Andrew Gause, currency expert and author of The Ravages, warns that the U.S. economy’s $5 trillion in debt—backed by trust funds like Social Security ($3T in bonds)—and the Fed’s manipulation of electronic money supply could trigger hyperinflation or collapse within months, risking sovereignty to institutions like the IMF. He dismisses debt-based assets (bonds, paper currency) and urges gold/silver coins, food storage, and a production-focused economy, citing 1970s inflation where gold surged 1,000%. Meanwhile, Art Bell’s chaotic callers debate Clinton’s scandals, Dole’s Iowa polling, and fringe theories like the "mark of the beast" currency, while Bell pivots to Bigfoot and election-year distractions. Gause’s dire predictions clash with Bell’s speculative tangents, underscoring a fractured view of America’s financial future. [Automatically generated summary]
I guess he'll say currency as he is historian, but he is prepared to speak about the economy and the new money and that kind of stuff.
And so we're going to get to all of that in a moment.
His name is Andrew Gauz, and I think you're going to enjoy him very much.
There have been so many currency questions lately that I felt it was time that we had somebody who would know what they're talking about on the air.
And we'll go investigating in many areas, and I'll outline a few of those in a moment.
So let me take care of some business.
This will be sort of a freelance night.
We'll guest for a while, then we'll open lines for a while, that kind of thing.
So get ready, folks, for Here It Comes.
Currency historian Andrew Gause is a nationally recognized authority on the U.S. monetary system.
Oh, you're going to like this.
A member of the Industry Council for Tangible Assets and Life member of the American Numismatic Association, that's collectible coins.
Mr. Gause has been an invited guest on more than 450 radio and TV programs where he has spoken on a wide range of financial and political issues.
A regular guest on Washington, D.C.'s blank show, BQ View.
I've never heard of that one.
And recently featured on PBS-TV's Tony Brown Journal, Mr. Gawes strives to alert listeners about how, throughout our nation's history, America's monetary policy has been shaped and controlled not by elected officials, but by private vested interests.
Mr. Gauss was recently invited to speak to a gathering of state and federal officials in Ogden, Utah, where he addressed the problem of our national debt.
Oh, we'll talk about that.
Outlined a program of monetary reform based on a return to constitutional public treasury system.
Many of his lectures are now available on audio tape, including the definition of money, the Bill of Rights, the Federal Reserve, and on and on and on.
A lot of things you're going to want to talk about.
The truth about money, megaflation 2000, the ravages of inflation, denominating your wealth.
Well, basically what's going on, Art, is we don't have a closed sum game.
And the reason for the run-up in gold and the reason for the run-up in the stock market is all this fresh money that came into the market as a result of Treasury Secretary Rubin's shenanigans by taking the money from the civil service trust funds and converting it into instant money in one.
Well, they're talking to the wrong guy, see, because as the Secretary of the Treasury, his actions were proper and prudent.
In other words, he acted to save the Treasury of the United States.
But as the trustee of the government employees trust fund, to my mind, he breached his fiduciary responsibility as a trustee of that fund.
He allowed the fund to be effectively looted.
You know, he took an IOU from a deadbeat, effectively.
If, in fact, the nation is on the brink of default and his action was taken simply to avoid default, then wasn't he breaching his fiduciary responsibility as the trustee of the trust fund?
What most people don't realize is that the majority of the money in this nation is not in the form of cash or in the form of demand deposits at the bank, but it's in the form of long-term Treasury obligations that have anywhere from an 18-month to a 30-year maturity.
Well, that's right, because what has happened is over the years, the government of the United States has convinced we the people through various maneuvers to establish different trust funds.
Now, there's some 170 different trust funds that we've established as we the people for various things, from fixing our roads to building new airports to our Medicaid trust fund and our social security trust funds and our government employees' retirement funds.
You have almost $3 trillion of hard-earned money.
I'm not talking about pie-in-the-sky money because each week when you see those deductions come out of your paycheck, that's current money that you just earned.
And it's remitted right into a big bucket, effectively, because it's not segregated into the trust funds.
What happens is the government takes all the money that comes into the trust funds every day and they replace it with IOUs, Treasury bonds.
So $3 trillion of the national debt is owed to trust funds that are earmarked for various things.
Now, if you look, for example, at the Highway Trust Fund, first of all, the condition of our roads is deplorable, but there's $160 billion sitting in the Highway Trust Fund.
Why can't we fix our roads?
Because it's $160 billion in IOUs, in Treasury bonds.
And until they mature, the money is just not there.
So although that's where those people that tell you that this whole national debt is a mirage, that's where they get it from.
Well, it has been suggested there are people out of the fringe who say, look, why don't we mint a $5 or $6 trillion coin, and that will cancel the debt?
But, you know, I'm reading in between the lines with the Fed here, and they've actually made the following statement that we're not as concerned with the paper money supply as we are with the electronic money supply.
And I can understand that because the paper money supply, like I said, it's only $500 billion.
But the electronic money supply, that's almost $5 trillion.
So as long as we leave them with the power to electronically create money, I think they probably wouldn't squeal too loud if we take the notes back.
All right, while we're on that subject, I recall an interesting statement by John Major in England.
And he said we are in extremely dangerous economic times that literally trillions or a trillion dollars or more could change hands electronically across the world, flashing across the world overnight.
Well, this increase in the debt ceiling, okay, if it would have just been proposed straight and clean, an increase in the debt ceiling to $5.5 trillion, I think that would have been enough to set the world on its ear.
They would have just raised their eyebrow at that.
So by going through these machinations, we're able to wind up in that location with a debt ceiling increase of $1.5 trillion, and no one is any more concerned.
As a matter of fact, most people are breathing a sigh of relief that we're going to come to an agreement.
What the Congress is saying to the people, what the people should understand, is that the Congress is saying we want to raise the debt ceiling to $5.5 trillion.
Then we're going to print half a trillion dollars worth of bonds.
And then the Federal Reserve, if necessary, will create $1.5 trillion in order to buy those bonds.
So, see, there's no shortage of money.
There's no crowding out effect.
There's actually an increase in the supply of money.
And proportionately, you know, one man in 100 can't figure it out.
They can't diagnose what's going on.
By increasing the money supply 10%, you're going to decrease the value of the dollar by 10 trillion.
If you had to make a wild guess, and they always do come in and save it and manipulate, where will the smoke and mirrors and capability to manipulate any longer simply, under the best of circumstances, no longer be possible?
There was tremendous arm twisting to buy that issue of bonds.
Yes, I would agree with that.
I see.
I will say that the announcers on the financial news channels were amazed at the quantity of the debt that is being brought to market.
Never before in the history of this Republic has this quantity of debt been brought to the market.
And it's going to affect one or two things.
Either A, the federal government will crowd out all the private borrowers, thereby driving interest rates up, which in an election year is not going to happen.
Or B, the more likely scenario is they will simply create whatever supply of money is necessary to pay all this impending debt, and it will seem like there's no problem because, Art, you know, all that freshly created money has got to go somewhere.
It'll go into the stock market.
It'll go into gold.
It'll go into real estate.
And it'll lead to a general euphoria.
I mean, you can track this back in history from the founding of the Federal Reserve.
I hate to think of the implications of a roaring summer economy, a roaring economy into the election, a roaring Dow, you know, jobs everywhere, plenty of money everywhere, plenty of money that you can borrow, low interest rates.
But the Federal Reserve and the current administration or the Federal Reserve and the administration that they choose work hand in hand with each other.
The Fed cooperates with the President if they want to get him reelected.
And in this case, Alan Greenspan's coming up for renomination next month.
And the recent interest rate drop should show the fire being lit in the stock market.
And the real estate market's starting to stir.
Unemployment is down.
You're going to see a roaring, booming economy.
The problem is that the person who already has amassed a pile of dollars and plans on getting through the next five years without losing purchasing power had really better wake up, especially if those dollars are stored in fixed return investments like bonds.
Well, there are many profound arguments about this, and I'm not necessarily a detractor of the Feds.
In other words, constitutionally, only Congress should be minting money and controlling the supply of money.
But when you consider the alternative to the Fed, in other words, I'm kind of a supporter of the Fed, and that gets me in a lot of trouble.
In the sense that if we were to go back to our constitutional way of doing things, putting the money supply, interest rate adjustment, all the rest of that the Fed now does into the hands of the people who are doing the unrestrained spending would just simply hasten the end date as far as I'm concerned.
Actually, what it would do is it would force prudence on them because they would see the Fed enables the Congress to spend our children's money and our grandchildren's money.
If Congress did not have the ability to issue bonds, but only had the ability to issue notes, then the notes that it issued would cause the inflation that would get Congress thrown out instantly.
And I suppose it is, in a way, if people began to think it was going to occur, then she'd all come down around our ears right now.
We're going to talk about that with Andrew Gauze in just a moment.
All the way to the East Coast and Andrew Gauze and.
Andrew, suppose this is just a what if.
I know that we've got a debt ceiling hike coming up, or we face default.
Now, I think both you and I agree that they're not crazy enough, or maybe smart enough, I don't know which would be the right way to think about it, to allow default to occur.
There are some who would argue you might as well let it crash and burn and rise from the ashes like the Phoenix and come up with a real system.
However, they won't do that.
I'm sure we agree on that.
They'll do what they are going to call the responsible thing.
See, the one thing that those people who say let it crash and burn don't realize they think we're operating in a vacuum.
We're going to let it crash and burn and then we maintain the jurisdiction over the problem.
But the fact of the matter is that if the federal government defaults on its treasury obligations, it will be hauled before the international court in The Hague and foreclosed upon.
What would occur is the taxing authority would pass from the Congress to the bailing out institution.
Now, I suspect the bailer would be the International Monetary Fund or perhaps the World Bank.
But the way that the bailout would occur, for example, is a third party would create world currency units or North American currency units, and they would offer an exchange of these things dollar for dollar.
So if you had a dollar on deposit in the banking system, they would exchange it for one of these world trade units, and then your new power of taxation would pass to this new organization, similar to the Mexican bailout.
If you look at the Mexican bailout, what did the Mexicans have to do?
They had to funnel all of their oil dollars through the New York Federal Reserve Bank in order to get that bailout.
So we would be forced to do the same thing.
We'd be forced to funnel all of our tax revenues, say, through the World Bank or through the International Bank of Settlement or something on that order.
There are people out there who firmly believe that this nation is hell-bent towards a one-world government.
And if you believe that, then you should pay particular attention to what would happen in the event of a default, because that would play right into that scenario.
Certainly, one of the things you need to have a one-world government is one-world currency and elimination of trade borders.
It wouldn't rise up as a free republic with its own monetary autonomy.
You know, forget that, because we would be, in the court of international law, we would be a debtor nation with a judgment against us, and the creditors could move to enforce those actions up to and including UN sanctions.
You know, all these people who have mutual funds, who seem to think that it's, you know, you can get in and out very easily, have never tried to get out during a falling market.
Everyone in a mutual fund would immediately see their asset value evaporate.
If they could get a sell order through, they'd be lucky to come away with half of their money.
So effectively, you'll be able to wipe out a big pile of existing monetary values and spread it out wide.
Because although it's 100 or 1 mutual funds, they represent the capital of a million or two investors.
So you catch them all in one big net, so to speak.
It would be something like, you know, 4 o'clock in the morning, the break would have already been felt in Tokyo.
You know, at Citibank in New York, they would know that the break is happening.
The rest of America's asleep.
You'd wake up 9 o'clock in the morning, and the financial markets would be in chaos.
The long bond would have tanked two, three, maybe four points overnight.
Gold would have shot up in multiples of its trading range.
Well, you would see trading limits because remember, we don't trade gold anymore.
The physical possession gold market would shut down instantly because the futures market, the derivatives market, would have reached its limit for the day and would have stopped trading.
So the official price of gold will be bogus.
And no one who holds physical possession gold will sell at those levels.
So what you'll have is the derivatives market relating to gold will collapse, much as the 10 market did.
And then the physical possession market that exists after that, and goodness knows, you have three and a half times the total supply of gold on the planet today is being risked right now in the derivatives market.
So that if every trade were settled in the derivatives market, it would take three and a half times all the gold that is already above the ground.
options are that can you explain it Yeah, I'll try to.
A derivative is something that derives its value not from the item itself, but from the right to trade that item.
So that if I said to you, Art, I'm going to give you the right to buy 100 ounces of gold from me in November for $425, even if I don't have the 100 ounces of gold, even if you have no intention of buying it, we can gamble on the price of gold.
It's not having physical possession of the item, but rather having a contract that derives its value from the ability to buy that item.
So derivatives can be bought on bonds, on stocks, on gold, on commodities of all kinds.
And that's, you're right, what got Orange County in trouble because the treasurer of Orange County figured that interest rates were going to go down, and he bet a bunch of money.
He bought the option or the right or the obligation to buy a certain number of bonds at a certain date in the future.
And when that date got there, the bonds were worth far less than what he was paying.
That's how he lost all that money.
So derivatives market in gold means that if the average person today wants to buy gold, he calls up his Merrill Lynch stockbroker, whoever he does business with in stocks and says, I want to buy gold.
And the guy says, well, you can buy the gold fund or the gold stock or the gold options.
And if you found a better professional gambler, he might have been more savvy than the treasurer there, who I understand was playing well beyond his depths.
The Federal Reserve Bank's Open Market Committee encourages the use of derivatives because they use them to shelter or to hide their financial maneuvers.
In other words, if the Federal Reserve Bank of New York decides that interest rates need to go down, and in order to make them go down, they should buy bonds, thereby driving down the price.
They are driving up the price, driving down the yield.
They sell or buy derivatives of bonds.
They don't want to have to actually load up on bonds.
They want to be able to sell options or contracts and affect the market.
And the same is true with gold.
So I really believe that this entire market developed, this derivatives market, as a way to allow the big boys to manipulate the markets so that the average guy cannot figure out what's going on.
If you have a sharp rise in the price of gold, everyone panics.
But if through the sale of derivatives, you're able, here's the example.
Let's assume everybody tomorrow panics and starts rushing out to buy gold.
Normally, the price of gold would skyrocket.
But if the Federal Reserve Open Market Committee can sell contracts on gold, thereby filling the demand, filling the supply, and causing the price to stay stable or at least not rise so quick, then they have the whole time that that derivative or that option runs to unwind their position.
And instead of the price of gold shooting up $100 overnight, it goes up $100 over three months, and nobody figures out what's going on.
Not only will it be worth money, but as the economy gets in trouble, it'll be really worth a lot more money or a lot more trading power or whatever is left of an economic system when the paper money ceases to be of great value.
And in a system where there's financial chaos everywhere and people are losing their shirts to stocks and bonds and other paper-type investments, tangibles shine.
And the person who has those tangibles will be able to swoop in and take advantage of bargains.
I mean, I remember in 1980, entire houses trading hands for $2,000 in silver quarters or for a couple of $20 gold pieces.
These are the types of trades that you'll be able to take advantage of if you've properly positioned yourself.
Now, if you're like everybody else in stocks and bonds, you'll be trying to get out with what's left of your skin.
So take a portion of your wealth and move it over to what the Constitution says is money, and that's gold or silver coins.
I publish some booklets, Art.
You know, I'll give them away to any of your listeners who use your name.
Educate yourself, find out what's going on out there, and then take action to protect yourself.
It's just that it's going to be distracting because it's going to be going on in the background all the time.
And I'm not prepared to let you go.
So we've got new $100 bills.
Now, ostensibly, our government is telling us that they are printing these bills to foil the counterfeiters.
And in fact, in the Bakaw Valley, in Lebanon, it's my understanding that Iran and others are quickly printing up counterfeit U.S. dollars with what I heard were actual plates they got hold of somehow.
Representative Jim McCollum revealed that to the people of the United States.
I found it shocking.
Not only did they sell him the press, but they sent technicians over there to align it and calibrate it.
And then, of course, he fell out of power.
The Aytolo Komani came in, and the press fell into the wrong hands.
And then, of course, the East Germans got the plates down there.
And so now, in the Becca Valley in Lebanon, is a printing press that prints currency that the feds refer to as supernotes because they cannot tell them apart from the authentic thing.
So when the Federal Reserve Bank can't tell them apart, how on earth are you and I supposed to?
You have Republic National Bank shipping over billions of dollars in planes out of New York in $100 bills to Russia, where I understand there's over $220 billion in $100 bills circulating there alone.
And then you have the other capitals of Europe being flooded with this counterfeit money from the Becca Valley.
So you have so much in the way of $100 bills circulating in Europe that I think that, well, they understand what's going to happen a lot better than we do.
I think they're going to one day, very soon, outlaw or demonetize the old $100 bill in favor of this new one available.
And in doing so, they'll be able to capture like $300 billion in money without ever firing a shot.
And if we are willing to not demonetize the old ones, but merely to trade them for the new ones, then aren't we, in effect, legalizing that counterfeiting operation?
If they're going to be the only ones producing the money.
And we're up against a lot of deadlines, so I've got a couple of quick announcements I've got to make.
The 1996 cruise to Scandinavia and Russia that we're going to take is coming up on deadline.
It seems impossible to me.
Impossible.
But we are actually going to stop it at 200, and we're at 150.
So we can take 50 more people, and then we're going to stop it.
After that, in other words, let me put it this way to you.
We don't want an unmanageable crowd, and it's going to be a premier cruise on the Holland America Lines Pride, the MSS Mazdom, which has cabins that make other cruise ships' cabins look like closets.
This is luxury, oh, like you've never seen.
We're going to Finland, Sweden, Norway, Denmark, St. Petersburg, and Russia.
I'm going on up to Moscow.
You can trail along there if you want.
See West Berlin.
We'll be in London.
And all in the luxury of this incredible ship.
And I don't have time to go through all of it with you, but I can tell you this.
The deadline to book is February 15th.
If you book before February 15th, you get a copy of my book free, The Art of Talk, which I will autograph for you on the ship.
I'm a person who has studied the monetary history of the United States right back to the founding of the Republic and even before when we were issuing continental currency and the Coinage Act was being decided upon and the location of the mint was being decided upon.
I would like to take, obviously we have generated many questions.
I want to give you this.
I've got a lot of faxes coming in for you, too.
Dear Art, let me give you a piece of damn good advice.
I believe that precious metals have their place in an investment portfolio.
But before expendable income is invested in that manner, I believe it's definitely more important to have a one-to-two-year food supply, other usable assets.
Yes.
Should this nation eventually suffer a drastic economic downturn, the people will at least have food to feed their families.
You know, you should keep a well-stocked pantry and figure that, you know, if you have kids and you know that they're not doing it, figure that you better do it for them.
Because, you know, what happens in these tough economic times is that the offspring tend to come running right back home.
And if you think you have enough for you and the wife put away, whether you add a hungry son and a wife or daughter-in-law and a couple of kids, you know, it'll be gone quick.
The brother of the perpetrator of that incident said, you know, my brother didn't have a job, has a child, was down and out.
What do you expect?
And I just, it blew me away.
It's like you should expect that when people get down and out, lose their job or come on hard times, they're going to take a high-powered rifle and they're going to start killing a bunch of people.
And unfortunately, in this day and age, I am becoming starting to believe that that is what we should expect.
And if we ever, I mean, what if we had something the size of the Great Depression on us?
It would be survival of the fittest, and that's all the more reason not to have to venture out of your house to get a loaf of bread or milk or a method or currency of exchange.
You'd be better off to take these steps in advance, stockpile a little something away, a little tangible asset, a little food to feed your family, emergency water store.
I have a tape that I put out, How to Survive the Coming Times, and a Call to Arms.
Both of them delve right into that subject because that's something that we need to take responsibility for.
This era of instant gratification art, where whatever your needs are, they can be filled instantly.
That's not the American way.
You really got to remember the story of the ant and the grasshopper.
See, what happened to silver is the photographic industry, which used to use, was the biggest number one user of silver, has taken to this electronic imaging now.
This has really cut into the industrial use of silver.
So silver was beaten down to like $3.70 per ounce, and it's now risen back to $5.70 an ounce based on monetary needs.
I would suggest that silver, with its traditional 15, 16 to 1 ratio for gold, is far, far and away a better investment in terms of potential.
Now, I would say if the choice is whether to buy silver or gold, you're not going to make a bad choice.
But I think when it's all said and done, percentage-wise, silver will have outperformed gold.
A quick rise in interest rates, not driven by the Fed.
In other words, the long bond taking a dramatic beating in terms of price and a dramatic rise in terms of yield.
When you see the long bond all of a sudden shoot up in a dramatic fashion, having tested its bottom and bounced off, that's your indicator that interest rates have stopped going down and will start going up.
And you can look for these signs, but you're on a steady upward course, my friend.
Gold and silver coins and metals and commodities, every single tangible that I can think of is just starting to march straight up.
And the momentum is there.
The psychology is there.
I would just look for that slow, steady price increase.
And when you see gold break 450, you don't need any more confirmation than that.
Well, it proves to me that it's not a healthy market.
If, in fact, the stock market was rising at these rates and the bond market interest rates were falling for legitimate reasons, then gold would be beaten down to its all-time low.
Because that fuel in the stock market and the fuel in the bond market is not the result of a healthy economy, but rather the result of excess government funding, where the Treasury Secretary is taking money that's not supposed to be circulating.
It's supposed to be sitting aside in a pension fund, and he is circulating it to pay the debt.
That's what's causing this recent rise.
You look at the increases in the supply of real money, it's been remarkable.
And that's what really fuels inflation.
Remember, that's all inflation is, is an increase in the supply of money.
Like, for example, if the farmer wants to plant corn, and at the end of the year, he doesn't know what corn is going to be worth, so he wants the ability to sell his corn before he grows it, and that's the proper use of a derivative.
unidentified
Well, there's no you can't yeah, I know I understand why a physical hedger uses the forward market, and that's why the futures market was first implemented as a risk management tool, especially for the for the physical uh for the physical owner or the lawing of the product.
All right, Color, my understanding of the the runway aspect of the derivatives derivatives is kind of like um a football game where you bet uh for example that Joe Montana, were he still there, would throw um a 90-yard pass in the second half.
You make that bet.
And derivatives, when they're based on solid things, as Mr. Gauss said, are one thing.
But would you agree that they've moved off into the almost gambling area?
unidentified
Well, the innovation of financial instruments is not.
I mean, you could make arguments that they've been created especially in the last four or five years.
So major investment banks can rack up huge, huge brokerage credits and whatnot.
My question is that I have been aware of predictions of economic collapse for a long period of time, including people who are advocating purchasing gold as a hedge against it.
And I'm thinking back in particular to the early 80s and a fellow called Howard Roof, who I used to pay some attention to.
It seems to me they've just kept on rolling over the debt and making it bigger and bigger.
What is to say that they cannot continue to do that?
What is to say we will not continue to be amazed by the way in which the debt grows and continues to maintain itself, let's say?
Yeah, it's the annual interest payment that's going to tell the whole story.
You know, when you get to where you're spending 60% or 70% of your total income in interest payments, that's the real telling point.
So we've reached the point where taxes are about as high as they can go.
I mean, all I ever hear people talking about are tax cuts.
I know it's an election year, but if somebody started talking about raising taxes, I think they'd be shot.
The American people would really feel that they're taxed to their limit.
You couple that with the fact that every tax dollar west of the Mississippi is necessary right now just to pay the interest on the debt.
I don't see how they can continue to roll this over beyond that point.
When your entitlement spending, which is your welfare, and they're already talking about cutting welfare, Social Security, Medicare, when your entitlement spending and your interest payments make up 88 cents of every dollar that you take in, you know, what is there left to cut?
You reach that point where the combination of maturity dates on the debt, which remember we financed the entire Vietnam War on bonds.
No one sacrificed for that war, and those 30 years are just about up.
Like I said before, Ross Perot pointed it out that fully 80% of our total debt picture is coming due and payable like now, like between now and 1997.
So when you factor in all the smoke and mirrors and all the trust funds they can dip into and the manipulations and everything they can do, it's still going to come apart in that time span.
As Ruben, Secretary Rubin, Honorable Secretary Rubin pointed out, he's used every financial trick that he has.
He's taken all the money that he can take and he only has one or two options left.
So he, the Secretary of the Treasury, has admitted that under current circumstances, he cannot go past February 29th.
Now, you know, what else do they need to tell you, folks?
The Secretary of the Treasury tells you he's already spent every dime in the Treasury, taken every bond that he can take, taken every dollar in every trust fund and replaced it with a bond.
He's done everything he can do.
Now, we're either going to raise the debt ceiling, create more money, or we're going to default on our debt.
My bet is they're going to raise the debt ceiling, create the additional money.
Inflation is the answer.
I'm not one of those who sees a complete financial collapse, although there is that possibility.
What I see instead is a steady hyperinflation over the next seven years.
The studies show it would bring 100,000 jobs to that region.
You'd have miners making twice as much as the average monthly wage for the whole state.
You know, a real shot in the arm to the local economy.
And they've passed all the hurdles.
It's not even in the park.
It's like two miles outside of the park.
But just every pressure has been brought to bear.
When it was clear that there was no domestic pressure that could stop this mine from opening, then the Interior Secretary asked the United Nations, UNESCO, to declare this park a World Heritage Site, meaning we, the people, no longer have sovereignty over the Yosemite National Park.
I think it's a simple land grab and gold grab because whoever gets the lease and the right to pull that gold out of the ground is going to be rich beyond their wildest dreams.
Right now, it's almost like somebody stumbled across this gold, and everything is being done to just grab it.
Now, you look at countries like Italy and Belgium, and they're in far worse condition than we are, and yet they are maintaining themselves as countries.
And I think that needs to be commented on, that we could probably have a few more tricks pulled out of the bag for a few more years here.
Clearly, you're talking about that point when we can no longer meet the obligations on our interest payments, but I think that's a ways off, is it not?
Yeah, well, unless they ⁇ if they don't raise the debt ceiling, it's a couple weeks off.
If they raise the debt ceiling, yes, we can do that.
But one thing that everyone seems to miss is that one of the reasons that gives the dollar so much help is that it's a currency of choice for foreign nations.
You have foreign nationals would rather hold their wealth in $100 bills than in their local currency because of this difference in the inflationary rates.
Some rates in foreign countries, 20%, 30%, even 100% annual inflation makes more sense to hold dollars.
And so that gives strength to the dollar.
That gives demand to it.
Additionally, you have entire economies pricing their goods in dollars.
For example, oil.
Anyone in the world who wants to buy oil has to convert their own currency into dollars, again, creating demand.
What my fear is, is if the dollar gets weaker from its position where it is now, and nations of the world decide not to hold their reserves in dollars and send those dollars back to the United States, that that one action alone could counteract all of these measures that have been put into place by Secretary of the Treasury and the Chairman of the Fed.
unidentified
So we are considering a security currency out there right now with enough liquidity as an alternative.
And this is the scenario I would like you to address.
And my theory is that we are seeing increasingly irrelevant nation-states, and power is shifting to transnational corporations and the central banks.
And as they gain more power and calling more and more shots in the world, perhaps there is sort of an electronic currency waiting in the lurch for us.
Yeah, the electronic currency is probably the biggest danger to our sovereignty of everything.
Because if I mean, think about this.
In 1933, the problem that our bankers had then was that the bankers had a supply of gold that was X, and they had a supply of notes that was 2X.
So they had twice as many notes as they had gold.
What did they do?
They prevented you, the people, from trading your notes in for gold.
Now we fast forward to 1995.
I've already told you that the money supply in terms of paper money is less than $500 billion.
But the total money supply is $5 trillion.
So what does that mean?
Same thing, that if just 10% of the people went to the banks tomorrow and demanded their money in cash, there wouldn't be enough.
So the caller is essentially right.
The solution to this problem is to eliminate cash, to prevent the American people from using cash at all.
If they don't use cash, then all of the money stays closed within a system and can be monitored and controlled because a controlled inflation is easy to swallow.
You know, 5% a year, 6% a year, we can take that, and we don't complain.
Even though we lose, you know, 50% of our purchasing power every few years, we don't complain.
I would stay away from anything weaker than the dollar.
I mean, you don't want to be in the Italian lira or the British pound or the French franc, but certainly the Swiss franc or the German mark will probably fare better in the coming years.
I'll tell you, Andrew, I went to the Orient last year, Tokyo, Hong Kong, Bangkok, and what is going on in Japan with regard to the currency exchange situation with the U.S., it was 78 or 9 at the time, or 80, I can't remember.
And, you know, they meet in the Plaza Hotel in New York City, the G7, and they decide amongst themselves that they're going to allow the yen to fall to 107.
Wouldn't you have loved to have been a fly on that wall, Art?
Can you imagine the inside information that left that room?
And certainly, fortunes were made as and that's really my problem with this whole system.
If we would give this power back to Congress, they were going to change the value of the dollar.
They would have to do it on the floor of Congress.
They couldn't do it behind closed doors.
What the system that they have now, Art, enables them to point to the Federal Reserve Bank and say it's all their fault.
We don't have anything to do with it.
And we need to make them act responsible because that's what we intend them to be.
They can put a trade embargo on us to prevent us from exporting our products overseas.
Or if any products do get through, they can seize whatever monies are due.
So the actions that the U.N. can take regarding sanctions, especially now that this WTO thing has gone through and the NAPDAN GATT, you know, we are just another member state, and if we fall into a rough position, don't expect the same treatment that we gave.
You know, okay, well, don't worry about it, Germany.
We're going to forgive your $50 billion in debt, or don't worry about it, Israel.
You know, you don't owe us any more money.
We as the United States will not be treated with such kid gloves.
We will be treated with the respect that a deadbeat deserves.
We forgive debt left and right, $7 billion to Egypt, and the list is long indeed.
We do it for all kinds of reasons.
We're very free with money.
But I just know those other nations, if we ever got in trouble, well, yeah, they might come bail us out, but it wouldn't be with a smile and a forgiveness.
And you really have to consider where the United States has gone in the last 40 years.
You know, we've gone from being the biggest creditor nation and therefore the one less likely to be pushed around to the biggest debtor nation and now the one most likely to be pushed around.
When we come back from the break, I would like to ask you, of the Republican candidates out there right now, we've got Mr. Flaptax, we've got Mr. Let's Close It All Down and have Fortress America Buchanan, we've got Mr. Let's Make a Deal Dole, we've got Lamar Alexander, who looks straight but hasn't caught fire.
Of the candidates that are out there right now, Andrew, when we come back, I would like to talk about the one that you think would do us the most good.
And so think about that, if you would, through the top of the hour.
Actually, I would also like to ask you about the one most likely to be our next president, I'm sorry to say.
You know that guy.
That's right.
All surveys show not any of the Republicans would beat Bill Clinton.
So we'll be asking about four more years as well.
unidentified
The trip back in time continues with Art Bell hosting Coast to Coast AM.
More Somewhere in Time coming up.
Art Bell, Somewhere in Time.
Tonight featuring Coach Coasting from February 9th, 1996.
Not, he says, an economist, but a currency historian.
He's been on 450 radio and television shows talking about the kind of stuff we're talking about this morning.
Our economic situation, the possibility of a U.S. default, the economy in general, how one protects oneself.
And we're about to ask him about the presidential candidates.
So stand by to stand by for that.
I wonder who do you think he favors?
knowing uh... his economic philosophy which you've been listening to for a couple of hours it'd be interesting to see who he favors wanted back down to andrew gauze the The lines are jammed.
My fax machine is going nuts.
Everybody has questions.
Here's one of them.
Dear Art, I have a theory for your guest.
If the collapse of the American dollar should come, the true currency of the future would be weapons, drugs, information, and electronics.
The days of paupers ransoming their gold to the nobility of the kingdom will be lost forever.
And Steve, it figures as Steve, he says at the end, I don't remember any gold in Mad Max.
I don't see anything even resembling Mad Max, folks.
You know what I see, Art, you and me on a rocket chair porch 20 years from now talking about how we would work all day for $100 and our kids down on the ground laughing at it.
I have a problem with the notion of allowing multinational corporations to import products into this country tax-free and then taxing the wages and the lifeblood of the American people.
You spoke earlier about the commodity market and the options market.
What would be the worth in looking at that way?
And let's say the gold is $400 an ounce, and you say you have an approximate net worth of $400,000, that you went into the commodity market, the options market, say a year or a year and a half out and took a contract for 1,000 ounces of gold or the equivalent in silver.
I don't, I mean, the problem, again, the problem, my problem with the derivatives market is simply that it's an amplification of the problem.
So when the boom comes or when the bus comes, it's amplified by the derivatives market.
Now, for the average guy to buy contracts into the future, it's a risky proposition.
You might just as well lose all of your money as make any money.
So I prefer the physical possession market.
If you're going to buy gold, you buy it physical, you hold it in your hand, you store it yourself, you don't get any margin calls.
The worst that can happen is if the gold price doesn't rise, at least you're holding an asset.
If you buy an option to buy gold in the future and the price doesn't move, every bit of money that you put up in terms of premium is gone.
So while it could amplify your returns, it could certainly amplify your losses, and that's the main reason I don't like derivatives for the average investor.
Well, then the reverse of that, then let's say instead of that, that you take in a certain amount of money, say that you're willing to risk whether it's $10,000 or $20,000, whatever, and you go to your broker and put it in the coin, what do they call it, whether it's held by the banks in New York, the American Eagles, they're called, yes.
Yeah, and you can do that with, I understand, with gold coin one-ouse coins or with the silver coin, or for billion, I guess, too.
The Roaring 20s were named that because of all of the hot money that was created to finance World War I.
And as it filtered back into the economy throughout the 20s, it's a similar situation to what we're looking at now, although the reason was different.
It was a war.
The reason is different from the current reason, but the effect is the same.
He had a lot of money going into the stock market, pushing prices ever higher, pushing real estate prices ever higher.
And ultimately, that inflation was followed by a collapse, which we're all familiar with, the Great Depression.
So I think the caller is essentially right, and his timetable pretty much agrees with mine.
Within the next 12 months, there will be some drastic shifts in the monetary values in the United States.
And he's right.
The people that have money are the ones that will suffer the most.
The average wage earner and the debtor, he's probably going to make out the best because he's going to be repaying his loan with dollars that are worth less than the ones he borrowed.
Yes, uh your guest forgot to mention one thing about uh one world money, and that is there won't be a debit card or a credit card, but rather probably a chip which would be inserted on the right hand or under the skin of the right hand or forehead, and this will probably be the mark of the beast, which is prophesied in the Bible to come just before the Antichrist rules the world.
I can't argue with that, but I just say to people who are waiting, there's if you're waiting for somebody to come and say, put this chip under your hand before you take action, I think you're waiting a little too long.
I suggest that by the time that occurs, if that even occurs, we will have already moved into a cashless society, and most transactions will be conducted electronically.
This will be just sold as a method of convenience.
Yeah, that's your primary risk on Krugerans, Maple Leafs.
Your primary risk there, there's two.
One is IRS 6045B, which says basically, if you sell me Kruger Ants, I have to have your Social Security number, and I have to report it to the Treasury.
The other one would be the Trading with the Enemy Act of 1917, as amended in 1934, which simply says that any time the President can outlaw the private ownership of gold bullion.
In that case, Kruger ants, Maple Leafs, all of that falls under the auspices of Gold Bullion.
So, I mean, I would urge you to trade your Kruger ants for old circulated $20 gold pieces or even low-grade uncirculated $20 gold pieces.
The premium difference between the two.
In other words, a Kruger ant is worth about $4.25 right now, and a $20 gold piece in its worst circulated conditions is worth about $4.75.
For that little bit of difference, you might as well go with the insurance.
Don't you think that there's signs of foreclosure already with the Gabon and after the Mexican bailout and our government's great interest in our guns?
Now, I have a non-profit organization that I'm trying to get off the ground, and I was wondering if it was okay or legal for non-profit organizations to invest in gold and silver.
I could be wrong, but I just think that municipal bonds will suffer the same.
You know, unlike stocks, bonds are all tied together with one rope.
And the minute that the Treasury bond yield falls, that's it.
It's over.
All of the other municipal bonds, corporate bonds, everything goes right along with it.
Unlike the stock market where one stock can completely collapse and the others could still continue, if there is any break in the long bond, it will drag municipal bonds, corporate bonds, just all brands of commercial paper right down the tubes with it.
So I'm just not a municipal bond fan.
I think anyone who buys a municipal bond at this level has to really have their head examined.
You know, you're looking at 6% long rates.
30-year money is 6%.
What's inflation?
3 or 4%?
You know, what's your real gain there?
You're almost losing money to inflation.
So I would really think carefully before I tied up my money for 30 years at 6%.
And instead of doubling those mortgage payments, pick up some survival silver, gold, or silver coins that will protect you a lot better off than an extra mortgage payment.
If the U.S., in fact, defaulted on the debt, and if the international authorities tried to enforce sanctions against us, I have to wonder what role our military power would play.
Or would there be any such confrontation?
In other words, would we rebel at international action taken against us, do you suppose?
I'll tell you the one thing that does give me hope, though, is I see, and I'm not a member and I don't support or promote the militias.
They are your last line of defense.
I think if the people decided that the military was going to act against this and the president called out the militia, I think he could count on the people of the states to defend this country.
And the hot dogs on the right and the hot dogs on the left are running at each other like a big old freight train, and somebody's going to ignite this pretty soon.
And, you know, it's funny that the extremist militia guys are the ones that get all the press.
I know several militia leaders who are ex-military men, sober, sound thinking individuals that you would have no trouble dealing with on a one-to-one basis.
And if you found out that they were militia members, you'd be shocked.
But the people that seem to get all the press and all the publicity are those extremist fringe groups that can somehow discredit the entire movement by their thoughtless actions.
I want to ask a little bit more about what would happen if the United States defaulted on their debt.
Sure.
I have a friend that we argue about this all the time, and he says that if worse came to worse, the United States government would just tell all their creditors to go take a hike.
And what I'd like to know is what would actually happen if you allowed that as a possibility, what would be the next things that would happen?
Okay, well, the first thing that would happen is the Social Security Trust Fund would be broke because the number one item at Social Security Trust funds are Treasury bonds.
So if the government defaults on its debt, then Social Security collapses immediately, not five years or seven years from now, but tomorrow, the next day.
And then all the trust funds besides those.
So all the civil service employee pensions are gone.
All of the Federal Deposit Insurance Corporation insurance is gone.
All of the every trust fund, remember, 170 different ones with $3 trillion in bonds.
All of it, United States debt.
$3 trillion would be wiped out of the money supply.
And if the government defaulted on its debt, and this is a real technical point, if it defaulted on its debt, then technically that money is wiped out.
And if you wipe $3 trillion out of the national money supply, a depression will ensue that will just rock the foundations of this nation.
It's not going to be a clean ceiling hike, anything but I suspect the Republicans are going to at least it certainly looks like they're going to attach all kinds of conditions.
Because, first of all, I believe that they would defend their Treasury Secretary with all the lawyers that they have.
And secondly, I think that the implications of a default would be far worse than any personal repercussions to my freedom or my financial affairs with the action I've taken.
I would divest a trust fund against legal authority and take the money and pay the Social Security recipients.
If Howard would just pick up a real issue like Art Bill does, if he would pick up one real issue instead of wasting the time of his listeners, you're an obviously intelligent listener.
In other words, the guys who get to decide what they're going to sell an option for in November or December of 1999, they're operating with a full deck.
They know as much as anybody can.
And that's a real good indicator, man.
That's a good thing to point out.
unidentified
And also, I see another thing.
How come a year out from now that the, let's say, in the corn, soybeans, that sort of thing, real commodities, the cash price today is what those prices are now.
So that means for the future, those are the low prices.
You look at whatever you call an asset, and if it represents debt, get rid of it and get on the equity side of the journal, preferably a physical possession equity, you know, something that you hold in your hand.
Exactly, because that's how you really produce wealth.
You know, when you grow stuff out of the ground, you are producing real wealth.
When you exchange paper dollars for produce, you are not producing anything.
So that's what we really need to get to in this country is a production-based economy and a tax on consumption and free production.
If we will just take those steps and remonetize our Federal Reserve system with United States notes, we could have this Republic back on a steady course within five years.
unidentified
Have you heard this rumor that one more half that Ruben has available to him is selling our gold reserves?
Well, yes, technically, except that the gold reserves of the nation are pledged against the Federal Reserve issue.
So that's when he can't sell the gold reserve, and I assure you that'll be the last thing he does because it's pledged against our Federal Reserve note issue.
So that technically doesn't even belong to the United States.
It belongs to the privately owned Federal Reserve Bank.
The largest gold supply on the planet is buried beneath the sub-treasury building, the former sub-treasury building, which is now the Federal Reserve Bank of New York.
And that's a privately owned bank.
And in their vaults lies the biggest store of gold on the planet.
So, you know, the golden rule pops its head up again.
There is gold in Fort Knox, but it's pledged against the Monetary Reserve, so it doesn't belong to the United States.
The only thing we have is a strategic gold reserve.
And believe me, compared to our Federal Reserve note issue, it's minuscule.
I like credit unions only because it's honest banking.
Commercial banks create money out of thin air, so they have an advantage over credit unions.
I would suggest if you have money in a credit union, understand that it's tied to your neighbor's 30-year mortgage.
If you don't mind having money in there for 30 years, it's a great place to put it.
But if you're looking for a short-term out, you might get caught in a squeeze if a bunch of depositors start requesting their money back from a credit union, and the credit union has it all loaned out in 30-year bonds or 30-year bonds.
unidentified
Right.
So what are you saying?
That for a small, very small person I own my own home.
By the end of his second term, we'll have double-digit interest rates, double-digit inflation, skyrocketing commodity prices, a Republican president and a Democratic House.
Well, they make money when they sell you the spread.
And he admitted that.
He was frankly honest.
And I say the same thing.
If you buy a coin that is a very low-grade coin in terms of collectibility, it's very close to the actual price of gold.
Very little amount of difference.
There is a small margin there when you buy perhaps even a circulated coin, but yet a collectible coin, you've got one ounce of solid, real 24-carat, honest God gold.
What happened basically is that the savings and loan institutions were deregulated so that they could begin to themselves invest money in risky ventures.
Here are some excerpts from an AP story I saw the other day, Art.
Bob Kerry, oh, I know Bob Kerry, a Democratic senator from Nebraska, was quoted in the January issue of Esquire magazine as saying, Clinton's an unusually good liar, unusually good.
Do you realize that?
Kerry said Tuesday he apologized to Clinton in December after learning the quote was made public.
It was an unfortunate remark that once it's in print, it looks a lot worse than it actually is, Kerry said.
But does he think the president is a liar?
I don't really want to comment further, Kerry replied.
If I was Colin Powell, I wouldn't be courted by anybody just yet.
I'd say, I'm sitting back here for about a month or two.
We'll let a few of the Iowas and New Hampshire's go by, and then we'll decide who to talk to.
unidentified
Well, you're sort of onto something there.
You've got to remember, though, around here, if you get the number one ranking, it's really the kiss of death.
It is.
I mean, who was that last guy in Lui?
And then the guy before him.
And the only reason that Dole is so big in the polls, and I think the latest poll is slightly artificially inflated, is because Dole is from the farming communities down there in Kansas.
And our governor is big on farming.
He's a farmer himself, and so is Senator Grassley.
And it just that farming mentality of the past 60 years.
I have to agree with Mr. Radio Free America that Bill Clinton's bodies are digging themselves out of the ground as we speak, and they're going to close in on it.
He was elected with 43% of the popular vote, and that was before the damage that he did with NASDAQ, GATT, the Brady Bill, all these dead Americans coming back from overseas and all these various countries where we had no idea.
Somebody from the county of Los Angeles, Department of the Coroner.
This is actually from the Department of the Coroner, Coroner's Office in L.A.
It says, Art, no way does that, it's on, you know, it's on stationery here.
Art, no way does that guy hold his breath for four and a half minutes.
If he did, he'd no longer be here with us.
Lieutenant Mike.
Oh, right on, Mike.
In my view, he'd be there with you.
Four and a half minutes.
You know, I mean, if he wonders why his life is getting strange and he holds his breath for four and a half minutes, Mike, you and I are on the same page here.
That's actually from the coroner's office in L.A. Cool.
Not a lot of Buchanan supporters think so, but I'm a pragmatic kind of guy, and I think that Buchanan actually would be a great vice president for Dole.
unidentified
Yeah, me too.
I mean, I really missed Colin Powell.
When we lost him, I felt such the leadership that we really needed in this country, or someone that could direct that anyway.
Beverly Bassett Schaefer, the former Arkansas Securities Commissioner, approved a proposed stock sale designed to keep Madison guaranteed savings loan afloat.
Republican critics have suggested that Hillary Clinton, then the First Lady of Arkansas as well, as an attorney for Madison, used undue influence.
And then it goes on to say, important, and if we blank expletive this up, we're done.
I'd say that someone's trying to strong-arm Ms. Bassett into lying for the First Lady.
It is my belief that marijuana is probably less harmful than alcohol.
That marijuana, when it is included with the other drugs that really are a problem, cocaine, heroin, PCP, designer drugs, all the rest of those, LSD.
That we damage our own credibility when we tell our youth that it's in the same class with those other drugs because that's just a lie.
And so we actually damage our own drug war because, you know, some little tyke takes a couple of hits off a joint of marijuana and says to himself, damn, I'm still alive.
My brains aren't fried.
I seem to be okay.
They lied to me.
Well, that makes it a whole lot easier for that little guy to suppose then that he's been lied to about other drugs, including cocaine.
Trouble is first time he puts a bunch of that up his nose, all of a sudden it's too late.
Well, sometimes power problems happen all on their own.
unidentified
Yeah, that's true.
Okay, also, since everybody's asking you questions here, if we all found out Hail Bob was going to hit the earth and we all had one hour to live, what would you do in your last hour?
It was one where we blew up one of them, and then we blew up two of them, and then the very end of it was where there were zillions of them coming down.
Let it be whatever it is, and let it go wherever it's going to go.
And I am thankful to the man up there, all of you, that it has gone, you know, that it's gone nuts the way it has.
I try not to think a lot about it.
I try not to let it affect me.
And I'm going to just keep doing that.
So we'll see.
I mean, who knows where these things are destined to end up?
The only thing I know for sure is not on TV.
Somebody sent me a fact a little while ago and said, you know, Art, when you do your book signing, you're going to have to let the TV station in that sent you the whale story.
And that one really went to work on my conscience.