Sunday's surprisingly strong "no" vote may be less significant than Greek voters think. There is no way to vote oneself out of such a debt burden. Liquidation and bankruptcy are likely the only solutions.
Sunday's surprisingly strong "no" vote may be less significant than Greek voters think. There is no way to vote oneself out of such a debt burden. Liquidation and bankruptcy are likely the only solutions.
Sunday's surprisingly strong "no" vote may be less significant than Greek voters think. There is no way to vote oneself out of such a debt burden. Liquidation and bankruptcy are likely the only solutions.
Hello, everybody, and thank you for tuning in to the Liberty Report.
With me today is Daniel McAdams.
Daniel, good to see you today.
Thank you, so good to be with you.
Good.
I thought we would talk a little bit about the big news over the weekend because the little bit of news we did here on the conventional stations and all had to deal with something that is very important, that is the financial crisis of Greece.
But of course, it's been going on for five years.
Does this mean it's the climactic end?
And a lot of people thought that this weekend would really, really make a difference because of the referendum.
And to the surprise of the establishment, at least they appear surprised, is that 61% of the Greek people said we've had enough of this stuff dealing with the European Union and the IMF, and we don't want them to direct our economy, and we want better loans, and we don't want to cut our spending habits.
So that continues to go on.
So the reaction, you know, over the weekend before our markets opened was pretty negative.
Stocks were down around the world, gold was up eight, nine dollars.
But it really, as far as the markets falling apart, it didn't happen.
It sort of fizzled, and at the present time, as we speak, the stock market is still down, but it's not in a panic state.
So I think what's happened is there's been more announcements between the Europeans and the Greek officials.
And maybe the Europeans know, well, we have to give a little bit more, and at least they say they're coming back together, and there is a little bit less concerns going on, and the markets are relatively stable.
But I don't think that's going to last forever.
I think this kind of problem is going to last for a long time to come because structurally I don't believe we've had any changes.
You know, it's interesting is the polls leading up to the referendum showed that it was very, very close.
It could go either way.
And it's interesting that there's a surprisingly strong no vote.
And I think what that may have captured is the real sense of anger among Greeks, probably shared by a lot of other Europeans toward the European bureaucracy.
And I think it's very interesting that whenever they had the chance to express that anger, they expressed it when they voted for the Syriza Party, the far-left party.
They expressed it on Sunday.
But, you know, like you said, immediately Lagarde and the IMF said, well, we'll continue to work with Greece.
So how much do you think really will change due to this vote?
Well, I don't think a whole lot because they're describing the problem.
There's the Syriza far left who has a strong following, but if they had their way, they might become communists or radical socialists, believing that the people deserve more, not less, and they're not responsible for the debt.
So therefore, they're shifting it one way.
But what about the people who are in central economic planning, not only in the local government, but in the European Union, and the IMF and the World Bank and the WTO and the reserve currency of the world, how much power we have through our Federal Reserve and the dollar.
None of that has changed.
You know, when I try to figure out who we should blame the most, I've blamed this group of people many times.
And I think it's philosophic.
I think it has to do with Keynesian economics and the most deadly advice that the Keynesians have given us.
And, you know, people like Paul Krugman and others, our central bankers say, well, you know, when the economy is weak, that's just the weakness of the free market system.
And therefore, the governments have to come to a rescue.
And fiscally, you should spend money and run up the debt.
And if you need more money, you just print the money.
But that's all we've heard for so many years.
And they will not consider the fact that maybe they were on the wrong track.
I think someday they're going to realize that there was a major shift in our economic system in the year 2000 with the stock market crash.
And then amplified again when our crisis hit in 08 and 09, but there were no corrections, especially since 08 and 09.
It's always more spending.
And this is what they're dealing with, is debt and who's going to get stuck with the debt.
But there are other things that contribute to the debt, too.
Yeah, one of the things about Greece that hasn't been reported, and we had an article up on the Institute's site written by a very astute writer about the fact that about half of Greece's outstanding debt is from military spending.
And that's interesting.
In 2010, they spent 7% of their GDP on military, which is unbelievable.
Greece spends the highest percentage of its GDP on the military of any EU member country.
You know, that might give the Europeans an incentive not to crack down too hard because I understand the French and the Germans make a little bit of money, and who knows?
Maybe the United States sends a few weapons over there.
So I think our central bank and the U.S. government is very much involved in standby mode right now, and they will come.
They say, we don't have a lot of direct debt related to the Greeks, but I think indirectly we do.
I think all the banks are intermixed, so that is a problem.
But it looks like the military-industrial complex is very, very strong, and like you say, nobody's ever talked about actually cutting it.
I wonder what war they're preparing for.
Well, that's the craziest part because what's been hopped up to the Greeks is the threat from Turkey.
But they're both NATO members, so it's absolutely insane.
If Article 5 of the NATO Treaty means anything, the idea that Greece and Turkey would fight itself is absurd.
But I think the military-industrial complex encourages this fear because they're making a fortune off of it.
Yeah, that would make more sense that it has to do with profits rather than real concern on national defense.
But, you know, this has suggested maybe there will be a new look at what's going on in Ukraine, you know, because Ukraine's not in bed with the European governments, but that was what the whole revolution was about that they orchestrated throughout the elected leader.
So they're involved there, but do they really, at this time, think it's good for the Europeans to take on another country and teach them how to run their economy since they're not doing all that well with Greece?
And I think Ukraine's economic situation makes Greece look like Switzerland.
You know, it's such a basket case.
So I think for political reasons, the EU wanted to bring Ukraine into its sphere of influence.
But now when they look at the balance sheets and Ukraine and Poroshenko say, oh, we can't wait to join, they're looking at the balance sheet saying, well, let's hold off for now.
You know, it's frequently said this should not be a big deal.
This is like a real big U.S. city and they can handle it.
We handled Detroit and the world didn't fall apart.
But they do owe $352 billion.
That's, you know, pretty good pocket change, especially when you don't have any money to pay and you owe all this.
But, you know, the real number that I think concerns me and why I talk about a coming catastrophe financially worldwide is the $180 trillion that all the countries of the world owe.
And it's not real money.
It's all based on fiat money.
It's all based on fiction.
And nobody is really solvent.
And guess who owes the most?
We do.
And yet we're the bedrock of the system.
We print the money.
They trust us.
We take care of everybody.
We send our troops here and yon.
And yet we owe over $6 trillion.
And they talk about Japan, how much they owe.
Yeah, they do.
And China is having trouble in their stock markets.
But if you take what we owe them, over a trillion dollars each to that country, they have almost half of what we owe around the world.
So I think they would probably feel a little bit better with money in the bank.
So if somebody's having financial trouble and say, yeah, I owe this, I owe this, and things aren't going well, but I have this nest day.
But we have no nest day.
And this was all built on an economic system that really came out of the Bretton Woods, especially the breakdown of the Bretton Woods in 1971, where money became pure fiat.
And then debt is pyramid.
Debt becomes money, and you keep pyramiding it up, and you have this fractional reserve banking.
And why would the Europeans loan the Greeks all this money?
You know, at zero rate interest, but it was just part of the game, you know, it's short term, and they think that's going to solve the problem.
What would you do if you got a phone call after the show and they said, Dr. Paul, we need you to come down here to Greece.
We're going to give you full reign to fix the problem.
What would be the first time?
Well, we can, I guess, theoretically talk about that, but, you know, they don't even call me from our own Fed ever, has been my opinion.
But the most important thing is, since the big problem is debt, that even if you go biblically, you know about the Jubilee.
You know, after debt gets a certain size, the people who borrow too much and the people who loan too much, you can't work your way out of it.
And Greece can't work their way out of it, nor can the world work their way out of debt.
We can't work our way out of debt.
Something has to happen.
The whole structure has to change.
The quickest way to do it is liquidate the debt.
And it will be liquidated because there's no other way for this to happen other than the liquidation of that debt.
But it goes slowly and tediously.
They're looking for who gets punished the most.
Will it be the citizens of Greece?
Will it be the bankers?
Will it be the military-industrial complex?
They have to liquidate the debt.
That means declare bankruptcy.
We're not going to pay the bills anymore and we're going to go back to work.
But they'd have to talk about a sound currency.
You know, have a currency.
And the Europeans, I wouldn't depend on the Europeans.
I'd depend on the government of Greece to do it.
And there'd be various ways of doing it.
You could hold stronger currencies, but most importantly, they should use some metals to back up that currency.
But also, they have to create an environment for the creation of wealth.
Right now, there is no creation of wealth.
The unemployment rates are too high, and they're not producing anything.
So you have to have a market economy, low taxes, low regulation, sound economy, people save money, and a real rate of interest so you can get the right signals.
The world gets the wrong signals when everybody's dealing with zero interest rates.
Everything is a mistake.
Some luck out and they're not as severe as others.
But everybody's making a mistake because it's based on a measuring rod, which is completely wrong.
It's like building skyscrapers with a yardstick that changes every single day and the buildings become unstable.
The building of the world economy has been built unstably and it's very vulnerable.
So you have to have these basic principles of not believing that debt is good, not believing debt is money, that the market is very worthwhile and let the market decide and give up on the Keynesianism.
And this was one fear I had in 89, 90 when the Soviet system collapsed, which was wonderful because pure communism was refuted.
But I was worried because it wasn't going toward free markets.
It was going toward what the United States had, a Keynesian interventionist planned economy.
And the world has accepted this and it's been propelled, but it's all based on a very, very weak structure.
So, no, the information is there.
Right now, though, the SARISA people are going to want more, and the people who want to control Europe and the rest of the world through central economic planning and world government, that's going to happen for a long time to come.
So, they're not going to call, and they're not going to likely pay much attention, but the world will have to change.
If they don't, I mean, it's going to get really, really bad.
I think it will change for the better.
Most of the time, when currencies in the past have just disintegrated, which all paper monies do, they usually say, oh, okay, yes, we better back up our currency with something.
So, they will probably come to their senses, but that is the job that all of us have.
I want to thank everybody for tuning in today and visiting with us.
This issue of the Greek debt is not just limited to Greece, it's limited to the whole world.
It involves the whole world.
The United States is very, very vulnerable, being the biggest debtor in the world.
And we could lead the charge by advocating sound currencies instead of advocating fiat money and pretending it's wealth.
Printing money is not wealth, even though that's what they believe.
Printing and spending money and having debt certificates is not money, and it can't persist.
And I think the last five years has been proof of that, and that all the money in the world and all the spending and all the debt hasn't done very much to the world economy.
It certainly hasn't helped us.
We are on the verge of another turndown in the economy and a recession.
In spite of all the things that they've done, all the spending and the zero interest rates, they have no other place to go.
So, the next downturn is going to be really rough, not only in the United States, but potentially around the world.
$180 trillion that governments owe around this world, and it's huge, and it needs to be liquidated, and we all need to go back to work.
It's conceivable, the ideas are there, and the understanding of the free market is very, very clear, and we should have much more trust and faith in free markets and liberty than we do in big government and internationalism.