Art Bell

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Dec. 18, 2008 - Art Bell

02:36:47

Coast to Coast AM with Art Bell - Economy and Financial Fraud - Gerald Celente - Catherine Fitts

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43:47

catherine austin fitts

01:18:39

gerald celente

23:58

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art bell ▲ ● ▼		From the high desert and the great American Southwest, I bid you all good evening, good morning, good afternoon, whatever the case may be, in whatever time zone you reside in.
		Hey O D. My name is Art Bell, and this is Coast to Coast AM.
		We are up for a slight change this evening.
		Now, they were having a little difficulty with updating the website, but originally we had Brennan Cook and Barbara Macbeth from the ghost, well, the GIS people actually, and they just couldn't make it.
		Several technical reasons for that, but we'll have them on again soon.
		That'll be rescheduled, so worry not.
		In the meantime, what I've been wanting to do for a long time now is a program on the economy.
		The main thing that happened, other than the election of a new president, president-elect, while I was gone all this time, was our economy is well into meltdown right now.
		And as I mentioned on the last program, I really want to do a show on the economy.
		And so, actually, I was going to have Uncle Warren on tonight, but he couldn't make it.
		So, we're going to have a couple of guests.
		Gerald Salente in the first hour will be here to talk about his forecast for the economy, which is not good at all.
		Catherine Austin Fitz in the following hours.
		She also does not have a good forecast.
		We'll try and figure out how all this happened.
		But I ran across a very, very interesting article at boston.com.
		This article is by H.D.S. Greenway.
		It's short.
		I want to read it if I can for you.
		It was done at the very beginning of all this, publicly anyway, September 23rd.
		There was more than a little deja vu in the dead, tired appearances of Treasury Secretary Henry Paulson and Ben Bernanke of the Federal Reserve, the desperate late-night meetings, the dramatic scenes in the New York boardrooms as the assets drain began to gurgle on Wall Street.
		It is said to be the worst financial crisis since 1929, and no one today can say whether anything will work or whether another Great Depression is about to descend.
		But I'm thinking of a financial crisis 101 years ago, the panic of 1907, as it was called, in late October.
		Why is it, by the way, that all these things happen right around the same time of the year, September, October.
		In late October of that year, the greatest banker of his day, and perhaps any day, J.P. Morgan, 70 years old, but at the height of his power, returned early from a meeting of Episcopalians in Virginia to gather the Titans of Wall Street together in the red room of his very famous library.
		He was suffering from a very bad cold, but he got through the following days and nights on heavy doses of Havana cigars.
		Around him, markets were crumbling.
		Venerable companies were going into receivership.
		Banks were about to go under his banks, saw crowds of people lined up to get their money out before the entire edifice collapsed.
		President Theodore Roosevelt's Secretary of the Treasury, George Cordill, went up to New York by train, but he was to play a minor role compared to Morgan's.
		Morgan rallied the great moneyman of the day, John D. Rockefeller, when asked if he would put his securities in the pot, said yes, and I have hordes of them, gentlemen, hordes of them.
		Over the following days, excited and desperate men would burst in on Morgan with reports of leaking assets that needed ever more money to save them from sinking.
		When Morgan rode down to Wall Street, there goes the old man, they said, there goes the big chief.
		There were times when Morgan banged his fist down the table and even locked the door, locked the door on them rather than let those money men go home before he got what he wanted finally.
		At a quarter to five on a November morning, Morgan presented the assembled bankers a document telling them what they were going to throw into the kitty to restore confidence.
		According to the artist recording all at that meeting, Morgan's black eyes were like confronting the headlights of an express train bearing down on you.
		The bankers meekly signed and the crisis was over.
		Of course, the amounts then, even though the money was more or very small compared with the figures being bandied about today, and the system was fairly simple compared with the masses of derivatives and packaged mortgage equities, but then, perhaps for the last time, Wall Street could take care of its own panics.
		Today, only governments have that resource, and it is not even certain that Bernanke and Paulson can pull it off.
		Not everyone, of course, thought Morgan a hero.
		Populist politicians claimed he'd done it for his own gain, but even Teddy Roosevelt, who once viewed Morgan and his ilk as malefactors of great wealth, was in awe.
		The panic of 1907 led to important reforms such as the formation of the Fed as we know it today.
		Who knows what new regulations and new controls the present crisis will produce?
		There are ironies heaped on ironies.
		The U.S., our United States, has touted free markets as the holy grail, and even liberal democracies have been explorated by Washington for not bringing out their last vestiges of socialism.
		However, today, much of the U.S. economy is about to be run by the central government, which is supposed to be where socialism went wrong.
		Today, China is looking to the United States for inspiration on what to nationalize rather than privatize.
		Neither John McCain nor Barack Obama seem to have a clue what to Do and they vie in denouncing Wall Street, Wall Street evil, just like the old Soviets used to.
		President Bush seems little more than a bewildered bystander.
		And as for Wall Street, good guys, bad guys alike, must be longing for the days when all this simply could have been settled in a red room with Havana cigars.
		We'll be right back.
		Just a couple of very quick notes.
		Should they get the website updating fixed and they get my webcam up there, you'll see a picture of a young lady from that great line in the middle of the world where they don't have snow who just experienced snow.
		And we had a pretty good shot right in our front yard yesterday as the entire desert southwest became white.
		My God, it was really something to behold.
		Gerald Salente, founder and director of the Trends Research Institute, is today's number one trend analyst.
		Number one, publisher of the Trends Journal newsletter.
		He accurately forecasts the current recession, the dot-com meltdown, the 97 Asian currency crisis, the 87 World Stock Market Crash, increased, I wonder what they're going to call this one, by the way, increased terrorism against America.
		And in 93, predicted that at the dawn of the new millennium, the Crusades 2000 would be raging beyond the geopolitical and economic trends which are in the headlines today.
		He coined the term clean foods, identified the growth of gourmet coffees, the big move to small towns, real estate trends, other economic, political, social, business, and pop culture trends, regularly provides business and industry with customized presentations and commissioned research studies in over 300 trend categories.
		Here he is, Gerald Salente.
		Welcome back to Coast to Coast AM, Gerald.
gerald celente ▲ ● ▼		Oh, it's so nice to hear your voice, and thank you for having me on.
art bell ▲ ● ▼		You're very welcome.
		You're very welcome indeed.
		Did you hear that little article I read from Boston.com?
gerald celente ▲ ● ▼		I certainly did.
art bell ▲ ● ▼		Okay, good.
		What are they going to call this?
		Ten years from now, when they look back, assuming that we haven't totally melted and there's something to reflect with, what are they going to call this, do you suppose?
gerald celente ▲ ● ▼		Well, they called it the Panic of 07, as you read.
gerald celente ▲ ● ▼		And what we wrote in our Trends Journal just one year ago, almost, it was December 17th, actually.
art bell ▲ ● ▼		No, that was 07, 101 years ago.
art bell ▲ ● ▼		I'm talking about the one we're going through now.
gerald celente ▲ ● ▼		Right.
		They called it the Panic of 07.
		We called it a year ago the Panic of 08.
art bell ▲ ● ▼		Yeah, why not?
gerald celente ▲ ● ▼		Well, that's, you know, so that's what it seems like.
gerald celente ▲ ● ▼		It's been the financial panic, and the financial panic, of course, will go into the next phase.
art bell ▲ ● ▼		Which is?
gerald celente ▲ ● ▼		First the panic and then the collapse.
		Unlike back then, you know, this is a very different story, as you pointed out when you were reading it.
		You know, it's a whole different era.
		Things were more manageable.
		This is the global economy.
		And this is really a global meltdown.
		This is going on worldwide.
		You look what's going on in Russia with the devaluation of the ruble, all of these stock markets overseas that were flying high in these so-called emerging markets, you know, those so-called also those brick countries, Brazil, Russia, India, China.
		The markets are crashing around the world.
		This is unprecedented, and there's no end in sight.
art bell ▲ ● ▼		When we first heard about this, the average person anyway on the street, Gerald, we began hearing that there were a lot of big men locked in rooms dispensing advice about financial Armageddon, that unless they coughed up whatever it is, $750 billion or more, it would be the end of the economic world.
		People said the oxygen was gone from the room.
		I mean, it was so serious.
unidentified		You privy to any of what went on at all, Gerald?
gerald celente ▲ ● ▼		No, we're not.
		But the reality, though, when you're just looking at this whole area called credit swap derivatives, they're talking in the neighborhood of worldwide about $353 trillion.
		How could anybody put their mind around that?
		So when you put $700 billion into it, that's nothing.
		It's a drop in the bucket.
		So what we believe is going on and what did go on back in October when this was pushed through the $700 billion bailout, which immediately went to $850 billion with all the pork added onto it, is really it was just a stopgap measure.
		The fear was strong and real among Bernanke and Paulson and the others, but we saw it more as a means for the Treasury Secretary to gain more, or the Treasury czar, as we now call him, to gain more and more power.
		So it was more of a power play in so many different ways than a bailout play.
art bell ▲ ● ▼		Well, he was a lame duck, though, really.
art bell ▲ ● ▼		I mean, it was all coming to an end along with the Bush administration, so I guess it could be a power play, but it was a power play for power that would be passed on to the new Treasury Secretary, about just appointed, I think.
gerald celente ▲ ● ▼		And where is the Treasury Secretary coming from?
		He's coming from the Federal Reserve, and it's the same crew going in and going out.
		Larry Summers, of course, Obama's chief financial advisor was a former U.S. Treasury Secretary under Clinton.
		And one of the architects, along with Robert Rubin, of course, another Goldman Sachs colleague, as Henry Paulson is, who were the architects behind the destruction of the Glass-Steagall Act, which was put in place during the Great Depression, to prohibit banks from becoming the banksters that they've become and not to become brokers and get in the insurance business.
		And Larry Summers and Geithner, Geithner, of course, also a protégé of Robert Rubin, were also instrumental in destroying the regulations that now allow the derivatives and all these so-called exotic securities.
		They allow them to be traded.
art bell ▲ ● ▼		Do any of these guys really understand what's going on here?
		I know that's an impertinent question because I certainly don't understand, but I watch Paulson.
		Every time he gets up and speaks, the market crashes by 100, if not hundreds of points.
		I watch everybody involved, even our president looks like he's befuddled by the whole thing.
		Nobody in power really seems to grasp exactly what's going on or what to do about it.
gerald celente ▲ ● ▼		It's out of control.
		We call it the Bernanke two-step.
		This is the only thing, and if anyone, you know, your listeners, anybody out there could say anything different, we'd like to hear it.
		The only two solutions they keep coming up with from Washington and Wall Street and the Federal Reserve is to adjust interest rates, and now they've adjusted them down, as we've seen, to zero.
art bell ▲ ● ▼		Zero to a quarter percent adjustable.
gerald celente ▲ ● ▼		Or print more money.
		These are the only things that they could keep coming up with.
		And those are not solutions.
art bell ▲ ● ▼		And they're printing so much money already that the dollar is beginning to tank.
gerald celente ▲ ● ▼		Exactly.
		Look what's gone on with the dollar over the last, what, two and a half weeks.
		It was 124 against the Euro, and now all of a sudden it's 143.
		And that's only in a little over two weeks.
art bell ▲ ● ▼		I know.
gerald celente ▲ ● ▼		So the whole world knows what's going on, but the problem is the whole world is in trouble.
art bell ▲ ● ▼		Is there any area of the world, Gerald, that is in less trouble than others?
gerald celente ▲ ● ▼		The United States is probably in the worst, one of the worst.
		All of Eastern Europe, they're going bankrupt already.
		I mean, they jumped on this bandwagon of so-called free enterprise.
		And it was a wild West game.
		Not really.
		The United States is in terrible shape because, for instance, compared to Europeans, we have this enormous amount of debt.
		I mean, the American consumer between credit cards, homes, automobiles, they're $14 trillion in debt.
		The United States government, we don't even really know how big the debt is because they just keep printing money and going deeper into debt.
		But it's estimated to be around $12 trillion.
art bell ▲ ● ▼		Right now, they have no choice but to print money.
		They have no choice but to spend, spend, try to spend our way out of this.
		The American people are not going to do the spending this time, so the government has got to.
		They really don't have any choice, do they?
gerald celente ▲ ● ▼		Well, what they do if they keep printing money, you have a Weimer Republic-Germany situation.
gerald celente ▲ ● ▼		You cannot keep printing money back by nothing.
art bell ▲ ● ▼		Well, they have to balance it.
		They have to be ready to pull the liquidity back at the right time.
		But they've got to do this, or we keep going down that road.
		We began going down, which would end with, you know, bank failures of Ed couldn't help.
gerald celente ▲ ● ▼		It's going to happen anyway.
		As a matter of fact, we think there's going to be massive bank failures and massive failures of all times.
		As I said, we're calling 09 the collapse of 09, and I'll explain what's going to happen as we see it.
		We're going to have a dismal Christmas retail season.
		We all know that.
		We're looking at what's gone on already, the stores that are, you know, the Circuit Cities that have gone out, the KB stores, the Linens and Things, the Steven Barry's, the Sharper Images.
		After the Christmas holiday, you're going to see a real decline happen.
		The retail sales are going to be miserable.
		You're going to see major bankruptcies start happening in the retail sector.
		Now, let's go on and look what's happened already.
		Current events form future trends.
		All those that I mentioned that have gone bankrupt and others, now look at the ones that have been closing stores, like the Starbucks, what was the one last week, Office Depot announced 122 store closings.
		You look at now who is going to rent all of these empty stores?
		The answer is nobody.
		Now you look what's going on in Wall Street.
		They're emptying out office buildings all over the place, floor after floor, because it's not only the equities market.
		It's everything interrelated to it.
		It's the bond companies.
		It's all the back office support.
		We're going to have a commercial real estate collapse.
		That's going to be worse than the home real estate collapse.
art bell ▲ ● ▼		Worse than the home real estate collapse?
gerald celente ▲ ● ▼		It's leveraged way far beyond what a homeowner leverages the home on.
		These big developments, these huge office towers, they're built with virtually no money down.
		For instance, when you build a mall, they're based upon a developer going to a bank and saying, listen, I have all these leases from these triple A retail outlets.
		And the bank loans them money on the basis of those loan guarantee rent guarantees.
art bell ▲ ● ▼		Gerald, why isn't that already happening?
art bell ▲ ● ▼		Why isn't that happening concurrent with the home mortgage collapse?
gerald celente ▲ ● ▼		And this is what we're saying.
		Now it's going to start happening now.
		When these stores become more empty, you're going to see the real collapse start to come.
		We believe in around February, it's really going to be felt because there's going to be a big upsurge of hope with the inauguration coming up, and then the hard numbers and the cold winters set in.
		We believe that that's the date that we're putting on when the collapse becomes recognizable.
		There's going to be office parks empty.
		There's going to be office buildings empty, and there's going to be huge sections of malls empty.
		That also takes a terrible psychological effect when you go into a building to work and your co-workers are no longer there and there are empty floors above and below you.
unidentified		Okay.
art bell ▲ ● ▼		All right, Gerald, hold it right there.
		That sounds like the Big D. Sounds like you're talking about the Big D, and that's exactly what we'll ask when we get back.
		From the high desert, which is kind of white at the moment, melting but still white, I'm Mark Bell.
		Credit default swaps are insurance-like contracts.
		They promise to cover losses on certain securities in the event of a default.
		They typically apply to municipal bonds, corporate debt, and mortgage securities.
		and was sold by banks, hedge funds, and others.
		The buyer...
		The buyer of the credit default insurance pays premiums over a period of time in return for peace of mind, knowing that losses will be covered should a default occur.
		It's supposed to work very much like someone taking out home insurance to protect against losses from fire and theft, except that it doesn't.
		Banks and insurance companies are regulated.
		The credit swaps market is not.
		As a result, contracts can be traded or swapped from investor to investor without anybody overseeing the trades to ensure the buyer has the resources to cover the losses if the security defaults.
		The instruments can be bought and sold from both ends, the insured and the insurer.
		Gerald Salente, right back.
		Gerald, my wife is from the Philippines, a fairly recent immigrant, actually.
		And, you know, every day from the moment I wake up, I hit the shower.
		I'm listening to Fox Financial in the shower, and I get out and I sit on the couch and I watch Fox Financial right on through the very volatile last hour of trading.
		And so she's exposed to a very great deal of this because I'm fascinated by it all.
		And the other day she asked me, well, the United States is a very rich country.
		Where's all the money going to go?
		In other words, are you going to wake up one day and we're all going to be poor?
		Everybody's going to be suddenly poor?
		Where will all the money go?
		And I actually struggled with answering that, Gerald.
		Where will all the money go?
gerald celente ▲ ● ▼		Well, the money is still around.
		It's just becoming cheaper.
		It's the value of it.
		It's worth less.
		Here's a story that just moved over the APY 13 minutes ago.
		The headline reads, Asian markets mixed after Japan rate cut.
		And this really says it all.
		Hong Kong, Asian stocks were mixed Friday after Japan slashed interest rates to almost zero as central banks around the world flood the markets with cheap money to support a troubled global economy.
		Cheap money.
art bell ▲ ● ▼		Cheap money.
art bell ▲ ● ▼		Trouble is that nobody can get a loan.
gerald celente ▲ ● ▼		No one could get a loan.
		And this cheap money, these fiat currencies, as I mentioned earlier, this is a global crisis.
		So what we're having, Art, is a typical depression scenario.
		And that is the yes, commodity prices, oil is falling across the board.
		Things are cheaper to buy, but the purchasing power is also going to go down along with it.
art bell ▲ ● ▼		By the way, as long as you're on oil for just a second, I noticed that OPEC huffed and puffed and said they were going to blow away 2 million barrels a day in production.
		And oil went from, I don't know, 40-something or another down to about 36.5 bucks, something like that.
		Just crazy.
		Oil is just falling, falling, falling.
		Where is it going?
		What's happening?
unidentified		Well, this is it.
gerald celente ▲ ● ▼		We're in a global depression.
		That's what's coming next.
		After the collapse, look, it took them a year to admit that we were in a recession in 2008.
		Right.
		Everyone was debating throughout the year, will it be a recession?
unidentified		If it is a recession, will it be a severe recession?
gerald celente ▲ ● ▼		We're going into a depression.
		And we're calling it the greatest depression, and I'll tell you why.
		Back then, in the depression days, most people didn't own homes.
		They weren't carrying property taxes, insurance upkeep.
		Back then, people didn't have credit cards.
		So as I mentioned earlier, they weren't $14 trillion in debt.
		And back then, we had trade surpluses.
		We weren't $700 billion in the hole each year.
		And back then, we had budget surpluses.
		We weren't $11, $12,000, $13 trillion in the hole as we are now.
		And back then, when we got out of it with the beginning of World War II, we were the manufacturing powerhouse of the world, bar none.
		We don't have the facilities, the capabilities to push out of this as we did before.
		So we're going to see times coming up.
		Look, when you're hearing these numbers that are coming out, a couple of weeks ago it was, what, Citigroup that announced they were firing, laying off 53,000 people.
		Last week it was Bank of America, 52,000 people.
		Just as I mentioned before, who's going to rent all these empty stores?
		We're looking at the unemployment numbers.
		And even when you look at the government numbers, which they admit to, it's not the 6.7.
		It's more like 12.5.
		We're looking at depression-level numbers.
		We're looking at 22%, 25% unemployment.
		Because where are these people that are losing their jobs?
		Where are they going to find new ones?
		Where are college students going to find jobs?
		They're getting out of college.
		They're not even going to get a job with sports authority.
		Current events form future trends.
		Following the collapse, then following the greatest depression, we're going to see revolution.
		And all you have to do is to look what's going on over in Greece.
		This isn't about a 15-year-old kid getting shot.
		This is about pent-up anger, particularly among the young people who have a futureless future.
		And they're looking at the corruption in the government, the scandals, and they've had it.
		You know, there's a saying that we have.
		I'm originally a Bronx boy.
		When people lose everything and have nothing to lose, they lose it.
		And the people in this country think that social unrest only happens in other countries.
		It's going to happen here when you have the homeless, the helpless, and the hungry out on the streets.
		What happened in Chicago with the workers refusing to leave the factory, you're going to start seeing more and more of it.
		We're going to see a revolution in this country, and these are the beginning phases.
		I tell a story, and I'll really abbreviate it.
		It was in 1992.
		John Connolly, the former governor of Texas, and the man, of course, who took the bullet in the back that was meant for John F. Kennedy, he was sitting in front of him.
		He had asked to see me, meet me in 1992.
		This is a week before the 1992 presidential elections.
		And he had read one of my first books, and I had predicted in that book that it would be a new third party, and someone like Ross Perot would be the kind of candidate.
		For some reason, I put Perot's name in there.
		So we ended up going to the book depository, the Texas School Book Depository.
		The fellow who arranged this, John Jay Hooker, had arranged for John Connolly and his wife, Nellie, and myself and two other people to go there.
		And we're parked out in front of the book depository, and it's Connolly's, by the way, the first time back since the assassination.
		And he told a story of what happened that day.
		And on the way back, I looked at him, and his hands had these terrible purple splotches on them.
		And I knew he was a dying man because my father, Man Saul, rest in peace, died of asbestos poisoning.
		And they had Connolly, he was on these heavy doses apprenticed for his pulmonary fibrosis that eventually killed him eight months later.
		And as we're walking back into the Anatole Hotel, he looked at me, stopped, and he said, you know, I read your book.
		He said, it's a fine piece of work.
		And I know your heart's in the right place.
		But you don't have a clue what's going on.
		And neither do the American people.
		Because if they did, there'd be a revolution in this country.
		And this was coming from the horse's mouth.
		This was the man that was a Treasury Secretary under Nixon.
		You know, he was an insider of insiders.
		And I had been around long enough by that time to, you know, become a political atheist, as I call myself.
		And I wondered when it would happen and if it would happen.
	And now to me, it's not a matter of if.
	It's a matter of when.
	And the matter of when is we're in the initial stages of it.
	And you can see, because one of the other trends we're coming up with for 09, we call it the little people squeeze.
	Look what's going on.
	Pick up yesterday's New York Post, and the headlines read about the taxes that they're pushing on the people now.
	To buy soda, they're putting 18% tax on it.
art bell ▲ ● ▼		Now you have New York State, right?
		Yeah.
		But it all spread.
		To get down to cases, you're saying you mentioned February, right?
		Is that going to be it?
		By February, we're going to know we're in a depression.
		By February, we're going to begin to see unrest, or is that the spring or the summer?
unidentified		Or is that a year away?
gerald celente ▲ ● ▼		In February, we're going to feel the effects of the collapse.
		It's going to be the reality.
		There are not going to be any more too big to fails to be bailed out.
		You just can't keep spending money to bail everybody out.
		So it's going to start happening in other sectors.
		We believe that by the spring, we're going to start seeing the unrest.
		It could be the college unrest.
		It could be that kind of thing.
		It could be worker unrest.
		So that's what we're really looking at because the people, again, they're putting the burden of the failing governments, this overspending.
		They're taxing the people.
		This is, I mean, history is replete with these kind of examples of pushing people over the edge with taxation.
		Look, we all know anybody that's a homeowner or property owner, when valuations are going up, they reassess our values and increase our taxes.
		Now our valuations are declining.
		We're losing equity in our homes.
		And what are they doing?
		They're raising property taxes at a time when people are losing jobs.
art bell ▲ ● ▼		They should be reassessing and our taxes should be falling.
gerald celente ▲ ● ▼		Exactly.
		So they're putting the pressure on the little people, as we call us, people that are working.
		And that's where the revolt is going to come.
		Taxation without representation.
		Who will fire the first shot that's heard around the world?
		We don't know.
		But it could come from any of those groups.
		The overtaxed, the people getting fed up with the next too big to fail.
		You know, we call this, by the way, a perfect Titanic situation.
		When the Titanic went down, who did they save?
		They saved the wealthy.
		They were the ones that got the lifeboats.
		The rest of the people were locked into steerage.
		And it's the same thing that's going on now.
		They don't bail out any entrepreneur, anybody that's in trouble.
		It's just they've come up with this mantra, Oh, the other people are too big to fail.
art bell ▲ ● ▼		What about the automobile companies?
		I know that there's a big brouhaha going on now.
		Senate didn't vote.
		White House almost seems as though they stopped it by suggesting they would use TARP money.
		That's another subject we've got to cover.
		But they'd use TARP money for the automobile companies.
		What do you think will happen there?
gerald celente ▲ ● ▼		It's a waste of money.
		It's throwing good money after bad, or cheaper money after bad, I should say.
		And I love it.
		I mean, the language that they use.
		They're going to come up with a car czar.
		I mean, what is this?
		A cartoon?
		Oh, like the drug czar or the education czar.
		Look at the people that are the players.
		And again, as I said, I'm a political atheist.
		You have on the Democrats, you have Harry Reid, you have Nancy Pelosi, you have Bonner and Bond, and you have Christopher Dodd.
		I mean, how about Laurel and Hardy Rabbit Costello?
		I mean, what have these people have ever done?
		Any of these politicians, any of these parties, that they could say, look at the greatness that we've created.
		Aren't we proud to put our name on this?
		Everything that they do is of Katrina rescue quality.
		They're not going to bail us out.
		They're not going to bail the car companies out.
		It's throwing money away.
		And they're forestalling the inevitable.
art bell ▲ ● ▼		Is that actually a prediction?
art bell ▲ ● ▼		You say they're not going to bail them out, or you're just going to be upset if they do?
gerald celente ▲ ● ▼		No, no, no.
		If they bail them out, it's not going to do anything.
		It's forestalling the inevitable.
		So if they want to bail them out, let them go.
		It's not going to do anything to reverse the trend because who's buying cars now?
art bell ▲ ● ▼		Don't you think the Bush administration is just sort of going to put up enough money to sort of pump this onto Obama?
gerald celente ▲ ● ▼		Probably.
		And it's really not pumping it onto it's the whole system.
		And as I mentioned earlier, when you look at the players involved, it's a revolving door.
		You know, it's kind of like it's electing the president of the country club.
		The country club is the same.
		And there's not going to be that much change.
		Whether it's, again, whether it's Robert Rubin from Goldman Sachs that goes into the Clinton administration or Henry Paulson from Goldman Sachs that goes into the Bush administration.
		And now the Federal Reserve coming into the White House through Geithner, no, there's not going to be much of a difference, we don't think.
		And of course, they're trying to stall this as long as they can.
art bell ▲ ● ▼		Well, I guess you can't blame anybody for that.
		They are trying to stall this as long as they can, put it off as long as they can, if it really is economic Armageddon.
		At this point, what would you do differently than is being done?
		If you were in charge of thrown into the middle of this and the current circumstances, you can't change that.
		It is what it is right now.
		What would you do?
gerald celente ▲ ● ▼		Well, the first thing I would do, when you Look at the data, the only job gains in the United States in 2007 were from government.
		And that's the first thing, federal, state, local governments.
		Here in New York, as I mentioned, they came out with all these taxes and they came out with the grand total of laying off 500 state workers.
		I mean, come on, this is New York State, 500 workers.
		So that's the first thing I would do.
		I'd really slash back government.
		And I'm a believer in the Washingtonian Jefferson way of thinking, of not becoming involved in foreign entanglements.
		We have to cut back on the – We have to cut back severely at a lot of levels, and we have to cut back on a consumption.
		We just can't keep consuming as a nation to keep loaning, borrowing money to buy more.
		So it has to be a retraction.
		We've all done it in life, I believe.
		You know, any of us that have not been born with a silver spoon in our mouths, when things get tough, you have to cut back.
art bell ▲ ● ▼		How much of a depression are we moving towards?
gerald celente ▲ ● ▼		As I said, it's going to be worse than the last depression, As we see it.
		And the other thing, too, is very important.
		And I'm not, you know, as I said, I'm a guy from the Bronx.
		You know, I'm not a classist, but we are a declining class society in the sense that you look at in the Depression, we were an ascending society.
		Now we're a declining society.
		You look at the high school graduation failures.
		There were like over 50% in major cities.
		So we had this huge, huge, huge growing underclass, bigger, bigger burdens.
		We have less of an egalitarian society.
		So we think it's going to be much worse.
art bell ▲ ● ▼		Gerald, do you honestly believe if what you said is true, that what we're facing now is going to be greater than the Great Depression, that the American people, the spoiled, rich generation that we have now, that we're facing something worse than the Great Depression, that we're going to get through this without an awful lot of dead people.
art bell ▲ ● ▼		I mean, I just can't believe that the current generation could face something worse than the Great Depression and get through to the other side without an awful lot of dead bodies.
gerald celente ▲ ● ▼		Well, you know, you make a good point in the sense that when you look at the type of people from the Great Depression, and again, those of us that are old enough to have had parents, my parents got married in 1934, and you look at, and they were Italian immigrants, when you look at the photos of these people, my friends' photos, whoever, you know, the people had a dignity, there was a strength about them.
		They were more survivalists, and they knew how to do many different things.
		As you point out, this is a very spoiled generation.
		They don't know what to do.
		And so, yeah, there's going to, and will there be dead bodies?
		Well, there can be, the revolution could be a peaceful, it could be a revolution, or it could be a violent revolution.
		And it really depends on how this is handled.
		If these politicians keep holding on to this belief that they're above the people.
art bell ▲ ● ▼		Gerald, what's the other side of the revolution?
art bell ▲ ● ▼		What is the revolution going to become?
gerald celente ▲ ● ▼		You know, these secessionist movements that they talk about, you could look at the former Soviet Union and you can see what's going to happen to America.
		We imagine America could be breaking up into smaller sections of California to Utah, for example, the East Coast, the South.
		I mean, we could imagine that happening.
art bell ▲ ● ▼		What do you think it would be that kind of revolution, a secession where California is its own country and perhaps other small fiefdoms will emerge and secede from the United States?
art bell ▲ ● ▼		Is that what you see?
gerald celente ▲ ● ▼		Most definitely.
		And again, when you look at the, like, take a country like Norway, New Zealand, where they have 4.5 million people, 5 million people.
		Yeah, we could see it happening.
art bell ▲ ● ▼		Oh, my God.
		All right.
		I wish we had more time.
		I really do.
		I will have you back for a full program in the future.
		But that's scary stuff.
		Gerald Slante, thank you for being on the program, and come back soon.
		Take care, my friend.
		All right.
		Coming up in the next boy, secessionist.
		Catherine Austin Fitz coming next.
		Here I am.
		Jeremy from Kentucky writes, hey, Art.
		Just wanted to let you know, listening to the ghost voices would have scared me a lot less than listening to what's on the program right now.
		I agree with that, Jeremy, actually.
		Coming up in a moment is Catherine Austin Fitz.
		She is the founder and president of Solari.
		She served as managing director and member of the board of directors of the Wall Street Investment Bank Dylan Reed and Company, Inc.
		Also served as Assistant Secretary of Housing, Federal Housing Commissioner at HUD HUD in the first Bush administration, and was the president and founder of Hamilton Securities Group, Inc.
		Catherine has a BA from the University of Pennsylvania, an MBA from the Warren School, and studied Chinese at the Chinese University of Hong Kong.
		Catherine serves on the board of the Gold Antitrust Action Committee and publishes a column mapping the real deal in SCOOP media in New Zealand.
		And she'll be talking about the state of the economy and how we got where we are and a lot more coming up in a moment.
		A couple of quick, very quick notes.
		One is if you go to the website, coastalcoastaam.com, go all the way to the very top of the page, you'll see something that says Art Webcam.
		Just click on that and you'll get a photograph of my dear wife and daughter.
		And that was taken about a little better than 24 hours ago, yesterday evening, shortly after the sun went down.
		As you may have seen on some of the national news, we've had quite a bit of snow here.
		Yes, snow in the desert in Las Vegas, crusting the palm trees, and it's quite a sight.
		All right, that and my email, of course, you can reach me by email, and I hope you do.
		I am Art Bell, A-R-T-B-E-D-L, at mindspring.com or artbell at aol.com.
		Once again, artbell at mindspring.com.
		That's all lowercase A-R-T-B-E-L-L at mindspring.com or the same thing at A-O-L.com now.
		Let's explore another point of view, specifically that of Catherine Austin Fitz.
		Catherine, welcome back, actually.
		You have been a guest previously to Coast to Coast AM.
catherine austin fitts ▲ ● ▼		Good evening, Art.
		What an opportunity it is to meet you and get to do a show with you.
		This is incredible.
		I never thought it would happen.
art bell ▲ ● ▼		Well, here we are.
		There was a little bit of breakup, Catherine.
		I don't know if you have call waiting.
catherine austin fitts ▲ ● ▼		No.
art bell ▲ ● ▼		No?
catherine austin fitts ▲ ● ▼		No?
art bell ▲ ● ▼		No, okay.
art bell ▲ ● ▼		I heard sort of a little breakup, but maybe it'll be okay, I hope.
catherine austin fitts ▲ ● ▼		Okay, let's try it.
art bell ▲ ● ▼		You were, you know, I read your bio, and my goodness, I'm honored to have you on the program.
art bell ▲ ● ▼		You obviously were very much an insider at one point.
catherine austin fitts ▲ ● ▼		Yeah.
art bell ▲ ● ▼		Well, several points.
art bell ▲ ● ▼		So now you're not, and you can sort of look back and, well, listen, did you hear any of the last hour by chance?
catherine austin fitts ▲ ● ▼		I didn't.
catherine austin fitts ▲ ● ▼		I didn't.
art bell ▲ ● ▼		I had Gerald Salente on.
catherine austin fitts ▲ ● ▼		He's terrific.
art bell ▲ ● ▼		Yeah, he is terrific.
		But he actually thinks we're headed for a great Big D Depression.
		He believes that things could deteriorate to the point where we would have, for the end of the hour, he suggested, another revolution.
		We could have areas seceding from the United States, like California, for example.
		It could really get that bad, he believes.
		Do you share any part of that point of view?
catherine austin fitts ▲ ● ▼		I think it's a possibility.
		I don't think it's the most likely scenario for 2009.
		I'm a believer.
		I think the highest or the highest probability scenario that we're going to see in 2009 is a continuation of what I call the slow burn.
		And the slow burn is really a managed economy where most, you know, the economy is defined by insiders and outsiders.
		And the insiders constantly subsidize the machinery by draining the outsiders.
		But it's a slow and steady process.
		It's a little bit like the frog in the water that slowly moves to a boil.
		So you'll see rising expenses, falling income, and shrinking assets, but in a very managed process.
		And as long as the federal government and the central bank can print money and get people around the world to continue to hold treasuries, we're just going to see that continue.
		So I think 2009 is going to be more of the same.
		For many years now, I've watched as one group after another thought, oh, this is it, the crash is going to come, and finally we're going to get out of this Orwellian state because the slowburn is very Orwellian.
		Things don't seem to make fundamental economic sense.
		And, you know, we're going to get a big bang and it'll be terrible, but at least we'll get back to fundamental reality.
		And the Orwellian period will be over.
		And I'm not so sure that that's the case.
		So my bet, if I had to give percentages 60% chance in 2009 that the slow burn continues, now it's going to get meaner and meaner because the drain of not just households, but now municipalities and numerous industries and businesses is going to, we're now cutting into muscle.
		We've cut through the fat.
		We're cutting into muscle.
		So I don't mean to say it's going to be an easy year, but it's going to be a year where there is also opportunity for change.
		Because if you look at the fundamental economy art, we don't have to go into a depression.
		There's tremendous, when you run an economy, I mean, think of a milk bucket.
		If I have a hole in the bottom of a milk bucket, no matter how much milk I put in the bucket, I'm not going to have anything that's going to drain out the bottom.
		So if we have an economy where we run things in a fundamentally unproductive way, there's never going to be enough money.
		We're always going to be headed for a depression.
		And of course, the possibility is perhaps it's time to change.
		Because if we do change, we don't have to have a depression.
art bell ▲ ● ▼		Okay.
		Go back with me, Catherine, to when the average person began to hear in the news that Fernanke, Paulson, all the bigwigs were in a room with lawmakers telling these lawmakers that something beyond our comprehension was about to happen.
		And if they didn't call up $700 billion right away.
		I don't know what exactly was said, Catherine, and I'm sure you probably do know what was said.
		They said all the oxygen went out of the room.
		It was a really, truly frightening moment.
		And whatever it was said was strong enough to cause without great attention after one hiccup, the lawmakers to cough that money up, the TARP money, and $700 billion appeared.
		I mean, any idea what really was said in that meeting?
catherine austin fitts ▲ ● ▼		No idea, but if I wanted to present the most frightening scenario possible, the scenario that I would present would be a series of defaults, and it could be private sector defaults, that would result in the federal government not being able to roll over its deficit or borrow money.
		At which point, you could literally see a situation where we have military spread out all across the world, and suddenly the money stops, and everybody's left where they are, you know, with the only way to get food and to survive is to just, you know, everybody's on their own.
		There is no more government.
art bell ▲ ● ▼		It could have been that.
art bell ▲ ● ▼		Do you think that's what they were presented with?
catherine austin fitts ▲ ● ▼		I don't know what they were presented with.
		But clearly the most, I mean, here is the biggest problem.
		If you want to reach down underneath the rug and pull out all the dirt and you want to say, okay, what's the worst problem?
		The worst problem in the economy is that we've kept the economy going with a debt bubble.
		And if you dig inside of that debt bubble, the amount of debt that is truly outstanding is much more than exists on the balance sheets of the Treasury and the big financial institutions.
		And so the books have been cooked to an extraordinary extent.
		And the way we've kind of, you know, we kept pushing it under the rug and doing more and more things to keep it going, the big mystery in all of this art is where did the money go?
		And this is where finance intersects with the black budget.
		Because my guess is where a lot of that money has gone is into the black budget.
		And of course, the mystery in all of this is why did we need to spend that money?
		Where did it go?
		And do we need to keep coming up with that kind of money?
art bell ▲ ● ▼		I was going to say What black budget?
catherine austin fitts ▲ ● ▼		What black budget?
unidentified		Yes.
catherine austin fitts ▲ ● ▼		Well, what's financing all those crazy, crazy spaceships at Area 51?
		I mean, the problem, it's very interesting because my passion for many years has been how do we create wonderful communities and neighborhoods.
		My neighbor, I grew up in West Philadelphia, about a block away from where Chubby Checker's mother lived.
		Do you remember Chubby Checker?
art bell ▲ ● ▼		I lived in Media, Pennsylvania.
catherine austin fitts ▲ ● ▼		Oh, really?
unidentified		Yeah.
catherine austin fitts ▲ ● ▼		Okay, well, then I grew up at 48th and Larchwood.
art bell ▲ ● ▼		Well, I went to Rose Tree Elementary.
catherine austin fitts ▲ ● ▼		Really?
		Okay.
		Well, so my neighborhood was basically destroyed by HUD fraud and narcotics trafficking.
		And I became very interested as a young person on why if you look at the amount of harm done to the real estate and to the households who lived in that community versus the profits that were pulled out from the HUD fraud and the narcotics trafficking, intuitively it seemed obvious to me that we could make a lot more money stopping all that stuff than doing it.
		So I could never understand why healthy neighborhoods as an economic matter couldn't be destroying neighborhoods with narcotics trafficking.
		And after many, many years of sort of working at HUD and researching it and trying to figure out what was going on and how to turn things around, what I discovered is that oftentimes you would see places where, you know, say a group of soccer moms had gotten together and started to back narcotics trafficking out of the neighborhood.
		And before you know it, what happens is it turns out that the local narcotics trade is financing James Bond, you know, is financing Tony Soprano, who's financing James Bond.
		And the next thing you know, I mean, I don't know if you know the story of Linda Ives and Mino Arkansas, but the next thing you know, you know, you've got black helicopters, you know, versus the soccer moms.
		And so, well, you know, if you look at all the financial fraud in the country, it finances one community at a time.
art bell ▲ ● ▼		We're going to get to financial fraud shortly.
		Madoff is just incredible.
		Well, let's get to it.
		Let's get to it.
		How can that happen?
		How can one man operate in the manner he did?
		Can it be?
		I mean, can it be one man?
catherine austin fitts ▲ ● ▼		No, it can't be because I've started a series of small businesses and run small businesses and run large businesses and government agencies.
		And what I will tell you is, in a small business, when you're the founder and running it, it's hard to run one set of books.
		And you certainly can't do it in a secretive manner because if you look at what it takes to just run one set of books for a simple business, there are all sorts of people who have to get into it.
		So you have bookskeepers, you have tax preparers, you have auditors.
		If you have a brokerage business, which is highly regulated, then you have all sorts of regulators who get involved.
		If you have an investment advisory business, even more complicated, more regulators getting involved.
		So this is something that's hard to do with a simple business with one set of books.
		What we're talking about is taking two highly complicated businesses, creating two or three sets of books, involving billions of dollars, in a situation where all sorts of people have to get in and out of those books.
		And when you run something, the kind of operation that Madolf was running, it's unbelievably complicated.
		There's no way that one person can do it.
		And there's no way that that cannot function without institutional support from outside The company, you need institutional air cover from the regulators, from politicians, from the intelligence agencies for that kind of scheme to go on.
art bell ▲ ● ▼		Well, you're suggesting that many will fall.
catherine austin fitts ▲ ● ▼		Well, one of the questions is: is this the tip of the iceberg?
art bell ▲ ● ▼		But let me give you an example that's kind of one would presume that the economic difficulties of present day brought him down.
		In other words, a lot of people suddenly needed liquidity, wanted liquidity that he finally didn't have.
		So would you agree that's probably what brought all of this crash down?
catherine austin fitts ▲ ● ▼		I don't think it was liquidity that he's one of two things is likely.
		It's liquidity that his network didn't have.
		In a situation like this, he's providing cash to the network.
		The network is ensuring that he makes above market yields.
		And so his clients get the yields and proceed to finance something that they have no idea is financing.
		And it all works until the redemptions can't be met.
		So that's one possibility.
		The other possibility is economic warfare.
		And that is they're playing this game.
		As cash flows diminish, there's more and more fighting behind the scenes between various institutions who are keeping this complex game going.
		Because remember, this is a complex game to keep going, particularly in this kind of environment.
		And one party pulls the plug on another party.
		So my question is, is this a war between factions?
		Because as the bubble dies down, remember all the factions running the covert side of the financial system are going to start competing in the game of musical chairs as the chairs get pulled.
art bell ▲ ● ▼		Okay, they say there's $50 billion ultimately involved, and this could be more.
		Who knows?
		But if I understand the whole Ponzi scheme set up correctly, it works until you finally don't have the money to, the liquidity, to meet demands, which no doubt were big during these very difficult times.
		You know, people were trying to cover this and that, and they asked for their money, and finally he couldn't provide it.
		I think that scenario is a bit more likely.
catherine austin fitts ▲ ● ▼		Except for this, and here's why, here's my big question, Mark.
		The Federal Reserve has lent trillions of dollars.
		Trillions of dollars.
		I mean, right now, Bloomberg has a lawsuit against the Fed because they won't disclose collateral on $2 trillion.
art bell ▲ ● ▼		So does Fox.
art bell ▲ ● ▼		Fox Financial also is suing.
catherine austin fitts ▲ ● ▼		Right.
		So we have trillions of dollars, and the Fed has made it clear, you know, we now have a Fed funds rate at 0%.
		And we have anecdotal information to suggest that the banks are lending to whoever the powers that be say please lend to.
		So when it comes to printing money, there's an infinite amount of money ready to cover whatever player who really needs it, who's on the inside.
		So this guy, so in that construct, remember, the $700 billion bailout is over on the administration side.
		Over on the central bank side, there appears to be an infinite amount of money to deal with whatever problems want to be kept going.
		And so if you look at the amount of money that it would have taken for the Fed to ensure that JPMorgan or whoever the Madoff's bankers are provide to keep the game going, it's there.
		So the question is, you know, AIG is being protected, but Lehman and Madoff are being thrown overboard.
		Why?
art bell ▲ ● ▼		Well, I'm not sure that I'd put Madoff in the same category knowing what we know now as, or would I?
		Or would you?
		I guess you would.
catherine austin fitts ▲ ● ▼		Well, if you look at his operation, this was an operation that had significant institutional support.
catherine austin fitts ▲ ● ▼		It had to have had tremendous institutional support for many years.
art bell ▲ ● ▼		Boy, they're sure not painting it that way.
		I mean, they're painting it.
		You know, it was just made off and maybe somebody else.
		I mean, it couldn't have been made off and, you know, his own computer and sending out the reports every month.
		It just doesn't work.
catherine austin fitts ▲ ● ▼		Well, I'll give you an example.
		In 1993, do you remember the first American bank?
		It was the Clark Clifford and the husband of Wonder Woman.
art bell ▲ ● ▼		Yes, I do.
catherine austin fitts ▲ ● ▼		Okay, so you had this huge financial scandal, and these guys had engineered the Middle Eastern guys to come in and the money from the Emirates to buy up this bank and all the shenanigans.
		Well, the bank got put in receivership, and the bankruptcy courts appointed Harry Albright as the trustee.
		And Harry asked me if I would come, he needed people on the board, so would I come on the board?
		And I'm sitting out in a house in McLean, Virginia, and Harry sends out a Brinks truck with case after case of document.
		I mean, thousands of pages of legal documents sort of documenting what this is all about.
		And to be described later.
art bell ▲ ● ▼		All right.
		Very good.
		Ladies and gentlemen, this is going to be, it's going to be a difficult show.
		Catherine Austin Fitz is my guest.
		She's been very much on the inside.
		We're talking about the financial road ahead.
		And to say it's bumpy is probably grossly understated.
		From the high desert, the white high desert where it's snowing, I'm Mark Bell.
		My guest is Catherine Austin Fitz.
		And to be sure, she was an insider.
		We're talking about the economic meltdown that we're all experiencing right now.
		We're all in this together, I guess.
		Mark from Greenville, South Carolina, wants to know what in the reference to Madoff, what she means by institutional.
		And I do, too, and we'll ask that, but that's almost scary to ask.
		Everybody is sort of making as though it's Madoff, and maybe another little guy with a computer printing out reports, and somehow they made off with $50 billion.
		It can't be that simple, and I think we all know it.
		But on the other hand, I really, Mark, can't ask unless I tell her not to name names.
		Could there really be institutional assistance for what happened, this alleged $50 billion ripoff.
		We'll try to ask that question in a moment.
		All right, Catherine, I think we have the Brinks truck rounding the corner to your driveway or something.
catherine austin fitts ▲ ● ▼		Anyway, so I took a weekend, I'm a speed reader, and I read thousands of pages of documents.
		And the story behind First American Art involved tremendous amounts of banks buying other banks, large amounts of money moving around in domestic and international wire transfers through the banking system, all sorts of different transactions and corporate changes that required a whole variety of FDIC or Federal Reserve or administration approvals.
		And what you finally realized after you read the whole history of this thing over a 10-year period, that there's no way these two guys could have engineered any of this without a wide segment of the government and the banking system wanting it to happen.
		So the idea that they were off on their own was ridiculous.
		They were just, they were part of a fabric of the economy that had very high-level support, had to have had support from the White House, from Treasury, from the Federal Reserve, had to have extraordinary air cover to do what they were doing.
art bell ▲ ● ▼		And you are suggesting there was similar cover for Madoff.
catherine austin fitts ▲ ● ▼		I don't see how Madoff could have, because in my experience, there is enormous competition over every dime of money throughout the whole economy.
		So I'll give you an example.
		When I was at Dylan-Reed, we had a head of capital markets, wonderful guy named Dick Bianco, who would, huge guy, about 250, 300 pounds.
		And the theory of markets says that in a perfect market, there's no profit because it's competed away.
		So anytime somebody made any money in a way that was unexpected, Dick would come roaring out of his office and say, tell me why I'm so lucky.
		What's going on that you should be so brilliant as to make profit?
		What am I missing here?
		And he had the account sitting right next to him.
		And it was because profit in that sense was an anomaly.
		And so he would dig in.
		And that was for, you know, if a trader was up $100,000 for that hour, that question would come out.
		Now, this is a guy who's swinging around billions.
		But he's regulated until 2006.
		He was a broker dealer.
		After that, he was a broker dealer and investment advisor.
		I started and ran a broker deal in Washington.
		It was absolutely tiny, nowhere near $50 billion swinging around.
		And we were constantly audited and picked over and had people into our books in many ways at different times.
		Then you've got the IRS.
		So he's got people preparing his taxes.
		But then over a 20-year period, you're going to have the IRS looking into your business and asking questions if there's discrepancies between what people are reporting in bank accounts.
		And finally, and most importantly, we have a role in our society called Know Thy Customer.
		And there's no way that this guy can operate without there being tremendous discrepancies between all sorts of reports and what's going on in his bank.
		And there's no way his bank is not going to notice because anybody who has a steady and continuous performance in highly volatile markets is very noticeable and unusual in the word gets around.
art bell ▲ ● ▼		How come he wasn't noticed?
catherine austin fitts ▲ ● ▼		I'm sure he was.
		It's inconceivable to me because one thing that the people, and I worked on Wall Street for 11 years, and you've got unbelievably curious, high-energy people, thousands of them who will investigate for a dollar, let alone $50 billion.
		So there's no way this guy went unnoticed.
art bell ▲ ● ▼		Well, I've heard, though, that there's sort of a in other words, Madoff was thought to have, I don't know what you want to call it, a black box.
		He had discovered something that others didn't know about.
		Now, on the one hand, of course, everyone would want to know what it is he knows that other people don't know, but that would be if it were real, and one would imagine on occasion, people do come up with things that earn them for long periods of time good profits.
		And of course, they will protect their secret.
		They will wish to protect their secret.
		And there's nothing that says they have to reveal their secret.
		Why do I make profits when others don't?
catherine austin fitts ▲ ● ▼		No, and that's true.
catherine austin fitts ▲ ● ▼		But again, if I'm making money with a black box, then my brokerage accounts are in alignment with my bank accounts.
art bell ▲ ● ▼		That's true.
catherine austin fitts ▲ ● ▼		There's not a significant discrepancy across institutional lines.
art bell ▲ ● ▼		So you are suggesting there had to be institutional support for the alleged fraud that was perpetrated over an incredibly long period of time with a very great deal of money, $50 billion or better.
catherine austin fitts ▲ ● ▼		I can't come up with a hypothesis which would explain this other than institutional complicity.
		Let me give you an example.
		So if we were just going to say, okay, we'll come up with a movie plot as to how this might happen, you know, it was funny, when the papers came out, somebody grilled me and said, what could explain this?
		What could explain this?
		The only thing I can think of that would explain it is a combination of PROMIS software and the intelligence agencies supporting this kind of operation.
		Because PROMIS software was literally a tool that could be used to promote many years of insider trading that would produce consistent returns.
		But of course, any player who would support you with PROMIS software on something like this would want the principal to finance other operations.
		But that's the kind of, if we wanted to hypothesize or just engage in conjecture about what could be going on here, I just, given the magnitude of the money and the time period, I don't see how you explain the story without significant support from whoever the large banks involved were and ultimately the sort of intelligence and enforcement bureaucracy that has jurisdiction in these areas.
art bell ▲ ● ▼		How, Catherine, does this unwind without those institutional names becoming public?
catherine austin fitts ▲ ● ▼		You know, I don't know.
		It's hard to say without somebody took a whack.
		You know, I can't see the game, but I know there's a game going on.
		I think what's going on is economic warfare.
		And as the cash flows shrink and sort of the market, the bubble deflates, you're having chairs pulled in the game of musical chairs.
		And somebody's taking a whack at somebody else.
		And of course, the question is, who took the whack and what's going on behind the scenes?
		And we just don't have enough information.
art bell ▲ ● ▼		All right, okay.
		And another question is, is this a solitary anomaly?
		Or is this just the very beginning?
		I mean, you've got to imagine.
		First of all, you can't imagine a $50 billion scheme like this happening.
		But then once the unimaginable has occurred, you have to then, I suppose, imagine there could be others.
catherine austin fitts ▲ ● ▼		Oh, I can imagine a $50 billion scheme.
		In the scheme of the financial fraud that we're dealing with, $50 billion is small.
		So now, of course, the other question, what we've seen in other financial frauds, when a situation implodes, fraud is taken from other areas and piled in.
		So there was speculation, for example, in the bearings collapse that the real trading problem was much smaller, but once the implosion happened, everybody decided to move, consolidate other frauds in and take advantage of the situation.
		So if you look at the, again, I go back to the number one problem right now in terms of the debt overhang and sort of getting through the shakeout and getting back to a healthy state in the economy is the amount of collateral fraud and debt fraud within the governmental structure in the United States.
		And if it's going on here, it could be going on elsewhere.
art bell ▲ ● ▼		I'm sure it is.
		Certainly, Europe is coming apart right now.
		And they're having very similar problems.
		A lot of the Europeans, particularly the socialist Europeans, laughed pretty hard at the beginning of all this.
		And I don't hear any laughter any longer.
catherine austin fitts ▲ ● ▼		No.
art bell ▲ ● ▼		And then, of course, there's the OPEC nations, and they really laughed it up for a little while, and they're, of course, not laughing at all.
art bell ▲ ● ▼		And I think oil closed somewhere around 36.50, somewhere in there.
catherine austin fitts ▲ ● ▼		Well, part of the problem, Art, is an economy, a financial system works on trust.
		Yes.
		And part of what we're seeing is not a recession or the beginning of a depression.
		It's a freeze-up where people can't price assets or trade with each other because they can't trust each other and they can't trust each other's accountants and they can't trust each other's lawyers.
art bell ▲ ● ▼		No, that includes the banks, right?
art bell ▲ ● ▼		The banks are not trusting each other.
catherine austin fitts ▲ ● ▼		Right.
		But the reason they're not trusting each other is because they're not trustworthy.
		And so the freeze-up is an example of markets working.
		The market is saying, unless you behave, you know, because we've gone for decades saying, look, we can maintain the respectability of the system and get away with this fraud.
		And the fraud grows and grows and grows.
		And at some point, we hit a tipping point and it imperils the system.
		And what the system has said is, okay, we've crossed the Rubicon, you know, we've hit the tipping point, and now we're going to have to figure out how to change.
		And the opportunity is, in fact, that if you look at the waste and the sub-optimization in the economy, in the system, it's huge because we have basically, I mean, we have been carrying around an 800-pound gorilla on our back in every community, in every household, in this country, all over the world.
		And, you know, this is a planet that is being, you know, steadily harvested by organized crime, fraud, and warfare.
		And the economic loss or drain or tax, if you will, is absolutely enormous.
		And we've put off facing it.
		I used to have a pastor in Washington that said, if we can face it, God can fix it.
		If we can face this and we can start to change, there is incredible, just incredible opportunity.
		Imagine, I mean, I know because you and the team at Coast to Coast have done more than just about anybody to talk about suppressed technology.
		Imagine if all that technology was brought out of the closet and integrated into our day-to-day lives and economies, the savings that could happen on our energy bills and our transportation bills.
		There's incredible opportunity here if we're prepared to face what's really going on and change.
art bell ▲ ● ▼		Will we face that and will we begin to change?
art bell ▲ ● ▼		And is the promise of the Obama administration, I mean, is that the promise of the Obama administration, do you think?
catherine austin fitts ▲ ● ▼		Well, I think that's the promise that the Obama administration has tapped into, you know, the hope of that in every person.
		The reality is that the Obama administration is going to walk into office on January 20th and walk Smack into what I call the red button problem.
		And the red button problem is as follows.
		In the summer of 2000, I was speaking to a wonderful group of people called the Spiritual Frontiers Foundation International.
		They have a conference once a year to talk about how they could evolve our society spiritually.
		So these are people very committed to the highest evolution spiritually of the human race.
		And I was in the middle of a presentation.
		I'd been asked to speak about the economics of organized crime.
		And I was describing the fact that the U.S. economy launders at the time, according to the Department of Justice, $500 billion to $1 trillion of all illegal monies.
		And now with the growth of financial fraud, I'm sure it's more.
		And so I said to this wonderful group of spiritually evolved people, what would happen if we stopped being the global leader in money laundering?
		And they said, well, you know, the stock market would go down and we'd have trouble financing the government deficit because we'd offend the people that control Googage's capital now that they've been laundering all this money for many decades.
		And our government checks might stop or taxes might go up.
		And I said, well, let's pretend there's a big red button up here on the lectern.
		And if you push that, by whatever dent of your imagination, you can stop all hard narcotics trafficking in your community, county, country tomorrow, thus offending the people who control $500 billion to a trillion dollars of all dirty monies every year.
		And God knows how much accumulated capital.
		Who here will push the button?
		And out of 100 people dedicated to evolving our society spiritually, only one would push the button.
		So I said to the other 99, why would you not push the button?
		And they said, we don't want our mutual funds to go down, and we don't want our taxes to go up, and we don't want our government checks to stop.
		Now, that's what I call the red button problem.
		And if you look at what it's going to take to- And these were the evolved?
		These were the evolved people.
		Believe it or not, that was 2000.
		In 2007, I was up talking to the Bioneers Conference in Alaska and asked a group of 200 people dedicated to sustainable economies and localizing and lots of good stuff.
		The same question and art, 50% would push the red button.
		And for the first time in my life, I was just doing a conference in Hoenwald, Tennessee, where we were talking about reengineering the economy in a community.
		It was called Financial Permaculture.
		100% of the audience would push the red button.
		But that was the first time that I was with a group of people where there was more than an 80% consensus.
		Now, remember, in politics in America traditionally, it takes about an 80% consensus to bring about a real shift.
		Now, the Obama administration is going to walk into the White House, and the political advisors are going to say, okay, you've been elected.
		What everybody in America now wants is their check.
		They want their government contract.
		They want their housing program.
		They want their community development grant.
		They want their agricultural subsidies.
		They want an increase in their Medicare payments.
		And what the Secretary of the Treasury and the economic advisors are going to say is, well, you need to do whatever the banks tell you to do to get that money.
		And so the administration can't push the red button unless everybody, every household in every county, or at least 80% consensus around not only pushing the red button, but doing it in a way that what I call turns the red button green.
		In other words, how can we make money pushing the red button because then we can.
		And there are, of course, ways to do it, because as I said, the way we're running the economy now is sub-optimizing wealth to a huge extent.
		But to change that, you're going to change many things, and that's going to require a bottom-up political consensus for that kind of radical change.
art bell ▲ ● ▼		Well, yes, but for the incoming Obama administration, certainly a liberal administration, this is the opportunity of a lifetime.
		I mean, even the conservatives are basically saying we're going to have to spend our way out of this.
		And so here comes a man who's sort of been going to be given a blank check to spend our way out of it, whether it be by infrastructure, renewal, or my God, opportunities are simply endless to spend money.
catherine austin fitts ▲ ● ▼		When you tell me spending our way out of it, what I hear is let's put more milk in the milk bucket, even though it's got a hole in the bottom.
art bell ▲ ● ▼		Oh, that's right.
		Let's fill it far faster than it's leaking out.
		And that's exactly what's going to happen.
catherine austin fitts ▲ ● ▼		Well, let me be a tough guy, and let me go back to basics.
art bell ▲ ● ▼		Get as tough as you want.
catherine austin fitts ▲ ● ▼		Okay.
		So I was at a dinner party up in Washington at the end of 2007, and the fellow next to me worked at the General Accounting Office.
		It's now General Accountability Office, GAO, and is terribly depressed.
		I said, what's the matter?
		He said, I just saw the most recent community surveys from the Census Department, and they're reporting that the average American watches eight and a half hours a day of television.
art bell ▲ ● ▼		Right.
catherine austin fitts ▲ ● ▼		Okay.
		So let's look at that.
		Let's say that.
art bell ▲ ● ▼		Sounds a little high, but I guess it could be.
catherine austin fitts ▲ ● ▼		Sounds a little high.
		I think my guess is that that estimate includes when TV is on and you're doing other things.
		So you're making dinner or you're getting dressed in the morning and the television is on.
art bell ▲ ● ▼		Yeah, that means we're about to get it.
catherine austin fitts ▲ ● ▼		I'll come back to it.
art bell ▲ ● ▼		So that figure was how many hours?
art bell ▲ ● ▼		Eight and a half?
catherine austin fitts ▲ ● ▼		Eight and a half hours.
art bell ▲ ● ▼		Eight and a half hours a day.
		All right.
		All right.
		Very good.
		My guest is Catherine Austin Fitz.
		We're discussing the economic pickle that we're in from the high desert.
		I'm Mark Bell.
		Good morning.
		It's an interesting time we're in.
		Catherine Austin Fitz is my guest.
		Catherine was very much an insider.
		She's founder and president of Solari.
		She actually served as managing director and member of the board of directors of the Wall Street Investment Bank Dylan Reed and Company.
		Also served as Assistant Secretary of Housing, Federal Housing Commissioner at HUD in the first Bush administration, president and founder of Hamilton Securities Group.
		It goes on and on and on.
		Very much an insider and now out.
		And so she looks at things from many points of view.
		She's looking at, as I said before the break, the financial serve to describe what we're in, the pickle we're in.
		Now, pickle doesn't really do it.
		We'll be right back.
		All right, Catherine.
		I think we were talking about how many hours of T V for some reason.
		I don't remember what it was watching.
		About 8.5, somebody said.
		I think it may be a little less, but say it's 8.5, 8 hours, whatever.
catherine austin fitts ▲ ● ▼		So let's just look at a county of 120,000 people.
		And let's say out of that, there's a TV watching population of about 100,000.
		Some are too old or too young to really be watching TV.
		And let's just assume, Art, that we took one hour a day.
		We said we're going to watch TV one hour less a day, and we're going to contribute that hour to sort of improving our skills and making our community much more economically productive.
		If you add that up, that's 20,000 full-time staff year equivalents.
		The federal government, I think it's about 1,900 hours.
		So that's 20,000.
		That's the equivalent of 20,000 people working full-time who could be doing things that significantly improve the economic health and self-sufficiency of a local economy.
		Now, imagine if we all just took one hour a day and shifted it to doing that.
		So that's important because if we, the most valuable economic asset we all have is our time.
		And if we spend our time in things which don't build our skills, our knowledge, our learning metabolism, our economic muscle, there is no solution.
		Because in fact, the way you build a great economy is one person at a time.
art bell ▲ ● ▼		Sure.
catherine austin fitts ▲ ● ▼		Okay, so that's media.
		Let's look at education.
		The educational system in this country, and the education is absolutely dreadful compared to what this country is capable of.
		I mean, if you compare the educational system here to Scandinavia or many of the European countries, there's just no comparison.
art bell ▲ ● ▼		You're absolutely correct.
		And it's not because we don't spend money on it.
		I think we spend per student more than most countries in the world.
		It's just that we're not getting much value for our dollar, are we?
catherine austin fitts ▲ ● ▼		If you take a look at the young people today and you compare a child who's getting an excellent education, particularly homeschooled, and a child who's going through the educational system is getting a rotten education, there's a light year of difference between them.
		And ultimately, you can't produce a productive economy with kids who do not have the opportunity to have an excellent education and spend all day watching television.
		Let's go to food, food and water.
		You and I cannot have a clear mind or a healthy body if we're eating junk food and drinking fluoride and chlorine.
		And so let's go to small business.
		If we took half the money we spend on the lottery and pulled it in our local communities to finance small businesses, small businesses would not be dependent on the banks and therefore would not be sitting here right now having all of their credit pulled all across the country.
		When I was Assistant Secretary in 1989, I watched as the banks pulled credits from all the healthy parts of the economy.
		And so thousands of small businesses that were earning a profit, were very credit worthy, got their credit pulled just at the worst time.
		And that made it possible for franchises and large corporations to move into communities and pick up the market share.
art bell ▲ ● ▼		Now everybody's getting their credit pulled.
catherine austin fitts ▲ ● ▼		Right.
		But everybody's getting their credit pooled because we're shipping our money to Wall Street, and it's not coming back.
		But we're the ones who are shipping it there.
		I've told this story on Coast to Coast before about I live in a small farming community in Tennessee, and I was sitting with a group of women one day, and I realized that the two women on my left were financing a large New York bank.
		One was financing them through CDs, and the other through buying stock in their 401k.
		And they were getting about 4% on their money.
		And the person on my right had financed their business with their credit card from the same New York bank.
		And after they had done it, the bank had jacked the rate up to 23%.
		So two women were sending their money over 1,000 miles away and earning 4%.
		And a third, very close friend, was borrowing their money back at 23%.
		Now, why do we need a bank over 1,000 miles away to get in between the three of us?
art bell ▲ ● ▼		Well, you don't.
catherine austin fitts ▲ ● ▼		You don't.
		You don't.
		So we've been intermediated, and we have the power to disintermediate, but that means sitting down and doing the long, slow, hard work of figuring out, okay, how can we re-engineer these cash flows and be trustworthy to each other?
art bell ▲ ● ▼		Well, this may be an opportunity for that.
		Certainly, everybody's pretty much yanked what cash is left and they're holding on to it.
		It's under the mattress or TV or, I don't know, in a zero government situation or wherever it is.
		So there's a lot of cash sitting out there.
		And I suppose in that world that you wish was, this would be an opportunity, wouldn't it, to do exactly that and go down to your local bank and pull your money out of the bank that is not providing financing to your community.
catherine austin fitts ▲ ● ▼		Go back down to your local bank that is.
		I mean, throughout the economy, Art, there are good people.
		There are good bankers.
		There are good business people who didn't want to go along with this.
		A lot of them have left the big banks and gone to little banks or started little banks.
		They need our support because the financial system is very leveraged.
		So every dollar that leaves a fraudster and goes to somebody who's trying to make the economy work, You know, that's a dollar that can be multiplied and leveraged many times by them.
		The more support they have within a local community, the more they can do.
		And there's nothing more amazing than to see the good guys who've gotten very little support from the crowd suddenly start to get interest and support from the crowd.
		It's one of the greatest wasted energies in this economy is the honest government officials, the honest business leaders who have not been supported by the crowd.
		Watch them get one little ounce of support and look, you know, I don't know if you ever saw the movie Patton, but there's a great scene where Bradley says, you know, give George a headline and he's good for another 60 miles.
art bell ▲ ● ▼		I saw it indeed.
		Many times, actually.
		Give him a headline and he's good for another X number of miles.
catherine austin fitts ▲ ● ▼		So there's a huge number of potential commanders in this economy.
art bell ▲ ● ▼		The trouble is, how do you tell the good guys from the bad?
art bell ▲ ● ▼		There you've got a problem.
catherine austin fitts ▲ ● ▼		Well, it's I promote an idea called financial intimacy, which is only doing business with people you know and trust or people that people you know and trust know and trust.
art bell ▲ ● ▼		Well, that's how everybody got to Madoff.
catherine austin fitts ▲ ● ▼		Yeah.
catherine austin fitts ▲ ● ▼		They got to Madoff because he made them money.
art bell ▲ ● ▼		Yeah, but no one trusts friends of Madoff, friends of friends, and then it's my understanding that he would occasionally just turn somebody down, you know, for the headline?
catherine austin fitts ▲ ● ▼		Well, you know...
		No, no, no, no, I understand that, but I don't think people were putting money with Madoff without really knowing where their money was going.
		And they were putting it there without having the kind of financial audits and transparency that make for, I mean, if you look at the stories, and again, I'm taking this from the media, there were people who wouldn't put their money because they couldn't explain this kind of performance over many years, and they had no independent verification of how it could be so.
art bell ▲ ● ▼		But that's how it happened.
art bell ▲ ● ▼		It happened because of friends of Madoff and their friends, and it was an intimate little inside group that grew and grew and grew.
catherine austin fitts ▲ ● ▼		Right.
art bell ▲ ● ▼		And so when I said, how do you tell the good guys from the bad, you described a process that made Madoff?
catherine austin fitts ▲ ● ▼		No, no, yes, yes, it went by intimate connections, but it was not intimate as to where my money is going and what it's doing.
catherine austin fitts ▲ ● ▼		In other words, I'm putting my money in the black box, and as long as my money makes money, I don't need to care where my money is and what it's doing.
art bell ▲ ● ▼		But can anybody really understand the process?
catherine austin fitts ▲ ● ▼		Absolutely.
		Absolutely.
		For 20 years now, we've had two economies.
		One is a real economy, and the other is a bubble economy.
		And what's grown up in the bubble economy is the theory that if I can understand it, it's too mundane and boring, and I can't possibly make magical amounts of money.
art bell ▲ ● ▼		Is there any way that we don't go from bubble to bubble to bubble?
		Isn't it inherent?
		Isn't it the system?
catherine austin fitts ▲ ● ▼		Well, it's inherent in a system where you use central banking to pump and dump economies, and you make your money by pumping and dumping.
		Right.
		And of course, there are, you know, in theory, there should be natural cycles in an economy, but we haven't experienced that.
		What we've experienced for quite a while, particularly since we've had a central banking system.
		So from 1913, we've experienced tremendous pump and dump.
		And of course, the biggest question that we face, and which no one has the answer because we haven't achieved it, is how can we achieve real enforcement of standards of integrity within an economy?
		And I don't see that there's a way to do it, Art, without the culture supporting it.
		In other words, I think ultimately enforcement has to come from the crowd.
		And so whether it's as a consumer or a citizen, we have to be prepared to insist and support financial integrity.
art bell ▲ ● ▼		But you're describing a sort of a wonderful world that isn't even close to existing.
catherine austin fitts ▲ ● ▼		No, I'm describing a world where we don't sell out cheap and we understand what's going on around us.
catherine austin fitts ▲ ● ▼		So I'm describing a world where the crowd has been sufficiently burnt that it's prepared to convert to something which is more sustainable.
art bell ▲ ● ▼		Well, we certainly have a crowd that's been sufficiently burned.
catherine austin fitts ▲ ● ▼		No, not yet.
unidentified		Not yet?
catherine austin fitts ▲ ● ▼		Not yet.
catherine austin fitts ▲ ● ▼		The shakeout is far from over.
art bell ▲ ● ▼		Oh, well, good.
		Let's talk about that for a second.
		How far from over?
		There's people calling bottoms to the market now.
catherine austin fitts ▲ ● ▼		There's no way we're at the bottom.
art bell ▲ ● ▼		No way, huh?
catherine austin fitts ▲ ● ▼		We're not even close.
art bell ▲ ● ▼		Not even close.
catherine austin fitts ▲ ● ▼		We're not even close.
art bell ▲ ● ▼		Where do you see it settling?
unidentified		When you say it, let's just talk about the Dow, for example.
catherine austin fitts ▲ ● ▼		Okay.
catherine austin fitts ▲ ● ▼		I think the chances are fairly reasonable that we could see a Dow before the shakeout is over of as low as 4,500.
art bell ▲ ● ▼		Oh, my God.
art bell ▲ ● ▼		And that would happen in 2009?
catherine austin fitts ▲ ● ▼		It could.
catherine austin fitts ▲ ● ▼		It could.
unidentified		It could.
art bell ▲ ● ▼		All right.
		Do you see that beginning to manifest at which quarter of 2009?
		You want to call it that close?
catherine austin fitts ▲ ● ▼		Let me go back to the last time this happened.
		We had, during the 80s, we had a very significant housing bubble.
		The bubble just went to real estate.
		It didn't really hit the stock market.
		Big difference now is we found a way to pump and dump everything, not just real estate.
		So now we're looking at a slightly different situation.
		By 1988, I'll never forget the number two guy at Treasury came up to Dylan Reed.
		I was a partner on the board of Dylan Reed and met with a group of the partners, and he said, You know, we're holding this together with band-aids through the election.
		And the chairman of my firm, Nick Brady, went in in September to become Secretary of the Treasury, which was remarkable because it was two and a half months before his candidate won the election.
		And Bush won in the election in 1988.
		And, you know, everything got held together through the election, and then the inauguration happened.
		And then we faced two big dates.
		We faced the tax and disclosure dates that are going to come in March and the tax dates for individuals in April.
		And that was a big chunk time.
		And by that time, the pain was incredible.
		Credit was stopping.
		It was the same kind of situation.
		And then by August, because remember, we had a housing bubble.
		The housing bubble has slowed down, if not burst.
		And now the economy is slowing down.
		And as incomes fall and unemployment rises, we're going to start into the natural housing recession that happens when the economy slows.
		That's just now beginning.
		And what we're going to have to experience is another cycle down in housing, which should really begin to hit by summer.
		In 1989, the worst point was August 89.
		That's when we passed the law for the Resolution Trust Corporation and the government resolutions of the foreclosed properties and defaulted properties and the banks that went down.
		Now, during that period, remember we still had an economy with lots of muscle.
		We still had manufacturing.
		We still had the auto companies going great.
		And the stock market hadn't been pumped and dumped.
		And so the stock market held even rose a little.
		And of course, what you saw was large corporations could get goo-gobs of equity at attractive prices.
		The small guys were cut off from credit.
		The big companies had a field day.
		The big banks had a field day.
		And finally, to get out of the mess, what happened was the Fed did what they're doing now, which is they allowed the banks to borrow at low cost in the short end, reinvest in Treasury securities on the long end, and just print profits.
		Now, what's the difference today?
		Or let's just look at the chronology and lay it out on what's going to happen next year.
		We have a new administration.
		Everything has been held together with Band-Aids through the election.
		We have a new administration coming in on January 20th.
		We have a lot of the pressure to hold things together until the election is going to be off.
		And things, more problems are going to start coming out.
		And everybody's going to face disclosure dates in March for the institutions and tax dates, and then individual tax dates in April, which is going to be a real come to Jesus time.
		One of the things that's going to come out is the pension funds have taken huge losses because they're not leveraged.
		We haven't seen the urgency of that.
		What that means, though, is corporations, municipalities, state governments are now going to be presented with a bill that says, oh, by the way, your unfunded liability is much greater than you thought.
		We need an additional amount of money this year, et cetera, et cetera, et cetera.
		So there's going to be a moment this spring which is going to be a big wake-up call and the shakeout has to go through that cycle.
art bell ▲ ● ▼		Gerald Flenty also suggested that coming at about that same time is going to be a commercial market crisis.
art bell ▲ ● ▼		He said that that'll fall right on top of the home mortgage business.
catherine austin fitts ▲ ● ▼		Right.
		Well, think of, you know, there are 3,000 counties in America and 300 million people.
		And whether it's a household or a county, you know, the planet is made up of molecules.
		It's just like a body is made up of molecules.
		The planetary, the global economy is made up of households and counties.
		And you can't have a healthy global economy just like you can't have a healthy body if the molecules aren't healthy.
		And so these issues of productivity of one person, one family, one county are, you know, on one hand, they sound very mundane.
		On the other hand, they're the building block of a healthy economy.
		And if you look at the things we've done to promote a consumption society, a large corporate society, a centralized control and economy, all of those things have been progressively reducing the productivity.
		And, you know, I hate to sound like mom, but unless we change things so that individuals, households, and counties are behaving in productive ways, there are no solutions.
		The minute we start to do that, there's a world of solutions.
art bell ▲ ● ▼		All right.
		Okay, mom.
		Hold it right there.
		We're going to take a break.
		So I hate to say it, but Catherine Austin Pitts is sounding an awful lot like Gerald Salente.
		More in a moment.
		Stay right where you are.
		This is truly scary stuff.
		I always thought we'd go in one strange way or another, maybe nuclear conflict, you know, the big trade of the megatons upon megatons would do it then, or perhaps some small vile dropped, you know, and a little virus would suddenly go around the world and eat us all up.
		Instead, though, it looks as though it's going to be the economy.
		Every bit as deadly.
		It's a kind of a scary thing to be talking about, but we talked about scary stuff on this show.
		We'll be right back.
		So 2009 is going to be one rough year, and looking toward March and perhaps April around tax time, Catherine, you think that the market's going to do a tumble down to, what, around $4,500?
catherine austin fitts ▲ ● ▼		Well, there are several ways it goes.
		And, you know, one of the biggest sort of unknowns is the Federal Reserve has made it clear that it will print money.
		And so we're watching in November the St. Louis Fed indicated that the aggregate monetary base, which is one measurement of money supply, was now growing at a rate of 785 percent annually, which means it's doubling every six weeks if the current rate continues.
		So what we're watching is the stock market is falling dramatically, but that is invisible to us because the money supply is expanding dramatically.
art bell ▲ ● ▼		Well, you can watch the dollar for that, and the dollar is beginning to show exactly what you would expect.
art bell ▲ ● ▼		It's beginning to tumble.
catherine austin fitts ▲ ● ▼		Right.
catherine austin fitts ▲ ● ▼		And in fact, the way it's held its price has been quite amazing up until very, very recently.
art bell ▲ ● ▼		So take it, the reason for that is the flight to what people have thought of as safety around the world.
		In other words, money has been flowing into the U.S. from God knows where, everywhere, I suppose.
		If you're a Russian oil guy sitting on a bunch of money, you don't care if you get zero.
		You're just going to store it in Treasury notes or something until things get better.
catherine austin fitts ▲ ● ▼		My guess is that it's really interventions.
		Really?
		Yeah, there are some commentators who say it's people needing dollars to pay off dollar debts.
		That may be true, but my guess is we've seen extraordinary interventions.
		But at this point, Art, it's so hard to see what's going on behind the scenes, and there is so much massive intervention by the central banks and treasuries.
		You know, we're looking at a very managed economy.
art bell ▲ ● ▼		I've heard rumors, Catherine, and I want to specify that's all they are.
		You said extraordinary interventions.
		And I've heard rumors of trillions of dollars of intervention that we don't know about.
		Could that be true?
catherine austin fitts ▲ ● ▼		Yes.
catherine austin fitts ▲ ● ▼		Yes, it could be true.
art bell ▲ ● ▼		Really?
catherine austin fitts ▲ ● ▼		And in fact, we're looking at a situation, again, because I think the fraud within the debt system is very significant, where literally tomorrow, Art, if you became the head of the Federal Reserve or you became Secretary of the Treasury, when faced with the real magnitude of the problem, that's something you would do.
art bell ▲ ● ▼		Well, yes, I'm not suggesting they're not doing what needs or the only thing that can be done, button.
		Are they filling the bucket?
		You know, it's just simply got too many holes down in the bottom.
		So I don't blame them for continuing to fill the bucket, but that doesn't give us very long, does it?
catherine austin fitts ▲ ● ▼		Well, here's the thing.
		Because if you look at all the scenarios, whether we get a radical devaluation or whether the dollar falls fast or slow, the one thing we can count on is long-term fundamental trends.
		And here's the long-term fundamental trend.
		We are eating more than we are growing as a society.
		And we are keeping that going by having a military that is able to, has created a global taxation system through the balance sheets.
		You know, people buy our securities, hold our dollars, and then they fall in value.
		And that's literally a global taxation system.
		But that can't last forever without more and more force and more and more depopulation.
		So the reality is we need to change.
		And it's kind of like my favorite song from Tina Turner, We Can Do This Nice or Rough.
		And so you don't need to wait for the government.
		We don't need to wait for the Obama administration.
		What we need to do in our lives and in our homes and in our communities and in our networks is say, okay, what's my time?
		This is about New Year's resolutions.
		What time do I have in 2009?
		And what can I do to improve my health and skills?
		What can I do to reduce my expenses, to live more simply, to put as many degrees of separation between a fraudulent institution or system and me and my family and my household?
		And how can I start to shift my deposits, my purchases, my investments, and my behavior and attention in the economy in a way that in the long run will better advantage me?
		Because right now I'm sending my money into the financial centers and it's not coming back.
		I'm financing the fraud.
		I'm supporting the fraud.
		How can I withdraw and start to shift my money in a way that is positive for me and for the whole?
		That's what it's going to come down to.
		Okay.
art bell ▲ ● ▼		And if you were in the market, you're not in the market now, are you?
catherine austin fitts ▲ ● ▼		Personally, I'm part of something called a Solari Circle, which is a kind of investment club.
		And my Solari Circle has some money in the stock market, in the equity markets, but it's a small amount.
		As far as me personally know, all my money's in real businesses.
art bell ▲ ● ▼		What would you say to the person who's got the 401k?
		They've seen it fall, what, roughly probably on average, 30 to 40%, something like that.
		They're still at this point, you know, they've seen the recent sort of small rally.
		They're seeing it hang right around, I think, around 8,500, wherever it is right now.
		And they're tempted to just sort of hold on as opposed to getting out and confirming their losses at this point.
		They're holding on.
		How would you advise them?
catherine austin fitts ▲ ● ▼		Well, every person's different.
		So I'm loath to give, you know, to recommend broadly.
		But between now and I want to see where this shakeout comes out.
		The way I call it is right now I'm a big chicken.
		And I think that we're not looking at a market.
		We're looking at an economic warfare battleground.
		And unless you can afford intelligence agencies and the kind of capacity you need to play in an economic warfare battleground, it's not a place to be.
art bell ▲ ● ▼		So you don't understand.
art bell ▲ ● ▼		You're saying that the average person cannot possibly understand the game.
unidentified		Well, don't play.
catherine austin fitts ▲ ● ▼		What my recommendation is, is there are two economies right now.
		There's a bubble economy and there's a real economy.
		And generally what you want to do is you want to be in those aspects of the real economy that have long-term staying power.
		Now, let me just point out sort of a model.
		Once upon a time, we all invested our time and our assets in things that gave us the goods and services we needed.
		And then we became what I call intermediated.
		So people think in terms of, okay, I'm going to put my money in this black box.
		It'll make me a lot of money.
		I'll use that money to go over here and buy food and goods and services.
		Okay, so we're being intermediated instead of investing our assets and things that provide us with food and goods and services.
		We're instead putting money and money, getting money, and then buying it from somebody else.
		Now, the problem with that is both the financial system in which we're investing and the goods and services that we're buying are becoming more and more fraudulent and untrustworthy.
		The supply lines are getting riskier and riskier.
		And so we need to think in a whole new way, which is, okay, money's not something I use to get more money.
		Money is something I use to assert ownership, control, or access to the strategic goods and services I need.
		So in fact, for example, I had a friend who was complaining once that the yield on her portfolio was going down.
		And I said to her, well, this is really, and she was also complaining about her water bill.
		I said, this is very simple.
		Why don't you just get out of the market and build a well?
		Now, she was in an area where she could do it.
		And the notion that she would provide this for herself was so, you know, it was such a new way of thinking because she was used to being intermediated.
		So look in your life for ways of disintermediating.
		Get out of the risk that's associated with participating with fraudulent institutions on the financial side and get out of the risk of, you know, eating genetically modified food on the goods and services side.
art bell ▲ ● ▼		Catherine, look around the world for me.
		You've had some experience around the world.
		It looks like I've seen New Zealand.
		You've been in Hong Kong.
		Catherine, it looks to me like along with the United States lagging, I don't know, a few months, a year, we've got Europe right behind us, probably in as much or more trouble than we're in right now.
		The Asian countries, some of them to some degree may be decoupled.
		I'd like you to tell me about that.
		Do you see any countries that, any relatively safe havens that are, to at least a larger degree, decoupled from what's going on in the rest of the world and might ride through this okay?
		Or how do you see the rest of the world, Catherine?
catherine austin fitts ▲ ● ▼		Well, tremendous capital has been pulled out of the United States and out of North America and reinvested in the emerging markets, particularly in Asia.
		Wherever you see a country that has invested tremendously both in its population and its infrastructure, example, Singapore, example, New Zealand, you see an economy that has more muscle than we do.
		Wherever you see a country that has a young population, as opposed to the aging populations in the United States and Europe, you see economies that have more muscle than we do.
		At the same time, the debt bubble is global.
		And this sort of overhang and shakeout is global.
		And so much of the global economy has been driven by the U.S. consumer.
		So it's not clear to me that what's called the decoupling will work, which is we've invested enough in Asia and the Asian consumer can keep the Asian economy going.
		More importantly, we also have a trust problem that is global.
		You know, the financial fraud has burned everybody everywhere just about.
		Now, what we do have is we have economies which have gone through a pump and dump cycle in the 90s.
		So we have Russia, we have Eastern Europe, we have countries in Latin America, and they seem to have developed some bottom-up, what can I say, some immunity.
		And I think there's a lot from those countries and those cultures that we can learn because it appears that the pump and dump is moving this way.
		So I think they're pockets, but we're in very unknown territory.
		And the question is, as things look worse and worse from the centralized economy, can the bottom-up develop, connect, and grow?
		And that's the question.
art bell ▲ ● ▼		Boy, this is scary stuff.
		We're really in an area that is, I mean, we've just never been here before.
		There's really nothing in our financial history as a nation that serves as a model for what's happening right now.
catherine austin fitts ▲ ● ▼		I totally disagree.
art bell ▲ ● ▼		Well, then what?
catherine austin fitts ▲ ● ▼		The prairie.
		Our ancestors, I mean, we have two kinds of ancestors.
		We have ancestors who were living in teepees very happily on the prairie, and then we have other ancestors who came here with literally nothing or almost nothing, and they invented towns, they invented municipalities, they invented utilities, they invented water systems.
		You name it, they invented it and they built it.
		And it wasn't easy.
		One of my favorite quotes is from Winston Churchill.
		He says, we have not traveled all the way across the centuries, across the prairies, you know, across the waterways because we are made of sugar candy.
		In other words, if you look at what our ancestors, I live in a tiny farming community in Hickory Valley, Tennessee.
		My original ancestors came to Hardiman County from North Carolina.
		They tried to get away from the war, didn't manage to do that.
		But they lived in a dirt cabin.
		I've seen it.
		You had a family of seven people living in a one-room dirt cabin.
		And you look at what they did to scratch out a living on a couple of acres of land.
		It was extraordinary.
		So if you look at what our ancestors have accomplished and what they did to build this country, our families have been through this before.
art bell ▲ ● ▼		When I said what I said, I meant in terms of the financial crisis that we're in right now, I really can't think of any analogy in some of the difficulties we've had previously from the Great Depression to the various anxieties to hit the financial markets in the past.
art bell ▲ ● ▼		I just can't think of any example that is analogous to what we've got today.
catherine austin fitts ▲ ● ▼		Well, that's true, because I think the hardest thing that we face is if you look at the financial problems we've had before, you look at the Great Depression, the thing that's different about this is there is an evilness about what has happened and what has caused it that is unprecedented and it's sickening to the soul.
		And what you need to deal with these kinds of times is you need vigorous.
		And it's hard to get your vigorous up when you're contemplating that kind of evil.
		So I think community and networks and relationship can solve a lot.
		But how do we build those relationships and how do we build those communications?
		And how do we build those intimacy in communities where we've allowed narcotics trafficking to go on for 20, 30, 40 years?
		And it's created all sorts of non-communications and distrust between us.
unidentified		Exactly.
art bell ▲ ● ▼		And how do we build trust back from the ashes of what we're in right now and what is to yet come?
art bell ▲ ● ▼		I just can't imagine trust emerging on the other end of this somewhere.
catherine austin fitts ▲ ● ▼		I can, because I've seen it.
art bell ▲ ● ▼		You're an optimist.
catherine austin fitts ▲ ● ▼		Yes, I am.
		But remember, I'm an optimist.
		I don't know how much you know about how it was that I got out of being an insider.
art bell ▲ ● ▼		Tell me about it.
catherine austin fitts ▲ ● ▼		Well, I went through a process of my company was acting as lead financial advisor to the Department of Housing and Urban Development.
		And essentially, I was part of a group of people who were running government relatively cleanly and stood in the way of the housing bubble.
		So they had to go.
		So you had a phony baloney scandal.
		It pushed the honest people out.
		It stopped a lot of the internal controls or things that would have prevented a bubble from taking place.
		And as a result, I ended up in a process where I lived through 18 audits and investigations, 12 years of litigation and sort of the cleanup of litigation.
		And in the process, I learned a great deal about how control is engineered on a very centralized basis and how things really work covertly.
		Because to kind of get out of the mess, I had to look deeply.
		You know, I had to live through the physical harassment and learn how it was being engineered, et cetera, et cetera.
		And what I discovered was a lot about where the opportunities are.
		Because if you look at what's stopping the sort of natural genius and the learning metabolism of what is possible to be unleashed, when you really see what's stopping it and how much harm it's doing, you start to realize what's possible.
		Let me give you an example.
		When I left the Bush administration as assistant secretary, I started Hamilton Securities Group, and I had seen in the government how much of the fraud depended on not having good disclosure for citizens about how government money worked in their county and in their community.
		When you think about it, Art, it's logical that every American should get financial statements once a year saying, here's how sources and uses of government money worked in your congressional district.
		It's the equivalent of a financial statement for a corporation.
		So we built a software tool called Community Wizard.
		It was trying to make that information available through the internet to communities.
art bell ▲ ● ▼		Frankly, with your outlook on how things ought to be and your personal integrity, I have no idea how you lasted as long as you did on the inside.
		That's just astounding.
		Tell you what, hold it right where you are.
		When we come back, I'm going to open the lines and we're going to allow people to ask what they will about this financial network.
		Here I am.
		I know, folks, a lot of this seems very esoteric and probably downright boring to a lot of you.
		This economic stuff that seems, I don't know, somewhere out there and not as though it's affecting you.
		But I'm going to tell you that this one is as frightening.
		It's as frightening as anything that Coast has ever Talked about.
		It's as frightening as any ghost story, the best you've ever heard.
		It's as frightening, or if not more so, than just about anything scary that we've ever talked about on this program.
		And if it has not yet personally affected you, get ready because it's going to.
		Our economy is like a living thing that's had a stroke.
		It's as though we've all had a stroke.
		Some of us don't know it yet.
		Some of us are bored by talk of it.
		But eventually it's going to cause us, at the very least, a grievous illness, grievous pain.
		We just don't know it yet.
		So while it might seem esoteric and boring at the moment, I'm afraid it's one of the scarier things we've ever chosen to talk about.
		In a moment, you're going to get an opportunity to talk to somebody who's been on the inside.
		And we'll answer your questions.
		I don't know.
		Is there anything you want to ask about the economy, anything you don't really know, don't really understand?
		And there are no really dumb questions.
		In fact, that's kind of how we got into all of this, by people not asking what they were probably afraid were dumb questions of somebody who was handling or mishandling their money.
		And that's how we got into this mess in the first place.
		So no dumb questions.
		Catherine Austin Fitz is our guest.
		If you have a question for Catherine about the economy and the pickle we're in, that's coming up next.
		Okay, Catherine, if you're ready, I would like to, unless you have anything else, and you're welcome to if we've missed you really want to get in.
catherine austin fitts ▲ ● ▼		No, I love the questions that coast-to-coast listeners come up with.
art bell ▲ ● ▼		All right.
		All right.
		Here they come.
		Let's see.
		Dan in Louisville, Kentucky.
		Good morning.
		You're on the air with Catherine Austin Fitz.
unidentified		Oh, good morning, Art Bill and Catherine Austin Fitz.
		That's an honor.
		Good morning.
		Oh, my name is Dan.
		Right.
		The only question that I had was really about how it is that we're supposed to perhaps empower ourselves in the face of what I believe to be demoralizing factors to the media, the educational system, et cetera, although it's difficult to get systemic in terms of it being a body, the body economic, the body politic.
		But how is it that people are supposed to stand in a slow burn and not really get the gumption, in my opinion, to transcend this and see the big picture so that they can truly empower themselves?
		Now, I know that you spoke of people beginning to take a stock in perhaps their education and using their time more wisely, but it's really difficult to transcend it because I don't think most people really have the opportunity to see the big picture and say, I can do this and empower myself.
		I know that a lot of the kinds of things that I've been hearing from you are things that you're describing in detail, in my opinion, detail, perhaps.
		To either of you, it isn't.
		But what the machinery is that's going on behind the scenes and the level of corruption that they've had to reach in order to maintain it.
		But I mean, I'm talking about perhaps a bigger picture of how there's no way to transcend this without continually propping it up in the face of what we know to be differences in the standard of living perhaps between countries like India and China and those that are industrialized.
		And if the tariffs aren't lowered, for example, this is just one aspect of it, zero taxation for offshore, massive immigration in the face of a shrinking economy, how are we going to transcend this?
		Are we going to come to a point where, I mean, if it's a slow burn, most especially, people won't be hit between the eyes and come to the conclusion that, you know, we better have some other perspective.
art bell ▲ ● ▼		Okay.
		All right.
		Let's hold it there.
		He makes a good point.
catherine austin fitts ▲ ● ▼		Excellent point.
		The slow burn, when you're intermediated and you're depending on the machinery for income and you're looking to source your goods and services, so you're paying expenses back.
		If you're shopping at the company store and you're working at the company store, then you're going to get slowly slaughtered.
		And if you look at who's successful in this environment, what they have been doing is investing, whether it's their time or money or both, in building ways of getting out of the company store.
		So they're investing in things that bring their expenses down and make them much more self-sufficient and independent.
		They're networking and building friendships.
		And instead of being an expert who takes care of most functions by buying in the market, they're networking and getting to know people with whom they can trade to do self-sufficiency.
		A lot of it revolves around building either networks or communities of people who see the problem and are working and understand you can't be alone.
		But I see pockets of people all over the country who are adapting successfully and are happy.
		Now, I think the hardest thing, Dan, and for me the hardest thing was I had to get to the point where I made a decision.
		I had to make a decision about what was more important to me.
		Was it important for me to maintain, you know, I used to live in a mansion and be very, very wealthy.
		Was it important to me to maintain that or was there something more important to me than a certain level of material comfort and inclusion within whatever group that was?
		And so I had to make a decision that death was not the worst thing that could happen to me.
		And freedom to me, you know, I believe our freedom comes to us by divine authority.
		And that freedom to me was more important and integrity was more important to me Than anything, and I was prepared to die.
		And once you go through that personal choice of saying, you know, I just don't want to be a part of anything that's this dirty and perverted.
		And I don't want to be in a business of doing things which are really targeting genocide towards people I love or neighbors or Americans.
		So I think there's a personal choice that we all have to make deep inside.
		Are we going to live in fear or are we going to organize our life around what we're prepared to believe is possible?
		And to me, the most important thing for me is to believe that there is a future that I can be proud to leave to my, you know, to the next generation.
		And that's what I want to be a part of.
		And I'm just not going to be afraid anymore.
		So I think we all have to make that personal choice that we're not going to live in fear, that we're going to be part of creating something and living a life that we can be proud of.
		And then it's a matter of getting up every day and working hard and networking.
		But there are pockets all over the country of people who are doing that.
art bell ▲ ● ▼		I hope that it doesn't get to the point where those pockets by necessity become rebellious to the point that they decide they're going to break away, as Gerald Fluente suggested might actually be the case if it gets bad enough.
catherine austin fitts ▲ ● ▼		Well, I think you're seeing a lot of talk of secession and secession movements.
		Now, I don't think that's going to take hold, Art, unless there's support for it, because we know that there's a desire to centralize government, and secession will feed that.
		So what we've been watching for the last two decades is huge amount of assets moved out of sovereign governments, liabilities moved back in, and where that has to go, it's what I refer to as financial coup d'état, that has to go towards a re-engineering of governance, and secession could be part, and breakup could be part of creating what's called the North American Union and moving towards one world government.
		So I don't see secession happening unless it's supported by the pro-centralization team.
		The other thing is I don't see, I certainly don't see violent revolution happening because if you look at what's been going on in the last three decades with invisible weaponry, you know that violent revolution is just not, you know, it's not on the table.
		It's not possible at this point.
art bell ▲ ● ▼		Well, you're right, Catherine.
		Here's Richard in Las Vegas.
		You're on the air with Catherine.
		Good morning.
unidentified		Good morning.
		Good morning, Art.
		God bless you and your family in this upcoming new year.
		I wish you both, all of you the best.
		The same for you, Catherine.
		And I appreciate you taking my call, Art.
		You're making my night not so spiffy.
		I have a couple of points and then just a couple of quick questions.
art bell ▲ ● ▼		Go ahead.
unidentified		I think the problem here, a lot of us have heard Gerald Salenti many times.
unidentified		And Catherine, you sound in some ways the complete antithesis of him, almost like from the Wizard of Oz, the girl from the Wizard of Oz.
catherine austin fitts ▲ ● ▼		Oh, dear.
unidentified		And I don't think things are going to straighten out unless, and I've heard you not say anything about this, capital gains, taxes with the rich, production coming back to this country, corporate taxes.
		Goldman Sachs reported this last quarter, 1% they paid in taxes, over 37% last quarter because they moved offshore into the islands.
		And until these things are addressed, I think you're seeing economic anarchy at hand.
		And I think Gerald Salenti makes some really good points.
		I will listen for your answers.
		And again, I hope you all have a great new year.
art bell ▲ ● ▼		All right.
		You too.
		Take care.
		All right.
		Well, in some ways, I see his point.
		Catherine.
catherine austin fitts ▲ ● ▼		Oh, I agree.
		I think you've seen, you know, we're watching these business entities called corporations, which are really dinosaurs.
		You know, they're huge.
		They eat far more than, you know, I call it the tapeworm.
		They're parasitic.
		And so they use the services.
		They do all sorts of things that lose the government huge amounts of money.
		And then they pay very few taxes, and their partners make a great deal of money, and much of it's tax shelter.
		So I agree that they're pulling more energy out of the system that they're giving.
		But if you look at the, you know, all politics and all entrepreneurship is about sequencing.
		And the question is, how do we start to build enough power to start to do something about it?
		And as long as we're shipping, you know, as long as we're maintaining our brokerage accounts and bank deposits at those entities and admiring and fawning over their partners, et cetera, et cetera, we're not going to get anyway.
		So it has to start with us shipping our own money and withdrawing our time, our attention, our deposits, our brokerage accounts, et cetera, from the system.
		And as we start to do that, we then start to build sufficient political power so that you can start to change some of these things.
		But it's going to take that kind of bottom-up movement to build the political leverage we need to start to change the rules.
art bell ▲ ● ▼		I heard some companies in Europe have begun policy of paying their CEOs bonuses in toxic assets.
catherine austin fitts ▲ ● ▼		Well, that's I think it was Credit Suisse just announced that they're planning.
art bell ▲ ● ▼		That's right.
catherine austin fitts ▲ ● ▼		Right.
		And it's kind of scary because it means that any old employee can take the toxic assets and mark them, basically mark them down and sell them quickly, which could mark to market the whole market.
		So you kind of shake your head and say, What's that about?
art bell ▲ ● ▼		All right, Jason in Lansing, Michigan.
art bell ▲ ● ▼		You're up with Catherine Austin Fitz.
unidentified		Hi.
		Hi, let me wish you guys both a happy and safe holiday, first of all.
		Thank you.
		My question is: with the government bailing out everybody with spending our tax money, with income taxes coming up, are we going to expect to get them?
		And also, another question, with the foreigners that come in and open up party stores and everything else, how they're not taxed for seven years and their family members come over and keep running them, is something going to change with that, the way the economy is?
art bell ▲ ● ▼		Okay, I'm sorry.
art bell ▲ ● ▼		Repeat your first question.
catherine austin fitts ▲ ● ▼		Yeah, I didn't understand it.
unidentified		With the government bailing out everybody spending our tax money, are we going to be getting an income tax refund next year?
unidentified		I mean, they...
art bell ▲ ● ▼		But are you asking about a further stimulation package of some sort?
		Or what?
		Are you just worried that they've stimulated the various too large to fail companies so much that they're not going to have enough money to send us for our income tax refund?
		Is that it?
unidentified		That's it right there.
art bell ▲ ● ▼		I see.
		Okay.
		So basically, he's worried that the federal government is going broke.
catherine austin fitts ▲ ● ▼		Well, the federal government's been broke for a long time.
		It doesn't matter as long as the federal government can borrow more money and the central bank can print more money and get people to hold it, which is really, you know, if anything, it's become a military question.
		No, I mean, the price of the dollar at this point is determined much more by our military capacity than any fundamental economics.
art bell ▲ ● ▼		Gee, I haven't heard that one before.
catherine austin fitts ▲ ● ▼		Well, it's a global taxation system.
		Everybody buys Treasury securities and holds dollars, and they go down in value.
		And so it's a way of taxing every country around the world without any legislature ever approving it or anybody ever admitting it.
art bell ▲ ● ▼		I guess the big question is, Catherine, do you think that they're going to be able to print enough money and inject it into the right places in the economy to save us from financial Armageddon?
art bell ▲ ● ▼		And then once they've saved us, if that actually happens, they can pull back that money and have a big bonfire with it somewhere before inflation devours us.
catherine austin fitts ▲ ● ▼		Well, in theory, yes.
		I get back.
		You know, the answer is yes, because the military, I mean, if you have sufficient weaponry and if you have sufficient surveillance technology, you ought to be able to do it as long as you're willing to depopulate when and as necessary.
		So that's the heart of the slow burn.
		Yes, you know, I believe it is possible.
		I'm not saying that that's what's going to happen, but as an operational matter and as an economic matter, it's possible.
		It's not the system that creates the most wealth, but it is the system that makes sure the current people in control remain in control.
		So you can run a global taxation system.
		I don't think that ultimately that's where this is going to come out.
		Because I come back, if you go back through history, ultimately systems that become too centralized fail because they're just not healthy enough, they're not intelligent enough, they're not productive enough.
		And, you know, the thing we're grappling with is how do we start to evolve to something that's more decentralized and has more health and less perversion, the kind of perversion that comes with highly centralized and manipulated systems.
		You can't do that unless you face what's really going on.
art bell ▲ ● ▼		Larry in Manitoba, Canada, you're on the air with Catherine.
art bell ▲ ● ▼		Not a lot of time before the break here at the bottom of the hour.
unidentified		Yes, what I want to talk about is the food system.
gerald celente ▲ ● ▼		Just what you've just said about the grain markets.
		Now, if the grain markets aren't priced reasonably, I'm not going to sell.
		Either I'm going to sell my product cheaply, quickly, and hoard my money, and I won't buy my inputs to resell a crop, or if the value is kept up, I might keep going playing this game.
		And that's one question.
		And the next question is the thought that you can keep feeding North America with cheap food if you destroy the infrastructure of agriculture is a fallacy because everybody in agriculture is very, very leveraged.
		And the thing is, going back and looking to my grandfather's era that we can survive the depression, they had cows, they had chickens, they knew what to do with them.
		Today, you go to the average farm, you won't find a damn cat.
art bell ▲ ● ▼		That's a fact.
		Larry, listen, hold tight for a moment.
		I'm going to hold you over, Larry.
		And Catherine, you hold tight.
		We've got a break coming up.
		We'll be back on the other side.
		I want those questions answered myself.
		From the high deserts, I'm Art Bell.
		Here I am.
		What an interesting program this has been.
		And what a scary one at that, too.
		By the way, please take the opportunity, if you've not done so, to record or listen to the first hour with Gerald Plante, which will be repeated on many occasions coming up after this interview.
		So let us continue.
		Well, no, let us take a quick break and we'll be right back and continue.
		Want to quickly remind everybody that you can get to me by email.
		I'm Art Bell at mindspring.com or artbell at aol.com.
		That's A-R-T-B-E-L-L lowercase at mindspring.com or A-O-L.com.
		Back now to Larry, I believe it is, and Catherine.
		And the question on food is a good one.
		Catherine?
catherine austin fitts ▲ ● ▼		We're going through a fundamental shift in the markets and the economy from what a financial person would call a bull market and financial assets to a bull market and tangible assets.
		So instead of people making money on churning financial paper, we're going to get really interested in real assets.
		And the most important area is, of course, food, because food is something we all want and need.
		And America is the breadbasket.
		The agricultural industry here is very important.
		And so this is an area which is only going to rise in importance.
		There's no doubt that we have dangerously centralized the farming land and farming business in this country, the agricultural industry, and the consumer has gotten very dependent on very long supply lines of fresh food and food from around the world and from Latin America.
		And with credit drying up and interfering with all the shipping, I think Nicole, Larry, I think you're right.
		We're in for some real potential trouble and change.
		And if there's anything I could recommend to the listeners, it's you really want to get to know your local farmer and you really want to start to consider what you can do to increase local food self-sufficiency because the supply lines of most of our food supply are becoming much more risky and the quality of corporate food is deteriorating dramatically, of course, with genetically modified food and other processing.
		So food is an area that we all want to pay particular attention to and I agree, Larry, that this is a very important issue.
gerald celente ▲ ● ▼		Do you think they're going to keep pumping money into the system so the grain prices won't implode so they get another crop out of us?
gerald celente ▲ ● ▼		Because they sure hit us with the input side.
catherine austin fitts ▲ ● ▼		I think we're going to see continuing volatility in the commodities markets and continuing pumping and dumping.
		And the problem anybody functioning the real economy is going to have is the paper economy.
		And the futures market is going to, you know, is going to be the tail that wags the dog.
		And anybody who's functioning the real economy is going to have to start paying a lot more attention to what the futures market and the paper market can do to us and how to protect ourselves from it.
		So if you're a farmer trying to function without figuring out how to hedge your operation, you know, there's danger ahead.
art bell ▲ ● ▼		Okay.
		In the interest of time, Jim in Washington State, you're on with Catherine.
		Good morning.
unidentified		Hi.
art bell ▲ ● ▼		Hi.
catherine austin fitts ▲ ● ▼		Hi, Jim.
unidentified		Mr. Tickle McColl.
		Yeah, I'm in a powder cake situation.
		I have a building here in Tacoma that I'm putting on the market.
		And, you know, I've identified a buyer, and it's just mind-boggling and frustrating.
		He's qualified, and the bank is almost, they won't release the money.
		They won't finance him.
		It's almost like things have changed overnight from where they were, you know, loose and goosey with financing everybody to now they're on the other end of the extreme where they're just not kicking out the assets.
		And it's really putting things into perplexing.
		You know, I don't know if it's going to change after the inauguration or if you have some inside information about that, but it just doesn't seem right.
art bell ▲ ● ▼		Okay, Catherine, what do you know about the beginning movement again of the credit markets?
		Is it going to start moving again?
		Or, you know, as you put it, are they just going to hold on to it no matter what somebody's credit score?
		The banks are just going to hold on to the money.
		They're not going to let it go.
catherine austin fitts ▲ ● ▼		Well, right now, the banks are not flowing credit to the economy.
		And I would not wait to see.
		I would not wait on the banks.
		There are tremendous numbers of investors who are unhappy with how they're doing in the stock market through the brokerage community.
		And the question is, will they and can they shift to take up some of the space of the banks pulling out in the local market?
		So again, if we're shipping all of our capital to Wall Street and it's not coming back, the time has come to pull our capital out and start making markets locally, can that be done?
		Over the last five years, there's been a much larger market developing of individual investors providing this kind of mortgage and real estate financing.
		And so I would not wait for the banks.
		I'd start to look for alternative markets locally.
art bell ▲ ● ▼		Well, that's what you've been preaching.
		Okay, to Seattle.
		And Doug, you're on with Catherine.
		Good morning.
unidentified		Yes, good morning.
unidentified		Can you hear me?
art bell ▲ ● ▼		I hear you.
art bell ▲ ● ▼		Yes.
unidentified		Good.
		Let me turn my engine off here.
		Art, it's a pleasure.
		I've been a listener since George took over, and it's a great opportunity.
		I really appreciate the chance to speak with you.
		And Catherine, wow, I really appreciate your voice.
catherine austin fitts ▲ ● ▼		Thank you.
unidentified		And you're a voice for sanity in this economy that we have.
		I wonder if you would talk a little bit more specifically about, you mentioned opportunities in the real economy, and you've already answered it with the last couple of callers to a degree, but what might someone do as far as searching the internet?
		Are there resources that you know of that are really good for sustainability?
		What type of areas to put our money into and our energy into?
		I feel like coast to coast is probably one of the most important assets we have on this planet and the conservation industry.
		Things like that.
		Can you speak a little bit more specifically about those things?
		And I'll take my answer off the air.
		Thank you so much for your words.
art bell ▲ ● ▼		You're very welcome.
		Thank you for the call.
		Go ahead, Catherine.
unidentified		Sure.
catherine austin fitts ▲ ● ▼		I think there are many areas of opportunities.
		First of all, there are a series of different safe havens.
		I'm a great believer in precious metals as an alternative currency.
		So in a world where the big fiat currencies are unstable or volatile or we run the risk of a devaluation, precious metals provide an alternative form of money.
		And I think that's one safe haven.
		I also think our local communities present lots of opportunities where we can invest either in our home base or in our community in ways that reduce our expenses or simply create supply lines which have a lot less risk.
		So get to know your local farmer.
		If it makes sense, finance your local farmer.
		So there are lots of things that you can do locally to kind of build your network and support.
		I always tell the story of when I got into trouble, the people who financed me were my family because I'd always financed them.
		And when you get into difficult times, you find out that the people who stand by you are the people that you finance.
		So, you know, finance and remember your networks.
		There are going to be, throughout the world, there are places that are managed in much more responsible ways than the United States.
		I think those places are going to offer opportunities, both, you know, the sovereign governments and the countries there as well as some of the equity opportunities.
		And last but not least, ultimately, what we need, a real solution.
		So I come back to what I said about real assets.
		Where are the companies and where are the municipalities and places that transform our situation by finding how we can do far more with far less use of natural resources?
		Those kind of companies are all over the place.
		And as we come through the shakeout and as the shakeout is over, my prediction is over the next 20 years, the great fortunes will be made in those organizations, those enterprises, those municipalities that come up with a real transformation and real solutions and help to integrate all the technology which is available into the daily patterns of our lives in a way that really make a difference to just people and family and
		households and all the different things that go into making our lives wonderful.
		So in the long run, my prediction is, as is usually the case, the equity markets, but in the area of real resources and making real resources go much further with far less.
art bell ▲ ● ▼		Catherine, you mentioned the metals.
		Although it has begun to move on in the last couple of weeks, along with the bread prices cranking up, gold hasn't made the kind of moves that a lot of people would have expected in this kind of atmosphere.
		Why?
catherine austin fitts ▲ ● ▼		Well, because you can't recapitalize the banks if the price of gold goes to the moon.
		And it wouldn't surprise me, Art, if one of the reasons the Fed does not want to disclose what it's doing with the trillion dollars of loans is because it's financing the extraordinary losses on the derivative positions that are necessary to keep the dollar up and gold down.
		So we've seen massive intervention in these markets.
		I'm a member of the Gold Antitrust Action Committee, and we've done a great deal to document the manipulation of the gold market.
		So I think gold has been suppressed, and what that means is if anything, it's a buying opportunity.
art bell ▲ ● ▼		All right, let's go to Al in Vancouver.
		Not a lot of time, Al.
		Catherine, you're on the air.
unidentified		Okay, a couple of quick questions.
		One is how widely can the common law right of offset be used?
		For example, could you use the common law right of offset against credit cards and deduct the amount of the interest that they had charged you?
		Also, would Catherine agree that the Canadian banking system is one of the strongest in the world?
		And does she have any comments on the Canadian economy at this time?
catherine austin fitts ▲ ● ▼		Well, my guess is the Canadian economy is much stronger than the American economy.
		You have huge natural resources, fewer people, more cultural cohesion.
		Whether the Canadian banking system is the strongest in the world, certainly there are a lot of market commentators that say that.
		I'm not an expert.
		I would say that the financial system globally is so interconnected that the weaknesses that we've seen in other places, including the United States, could very dramatically impact the Canadian financial system.
		So I'm not sure that anybody completely gets out of the problem.
unidentified		Common law right of offset?
catherine austin fitts ▲ ● ▼		Common law right of offset.
		This is kind of one of my bugaboos because the common law right of offset was used, was asserted by the Department of Justice in the litigation that I was involved in with the federal government.
		So it's something I've gotten deeply into.
		I'm not an attorney, but my guess is that the common law right of offset could be used in literally any circumstance where debt has been originated with material omissions and disclosure or what I would call fraudulent inducement.
		But of course, what you can do is ultimately what you can succeed in asserting with creditors or what the courts will support.
		And we're at the beginning of that being battled out in the courts if it ever is.
		I hope it is.
		But my guess is, yes, common law right of offset could be offset in many different situations where there has been significant fraud or criminal behavior in the creation of an obligation, whether debt or taxes.
art bell ▲ ● ▼		All right.
		Mark in Lima, Ohio.
		Your turn with Catherine.
		Good morning.
unidentified		Yes, Catherine.
		Great show again.
		I've heard you and Gerald Salente use the term economic warfare.
		You used it earlier.
		Is the warfare nation against nation?
		Is it the government against the people?
		And if it's the government against the people, how can we not have major civil unrest, which would be a pretty easy way to do some depopulation?
		And I've got to bring this up about food.
		I've heard you say a lot of times about co-op kind of things.
		Well, you know, a co-op near Cleveland was raided by a SWAT team, and everything was confiscated, and no reason for it.
		So I agree with what you say.
		We've got to kind of band together, but I believe that that's already being fought against by whoever Is fighting against us.
		And that's the question.
catherine austin fitts ▲ ● ▼		Right.
		Good point.
		I don't disagree.
		And it's going to take tremendous organization at a local level to checkmate some of that.
		You know, I don't mean to say that this process is going to be easy.
		On civil unrest, of course it depends on how bad the economy is.
		The reason I am skeptical of whether or not we're going to see significant violence is I unfortunately had the opportunity to study in depth the development of non-lethal weapons.
		If you're interested, I would do a search for non-lethal weapons on the Internet.
		There have been several good books written.
		And tremendous technology has been developed, electromagnetic weapons, acoustic weapons with sound and other things over the last two decades.
		And if you look at where that weaponry has gone, I just think as a scientific matter that unrest that turns violent can be prevented, and it can be prevented in very sort of invisible or powerful ways.
		And so I don't see unrestricted.
art bell ▲ ● ▼		But if that's the only thing that's going to stand between us and unrest, I don't know how pleasing a prospect that is.
		I understand.
		There are microwave weapons that can keep you up.
		There are acoustic weapons that can make life so painful for you that you'll head back to wherever you came from.
		But, you know, even those things, Catherine, I'm not sure that if it gets to the point where people don't really, where the masses don't want to be pleased that they can be.
		I just don't know.
catherine austin fitts ▲ ● ▼		Well, my sense of it is that if you look at the tactics that will succeed against what I call the pro-centralization team, the most powerful tactics in the world are both spiritual and economic organization at the grassroots level.
		And if you look around the world at what happened in Russia or Latin America, those are the circumstances where people have gathered power and been successful.
		So I don't think violence will work.
		And I think the places that will be successful are the ones that use spiritual and economic power at the grassroots level.
art bell ▲ ● ▼		Okay.
art bell ▲ ● ▼		Michael in San Antonio, Texas, you're on with Catherine and not a lot of time.
unidentified		Good morning, Art and Catherine.
		It's an honor and privilege to speak with both of you all.
		I think this is amongst the most important discussions going on anywhere in the world.
		I had a specific question on online brokerages.
		Are those accounts even safe anymore?
		Like if you use them, like say to invest in gold or like an EFT or ECF in gold or silver?
catherine austin fitts ▲ ● ▼		Well, I'm a great believer in diversification and in scenarios where brokerage, I mean, because I think if the brokerage system goes down, everybody goes down.
		If you're really looking at the clearance operations and the clearing firms and through them, the big banks, if the brokerage system doesn't work, then, you know, again, the advantage of having real assets and assets in other places or other custodians, including in your own possession.
		So I do, you know, the watchword of good investment is diversification, and so you want to be diversified.
		But, you know, I think it's no one can tell what can happen with the brokerage systems, but I think it is also a danger to say you can't trust everything.
		We can't go off in the woods and eat beans and wait for the end of the world with our shotgun.
		That's not going to work.
		And so I think we want to be engaged in systems, but we just want to be diversified.
unidentified		Well, Mr. Cemente say there's going to be like bank holidays and will brokerages have that kind of experience where they say, hey, you can't get to your brokerage account for several days or will they always be available like they are right now during business hours?
catherine austin fitts ▲ ● ▼		Anything's possible.
catherine austin fitts ▲ ● ▼		And what I try and do is say I can't predict what the future will be, but I can plan to do well in any different scenario.
art bell ▲ ● ▼		And well you have done.
art bell ▲ ● ▼		Catherine, we're out of time.
unidentified		Chill's over.
art bell ▲ ● ▼		Thank you so very, very much.
catherine austin fitts ▲ ● ▼		Thank you, Art, very much.
art bell ▲ ● ▼		We will do this again one time.
		Catherine, thank you.
		Good night.

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