Part Of The Problem - Dave Smith - The Fed And You
Aired: 2020-05-19
Duration: 01:01:35


=== New Plans After Eviction (06:30) ===

[00:00:00]  Fill her up.
[00:00:02]  You are listening to the Gash Digital Network.
[00:00:07]  We need to roll back the state.
[00:00:09]  We spy on all of our own citizens.
[00:00:11]  Our prisons are flooded with nonviolent drug offenders.
[00:00:15]  If you want to know who America's next enemy is, look at who we're funding right now.
[00:00:20]  Every single one of these problems are a result of government being way too big.
[00:00:25]  You're listening to part of the problem on the Gash Digital Network.
[00:00:29]  Here's your host, Dave Smith.
[00:00:32]  Hey, what's up, everybody?
[00:00:33]  Welcome to a brand new episode of Heart of the Problem.
[00:00:38]  I am the most consistent motherfucker you know.
[00:00:41]  He is the king of the caulks.
[00:00:43]  And if you'll take a look over his left shoulder, you'll notice he's also the fire.
[00:00:49]  Robbie the fire, Bernstein.
[00:00:50]  What is up, my brother?
[00:00:52]  How are you?
[00:00:52]  Is this the first episode from the new home?
[00:00:55]  I did skanks the other day from here, but this is the first part of the problem from my new house.
[00:01:03]  Not too many people were this immediately able to benefit from a family being evicted.
[00:01:08]  So I appreciate what you did there.
[00:01:12]  Yeah, you know, they know I'm not evicted, Robbie, because evictions are illegal right now.
[00:01:18]  There's nothing you can evict people, even if you want to, which is not necessarily.
[00:01:22]  Did the Buddhist head come with the house, or is that your little piece of furniture?
[00:01:27]  This is something that somehow my wife brought over here that will not be there for very long.
[00:01:33]  For those people who don't know, I just got a house.
[00:01:36]  I moved out of my apartment, and I'm living the burbs life now, which is, let me say, first of all, I apologize if there's like a little bit of an echo or a tinny sound.
[00:01:49]  I'm still, I'm going to set up a full studio down here, but I got to fucking lay some carpets and some thick drapes and absorb some of this sound.
[00:01:57]  So bear with me through this episode.
[00:02:00]  It'll be, it should be much better by the next couple.
[00:02:02]  What more do you need?
[00:02:03]  You got the great Ron Paul decoration.
[00:02:05]  You should make that just wallpaper.
[00:02:07]  I got that out of a out of a box.
[00:02:09]  I was like, all right, I'll stick this here on the for.
[00:02:13]  And is that a legit fireplace?
[00:02:15]  Oh, yeah, baby.
[00:02:17]  Oh, but now we're at home, Davey Smith.
[00:02:19]  That's right.
[00:02:19]  We can have real fireside chats.
[00:02:21]  It's, you know, right.
[00:02:23]  We both, we're both from the fire.
[00:02:24]  I mean, you have the like the legit, this is a gas, you know, fireplace.
[00:02:28]  You have like a legit, you know, chop down.
[00:02:30]  I can see you chop down several pieces of wood, really got that thing going.
[00:02:34]  I think you probably rubbed two sticks together to start that fire.
[00:02:37]  It just seems like a real authentic, outdoorsy type fire.
[00:02:42]  Anyway, it's a weird thing.
[00:02:43]  Like I've just literally just moved in, boxes everywhere.
[00:02:48]  And I've never lived in the burbs before.
[00:02:52]  And it's, I know you're, you're basically from the burbs, right, Rob?
[00:02:57]  Burbs guy.
[00:02:58]  It really is.
[00:02:59]  It's a much different life.
[00:03:00]  And I'm kind of looking forward to dipping my toe into it.
[00:03:06]  I'll tell you, I got a fucking big house for the price of my Upper West Side apartment.
[00:03:11]  So that part's pretty cool.
[00:03:13]  And it was just anyway, just to let people in a little bit, more or less, I mean, my lease in my apartment was up this month, the end of next month.
[00:03:23]  And me and my wife's plan had been to spend another year in the city.
[00:03:28]  And then we were going to go buy a house.
[00:03:31]  That was our plan because we didn't really want to raise our daughter in New York City.
[00:03:34]  And it's just, you know, you need more space and stuff like that.
[00:03:38]  And you pay so much for so little in the city.
[00:03:40]  And, you know, I like the idea of raising my daughter in a house with a backyard and things like that.
[00:03:46]  And so the plan was to stay for another year.
[00:03:48]  But after all this kind of craziness going down and just the fact that In a situation when you have to, you know, wear masks constantly.
[00:04:00]  There's, you know, if you're, if you're stuck in your apartment, it's, it's much nicer to be stuck in a house.
[00:04:05]  It just seemed like, eh, fuck the fuck the extra year.
[00:04:08]  Let's just get out now.
[00:04:10]  And so we did.
[00:04:11]  And so we're here.
[00:04:12]  And I'm excited about it.
[00:04:14]  So there, there's my little thing.
[00:04:16]  And the great Ron Paul by Scott Horton came with me.
[00:04:20]  Right there.
[00:04:23]  Okay.
[00:04:24]  So how are you?
[00:04:25]  How's everything going by you, Rob?
[00:04:28]  I don't know anymore.
[00:04:29]  Whatever.
[00:04:30]  I'm just, I don't know.
[00:04:31]  I got to figure out a new life plan myself.
[00:04:34]  My apartment's up in July.
[00:04:35]  I got to figure it out somewhere else.
[00:04:36]  Yeah.
[00:04:37]  You've been here for quite a while.
[00:04:39]  Yeah, three years, but whatever, man.
[00:04:40]  If you can't do stand-up, there's no reason to be in the city.
[00:04:43]  And I need a whole new plan here.
[00:04:45]  But, you know, I'm created.
[00:04:47]  My other plans in life have gone amazing.
[00:04:49]  So I'm really good at the planning thing.
[00:04:52]  Well, it is.
[00:04:52]  There's a lot of, I think a lot of comedians are in a similar situation.
[00:04:58]  And we talked about this on Skanks like a few, a few weeks ago, the episode when Bobby Kelly was on.
[00:05:03]  We were saying it's like, there's kind of this thing where, especially for comedians who get a little bit older and have a family and stuff like that, that makes a real big difference.
[00:05:12]  But there is this thing in general where you're kind of like, okay, there's all the comedy clubs are in New York.
[00:05:18]  And so you got to be in New York to be where the action is, you know?
[00:05:23]  And after a while, when you're in the situation I'm in, in the situation you're in as well, when you've kind of done a lot of podcasting and you've built up a fan base, and really now you can kind of go on the road and fans will come out and see you.
[00:05:39]  Already it's less important to be connected to the clubs.
[00:05:43]  You know, it's like it's less important to go run a 10-minute set at the clubs when you're going out and doing a half hour, an hour in front of your fans.
[00:05:52]  And now, where there's this situation where, I mean, a lot of the comedy clubs in New York City were barely getting by.
[00:05:58]  I don't know how many of them are going to reopen at all.
[00:06:01]  On top of that, when is New York City going to be fully open?
[00:06:05]  I mean, a comedy club is an environment where you're really right on top of each other.
[00:06:09]  I don't know that anytime soon they're going to be allowing 100% capacity in there.
[00:06:13]  And then once you take that element out of it, you're like, oh, so I'm just staying here to be in a tiny apartment instead of having a big, nice space.
[00:06:24]  And then, you know, you can find them like an hour outside of the city or something like that, where like what I did, where you can get in really easily.

=== Lockdowns and Civil Liberties (04:28) ===

[00:06:31]  So it's just, I think a lot of people are kind of re-questioning what the plan is.
[00:06:35]  I think you're not alone there.
[00:06:37]  Yeah, me and Nick are going to have to figure something out.
[00:06:39]  My life partner Nick of three years.
[00:06:43]  There you go.
[00:06:44]  Okay.
[00:06:45]  So for today's episode, I wanted to do something a little bit different.
[00:06:51]  And it's something I was thinking about doing during the course of this wonderful lockdowns, where I thought we might start like a series that I was going to call Back to Basics and go over some libertarian basics that I think are important.
[00:07:09]  Because, you know, as I've said before, don't mean to repeat myself too much, but we are clearly moving into a different era, a different time now in terms of, you know, everything, but really, particularly in terms of the size and scope of government, liberty versus statism, which has always been the most important dynamic, but now it's really even more so than before.
[00:07:38]  They might have turned up their timetable of people willing to accept universal basic income and electronic location monitoring by about a decade.
[00:07:47]  Yes.
[00:07:47]  Like if you're projecting when you thought those things might come due, I would have said maybe like a decade, but now they're here.
[00:07:53]  Yes, that's right.
[00:07:54]  And on every level, in terms of, I mean, civil liberties, the idea of civil liberties are basically suspended right now.
[00:08:04]  The idea of even a pretense of caring about deficits and the size of government is completely gone.
[00:08:13]  I mean, you know, every president so far has, you know, railed against the spending of the previous administration.
[00:08:20]  Like Trump, you know, railed against Obama driving up the debt and Obama railed against George W. Bush driving up the debt, right?
[00:08:29]  And what we've just seen in the last three months is more deficit spending than, I mean, probably ever in a couple years.
[00:08:38]  So, you know, that's another.
[00:08:42]  Obama's having such a fun field day.
[00:08:44]  Like, okay, if you take the worst case scenario of that this thing is 100% true, then you have, okay, so the worst economic disaster of all of American history happened, that there's a freak episode of some unknown novel virus that never existed and the economy needs to be shut down because there's nothing that we could possibly do about it.
[00:09:02]  That's if you take the liberal agenda of what COVID-19 is and then Obama gets out there and goes, this whole thing is Trump's fault and it's because of his lack of preparation.
[00:09:10]  It's such a fun game that these guys get to play that if, you know, if you can spend the debt and enjoy the money while you're in office, you look great.
[00:09:17]  And if the house of cards crumbles while you're in there, it's because it's your fault.
[00:09:21]  Yeah.
[00:09:21]  Yeah.
[00:09:22]  But look, no matter what the situation is, whether every claim, every one of the worst claims about COVID-19 is true and this was the best thing to do and maybe we didn't even do enough or if it's bullshit, you know what I mean?
[00:09:41]  Or if it's a very, what I kind of think, which is a very real nasty virus, but these actions were not the appropriate way to deal with them and have caused much more long-lasting devastation than the virus was going to.
[00:09:56]  If that's the case, or if any of those things are the case, the reality is that we are quickly approaching 40 million people just filing for unemployment benefits.
[00:10:07]  Forget which are worth more than their jobs.
[00:10:10]  In many cases.
[00:10:11]  Yeah, most of these people don't even want to go back to work.
[00:10:13]  They're cleaning up on unemployment.
[00:10:15]  That's the best thing that ever happened.
[00:10:16]  That's a fair point, too, which actually, you know, kind of pulls in the other direction that the numbers in that sense might be a little bit inflated, that they've pulled a lot of people into wanting to be laid off.
[00:10:27]  And a lot of people have been requesting from their employers that they be laid off.
[00:10:32]  And you understand why?
[00:10:33]  I mean, sure, who would want to work for money when you can make just as much or more money in some cases from not working, particularly if there's a virus out there that you're afraid of?
[00:10:45]  I'd rather stay home and collect the money and spend time with my family.
[00:10:49]  By the way, that's such the dummies game because now you're really putting your, you're really putting your cards into the hands of the government that they're going to continue to give you a paycheck.
[00:10:57]  I mean, you're like totally walking away from personal response.

=== The War on Liberty (07:04) ===

[00:11:00]  Like for you, I'm not talking about like you might get some money now.
[00:11:02]  You're better off doing your dumb factory job unless you're going to sit home and study something.
[00:11:07]  Yeah, no, that's that's the case.
[00:11:08]  And I'm sure that sitting home and studying something is not the case for the vast majority of the people.
[00:11:14]  And no, you're absolutely right, but it does seem to be, and again, a lot of different things can be true at once, but it does seem like a lot of the politicians are quite happy to just put everybody on welfare, essentially.
[00:11:30]  And it's a scary thing.
[00:11:32]  But one way or the other, the government kicked tens of millions of people out of their jobs.
[00:11:37]  That's a reality of what's happening, whether you think it was the right thing to do or not.
[00:11:41]  That is happening right now.
[00:11:42]  But the thing, the topic I wanted to, and for these back to basic episodes, maybe I'll talk to the guys at Gas Digital.
[00:11:48]  We'll just leave these up and not put them behind the paywall because people ask me a lot of times for things to like, oh, do you have a great like intro to libertarianism type, you know, episode where we can share it around to people who aren't libertarians and convert them in.
[00:12:02]  And a lot of times I'm kind of in this tough situation where you kind of, when you do a show like this, you have a lot of people who have been listening for almost a decade, then you have other people who have been listening for a few years, then you have someone else who's checking it out for the first time ever.
[00:12:18]  So I can't every episode be introing you into this shit because then it's like, well, the people who have been here all along are they're already you know on level 20.
[00:12:28]  They're not trying to go back to level one.
[00:12:30]  But for this time period right now, our premise has basically been that we really need and have the potential for a new liberty moment.
[00:12:44]  And it's never been more important.
[00:12:46]  And I think that a lot of times over the last few years, a lot of the talk of the Ron Paul days, the liberty movement days, hasn't been quite as sexy as some other topics.
[00:13:03]  You know, if you're watching like a brawl between Antifa and the alt-right or something like that, you know, it's like that, that's just, it's all these cultural issues that people are going to war over.
[00:13:14]  And a lot of them are really important.
[00:13:15]  I've spent a lot of time over the last few years talking about them.
[00:13:19]  I'm not trying to downplay their significance, but they really sucked all of the air out of the room for the issues that us in the liberty movement really wanted to put forward.
[00:13:28]  Like if you're talking about, I don't know, like white privilege and transgender bathrooms and whatever, ethno-states or any of this other kind of just distraction silly issues, it gets a lot more clicks and a lot more attention than someone talking about central banking or the deficit.
[00:13:48]  That stuff comes off as almost a little bit boring in comparison.
[00:13:52]  And I understand.
[00:13:53]  I understand why.
[00:13:55]  But now things are getting serious.
[00:13:58]  And it's a whole lot of the shit that the people in the liberty movement have been talking about for years.
[00:14:03]  This is all about government overreach.
[00:14:06]  And, you know, so I just think this stuff is important now.
[00:14:12]  And so it's not a bad idea for us to kind of go over some things that we think need to be inserted back into the conversation.
[00:14:20]  And even for people who are on level 20, who have been here with us forever, it's not the worst thing in the world to get a little refresher and to kind of all go over this shit together.
[00:14:29]  So the thing I want to talk about on this episode is the Federal Reserve.
[00:14:33]  This is going to be like a basic, back to basics, why we oppose the Federal Reserve and want to see it abolished and how much damage it's caused.
[00:14:47]  And the Fed, I think, is that of all of the big issues from the Liberty Movement, and this is what Ron Paul gets all the credit in the world for.
[00:14:57]  Scratch your chin right there, Ron Paul.
[00:14:58]  You've earned it.
[00:14:59]  There you go.
[00:15:01]  He was the only guy who really defied the odds to insert the Federal Reserve into the popular conversation, at least to some degree.
[00:15:13]  I mean, he was drawing tens of thousands of people to his rallies, and they were screaming and the Fed with passion and enthusiasm.
[00:15:22]  That is pretty crazy that he was able to accomplish that.
[00:15:26]  I know people, I think it was both Bob Murphy and Tom Woods, when Ron Paul was running, were advising that he not talk about the Fed because Ron Paul wouldn't shut up about the Fed and they were just kind of like, look, I'm with you completely, but no one's going to care about this.
[00:15:44]  Like, you know, you're not going to reach young people talking about the Federal Reserve.
[00:15:47]  Talk about the war on drugs, talk about blah, blah, blah, the war in Iraq, all this other stuff.
[00:15:52]  That's what people care about.
[00:15:53]  And they were both like, wow, we were so wrong.
[00:15:56]  And they were delighted to be wrong.
[00:15:57]  Or they were like, he actually got people really excited about this shit.
[00:16:01]  All right, guys, let's take a quick second.
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[00:17:21]  All right, let's get back into the show.
[00:17:24]  This was one of my first big things.
[00:17:26]  When I found Ron Paul and the Liberty Movement in 2007, 2008, I was really anti-war, and that's kind of how they pulled me in.
[00:17:33]  And then they kept talking about this thing called the Federal Reserve.
[00:17:37]  And I was like, what is this?
[00:17:38]  And the way Ron go ahead.
[00:17:40]  Just to, you know, firstly, it's interesting because it's the greatest con story ever.
[00:17:45]  If you've ever watched, like, this puts, what was that?
[00:17:49]  The any casino heist movie you've ever seen, the Federal Reserve is more interesting because they convinced us all of the greatest scam ever.
[00:17:57]  And if you're concerned about war, it ties into it because we wouldn't be able to go to these wars because you'd have to actually tax people.

=== Central Banks vs Private Money (15:12) ===

[00:18:04]  You'd have to raise the money.
[00:18:05]  And people would be like, I don't really care about going to war with Iraq enough.
[00:18:09]  And so the Federal Reserve ties into the war issue because if you took it away, you wouldn't be able to have these unfounded wars.
[00:18:15]  Absolutely.
[00:18:16]  And that goes not just for wars, but for every big government program you can think of.
[00:18:20]  This is, this is, it is the great facilitator of big government.
[00:18:25]  And as you said, it's the greatest robbery.
[00:18:30]  It's the greatest heist in human history.
[00:18:32]  There's never been anything even close to the level.
[00:18:35]  Bernie Madoff is like stealing your change jar compared to what the Federal Reserve has robbed from the American people.
[00:18:43]  I remember when I first heard Ron Paul talking about the Federal Reserve, and I didn't know what it was.
[00:18:47]  I heard the term a few times before, but I couldn't have even begun to explain to you what the Federal Reserve was.
[00:18:57]  And he would describe it.
[00:18:58]  And I remember thinking to myself, this can't be right.
[00:19:02]  This can't be right.
[00:19:03]  I would have heard of this.
[00:19:04]  Someone would have taught me about this.
[00:19:07]  One of my teachers would have mentioned it.
[00:19:09]  One of these fine people on the news would have brought this up at some point.
[00:19:14]  It can't possibly be that there is a secret organization that's privately owned that just can make as much money as they want and they can profit off of it.
[00:19:28]  And they work in partnership with all the big banks.
[00:19:30]  This can't be real.
[00:19:32]  And there's no way it was created by bankers writing legislation in secret and then bankrolling presidential candidates and congressmen to get it passed.
[00:19:44]  This can't be real.
[00:19:45]  But you know what?
[00:19:46]  Do what I did.
[00:19:47]  Go do all your own research.
[00:19:48]  Go find the lie in all of what was just said, and you won't find one because that is the system.
[00:19:55]  Here's the thing, Davey Smith.
[00:19:57]  You have to understand money's very complicated, and we need bank elasticity.
[00:20:02]  And what we need to make sure is that if there's ever a run on the banks, there's some sort of a lender of last resorts that people feel comfortable keeping their money in banks.
[00:20:10]  We also need a working system where if the government's going to run a deficit and we suddenly really, really need money, there's someone that we can lend it from.
[00:20:18]  And I believe at the origins, it's because the bankers actually had that money.
[00:20:22]  But then that somehow translated to, oh, we'll just allow these people to just print it and hand it to us.
[00:20:26]  So at least it's not the government just printing money and having a deficit.
[00:20:29]  We borrowed it.
[00:20:30]  Who do we borrow it from?
[00:20:31]  Oh, the people at Chase Bank and where they get it from?
[00:20:33]  They just printed it because they're allowed to do that.
[00:20:36]  They get the magical special power that while no one else can just print money, invent it, and say, hey, here it now exists, they can do it.
[00:20:42]  And guess what?
[00:20:43]  They can also bail themselves out.
[00:20:45]  Yeah, that's right.
[00:20:46]  That's right.
[00:20:47]  And why is it exactly that we need this elasticity?
[00:20:52]  Why is it that the other system or like a commodity-backed money system or something like that would be too rigid?
[00:20:59]  Well, there's basically a couple reasons that are given.
[00:21:03]  Now, one is to smooth out the business cycle.
[00:21:08]  Okay.
[00:21:08]  Because they say basically capitalism just has this natural tendency to have these ups and these downs, these ups and these downs.
[00:21:16]  So we need to smooth that out.
[00:21:18]  We need to have a dual mandate where we're concerned about both employment and inflation.
[00:21:25]  Okay.
[00:21:26]  So these are their arguments.
[00:21:28]  These are the official arguments for why we need a central bank and we need fiat currency.
[00:21:33]  And we'll examine all of those in just a minute.
[00:21:36]  But I just want to for it's let's just say there's somebody starting off from zero, not understanding it.
[00:21:43]  This is how I would describe the Federal Reserve.
[00:21:46]  The Federal Reserve is essentially the government department of money.
[00:21:52]  Now, they don't call themselves that.
[00:21:54]  They don't even call themselves a government organization, but that's what it is.
[00:21:58]  It is a government department.
[00:22:00]  It's a very special government department that's allowed to consider itself private.
[00:22:06]  And because it considers itself private, it's never been audited.
[00:22:09]  It operates in as much secrecy as it wants to.
[00:22:13]  They don't vote.
[00:22:14]  Right.
[00:22:15]  There's no vote.
[00:22:16]  There's no, right, there's nothing like that.
[00:22:17]  There's no even, there's no pretense of transparency.
[00:22:23]  But, you know, that's, but, but it's not a private organization.
[00:22:28]  They just use this so that now they'll give out some information sometimes, but it's only what they want to.
[00:22:34]  So they'll give out, you know, they just like, I think it was in the last 10 years, they just stopped giving out the M3 monetary numbers.
[00:22:41]  It's like, we're just not going to do that anymore.
[00:22:43]  I don't feel like it.
[00:22:44]  Who profits off the Federal Reserve?
[00:22:46]  Who owns the Federal Reserve?
[00:22:48]  They don't need to tell you.
[00:22:49]  They don't what transactions have they made.
[00:22:51]  Like I said, they've never been audited.
[00:22:52]  But they are essentially a government department.
[00:22:56]  Now, they were created in 1913 by an act of Congress that was signed into law by Woodrow Wilson.
[00:23:04]  The Fed chairman is appointed by the president.
[00:23:08]  So to use an analogy that I believe Bob Murphy used, you know, it's as if you said, let's just say that Walmart or some company like that was created by an act of Congress.
[00:23:22]  They weren't just a company that got together.
[00:23:25]  You know, it was like Congress created in the Walmart Act.
[00:23:27]  We built these stores Walmart.
[00:23:29]  And then the president appointed the CEO every few years.
[00:23:33]  Would you consider that a private company?
[00:23:36]  Probably not.
[00:23:38]  It's really more of a government agency than anything else.
[00:23:42]  And what they are is a central bank.
[00:23:47]  So they print money and they can create as much or as little as they want to, especially now that we're, since 1971, we're off the gold standard or 73, we're off the gold standard.
[00:24:02]  So they can, it's a complete fiat money.
[00:24:04]  They don't even print it anymore that much.
[00:24:08]  They really just create it on computers and then they can lend it out.
[00:24:12]  And they basically can set the short-term interest rates.
[00:24:17]  So they can lend money out to banks, to the big banks for basically nothing at this point.
[00:24:27]  I mean, the Fed funds rate is down to zero.
[00:24:29]  So they lend money out to banks for free.
[00:24:33]  They can pay the money back if they want to with no interest on it.
[00:24:37]  And then those banks lend the money out to suckers like us at interest.
[00:24:41]  So the banks make huge money just from taking money from the Federal Reserve and lending it into the economy.
[00:24:50]  The money that we all use to trade and exchange goods and services, by government decree, we have to use it, right?
[00:25:02]  There are these legal tender laws.
[00:25:04]  You have to accept this money if you're a business anywhere, and you have to pay your taxes in this money.
[00:25:10]  So the money has this value that is legislated by the government baked into the cake.
[00:25:16]  And they get to print as much of it as they want and hand it out to their buddies who can then lend it out.
[00:25:21]  Here's what's interesting about that is that sometimes they don't even lend it out.
[00:25:24]  If you look back to what happened in the last financial crisis, they gave over all this money to the banks to lend out and they never lent it out.
[00:25:31]  Now, here's where I'm kind of talking out of my ass, but I believe this to be accurate.
[00:25:35]  They're not allowed to take that the money from the Fed and then go and put it into risky assets.
[00:25:40]  They're not allowed to do that.
[00:25:41]  But what they can do is take all the other money that they have and spend it on risky assets and then take the Fed money and keep it in the reserves so that they're shoring up their balance sheets and making more of those other funds available.
[00:25:51]  So I think probably part of why is firstly, they just keep the like they didn't lend it out.
[00:25:56]  That's what happened the last time around.
[00:25:58]  So I think part of it is because it allows them to get away with their more speculative bets.
[00:26:03]  And at the moment, they might even be playing, whatever.
[00:26:05]  That's too speculative.
[00:26:06]  So I don't want to say it.
[00:26:06]  But what we were saying earlier about smoothing out the business cycle.
[00:26:10]  So there's two parts about that that are truly insane.
[00:26:12]  Firstly, the idea is supposed to be to save when things are going well.
[00:26:16]  That's part of what the game is.
[00:26:18]  And they never do that.
[00:26:18]  Government is never once saved when there's a surplus to then smooth out the business cycle and invest in a downturn.
[00:26:25]  The other thing, and I've never really heard anyone say this, but if you look at like a financial trend line and stock goes up and down, but it's up on like a trajectory where it's going up, that works out well for everybody.
[00:26:35]  But part of what's going on in a boom and bust cycle is that your speculators are getting wiped out.
[00:26:39]  People made bad investments.
[00:26:40]  People had the wrong signals and all of a sudden they crash and we got to purge the bad actors.
[00:26:46]  But now if all those bad actors are being propped up by government or they're making male investments because they have bad price signals, so then your boom and bust cycle is going to be significantly worse than your natural cycle.
[00:26:57]  And that's being, so in other words, you have two problems with the government kind of interjecting itself into the economy is one is I think you actually erode what would otherwise be an upward trajectory and you're creating bigger boom and bust because firstly, you're propping up the male investors and you're giving people bad price signals.
[00:27:16]  Yes, that's absolutely right.
[00:27:18]  And the idea that is really just accepted in the mainstream is that it's the nature of capitalism that leads to these boom bust cycles.
[00:27:28]  But there's really no good working theory to explain why that would be.
[00:27:33]  I mean, if you think about right, like an economy as advanced as any modern economy is today, You could understand a reason why there would be ups and downs in certain sectors, right?
[00:27:47]  Like, I don't know, there's something happens, you know, whatever.
[00:27:51]  Like, maybe there's like a bad harvest season or something.
[00:27:55]  And so, farming takes a big hit, or maybe there's something like, you know, whatever you could think of in any particular industry that might lead to that industry having a boom and then a bust.
[00:28:07]  You know, like, just for example, maybe we come out with some really cool cars, and so everybody goes out, more people go out and buy cars.
[00:28:14]  So, the number of people who buy cars goes way, way up, but these cars last a really long time.
[00:28:20]  Like, you don't need to buy new cars.
[00:28:21]  So, then in the future, since everybody already bought them, now you have a big dip, right?
[00:28:25]  You could think of in a particular industry why there'd be a boom and then a bust.
[00:28:30]  But why would it be the case that across the board, we just have a good economy and then a bad economy, and then a good economy and then a bad economy.
[00:28:40]  And if you're at least 30 years old, you've already lived through this.
[00:28:45]  Everybody has.
[00:28:46]  And if you're 60 years old, you've lived through it several times, where all of a sudden the whole economy is humming along, everything's doing great, and then boom, there's a big tank in the entire economy.
[00:28:58]  Now, what would really account for that?
[00:29:00]  Well, think about it this way, right?
[00:29:03]  If you're trading, if every economic transaction is 50% money, or just about every one of them, right?
[00:29:13]  Like, if I go to get a coffee at the store, we trade coffee for money.
[00:29:18]  If I go to buy a car, we trade a car for money, a computer for money, whatever you want to insert.
[00:29:24]  This is the central issue.
[00:29:25]  So, when there's someone's fucking with the money, this affects the entire economy.
[00:29:31]  And this is why you see the boom and the bust.
[00:29:34]  And what happens is the, you know, just like this is why I started by saying the Federal Reserve is the government department of money, because I think most people, certainly most free market-leaning people, will understand that if a government department has a complete, you know, control on something, it's going to suck.
[00:29:54]  And there's going to be all types of problems associated with that, just like every other government department.
[00:30:01]  And there's several reasons, but the main reason is the problem of monopoly, which is that there's no competition, there's no real market, and so things don't get figured out.
[00:30:14]  And you can just ask yourself why when you go to the, say, the DMV, it sucks.
[00:30:22]  And when you go to the Apple store, it sucks a lot less.
[00:30:26]  And why is that?
[00:30:28]  Well, because at the Apple store, they have to compete for your patronage.
[00:30:35]  They have to compete to make sure.
[00:30:37]  I mean, there literally will be there and around the corner.
[00:30:39]  There's like a Hewlett-Packard store.
[00:30:41]  And so if they're just shitty to you and they're like, no, get in that line.
[00:30:45]  You have the wrong form.
[00:30:46]  Go back in that line.
[00:30:47]  Go back in that line.
[00:30:48]  Then that line.
[00:30:48]  You'd be like, fuck this.
[00:30:50]  I don't really need an apple that bad.
[00:30:52]  And so they, in order to get that money from you, they need to win over your competition.
[00:30:57]  But the DMV doesn't.
[00:30:59]  They have a monopoly.
[00:31:00]  You want to drive?
[00:31:02]  Well, then you got to get your license from us.
[00:31:04]  And so I don't know what to tell you.
[00:31:05]  Get in these six lines, blah, blah, blah.
[00:31:08]  Now, the other thing that is really worth mentioning, and this is to me, probably the central economic problem with the Federal Reserve, is that it is, by its very nature, price fixing.
[00:31:23]  And this, almost any economist, any economist worth their fucking, you know, their degree, worth their weight and whatever, worth their salt.
[00:31:34]  What's the, I'm not good with expressions, but almost any economist will tell you very easily the problem with price fixing.
[00:31:42]  Like, why is it that we can't just decide that the price of, you know, like, let's say we just want everybody to have a computer.
[00:31:51]  Well, why can't we just write a law and say the price of computers is five bucks?
[00:31:56]  Now everybody can afford a computer.
[00:31:59]  I mean, like, everybody should be able to think this through the basics of this.
[00:32:03]  Why, why we can't do that?
[00:32:06]  Forget like why it's evil and why, you know, like forget the moral libertarian case, which is very important.
[00:32:13]  I'm not like saying forget that permanently, but just for the moment, forget the fact that you're now saying the government is going to like arrest somebody for the crime of selling a computer for more than $5 and that it's a voluntary transaction, any of this.
[00:32:25]  Just in terms of the economics of it, why would it not work to legislate?
[00:32:31]  You ready?
[00:32:32]  I'm going to lay it on.
[00:32:33]  First is within a week, you won't have any computers left, and that's what they call rationing.
[00:32:38]  Or suddenly you have computers that are essentially calculators and you'll be like, oh, if I gotta, I gotta do 5537808 if I want to see boobs on this thing.
[00:32:47]  Well, right.
[00:32:47]  Well, so what's gonna happen here, right, is that right away you have you have these stores with a bunch of computers in them and you just legislated that they have to sell them for five dollars.
[00:32:56]  So they don't want to go to jail.
[00:32:58]  You know, now some of them, of course, will immediately go into the black market, right?
[00:33:02]  But so they're going to sell a few computers for $5.
[00:33:05]  People are going to rush in, Walmart stampedes, Black Friday style, to get these $5 computers.
[00:33:11]  The people who sell them are going to sell them at a tremendous loss.
[00:33:15]  They're losing a bunch of money, right?

=== Price Controls and Interest Rates (08:49) ===

[00:33:17]  Because it costs a lot more than $5 to make a computer.
[00:33:20]  It's whether you like that or not.
[00:33:22]  It's just nobody's going to fucking build computers and get all the parts and manufacture them for that little money.
[00:33:28]  So they're just not going to build them for that.
[00:33:31]  You hope you get a lot of sodas and fries while they're picking off their computers so you can make up the margins.
[00:33:36]  Exactly, right?
[00:33:37]  So now there's going to be a huge shortage in computers because no one's going to produce them anymore because they've all been bought up, the ones that were out there, and there's no money to be made in this anymore.
[00:33:47]  So nobody is going to go into producing them anymore.
[00:33:51]  Now, likewise, if you were to say, we don't want people to have computers as much, so let's legislate that computers cost $20,000 a computer.
[00:34:01]  Well, far less people are going to buy computers because they're unaffordable now, right?
[00:34:06]  So prices are not some arbitrary random number.
[00:34:11]  Prices carry with them a tremendous amount of information.
[00:34:17]  And just for like another quick example, right?
[00:34:19]  If there was something that you could make out of steel and aluminum or aluminum, right?
[00:34:27]  Like let's say you could use either, like it could be any two metals or whatever, just a random example.
[00:34:31]  And we come up with some technology where it's very, very easy for us to produce steel, but it's very, very hard for us to produce aluminum.
[00:34:40]  Well, what will happen is the price of steel will go down because it's so easy to produce and the price of aluminum will go up because it's so difficult to produce.
[00:34:48]  So if you have a choice between those two, people will start using steel because that's more cost effective, right?
[00:34:54]  Prices aren't just there as some random number.
[00:34:59]  They carry information with them about what is the best, most efficient way to produce things.
[00:35:05]  And the way this happens, if you think about it, right?
[00:35:08]  Like just on a very basic level through the way markets work, right?
[00:35:13]  If you go, and this is just how voluntary interactions work, which is just another word for markets.
[00:35:18]  That's what markets are, essentially, just voluntary transactions.
[00:35:24]  If you go to buy a coffee at the store, what would you like to pay for that coffee?
[00:35:31]  Well, you'd probably like to pay nothing, right?
[00:35:33]  You'd probably like to get it for free and not have to pay for it at all.
[00:35:37]  Then, what would the guy selling you the coffee like to pay for it, like you to pay for it?
[00:35:43]  Probably a whole lot, right?
[00:35:44]  Like, he'd be happy if you'd pay him a million dollars for that coffee.
[00:35:48]  But how have we settled on like two bucks or whatever it is that we come?
[00:35:52]  Well, it's this constant negotiation.
[00:35:55]  It's all about how much it cost him, how much labor was necessary, how much he, you know, he had to transport it, all of these things, what it cost him, where he can still make a profit, right?
[00:36:05]  Because he wants to exist for a reason too.
[00:36:07]  He's not trying to work for charity, he's got bills to pay.
[00:36:11]  So, it's how much he can charge where you're still going to come in and buy that coffee from him.
[00:36:16]  And if he tried to charge you eight bucks a cup of coffee, most likely most of us aren't going to go to that place and get coffee anymore.
[00:36:23]  And then someone else could come along and undercut him.
[00:36:25]  And so, everybody's constantly competing to find the right price that will work to maximize profits and to still be able to have customers.
[00:36:35]  So, this goes on all over the place.
[00:36:37]  Prices communicate a lot of information, and almost every economist would agree with everything that was just said.
[00:36:44]  Like, this, none of this is controversial at all.
[00:36:47]  This is like basic economics.
[00:36:49]  Yeah, these are the problems with price controls: you have shortages, or you have rationing, or any of these things, and this, and the fact that prices communicate information.
[00:36:59]  This is standard stuff.
[00:37:00]  This isn't like some nutty Austrian economists' theory.
[00:37:04]  This is standard, basic modern economics.
[00:37:10]  Except when it comes to the price of money.
[00:37:15]  When it comes to the price of money, price controls are just accepted.
[00:37:20]  Now, this goes back to the whole thing of why our economy is constantly in this like house of cards state, because the price of money is fixed by the Federal Reserve.
[00:37:33]  And in response to this COVID crisis, they just decided that the price of money is zero.
[00:37:39]  Now, imagine any other price, just the government just decides it's zero.
[00:37:46]  Just think through what effects on the economy that's going to have.
[00:37:51]  But that's what we accept from the Federal Reserve always.
[00:37:55]  Just price fixing and price fixing for arguably the most important price.
[00:38:02]  Because, as I said before, money is half of every single transaction.
[00:38:06]  So, if there was anything, you know, like I don't think we should have price controls on milk, but I think that would be a lot, you know, less, there would be much less of negative repercussions from having price controls on milk than on money, because that's basically price controls on everything.
[00:38:27]  Because money is 50% of every transaction, just about.
[00:38:31]  I mean, there's some bartering out there in the economy still, but just about 50% of every transaction.
[00:38:37]  So, you have a system now where interest rates are controlled by the government, essentially, the government's department of money, known as the Federal Reserve.
[00:38:48]  Now, what is the significance of the price of money?
[00:38:53]  Well, it's pretty important.
[00:38:56]  If you are a business and you're thinking of expanding, let's say, you know, whatever, you got a restaurant, it's doing pretty good, and you're, you know, you're like, wow, we're really doing business.
[00:39:09]  I think we should open two more restaurants because this business model works and there's two more.
[00:39:15]  You know, this is assuming a time when restaurants are allowed to exist.
[00:39:18]  But this is, you know, there's two more good locations we got here.
[00:39:22]  Now, we're going to have to spend $500,000, but we can set up two more profitable restaurants.
[00:39:30]  Now, if the interest rate, if you could get a loan and the interest rate was 5% or the interest rate was 15%, do you think that has an effect on whether or not you're going to open these next businesses?
[00:39:44]  Do you think there's any businesses out there who it would make sense to borrow money at 5%, but it wouldn't make sense to borrow at 15%?
[00:39:53]  Of course, right?
[00:39:54]  Of course, there's got to be some ventures that you would undertake. in normal times, but you wouldn't undertake in more expensive times, right?
[00:40:03]  Like this has to be the case, just logically.
[00:40:07]  So what interest rates would be in a free market, right, without the government department of money, what interest rates would be would just be dictated the way normal prices are through supply and demand and many factors that go into that.
[00:40:25]  So if you wanted to borrow money from a bank and they had a whole lot of money sitting in reserves, money would probably be relatively cheap to borrow, right?
[00:40:37]  Just like basic supply and demand, just like the same rules that mainstream economists use about everything else, just apply it to money.
[00:40:46]  If you got a whole bunch of money, like you're just sitting on a pile of $10 million and someone wants to borrow a couple hundred dollars, well, you got plenty of it.
[00:40:54]  You can lend it out to them at a reasonably low interest rate.
[00:40:57]  But if you only got like $500 and someone wants to borrow the whole $500, you might have to charge a higher interest rate.
[00:41:04]  So interest rates would also, just like all other prices, communicate information.
[00:41:10]  And the information would be about how much money is saved.
[00:41:13]  So if you had a society...
[00:41:15]  Can I add a layer to this?
[00:41:16]  Sure.
[00:41:17]  Also, if you took all the government money out of the system, what you'd end up having is a lot of prices coming down.
[00:41:23]  Like even look at commercial real estate.
[00:41:25]  If there wasn't funds available that initiated from the government to be lent to companies in order to buy the commercial real estate, you'd end up with commercial real estate prices that were just less.
[00:41:35]  So the institution of government money kind of coming into the system also works to saddle everybody with debt, which is essentially in favor to the banks because they capture all that interest rate.
[00:41:45]  Look at the housing market.
[00:41:47]  If you never had Fannie Mae Freddie, like those institutions, is there really less people who are able to afford houses or just most houses purchased at a much significantly lesser, like people want to, like there's a market for selling people's houses.
[00:42:02]  They might not be mansions, but there's going to be people that want to sell you land and put you in a house.

=== Kratom, Payments, and Profit Margins (02:08) ===

[00:42:06]  That doesn't go away.
[00:42:07]  It's just their profit margins are less because there's less money that they can capture.
[00:42:11]  If all of a sudden it's what happened with college prices, you know, government made money available to colleges.
[00:42:16]  So college price outplices inflation.
[00:42:18]  Same thing happens with insurance.
[00:42:20]  You create a financial incentive for insurance.
[00:42:22]  Everyone's got to get insurance.
[00:42:23]  And all of a sudden healthcare costs go through the roof.
[00:42:25]  Yes.
[00:42:26]  So the other thing is just government creates not, firstly, it creates bubbles.
[00:42:30]  You end up with credit asset bubbles, but it also is a system that works in favor for the banks because it saddles everybody with debt.
[00:42:37]  It makes everything more expensive and allows them to create, like if they're in the business, if they're in the business of creating interest, like basically just creating interest payments, the more money that they can saddle on everybody, the more interest payments they get in.
[00:42:48]  So when you go and purchase a house, they would rather the house that you purchase cost you a million dollars to $1,000 because they're going to capture more interest payments.
[00:42:56]  And so that's part of the system where government comes in and it distorts the entire market because it pretends, hey, we're doing you a favor because we're making all this capital available.
[00:43:04]  It's not doing anybody a favor.
[00:43:06]  It just means prices, because then demand for all the products that everyone wants goes up.
[00:43:10]  All of a sudden, the price for all of that shit goes up and it's just more money to the bank through interest payments.
[00:43:15]  Exactly.
[00:43:16]  Exactly.
[00:43:17]  All right, guys, let's take a quick second.
[00:43:18]  I want to thank our sponsor for today's show, which is Yo Kratom.
[00:43:23]  They've been sponsoring a bunch of shows on the network.
[00:43:25]  They're also the marquee sponsor for Skank Fest.
[00:43:28]  The owners of Yokratom are great guys.
[00:43:30]  They're fans of our network, and we really appreciate them supporting us.
[00:43:33]  This is for people listening who are over 21, who are already into Kratom.
[00:43:37]  If you like Kratom, go to yokratom.com.
[00:43:40]  It's an easier way to get it.
[00:43:42]  It's cheaper.
[00:43:42]  They have the $60 kilo.
[00:43:44]  Like I said, they're great guys, despite coronavirus and the world coming to a halt.
[00:43:49]  They're still sponsoring shows.
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[00:43:52]  This way it comes right to your door.
[00:43:54]  You don't have to go out and search for a gas station to find it.
[00:43:57]  So thank you to yokratom.com for supporting this show.
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[00:44:05]  These guys are one of the biggest Kratom wholesalers and they've created yokratom.com so you can buy directly at incredible prices.
[00:44:12]  All right, let's get back into the show.

=== Deflation and Valuable Money (15:47) ===

[00:44:14]  One of the Federal Reserve's mandates is to control inflation.
[00:44:20]  Now, the way they measure inflation might be different from the way an Austrian economist measures inflation.
[00:44:26]  And I think that's a very key distinction.
[00:44:29]  So the modern economist measures inflation by the CPI that's known as the Consumer Price Index.
[00:44:40]  And they'll say things like, you know, well, it's only at 3%.
[00:44:43]  So that's reasonable, which, okay.
[00:44:45]  You got to say that here's the biggest reason why that's a broken tool is because most of our goods are coming from China now and the CPI doesn't reflect quality.
[00:44:54]  That's a good point.
[00:44:54]  That's a very good point.
[00:44:56]  You buy a refrigerator now and on paper, it might have not gone up, the price of a refrigerator might not have gone up over the last seven years.
[00:45:03]  But the thing, firstly, it's partially because technology is really good and Amazon made these things a lot cheaper.
[00:45:08]  And it's also because your refrigerator is probably going to last half as long as it did when people bought them in the 70s.
[00:45:14]  And that's true for a lot of goods.
[00:45:15]  Things that would have lost you, lasted you 15, 20 years or lasting you two years, and none of that's from none of that's reflected in the CPI.
[00:45:22]  Also, didn't they take things off the CPI like energy?
[00:45:25]  Yes, they've removed.
[00:45:27]  Well, okay, so there's a lot of problems.
[00:45:28]  Let me start with the more broader philosophical problem and then we can mention like the actual problem.
[00:45:34]  I keep jumping to advanced.
[00:45:36]  No, it's fine because this is all important stuff.
[00:45:38]  But I would just say that the Austrian economists, the way they look at it is if you create new money, that is inflation.
[00:45:47]  That's the inflation, the creation of new money.
[00:45:50]  If you put new money or credit into the system, that is inflation.
[00:45:55]  That's a very different way than looking at the prices going up as inflation.
[00:46:00]  So, and the reason why the Austrian economists are right about this is that measuring prices is a flawed, just to begin with, even if we're measuring prices honestly.
[00:46:12]  Exactly.
[00:46:13]  So let's say, hypothetically, right, that prices, and if you just understand, very basic, right?
[00:46:21]  That just if you inject more money into the system, the money gets less valuable, right?
[00:46:27]  Like just to basically understand that, like just very basic, you know, desert island economics.
[00:46:33]  If you have an economy that has like, you know, whatever, it's, it's, you know, it's made up of like someone built a horse and buggy and picked some fruit and gathered some firewood or whatever, like a very basic level economy, and you have X amount of money in the economy, right?
[00:46:53]  That you're just using to trade back and forth.
[00:46:55]  Everyone agrees we'll trade for money.
[00:46:58]  And this is your little economy.
[00:47:00]  And then you double the money supply.
[00:47:02]  Well, there's no more wealth.
[00:47:05]  There's no more production.
[00:47:07]  Nobody's any richer.
[00:47:08]  Nothing more has been produced.
[00:47:10]  You still have the exact same amount of goods with more money chasing the goods.
[00:47:13]  It just makes the money less valuable, right?
[00:47:15]  Because there's more of it, but nobody actually got wealthier from it's just pieces of paper.
[00:47:19]  So no one's gotten wealthier from that.
[00:47:21]  So it's just, if you just add more money into an economy, it makes the existing money less valuable.
[00:47:28]  And therefore, things cost more money.
[00:47:29]  So, costs go up.
[00:47:31]  All right.
[00:47:32]  Which is just another way of saying the value of the dollar or the money goes down.
[00:47:36]  So, if you were in a situation where, let's say, you were about to have massive deflation, just hypothetically, let's say prices were about to, on average, be cut in half because there was huge deflation for whatever reason.
[00:47:50]  There's huge deflation coming.
[00:47:52]  And then you doubled the money supply, for example.
[00:47:55]  And so, prices stayed exactly still.
[00:47:58]  Now, an Austrian economist would say you just had tremendous inflation, right?
[00:48:03]  Because prices were going to come 50% down, but instead they stayed level.
[00:48:07]  That's the prices were inflated back up.
[00:48:10]  And that's pretty important to understand in that moment.
[00:48:13]  Whereas someone just looking at the prices would say there was zero inflation because prices didn't change at all.
[00:48:20]  This is the problem when you're judging the symptom rather than the cause.
[00:48:24]  So, this is something that the Austrian economists, just one more thing, they're absolutely correct on.
[00:48:28]  Now, the other problems with the CPI, as you were just getting into, is that they will manipulate the CPI to show less inflation.
[00:48:36]  So, when housing prices started going through the roof, they took housing out of the basket of goods.
[00:48:41]  They took different foods out of the basket of goods.
[00:48:44]  They took energy out of the basket of goods.
[00:48:48]  So, they now to the average person, getting housing and energy is still pretty important, but that's not reflected in the CPI anymore.
[00:48:58]  It's also, I guess, it's inevitable if you increase the money supply, you're going to have inflation.
[00:49:04]  So, the Austrians basically go, okay, so we know printing money means money is less valuable.
[00:49:09]  Inflation, they go, well, no, it's not inflation until we can monitor it.
[00:49:13]  The issue with that is like, let's say, yeah, let's just theoretically, you had a money supply, it's exactly $1 trillion, and then you're going to increase it to $2 trillion.
[00:49:21]  So, I'm not an economist, but I'm going to assume it's probably going to take three months, maybe two months.
[00:49:25]  There's some amount of time that there's going to be a lag between when you give the money and between when you monitor the inflation.
[00:49:31]  But here's the issue: if you're just going off the monitoring, you go, oh, well, we were able to print a trillion dollars.
[00:49:35]  And look, we're not monitoring inflation.
[00:49:37]  So, I guess we can print another one because that doesn't cause inflation.
[00:49:41]  And at some point, here's where it goes boom and bust: is that these things happen all at once.
[00:49:45]  All of a sudden, people realize, oh, prices are going up.
[00:49:47]  And then it chases its own tail because everyone makes the adjustment really quickly.
[00:49:51]  And that's when all of a sudden, fucking boom.
[00:49:54]  And so the, you know, the Austrians are like, well, let's understand it's inevitable.
[00:49:57]  So as opposed to waiting until we can monitor it, let's just say it's happening once we do it.
[00:50:03]  And so let's make all of our decisions and pricing and all these arrangements around that.
[00:50:08]  Which to me, that's the biggest flaw of the government system is that it's reactionary.
[00:50:11]  It goes, well, it doesn't exist until we can monitor it, but it's inevitable.
[00:50:15]  It's like you're pretending like it's some sort of a, or, or it's like what you're saying, where technology is getting so good where you otherwise would have had deflation.
[00:50:24]  And so then, oh, so you're not, you're not, you're not accounting for, I guess, almost advances in human ingenuity.
[00:50:29]  Well, that's right.
[00:50:30]  We have benefited much less than we otherwise would have for all of the advances.
[00:50:36]  We should have, we should live in a world of deflation because production gets better and better as technology gets better and better.
[00:50:45]  So things should be cheaper because that's the natural trend of things.
[00:50:49]  And then one more thing on deflation.
[00:50:51]  So the biggest fear of government is that if there's deflation, people are going to save.
[00:50:56]  People are going to realize, oh, if I hold on to my money, it might get me more tomorrow than it will today.
[00:51:00]  Now you have to realize that the foundation of a good society is savers.
[00:51:05]  It's people realizing, hey, it's building capital so that you can make good investments for one.
[00:51:09]  And for two, it's the spiritual side of not going, hey, I need immediate consumption now.
[00:51:14]  There's a value in delaying gratification.
[00:51:16]  And so when government comes in and says we're the enemy of saving, we're the enemy of deflation.
[00:51:21]  We don't want to ever have that.
[00:51:22]  We want to make sure that there's constant inflation.
[00:51:24]  We're going to pretend like we could do it as a steady rate, and we want to force people to always spend and take on debt to ensure that you like, in other words, they create a system that really devalues the most foundational principle of what would be a moral society, which is delaying gratification.
[00:51:39]  Yes, otherwise known as time preference.
[00:51:41]  And this is why the Federal Reserve is the great destroyer of time preference.
[00:51:47]  So in, you know, the idea of time preference is just that obviously everybody, you know, you'd prefer to consume in the present, but you're willing to delay that to put that off for greater consumption in the future.
[00:52:05]  Also known as, as you said, delaying gratification.
[00:52:08]  So everything, you know, just going to work is an example of this, right?
[00:52:13]  Like you're going to work now so that you can get a paycheck at the end of the week or the month or whatever, right?
[00:52:19]  So you're going to put in some work now for something you maybe you don't really want to do, but because later it will be better.
[00:52:27]  Now, if people save money, what they're essentially doing is delaying their current consumption for the ability to consume in the future, right?
[00:52:40]  So if people are saving money, this is how a market economy operates, right?
[00:52:46]  If people are saving money, that means in the future, they're going to have money to consume, right?
[00:52:53]  So as they're saving money, the interest rates come down.
[00:52:58]  And this is a signal now.
[00:53:00]  Remember, price is carrying information for businesses that it's a more friendly environment to expand, to borrow money, because there's going to be consumers in the future, because people are saving, right?
[00:53:13]  So this is the beautiful harmony of the marketplace is that in the same way that you buying a cup of coffee from somebody is this beautiful harmony.
[00:53:21]  Well, this is about what I'm willing to pay for a coffee.
[00:53:23]  Okay, this is about what I can pay for a coffee.
[00:53:25]  And it all comes together.
[00:53:26]  So the signal when people are saving from the prices would be, okay, there's going to be consumption in the future.
[00:53:33]  So you're probably going to want to open your business now.
[00:53:35]  And if people aren't saving and they're spending, well, this isn't a great time to expand a business because people are doing all of their consumption right now at the expense of future consumption.
[00:53:46]  Okay.
[00:53:46]  So, and just back to the inflation point, just zoom out a little bit.
[00:53:50]  If you really, if the Federal Reserve, by their own admission, their role, or at least half of their role, is to control inflation.
[00:53:58]  Well, just look at the job they've done.
[00:54:00]  The Federal Reserve was created in 1913.
[00:54:03]  Do you feel like things are a lot cheaper now, or maybe they're a little bit more expensive?
[00:54:08]  Just look since the early 70s when we went off the gold standard and they really were unleashed to print as much money as they wanted to.
[00:54:18]  Well, would you rather pay, you know, I'm going to sell you a house.
[00:54:21]  Would you rather pay 1975 prices for it or 2020 prices for it?
[00:54:27]  What do you think is a better deal here?
[00:54:29]  The fact that they can sit there and say, oh, we've controlled inflation and look at the CPI, it's not that bad.
[00:54:35]  Look at the price of everything.
[00:54:38]  Look at the price of a car, of a house, of health insurance, of college, of food, of everything that people need.
[00:54:46]  And they've all gone up and up and up and up.
[00:54:48]  And you explained to me the reason for that other than monetary policy.
[00:54:53]  We are more efficient.
[00:54:55]  We have more technology when it comes to building houses, cars.
[00:54:58]  We have way better medical technology.
[00:55:01]  We have way more people going to college, which should bring down the costs.
[00:55:05]  Okay.
[00:55:06]  So the only explanation for all of this is the Federal Reserve.
[00:55:11]  Now, I want to transition toward the end of this because this has just kind of been, again, just basic primer.
[00:55:16]  And also understand, we're not economists.
[00:55:19]  This is just my whole premise of this show has always been that this is not shit that should be reserved for brainiacs and academics.
[00:55:29]  This is basic common person shit that we should all understand.
[00:55:33]  It's really not that complicated.
[00:55:35]  They dress it up and try to make it sound super complicated to intimidate you out of thinking that you can think for yourself.
[00:55:42]  But believe me, you can, okay?
[00:55:44]  And this is, so there's a million economic problems with the Federal Reserve.
[00:55:50]  But the real heart of the matter here is what we started off at the beginning with.
[00:55:55]  They are ripping you off.
[00:55:57]  That's why they like this system.
[00:55:59]  They don't have this system because of all the wonderful economic inefficiencies and all of the problems with it.
[00:56:05]  They have it because, like, what's the benefit of the system if this is all the cost?
[00:56:10]  Well, the benefit of the system is that they can enrich themselves at your expense.
[00:56:17]  So when you create new money, as you pointed out before, you're not going to see a rise in prices immediately.
[00:56:26]  Like, people don't even know the money has been created.
[00:56:29]  The store owner doesn't even know that.
[00:56:31]  It's not like the Federal Reserve prints money and the store owner is watching the Fed balance sheet and then goes, okay, better raise prices.
[00:56:37]  It takes a period of time before the money gets into the economy and starts circulating around.
[00:56:42]  And then it's realized that the money is less valuable and prices go up.
[00:56:48]  But whoever gets the money first gets to buy at the current prices.
[00:56:54]  And then they get the value of it going up.
[00:56:57]  And who gets the money first in this system?
[00:57:00]  Well, wouldn't you believe it's the big banks, the same ones who wrote the legislation of the Federal Reserve Act, the same ones who financed the worst president of the 20th century, Woodrow Wilson, and got him in office so he'd signed the Federal Reserve Act.
[00:57:17]  Those same motherfuckers are the ones who get the money first.
[00:57:22]  So they get money for free that they can then loan out for interest.
[00:57:26]  They get it before the inflation's hit, and they're ripping you off.
[00:57:31]  This is now just already in this COVID shit, the Federal Reserve has extended trillions and trillions of dollars.
[00:57:38]  Okay.
[00:57:40]  It's hard for human beings to wrap their heads around how much money that really is.
[00:57:45]  But it's more, you think of the biggest business you've ever thought of.
[00:57:49]  It's way more than that.
[00:57:51]  Way more.
[00:57:52]  And they're taking it from you.
[00:57:55]  The money isn't magical.
[00:57:57]  Printing more money doesn't add any more wealth into people's lives.
[00:58:01]  It just devalues the currency that's out there.
[00:58:04]  It's the same thing in effect as stealing your money.
[00:58:08]  It just makes your money less valuable.
[00:58:11]  If your money loses half its value or half your money is stolen, it's the same fucking thing.
[00:58:17]  And this is how they get away with it.
[00:58:20]  And so when you look around and you see how the ruling class of this country just gets richer and richer and richer.
[00:58:29]  And believe me, they've gotten richer through this whole crisis.
[00:58:32]  This is at the heart of it.
[00:58:34]  It's the fucking Federal Reserve.
[00:58:38]  So this is something that needs to be inserted back into the conversation in these crazy times that we live in.
[00:58:46]  This is what's going on.
[00:58:47]  When America was at its, you know, in its darkest hour, the Federal Reserve came in and stole trillions of dollars of your wealth.
[00:58:55]  That's the reality of the situation.
[00:58:57]  This is a criminal organization.
[00:59:00]  There's no constitutional authority for it.
[00:59:05]  It's the greatest scheme in the history of the world.
[00:59:09]  It destroys the economy.
[00:59:11]  It's taken away.
[00:59:13]  Should be at such a higher standard of living than we are if we didn't have this monstrosity running the Department of Money.
[00:59:23]  And it should be ended.
[00:59:25]  Or at the very least, as Ron Paul was pushing for, it should be audited.
[00:59:29]  There should be a new movement coming out to audit the Federal Reserve to find out what the fuck they're really doing.
[00:59:35]  Because guess what?
[00:59:36]  None of us know.
[00:59:37]  None of us even have a right to see their balance sheet.
[00:59:40]  At least in other government departments, you can have these Freedom of Information Act requests or you can get some of these things released.
[00:59:48]  We just had the Justice Department released these transcripts and the testimony about Michael Flynn and the FBI notes.
[00:59:56]  When was the last time you ever saw any of that shit come out of the Federal Reserve?
[01:00:00]  Never.

=== Separation of Church and State (01:33) ===

[01:00:02]  Okay?
[01:00:02]  So that's where there should be a big push to audit the Fed, end the Fed, and let the free market take over money.
[01:00:10]  In the same way, you know, the people look back on the development of the separation of church and state and how wonderful that was for humanity because it cut down on like religious wars and all of this type of like unnecessary bloodshed.
[01:00:27]  But we need a separation of banking and the state.
[01:00:31]  And we might need it more than we needed the separation of church and state.
[01:00:34]  But once and for all, a separation of banking and the state.
[01:00:38]  Let the free market do its job.
[01:00:40]  And until then, we really don't have a free market.
[01:00:43]  If the government's controlling 50% of every transaction, that's a lot closer to communism than it is to capitalism, if you ask me.
[01:00:52]  All right.
[01:00:54]  Go ahead, you want to add something?
[01:00:55]  Yeah, let me get a plug in here.
[01:00:56]  If you guys are interested in this stuff, 30 minutes in on my last Run Your Mouth, I talk about how they're using special purpose vehicles, which is illegal, to give all this money over to BlackRock and basically bail out the junk bonds.
[01:01:07]  So if you're curious to know, they've taken the scheme one step even further than their charter.
[01:01:11]  And go check out Run Your Mouth.
[01:01:13]  That piece is like a half hour in.
[01:01:15]  All right, absolutely.
[01:01:16]  And just in general, go check out Run Your Mouth, hilarious, very informative podcast.
[01:01:20]  And go support Robbie the Fire.
[01:01:23]  He needs more firewood for that beautiful fire behind him.
[01:01:26]  All right.
[01:01:26]  So that's our Back to Basics episode on the Federal Reserve.
[01:01:30]  Hope you guys enjoyed it.
[01:01:32]  And I'll see you soon on the next episode.
[01:01:34]  Peace.