the public has changed. I don’t think it’s all rederic, but they sense the public has changed and they sense they can do this. For example, Dr. Paul would talk about the end of foreign aid and why we need you know — and really great language. He — Dr. Paul’s definition of foreign aid as you know is taking money from poor people in rich countries and giving it to rich people in poor countries. [Inaudible].
Jason Hartman: That’s a great definition too.
Doug Wead: Yeah.
Jason Hartman: You know, the — the U.N. oil for food scam, I mean just — it’s scam after scam after scam and all it does it – it just stays at the top in — in these — in these developing countries. I mean it’s so unfair.
Doug Wead: And even Israel as — as you know, comes back to the United States to — the — the lobby in the United States —
Jason Hartman: Right.
Doug Wead: — lobbies for aid Israel are the people who make the money, when Israel turns around and takes that money and buys stuff from companies in the United States. So it’s — it’s — it’s — corporate welfare. It’s oink, oink, give me some of the taxpayer’s money and yet it’s — it’s scammed as foreign aid.
Well, Rand treated it very differently. He went — went to Israel and said, here’s one of our traditional allies. Here’s a country whose instincts are the same as ours. We don’t even have a formal treaty, yet we can count on Israel to stand up for the things we wouldn’t believe in, in the Middle East, and yes I’m against foreign aid. I think we should — these countries should be weaned off of our foreign aid. We’re broke and we need to quit borrowing money from China and giving it to Pakistan, but I would start with our enemies. I would start by ending foreign aid with our enemies. Israel’s the last one I’d stop the foreign aid to. Well, that — he’s still saying the same thing Dr. Paul’s saying which is let’s end foreign aid, even the foreign aid to Israel. But the way he put it, is far more politically powered able in the United States and understood in the United States. And so, some of the people that opposed his father, find themselves now comfortably promoting Rand Paul because they see this is where the country’s headed.
Jason Hartman: We’ll be back in just a minute.
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Jason Hartman: Everybody likes to write Ron Paul off, well not everybody of course, but so many people do in the — the lame stream media. I love that phrase. And say look, you can’t be so iso — isolation as in — in the modern interconnective world. I agree. I mean I take kind of a middle ground on that. I think we’re way too interventionist. I think we’ve got way too many military bases around the world, but don’t you agree though that I — I mean, Ron — Ron Paul’s ideas were maybe just a little too far to the isolation’s prospective.
Doug Wead: I — I personally don’t think so. I agree with Dr. Paul on just about everything. I guess that — I think —
Jason Hartman: Well tell — tell me why, though, because you know I haven’t had a chance to ask him.
Doug Wead: Well, one thing I think that his views were not accurately explained and he — he’s a very kind person and he’s a teacher more than he is —
Jason Hartman: I agree, and he’s so consistent too.
Doug Wead: Yeah.
Jason Hartman: He’s so honorable compared to you know, everybody else.
Doug Wead: For example, he didn’t want to end the federal reserve and if you go on YouTube, that question over and over you’ll find him saying every time he’s — he’s interviewed, no I don’t want to end the federal reserve. I — I want to phase it out, phase out its influence, and I want it transparent and audit as a first step. And he goes in — he — so, it’s a little bit different than is portrayed by the media than even some of the old liberty movement beliefs. So, I mean I disagreed with him for example, on the whole issue of — of drugs and argued with him a little bit about it, but I — I — I’ve come down on the — on the same side with him on that issue. I mean you — you stop and think.
I — I was reading Anne Bloom’s book on gulag, her Pulitzer Prize wining book on the gulags and she characterizes everything that happens. It’s a wonderful book, but she gets to the great terror when Stallion had so many people and — and the gulags in prison that he — he — the econ — economy couldn’t sustain it so he had to kill them off, so they started working them to death. So here are these people in Siberia and all these concentration camps sprung out all over the Soviet Union. He’s going to kill them all because there’s too many of them. How many did he have in the gulags?
Well, the — the best estimate is at that point, one million Soviet citizens were in prison including children, and many children were born into the gulags.
Jason Hartman: And — and — and — and the question — the question asked, and you may not know this but how — what was the population of the Soviet Union way back then? You know, it was much lower — well, I don’t know. You know that country is —
Doug Wead: It was about two hundred fifty million. That’s what it was then. So today, our population in prison as you may know is one point five million people. We have more people behind bars than they had during the great terror and by far the vast majority of them are prisoners over marijuana.
Now, I’ve never smoked or — or — I’ve — I’ve never tasted marijuana, inhaled or — or otherwise, and so I’m not just a big marijuana — wanting to promote marijuana, but I — I think this is ridiculous to — to incarcerate so many of our people. So, I’ve tended to agree with him on a lot of things. I — I think violent criminals ought to be pulled off the street and white collar criminals ought to pay for their crimes and have their wages garnished and — and productive. I think we ought to — our — our system ought to gear more towards the victims of crime and less than this warehousing of bodies.
Jason Hartman: Yeah, I couldn’t agree more. So, with the drug issue should we just treat that as a social problem the way the Europeans do and stop criminalizing all of it? It’s just ridiculous the amount of money we’re spending on that, but what scares me with the — with the prison system is, so much of it has become private. Now we’ve got these incentives again and we’ve got these iron triangles forming just like the public employee unions of California, you know. It’s another bunch of interest and there’s a prison lobby and they’re looking out for their own interests. How can they get more customers, which means more prisoners.
Doug Wead: Yeah Jason, it’s the point you made earlier, but what — the quote you used, what gets rewarded, gets repeated.
Jason Hartman: Yeah, yeah. It does, it does. But what do we do about it, that’s the question?
Doug Wead: Well, exposing it is the start and I — I guess I’m so new to the liberty movement, I have a little more hope than some of the old timers do. Some are pretty cynical about it and some almost kind of want us to lose. I think they want martyrdom. I’m — I’m finding, there’s a lot of change in the liberty movement. There’s a lot of things you can’t do — they don’t want you to do. It’s a pretty tight culture, but I’m enjoying it and learning so much and feel rather ashamed of myself for coming to it so late.
Jason Hartman: Uh huh, yeah, yeah. Well, it’s good that you’re involved and that you’re helping getting — get these ideas out there Doug, but anything you’d like to — to say in closing, just to kind of wrap up, Doug?
Doug Wead: No, but I loved your earlier synopsis. I hope you’ve got that captured.
Jason Hartman: I do, I do. I’ll email it to you.
Doug Wead: That’s really good stuff. That — that sums it up.
Jason Hartman: I — I — I just – I just think, as negative as I am about things and — and on the way they’re working, overall I think the demise of America has been vastly overstated. I think it’s going to take a long, long, long, time before — before we see the big collapse that everybody keeps talking about.
Doug Wead: Well that may be true but — but what — what I’m afraid of is, we may have had a collapse of freedom. The country may endure it. My — my wife is French and she was asking me the other day, she — she was saying now — now George W. Bush is a conservative republican? I said, yeah that’s what they say. She says now — now, when I was in France, Franz Von Rigeron ran for president. He wanted to nationalize the banks and we called him a socialist. There was no shame in that. He was elected. He was the socialist president of France and my dad was on the board of the bank and so it was hotly debated, but we did nationalize the banks in the country, and we backed away from it after a few years, but that was a big debate and — and it was the socialist government of France.
But your President, George W. Bush, he nationalizes the banks and you call him a conservative republican. I don’t get it.
Jason Hartman: Right, right.
Doug Wead: Well — I had to say to my wife, well I don’t get it either.
Jason Hartman: Yeah, it’s — it’s — it’s hard to explain that one but then also, they all make the argument that they didn’t really nationalize the banks by bailing them out —
Doug Wead: Yeah.
Jason Hartman: — of course. But that’s a whole other discussion my friend, yeah. But I agree — I think — I think a collapse of freedom is very much there. They — they have so many laws. John Di Stasio did an interesting show on this. You probably — you probably caught that I bet, and it was about how what I’ve been saying for many years, there are — there are so many laws that we’re all violating laws all the time now days.
My mother, growing up I remember she used to say to me, ignorance of the law is no excuse.
Doug Wead: Yeah.
Jason Hartman: But — but you can’t possibly know all the laws now days, especially if you’re in business. It is so immensely complex. I mean —
Doug Wead: Yep.
Jason Hartman: — you – you — they just — they always — in other words, the government always has something on us now days.
Doug Wead: And it’s meant to be that way, right?
Jason Hartman: Yeah.
Doug Wead: It’s kind of like, click here. I have read this and I agree.
Jason Hartman: Nobody reads it, of course.
Doug Wead: Yeah, and that’s what’s happened to our laws. You’re right and everybody’s vulnerable. And — and in business, it’s the same way. You sign the contract, you accept the P&P, the procedures and policies of the company and they are designed to immediately make you vulnerable and at their mercy.
Jason Hartman: Yeah, yeah. Hey, just since you mentioned that one more thing. I hope you’ve got a minute to talk about this, but I am — I watched a — a documentary last year called hot coffee and it was about this Stella issue, the McDonalds lady who spilt the coffee on her lap and — and — and it’s just amazing how malign that whole story was. I finally heard the other side of it, but the — the upshot — one of the big takes I got from it, and what I’m really thinking a lot now — about now days is how these large companies, in their contracts, they force us into these arbitration clauses. And these — these arbitrations are basically kangaroo courts for the big customers — their repeat customers, these companies, and the consumer just doesn’t have any rights, no due process anymore.
And you know, we all say oh there’s too much litigation and it’s just clogging up the courts, frivolous law suite. I know, everybody knows that — that — that is true. But my gosh, it’s like the consumer has really — when I think of Scalia on the supreme court was the deciding judge — justice on that, I could be wrong on that by the way, but I — I think it was, it’s like the consumer’s just lost their freedom. They lost their rights, and then you know you add to that the fact that we’re going to have drones flying around spying on us — that’s the legal system, it’s not the government directly, but it does matter.
Doug Wead: It matters. The — the meat tainted and on and on you can go on and on and on. And we’ve got tumors and cancers popping up all over and no real competition among the — the watch dogs that check our produce and food, and some of the most basic things now are under attack. It’s — it’s interesting — interesting times and my feeling is, people in the Ron Paul movement were — kept referring to a revolution.
I believed — I felt it was a counter-revolution. I believe the revolution happened under my friend, George W. Bush and Barrack Obama. I think we’ve had a change of government and a — a counter-revolution to go back to the U.S. constitution, is what we need now. I — I — I think that we’ve — we’ve already — we’ve left behind the U.S. constitution. It’s — it’s treated like camp — youth camp rules and you’ve got to be in bed at 10:00 o’clock, wink, wink. So wink, wink —
Jason Hartman: And — and — and selective enforcement of those rules is so the government always has something on you. But what’s interesting, you talk about the tainted meat and the pharmaceutical industry and stuff, it’s — it’s just unbelievable that all these people that work for these various government agencies — it’s particularly common on Wall Street. I mean, what a bunch of criminals that whole enterprise is.
You go and investigate a company and it’s basically a way to apply for a job.
Doug Wead: It’s a revolving door.
Jason Hartman: Yep, because these regulators, they get hired away by the private — the big giant corporations, and they know that if they bust them, if they’re on their case too much, they’re not going to get a job offer. I mean it’s just — it’s total conflict of interest.
Doug Wead: Yep, it is. It is. It’s a revolving door.
Jason Hartman: Well, keep up the good work, my friend, and keep —
Doug Wead: You too, Jason.
Jason Hartman: — keep saying the things you do and thanks so much for joining us. Any websites you want to give out, or — or any of your books that you want to recommend, tell people where they can get them? Anything like that?
Doug Wead: Well, just DougWead.com. D-o-u-g-W-e-a-d.com.
Jason Hartman: Excellent. Well Doug Wead, thanks so much for joining us today.
Doug Wead: Thank you, Jason. It was great.
Female Voice: 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 to be specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Empowered Investor, LLC., exclusively. (Top image: Flickr | DonkeyHotey)
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