Jeff Berwick, the host of Dollar Vigilante speaks to Stefan Molyneux of Freedomain Radio about inflation, the Federal Reserve, fiat currencies, fiscal collapse and the light at the end of the tunnel... http://www.dollarvigilante.com
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| Hi everybody, it's Stefan Molyne from Free Domain Radio. | |
| I have the Dollar Vigilante on the screen. | |
| I am absolutely shocked that you don't come with an eyepatch and a parrot, but we'll photoshop that in a little bit later. | |
| This is Jeff Berwick. He runs DollarVigilante.com and an ex-sailor, ex-backpacker, ex-master of the universe of high-tech and entrepreneurship. | |
| Thanks so much for taking the time, Jeff. | |
| Oh, thank you. I'm a big fan of yours, Stefan, so it's a real pleasure. | |
| Thank you. Thank you. So make sure that people can get a hold of the stuff that you want to put in their inbox and into their brains. | |
| If you just give off your vital statistics so that if people like what you have to say, they can find you very quickly. | |
| Sure. Right now I write The Dollar Vigilante and it's just dollarvigilante.com and right on our website, right on the front page, you can sign up. | |
| We have some free content like our blog content and you can just put in your email address and we'll send you my vigilante thoughts. | |
| Beautiful. So you come from the Doug Casey Island of anarcho-capitalism, or at least you've stayed there for quite some time and broadcast your brain from that locale. | |
| What do you think were the major events along your journey? | |
| Because, I mean, it took me like 20 years, and everyone I talk to who's younger than me appears extraordinarily brilliant relative to my slow dinosaur brain. | |
| But what do you think were the major stops along the highway for you on this journey to where you are now? | |
| Yeah, well, like a lot of people, I was a little bit, I didn't really know a lot about how the entire, this monetary system worked or even how these governments worked until I started a website called stockhouse.com in Canada. | |
| It's still the largest financial website in Canada. | |
| And I started out of my house and basically it went from being just myself in my house to In literally a few months, in about 18 months, being worth $250 million, we were in eight countries worldwide. | |
| We were going to do a billion-dollar NASDAQ IPO. And then as soon as the tech bubble crashed, no one returned my calls anymore. | |
| We basically had to almost shut down the whole company. | |
| And we ended up surviving, but it was a very difficult time. | |
| And once I basically salvaged the company and made it so we didn't go bankrupt and made it so we survived, I basically decided at that point to sell the company because I'd worked literally eight hours a day for eight years in a row basically from 1994 to 2002 and at that point I was really just confused. | |
| I thought, what just happened? | |
| I went on a little bit of a world tour, a little discovery tour, my own personal discovery tour. | |
| And I traveled the world and all I did was I traveled and just tried to see things with my own eyes, not through the eyes of the media, not through the lens of the media. | |
| And during that time I stumbled upon a few things, a few key things that helped me to figure out what happened during that period. | |
| And one of the first things, you mentioned Doug Casey right off the top. | |
| He's basically my hero. | |
| He's a good friend and I call him my mentor, basically. | |
| He was the first person I came across on the internet around 2003. | |
| And I remember the first article I saw from him. | |
| It was a really basic article, but I had been traveling so much that it really hit a chord with me. | |
| And he basically just said, don't be nice to these customs people. | |
| He sees all the people come up and they start groveling and making small talk and smiling and basically just trying to please these people. | |
| And he said, these people are attacking your own privacy and you shouldn't be nice to them. | |
| And basically I read that article and I thought, wow, that's exactly what I think. | |
| And I searched Doug Casey for the next month probably. | |
| I read every single article I could from him. | |
| So he was really the first person who got me into this sort of freedom, what freedom really is. | |
| Not many people even know what it is anymore. | |
| It's really bizarre. And then I got into the whole Austrian economics side, which is basically the freedom school of economics. | |
| It's really just true economics. | |
| All the other schools of thoughts are basically just wrong. | |
| Keynesian is... It's complete fairytale. | |
| So that was basically how I got into this whole thing and it's been a complete whirlwind tour since then and ever since then I've just become addicted to this sort of information because it can be... | |
| a lot of people tell me it's actually when they first find out about this sort of thing it can be quite scary but I found it just so exciting. | |
| There's hope for the world and we just have to let people know about true freedom and what freedom is and how the governments and states and As you call them tax farms, which I really like, how they really are ruining this planet for humans. | |
| Yeah, I just read a statistic today, and I'm sure it's underreported, says that military conflicts around the world, war, cost over $8 trillion out of the economy every year. | |
| And I'm sure that's just the tip of the iceberg in terms of the long-lasting damage, let alone to the psychology of the people involved in it. | |
| But, yeah, people don't understand what an enormous amount of overhead, just from a financial standpoint, the government really is and how much wealth we'd have to solve problems. | |
| To proactively, positively and permanently solve social problems like poverty and miseducation without this overhead. | |
| It's like an athlete who's got a giant leech on his neck and he's like, oh man, I'm too tired to be an athlete. | |
| It's like, just take that leech off, you'll be able to climb mountains. | |
| But anyway, people don't really see it, but there it is. | |
| Yeah, that's really the case. | |
| It can be so fast, you can just in an instant understand all this stuff, but it's because we've been educated in the education indoctrination system by governments worldwide, really, that they never teach us these things. | |
| They don't want us to understand freedom. | |
| And as soon as you start to understand it, it becomes so obvious. | |
| But until that point, it can be People just don't really understand. | |
| They just think, oh, well, I guess that's just the way it's always been and the way it always has to be, and, you know, governments are good because they protect us, and all these sort of, you know, incorrect statements. | |
| And the other big thing, like you mentioned, wars, is not just wars. | |
| That's the most obvious, horrible thing that the states do. | |
| But there's so many other horrible things they do that not many people even understand, like central banking. | |
| Central banking is just a complete abomination of a free market. | |
| Central banking is actually one of the top tenets of communism and basically it's non-free market artificial system where they can use inflation to use it basically as an extra tax. | |
| But because they use that, they end up just destroying so much of the wealth of the world. | |
| If we didn't have governments or central banks for the last hundred years, we'd probably be living in just a peaceful utopia right now. | |
| We'd all be just We're so wealthy in terms of things that we have and the amount of time that we need to spend working. | |
| But because of all of the things that the state and the central banks have taken out of the world and destroyed, destroyed wealth, a lot of people say, oh, well, it's pretty good right now. | |
| People have no idea how good it would have been, and no one can say for sure, obviously, but if you just look at the numbers and the amount of waste from all of these Keynesian boom and busts they put everyone through, and it's just getting worse and worse and faster and faster now, and the whole system's actually starting to actually collapse, which is great. | |
| Well, just imagine, just imagine, right? | |
| Let's just take a mental exercise about, because the three things that I wanted that so far aren't here that the free market would have provided in the absence of government, jetpacks, time travel, and teleportation. | |
| So you and I would actually be doing this interview face-to-face in midair yesterday. | |
| Anyway, that's just, you know, maybe I'll try and Photoshop that in to give people a sense of what the future is like. | |
| And, of course, I'd have all my hair. | |
| But that's a whole other Rogaine mystery. | |
| So your argument is that the U.S. dollar is like a piece of space debris orbiting in a tighter and tighter and collapsing orbit around a black hole of a fiat currency collapse. | |
| I wonder if you can take people through the case for that so that they can put it in some kind of perspective. | |
| Because, of course, until... | |
| Disaster hits. Disaster hasn't hit. | |
| And there's this sense of like, okay, well, we just, you know, we've gone through bad things before and we'll find a way through this one. | |
| And, you know, the doomsayers have always been wrong. | |
| And it's not my particular perspective, but I wonder if you can take people through the case for the wrenching changes ahead. | |
| Sure. First of all, I don't see it as doomsday. | |
| We've really been in this system, in a true fiat currency, not backed by anything system for only 40 years now, since 1971. | |
| And as early as 1930s, we really had a decent financial system. | |
| So this collapse of the system, which we just talked about, actually enables all of these wars. | |
| You can't have any of these big wars without central banking and this fiat currency system because if people receive their check or bill in the mail every month for their Iraq war, for their Afghanistan war, their Libyan war, their Pakistan, whatever they're doing over there, People wouldn't want to do it for 10 years, which they've been doing, but because they can inflate it and people don't understand inflation, they can get away with it. | |
| But basically, to talk about why the system's going to collapse, and it is a good thing it will collapse, it's just going to be kind of a very, no one knows what's going to happen when it collapses. | |
| There's going to be a transition period that could be kind of scary, that's for sure. | |
| And that's sad, but it is the case. | |
| This system has really only been around for 40 years, as I said. | |
| And no fiat currency has ever lasted very long. | |
| Because basically what a fiat currency is, is a currency that has nothing backing it. | |
| And the government uses guns to make you use it. | |
| And so it's a completely artificial, non-free market money. | |
| It uses guns to prevent anyone from competing with it. | |
| Yes. So you have to use it, and nobody else can offer an alternative. | |
| It is pure fascistic, totalitarian, dictatorship-based communism right at the heart of the free market system, which is why it's not a free market system the moment you get state fiat currency. | |
| Totally. And that's another thing that's really kind of irritating about this whole thing is when this system collapses, a lot of people are going to say, look, capitalism collapsed. | |
| Capitalism doesn't work. We don't have capitalism right now. | |
| We're not even close. The U.S. actually adheres to nine of the ten main tenets of communism right now, which is pretty funny when you consider—well, not really that funny, but odd when you consider that they went over and attacked Vietnam— Supposedly to fight communism and now one of the most communist places in the world is the US right now. | |
| The only thing that's left that they haven't totally dismantled is private property, but they're already every day. | |
| You just talked about it the other day in one of your podcasts about how in the recent court case they've taken away even more things. | |
| Now police can even go into your house in the US apparently Take something, not tell you they took it for 18 months. | |
| I don't know who picked that number, 18 months. | |
| It's just bizarre and unbelievable. | |
| Yeah, I think the way that people should look at, I think, the system, if we count paying off bureaucrats as a bribe to continue doing business, which is what licenses are and other kinds of forms of taxation are, it's just bribes to allow you to continue to do business. | |
| Then what we have is pockets of quasi-black market activity sustained by bribes in the middle of A statist, communist, financial environment. | |
| That's exactly right. You said it perfectly. | |
| Again, like I said, it's so funny that people are already saying, you look at some of the protests going on around the world. | |
| For example, there's one in Spain right now. | |
| And every time I hear about a protest, I get all excited. | |
| I go, oh, people are waking up. | |
| So I watch some of these Spain people, and they're like, no, down with austerity. | |
| We want more government benefits. | |
| And it's like, what in the world are these people talking about? | |
| And if you talk further with them, they'll say, look, this proves that the capitalist system doesn't work. | |
| You know, they've got everything backwards. | |
| No one really understands this stuff because they don't get taught this stuff in government schools, and that's the way they like it. | |
| And it's really sad, and I'm not sure what's going to happen, but that's basically the reason why I'm doing what I'm doing today. | |
| I just felt like we need more voices like yours. | |
| And like Doug Casey's and other people like that to get out there and help educate people because people are obviously very confused because the things they're saying make no sense. | |
| You look at the people in, for example, the UK when they had their student riots. | |
| All the anarchists saying, no government cuts. | |
| It's like, really? Are you kidding me? | |
| Exactly. It's like anti-racists saying, more lynchings. | |
| It's like, dudes, you really, really, really are off base here. | |
| I know. I turned on the TV. I don't watch TV, but I turn on the internet and they say, oh, anarchists are rioting in the UK. I'm like, finally! | |
| And then I turn it on and it's exactly like what you said. | |
| It's students who want free government education, which is basically a communist socialist sort of outlook on things. | |
| These aren't anarchists. And of course, as you know, I'm sure, they just try to change these words around. | |
| So they took the word anarchy, which solely means a person or a philosophy or an ideology where you don't want to be controlled or under a government, which is a really good thing. | |
| And they turn it around and they say, oh, people who burn down buildings, those people who are rioting, those are anarchists. | |
| Yeah, of course, anarchy technically just means without violent rulers. | |
| It doesn't mean without rulers. | |
| I mean, my doctor is the ruler of my health. | |
| I don't argue with her too much. | |
| But it just means without violent rulers and it has nothing to do with idiot kids throwing bottles through windows. | |
| It's got nothing to do with anything. | |
| I know. It's just really crazy. | |
| I don't know when people are going to start figuring these things out on a more bigger scale, but I am actually quite optimistic. | |
| Again, a lot of people say these things that I'm talking about, about the collapse of the monetary system, are really negative. | |
| I see them as being quite positive, and I don't really I don't see how this is a negative thing at all. | |
| You have the collapse of really horrible, coercive institutions. | |
| I don't see what's bad about it at all. | |
| The only thing, like I said, is the transition period could be quite scary. | |
| Hopefully, the more people figure things out, and I think the real I wouldn't say, I wouldn't be that optimistic about a lot of things if it wasn't for the Internet. | |
| Without the Internet, I wouldn't actually know what I know today. | |
| And I wouldn't have never heard of you. | |
| I'm sure you'd never be on any major mainstream channel. | |
| I guarantee you that, yeah, for sure. | |
| And so, thanks to the Internet, we all have a chance to find out the truth. | |
| And of course, now governments are trying to shut down the Internet. | |
| Of course they are. Well, the internet has... | |
| If you don't know now that there's the internet, if you don't understand the basic realities of the world you live in, then you're a self-made idiot. | |
| Beforehand, you weren't really an idiot because it was just the propaganda was everywhere and you couldn't reinvent the sum total of human knowledge in terms of freedom. | |
| Like somebody who was under Stalin in 1950 was not a, quote, communist and wasn't a bad guy. | |
| It's just all he had was the propaganda. | |
| But... The internet now, if you don't know, then you're ignorant by choice. | |
| If you don't understand, then you're a fool by choice. | |
| And I think that label has, we're allowed to use that label now because the information is just a click away and there's so much of it that if you don't know now, it's because you're avoiding, not because you're trapped. | |
| That's an excellent point. | |
| I would agree with that. And yeah, the really exciting thing is you can kind of see it happening on the internet. | |
| You can see every day people waking up. | |
| And the things that we're talking about are just really taking off right now. | |
| I'm doing interviews like this almost every day now, which even a year or two ago. | |
| And what I'm finding now too that's really funny is the stuff I'm talking about, people used to be shocked. | |
| I can't believe you said that. | |
| And now when I say it, everyone's like, yeah, we know. | |
| So it's like, things are kind of changing pretty fast, but I'm not sure. | |
| I think the big thing is that people, they don't really see the total sum of everything. | |
| So they're kind of getting parts and pieces, and they're kind of understanding bits and pieces. | |
| But again, like you see these so-called anarchists in the UK and these people in Spain against capitalism by, you know, wanting more government programs is they're just confused. | |
| And who knows, maybe the Internet isn't as big over in Spain or the UK or something. | |
| Well, no, but remember, not so much in the UK, but definitely in Spain and Greece, the anarchist tradition comes from the left. | |
| In other words, we don't want governments. | |
| We want local communes with ultimate authorities. | |
| So they want fragmented, broken, local communism rather than centralized communism, which to me is not the same as being without a ruler. | |
| I mean, property rights and the non-aggression principle, there. | |
| I just made the whole case in like three seconds. | |
| That's all people need. But they try to complicate things. | |
| And they very... Even the left anarchists are very, very terrified of what might happen if people just have property rights and respect the non-aggression principle. | |
| They have a feeling that, I don't know, these monolithic tentacle-armed corporations are going to rise up and strangle the life out of humanity. | |
| But that, of course, realizing that corporations are just another tamed beast of the state that people can blame instead of the state. | |
| So... I'd like it if you could just take us through the steps. | |
| I know this is prognostication time, so this is with every caveat in the world. | |
| How do you think it's going to go down? | |
| I mean, Doug seems to think it's pretty imminent, but how do you think it's going to... | |
| What are the sequences that you think are going to happen that are going to take the dollar down? | |
| That's the tricky question. | |
| That's predicting the future, and there's really no way to know. | |
| There's too many variables. | |
| However, I'll say this. | |
| Everything that's been happening in the last year or two ever since that so-called financial crisis in 2008 It has been speeding up at incredible rates. | |
| If you look at the system as a dying animal, you can actually see the death throes we're going through of this system and how things are speeding up. | |
| Sorry, just so people, again, people who are maybe coming into this from the outside, what are the death throes that people, of course they're not going to get it from the mainstream media or television or whatever, but what is it that you see as the death throes that other people can look into and research more? | |
| Well, just things like look at how the wars are all speeding up right now. | |
| Things like Libya. They talked about Libya for one or two days and then they went and attacked it. | |
| So all these things are speeding up now. | |
| Whereas there was like six to eight months before Iraq, right? | |
| Years. Years even. | |
| And now it's just a few days. | |
| So these governments know, especially the US government. | |
| The US government knows it is bankrupt. | |
| It is completely done. | |
| They're just trying to find ways to make it last a little longer so they can get out of office and then put the blame on someone else. | |
| And one of the ways that they can do that is to inflate the money supply, which always confuses people. | |
| So that's what's going on right now. | |
| So people say, oh, gas, everything's going up in price. | |
| Food's going up in price. Well, it's actually not. | |
| The dollar is just collapsing. | |
| But that's how it is felt by people. | |
| And so... So they heard this term quantitative easing, which has always sounded to me like some sort of hellish status laxative. | |
| But this quantitative easing is simply printing money. | |
| Now, as far as I remember, the Federal Reserve has stopped talking about the amount of money that they're printing. | |
| So you can really only see it through an Austrian economics defined lag time of 12 to 18 months. | |
| You can only really see it As the price of everything goes up, that's simply because they're pumping more and more dollars into the economy that are representing the same or at least less of an increase in goods and services. | |
| So each component of goods and services is worth less relative to all of the extra money that's being pumped in. | |
| It's like doubling the monopoly money in your game. | |
| All that means is the prices of hotels go up double because they still got to represent the same number of hotels. | |
| So yeah, people can see it from inflation, which is artificially suppressed in the reporting by leaving out the really important things, right? | |
| The consumer price index leaves out all the stuff that is actually being affected by inflation. | |
| So you get a whole bunch of nonsense that is nowhere even close to the truth. | |
| No, it's not even close. | |
| And I don't know if you probably are aware of ShadowStats.com. | |
| All he does is he just tracks the government statistics the way they used to be tracked just in the 1990s or 1980s. | |
| And if you look at the CPI, which is supposed to be inflation, it's not. | |
| It's just supposed to be a basket of goods. | |
| And as you just stated, what they've done is they've hedonistically, they call it, They take out everything that you use or that goes up in price, and they just say, well, you used to eat steak, but now that's too expensive, so now everyone eats hamburger. | |
| So the price of things didn't go up. | |
| People just started eating hamburger. | |
| And if you just look at the way they used to track that data, if you look at the CPI, the way they tracked it in 1980, it's over 5% right now. | |
| And John Williams, who runs ShadowStats, expects that number to be over 10% by the end of this year, just based on the trends. | |
| But again, that's not even inflation. | |
| Inflation is actually probably even a lot more than that. | |
| Inflation is the increase in the money supply, and you actually can get a fairly decent look at it, but it's not provided by the Federal Reserve in their M1 and M2 numbers. | |
| They actually provide the data, and we actually calculate it. | |
| It's called an Austrian money supply. | |
| It's a way of calculating the money supply from the Austrian school and It's something we calculate every month in our newsletter. | |
| And right now, that's still over 10%. | |
| It was as high as 15% for the last year or so. | |
| So that means that year over year, relative to the change in goods, you're getting 10% to 15% more printing of money, which is going to translate into that or more inflation? | |
| Yes. Definitely, yeah. | |
| And so you see that going into the stock market right now. | |
| Some people point to the stock market and they say, oh, the stock market's doing good. | |
| Well, the stock market always does okay when there's inflation because one of the first places that the people who get this money, which are almost always the bankers, put it is into the stock market. | |
| But it's all fantasy. | |
| Literally, I expect... | |
| In the next few years, definitely no more than five, six years, the US dollar will probably collapse to zero. | |
| Or if it doesn't collapse to zero, it will come really close to it and then it will try to salvage it through some sort of a bankruptcy or something. | |
| Basically, the US government at this point has only two options. | |
| They can basically announce that they're insolvent, that they can't pay their debts, which is completely known by everybody. | |
| It's just an emperor has no close situation at the moment. | |
| Or they can inflate the currency, which may make it last a little longer, but it'll actually be much worse for everybody in general. | |
| I'm sorry about the second one. | |
| Sorry to interrupt. Do you think that's a viable alternative? | |
| I think that the hyperprinting of money and inflation is so well understood. | |
| Given that you guys can calculate the statistics, lots of people can. | |
| Do you think that bondholders would even accept that? | |
| I think that the moment they see printing going on, they'll just dump their bonds. | |
| And I think the US knows that, which is why it's curtailing, not going to Argentinian or Weimar-style printing. | |
| I think that they would expect too much punishment from the bond market should that start. | |
| Well, who owns all the bonds now? | |
| The Federal Reserve. The Federal Reserve owns more bonds than any other party in the world and they're increasing it still at this date at huge amounts. | |
| Ever since they announced QE2 in August, the amount of treasuries that have been bought, Japan bought 57 billion, China bought 17 billion, the oil exporters bought 7 billion, the Federal Reserve bought 422 billion. | |
| They're by far the biggest owner of bonds and They'll just continue to buy them, in my opinion. | |
| They actually have no choice. It's so bizarre, you know? | |
| It's like selling yourself your own visa statements and saying that you're getting out of debt. | |
| I mean, it's just completely insane. | |
| Everything nowadays is completely insane. | |
| If you actually understand what's going on, it's like watching the most bizarre story you've ever seen. | |
| I remember when I was younger, I used to think, man, what was it like growing up in 1930s in Germany and seeing how that whole Nazi thing happened? | |
| And in the last few years, it's not a Nazi thing that's happening, but it's similar. | |
| Everyone in the US especially, and I'm not saying that other Western countries are all that much better, but the US is really the epicenter of the real stupidity and real craziness. | |
| Everything I'm seeing is completely bizarre. | |
| I never thought I'd see a lot of these things in my lifetime. | |
| I actually stated about four years ago, I said, if the Federal Reserve starts to be the biggest buyer of U.S. government debt, that will basically denote the end of this system. | |
| Just for people, again, who may be coming in from the outside, and you're certainly more of an expert in this than I am, so correct me where I go astray, but the demand for U.S. Debt for bonds or treasuries is declining because everybody gets that there's going to be a haircut. | |
| There's going to be some default. | |
| Nobody's going to get back $100 on the $100 or $1 on the dollar. | |
| They're going to get some amount back that's less. | |
| And so in order to prop up the price of treasuries, the U.S. is actually buying its own treasuries, which props up the price. | |
| And I don't know. | |
| I mean, I guess it's such a short-term strategy that, I mean, it can't imagine that it's going to last more than another year or two. | |
| And what's going to happen then? | |
| It's hard to imagine. | |
| But there is absolutely, it's either going to be some hyperinflation, which I consider unlikely, but more likely there's simply going to be an Argentinian-style default. | |
| People are going to get back 50 cents or 40 cents on the treasury dollar, and they're just going to have to restructure from the ground up. | |
| Yeah, it's one or the other. | |
| And I'm a little bit more on the hyperinflation side. | |
| And the reason is that I can't see Barack Obama stepping up to that podium and announcing the U.S. government is bankrupt after, you know, these politicians, they don't like to announce those sort of things. | |
| He talks about hope and change. | |
| And, you know, he said he killed Osama bin Laden and didn't take any pictures and threw him in the ocean, you know, all these sort of Things that he's done, apparently. | |
| But I actually can't see that happening. | |
| I think, and if you look at history, most governments always, when faced with this choice, they actually go for hyperinflation because they can state, because no one understands how inflation works exactly, like not many people in society. | |
| And so that's what they're doing right now. | |
| So prices are going up, and what do they say? | |
| Oh, well, it's the greedy corporations, right? | |
| They're the people making the prices go up. | |
| Or it's the Chinese, which is a really funny one. | |
| You know, the biggest creditor of the US is causing their problems. | |
| Everything's just bizarre. But because not many people understand how inflation works, They can kind of get away with saying it's someone else and that's how it's always gone in history and that usually actually ends up going to war. | |
| They'll go to war and say oh China caused all this because they stopped buying our treasury debt and now everything started to go up in price a lot and And now we can't afford to eat and we're going to have to attack China. | |
| And that's something that might happen. | |
| And that's fairly normal when you get to this stage of a collapse of a government system. | |
| And this is the worst ever in history by far because the fiat currency that's going to collapse is the world's reserve currency. | |
| And it's the most widely used currency in the world by far, the U.S. dollar. | |
| Sorry, just again, so people understand that, if you could just break out that term, I get it, but world reserve currency is, everybody's using it. | |
| In fact, I think somebody was saying there's more dollars rolling around in Russia than there are in most of the US. And so anything that collapses that value has a worldwide impact. | |
| It's not just limited to the domestic US economy. | |
| Is that a fair way to put it? Yeah, and the real risk here and the real scary thing is that if you were in Zimbabwe recently and they had their hyperinflation or if you were in even Weimar Germany in 1930s and they had their hyperinflation, a lot of people just saw it coming, a lot of smarter people saw it coming and they just bought dollars, US dollars. | |
| Now, however, if the US dollar is going to be the one collapsing, what do you buy? | |
| It becomes things that are a lot harder to buy. | |
| A lot of people even understand them. | |
| Things like gold and silver. | |
| If you ask your average man on the street where to buy gold, they wouldn't even have a clue. | |
| So that's really why this is quite scary. | |
| Why the collapse is really dangerous and quite scary is because And as well, all the currencies in the world, almost all of them are all backed by the U.S. dollar. | |
| That's what they use as a reserve. | |
| Canada, for example, not many people know this. | |
| The Bank of Canada only has 3.4 tons of gold, which is enough. | |
| It's about like this big in gold. | |
| Stephen Harper could fit it in his desk drawer. | |
| And in six months, he might be doing exactly that. | |
| But anyway, go on. Yeah, and that'd be a normal thing. | |
| Most of these politicians, it's funny when you see these politicians or politicians, dictators, whatever you want to call them, in some of these other states, the smaller ones like Tunisia, when they leave, they take all the gold with them. | |
| I think that's what politicians generally do anyway, but it's just so funny to see them do it so directly. | |
| But Canada, the Bank of Canada... | |
| has just 3.4 tons of gold. | |
| That's number 78 of all countries in the world in terms of gold holdings. | |
| Almost all of Canada's reserves are US dollars. | |
| They have I forget the exact amount. | |
| I'm just looking it up here right now. | |
| It's $28 billion in US dollars backing the Canadian dollar and $150 million in gold. | |
| So it's like less than 0.1% or something like that. | |
| So if the US dollar collapses, what's going to happen to the Canadian dollar? | |
| If you think about it, the Canadian dollar is not a global currency. | |
| You can't go to Shanghai and buy some street noodles with some Canadian dollars. | |
| They'll just look at you like you're crazy, right? | |
| So, once the US dollar collapses, who's to say why would the Canadian dollar be worth anything? | |
| The whole thing backing the Canadian dollar, supposedly, is US dollars. | |
| And of course, the export trade from Canada to the US would collapse if the US dollar collapses because it would cost too much in US dollars to buy anything from Canada. | |
| So, 90% of our trade is along the south of the border. | |
| There would be very much a sort of isolationism within Canada. | |
| We'd have trouble buying things like oranges. | |
| I mean, that sounds crazy, but that's the reality that the international trade would collapse between the two countries. | |
| Totally. And so anyone who is aware the U.S. dollar might collapse, and I've heard a lot of Americans say, oh, I just opened a Canadian bank account, I bought Canadian dollars, and I look at them and I go, what's the point of that? | |
| Basically, if the U.S. dollar collapses, the Canadian dollar will probably collapse as well. | |
| So it's really a time right now to be very safe and to buy hard assets. | |
| That any central banker can't counterfeit or make is a good thing to buy anything hard. | |
| We've been big proponents of buying gold and silver and it's done very well for us and we don't see it as being anywhere near any sort of peak or anything. | |
| We think the peak will end when these fiat currencies collapse. | |
| And in either scenario, even the one that you say is the most likely where the US government defaults on its debt, that will still cause massive problems and they'll probably have to back the US dollar at that point by gold to show people that they're serious about not defaulting again. | |
| And so either way, gold and precious metals and any hard asset is a reasonably good way to try to protect yourself from what's in process of happening. | |
| Well, and you can see some signs of this. | |
| Utah, of course, I think it was yesterday or the day before, has just announced that they will allow for gold and silver to be a legitimate currency and exempt it from capital gains taxes. | |
| So I think they're sort of breaking ranks and recognizing what is going on with the dollar. | |
| And that's, of course, only going to increase the demand for gold and silver over time. | |
| Yeah, there's all sorts of really good signs showing up right now. | |
| It's just a headline just two days ago. | |
| Zimbabwe is looking at backing their currency by gold. | |
| So that's an interesting one. And then I just interviewed just last week Hugo Salinas-Price, who's a very multi-billionaire Mexican. | |
| I live in Acapulco. | |
| I'm here in Acapulco right now. | |
| And he lives in Mexico City. | |
| He's actually got a sailboat and he's going to come out here. | |
| We're going to go sailing, which will be great. | |
| I interviewed him and he's trying to back the part of the Mexican peso, not the entire Mexican peso, but he's trying to put silver back into the monetary system, which is a small step, but it's another good step. | |
| You're starting to see more countries and more people start to talk about this. | |
| Even the Chinese government for the last Five years. | |
| They've been very vocal with all their citizens saying, buy as much gold as you can, because they see what's going to happen as well. | |
| And so there's a lot of people who are starting to wake up and they're preparing for this. | |
| And, you know, it's not like a lot of people say to me, well, you're a gold bug or something like that. | |
| And it's not like I have any... | |
| It's not like I wake up and I hug my gold and I'm like, I love gold, like Goldfinger, whatever his name was. | |
| No, I don't care about gold. | |
| All I care about is protecting my assets and gold has been a time-honored way of storing your value and especially during a currency collapse or a major massive government default like Like you said, the U.S. government might do either one of those. | |
| You'd be much better off holding gold and U.S. dollars in a U.S. dollar bank account especially because if the U.S. government defaults, that will basically make all of their banks insolvent because all the banks in the U.S. hold huge amounts of U.S. government debt. | |
| And so if you hold your U.S. dollars in a U.S. bank account, when that happens, you basically look at losing everything. | |
| So you need to own things like this. | |
| I've said this many times. | |
| I'd much prefer to be out there and investing in real interesting, amazing companies, technology companies especially. | |
| I really like technology. | |
| But it's just such a time right now that you just have to just Protect yourselves from this collapse of this completely artificial non-free market system that we've been in for the last 40 years and more. | |
| Since the Federal Reserve was founded in 1913, we've been in basically a non-free market system. | |
| If it lasts to 2013, that'll be 100 years. | |
| I can't see it lasting too much longer than that. | |
| If you look at all the numbers, if you look at the US government debt, if you look at GAAP debt, generally accepted accounting principles. | |
| The total debt and obligations, liabilities of the U.S. government is $70 trillion. | |
| And that's just if they calculate it just the way they make every company in the U.S. calculate their accounting. | |
| $70 trillion. If you divide that by the amount of people in the U.S., 300 odd million, that works out to $900,000 per family of four. | |
| Each household in the U.S. has over $100,000 in their own personal debt. | |
| So each family of four in the U.S. has over a million dollars of debt and liabilities overhanging it. | |
| And some people say, oh, well, the U.S., they always grow out of it. | |
| Well, that used to be the case when they were more of a free market country. | |
| But now they're almost the exact opposite of a free market country. | |
| It's nearly impossible to even start a business in the U.S. right now with the amount of regulations and And things like that. | |
| And so, we're just going to see, how is anyone going to pay that debt off? | |
| There's just no way. No, no. | |
| And that's, of course, not everybody is going to be working, and a lot of people are working for the government, and their salary should be counted as debt, not the capacity to pay off debt. | |
| So, if you actually get two people in the genuine free market, it's you, me, and three other guys who Responsible for that whole debt. | |
| And people don't understand, I think, there's an eerie continuity in the value of gold. | |
| If you measure gold against assets, like real tangible assets. | |
| So an ounce of gold in 1900 bought you a really nice suit. | |
| An ounce of gold in 2011 buys you a really nice suit. | |
| It's an eerie kind of continuity in value, despite the fact that there's fluctuations all the time in the amount of gold that's available and who's buying, who's selling, largely because of status stuff, but also due to advances in mining technology. | |
| But there is this weird kind of continuity that gold Wraps itself around fixed goods very, very neatly and with a real continuity of value that fiat currency, as I'm sure you know, I mean, the US has lost more than 95-97% of its value, the dollar, since the Fed went in in 1913. | |
| But gold, relative to assets, has been really, really stable. | |
| Yeah, and the reason it has been stable is because the actual supply of gold barely increases at all. | |
| It increases through mining at about one to two percent per year, which isn't much compared to how these fiat currencies are being inflated. | |
| So that's the reason why I don't see it as being all that eerie. | |
| I see it as being just common sense that if you have something that doesn't increase in supply too much, hardly at all really, Obviously, compared to other things that haven't increased or decreased in supply dramatically, it would be at about the same value level as it was. | |
| And that's how money is supposed to be. | |
| And money is supposed to be something that stays the same. | |
| So even if you hid it under your mattress and 50 years from now you found it again, you would be able to buy the same general things or even more because theoretically over time, it's not even theoretical, it's pretty much proven through technology and through advances, things get cheaper over time than they're supposed to. | |
| Can you imagine, Jeff, what the world would look like if there was the general deflation that occurred certainly in America to some degree in Europe and particularly in England? | |
| The deflation that occurred, and deflation, of course, has gotten a bad rap, because although we all love deflation in our computer equipment, somehow it's a bad thing in society as a whole. | |
| But if prices actually went down, in other words, if you put your money in your mattress, it would increase in value. | |
| Imagine, you'd barely need banks, you maybe need a vault, you'd have like maybe 1% of the current number of people in the stock exchange, in the stock exchange, because everybody's a speculator, almost nobody knows what they're doing. | |
| Just what an incredible change it would be if you just didn't have this annoying little terrier yapdog nipping at the heels of every financial decision you made, which is like, oh man, it's going to be worth less next year and the year after that, so I've got to do something to save it from these vampires. | |
| And oh man, what a great and glorious economic system that would be. | |
| We've seen it before to a large degree. | |
| It would be great to see that in the future. | |
| And if people could just understand how peaceful and how relaxing a monetary system that would be, they'd shuck up this stuff without even looking backwards. | |
| Totally. It's just unbelievable how these currencies, because they are inflated so much, how it really warps and changes our world in ways that most people, in ways that you can't even really understand because there's so many variables involved. | |
| But for example, in Japan, they've had a They've been basically doing this quantitative easing thing for the last 30 years. | |
| But of course, the line is they've been in deflation. | |
| But that's not actually the case. | |
| With most things in the media said by governments, it's not right. | |
| But if you look at it, for example, their population, if you look at their demographics, There won't be Japanese people in like 200 years because they've slowed down their reproduction rate. | |
| And you actually had an excellent quote that I'm stealing sometime in the future with Doug Casey recently. | |
| He said that humans don't breed well in captivity. | |
| Certainly smart humans don't. | |
| I think the lower quality humans do, but the prize bulls do not breed well in captivity because we can calculate the consequences, of course, right? | |
| Yeah, and so this non-free market artificial money system has actually warped and changed everything in our lives. | |
| And if you look at even people in the US who are on all these pharmaceuticals and they're all depressed, a lot of that is from this system. | |
| When you live in a system where you can't get ahead unless you risk and gamble everything, which is basically what you're talking about, about having to go into the stock market just to keep ahead of the inflation rate. | |
| These things, they have massive repercussions on how our society functions and how people are in general. | |
| If you go to countries, my favorite countries to visit are the ones where they've never really done too much. | |
| The country hasn't done much and they're not really proud of it at all. | |
| They're just kind of embarrassed that they even live there. | |
| I love those countries. Those people are awesome. | |
| They're totally relaxed. | |
| They kind of know that they've never really done anything. | |
| They're not really proud of anything their country's done. | |
| And that's a good thing. You shouldn't ever be proud of anything that your country does. | |
| Your nation state is just your tax slave. | |
| You're your slave owner. And there's nothing to be proud of there. | |
| And when you go and talk to these people, for example, like in Thailand and places like that, they're so different. | |
| You know, they've lived in a world where, of course, we would never hold the Thai bot in our savings. | |
| You know, we hold gold, you know? | |
| And they're just relaxed. They can just hold their gold for decades, you know? | |
| If the government's screwing around too much and they can't really invest it well, well, just hold onto it, you know? | |
| But in the U.S., and you talk to people there more and more, they're just... | |
| Every time I visit the U.S. now, it's like my heart starts to just beat like crazy because everyone's talking so fast and moving so fast, and you can kind of sense this They all kind of sense that something's happening and they have to keep up. | |
| And what it is is they're having to work harder and harder to get less and less because of inflation. | |
| And this whole system makes them do things that they wouldn't otherwise have to do. | |
| And it really just affects people so much and people don't see it. | |
| And that's the problem. If you talk to most people on the street today and you say, what do you think of the monetary system? | |
| They'll just go, it's fine. | |
| I don't know why. | |
| Well, I think you're right about the psychological impact of a dying system on people. | |
| The image sort of came to my mind that there are people who, like, have problems gambling. | |
| But it's not a self-destructive habit. | |
| It's just, you know, they spend some money gambling maybe online or in a casino. | |
| And it's, you know, not great, but it's not the end of the world. | |
| But then there are people who kind of cross over that line to where their habit becomes self-destructive, to the point where they're bleeding off their capital, they're harming their marriage, and it's not sustainable. | |
| And I think those people get pretty hysterical. | |
| And it becomes a really, really difficult and incredibly stress-based I think everybody gets deep down. | |
| I mean, you can't look at these numbers unless you're completely math illiterate, in which case you're probably not looking at these numbers anyway. | |
| You can't look at these numbers and imagine that this is going to sustain itself and there's a real kind of anxiety because it is a destructive habit that can sustain itself and the end is nigh. | |
| And I think that makes a lot of panic go on in people and, of course, people get into debt. | |
| Because real incomes have been declining and because costs have been going up and people have been filling in the gap with debt in the hopes that it's somehow going to turn around. | |
| And certainly since 2008, everybody with any brains whatsoever gets that is not going to turn around, that their personal debt isn't going to be recovered by growth. | |
| That the government is not going to be able to grow its way out of debt. | |
| And so there's this kind of hysterical paralysis that people have about, oh God, we're screwed, but I don't know when and I don't know how, and I can't explain it, but I get it deep down. | |
| And I think that is having a very strong effect on American culture. | |
| Totally. I just spoke at a conference in New York and I was really kind of surprised because I've spoken at quite a few conferences in Canada and Canada is not as bad in the US in some of these ways. | |
| It is still bad. | |
| Almost all the problems we've been talking about exist in Canada as well. | |
| It's just the US is on a little bit bigger of a scale. | |
| But I went to New York, and I had quite a large audience, and they came up to me afterwards, just hundreds of people, and Dow looked like they were scared to death, and they were just like, what can I do? | |
| How can I get out of this system? | |
| And, you know, it's really kind of scary if you look at it from the Americans' point of view, because their government has really turned them into the biggest tax slaves in the world. | |
| They cannot escape that tax net now. | |
| And if they try to go to other countries and open bank accounts, they have to report it to the IRS, and There's not a stock brokerage account in the world that will open a US brokerage account for Americans because the IRS will come in with black helicopters basically and cause them so many problems that it's just not worth the hassle. | |
| And I just tried to leave New York and you go through the TSA, they tried to put me through the naked radiation bath and I said no and then they gave me my full 10 minute I touched every part of my body, pat down. But even after that, when I tried to get onto the plane, you turn a corner and there's 10 customs people in plain clothes with just a customs badge around their neck. | |
| And they're asking you if you have money. | |
| And they didn't this particular time, but I've heard in many American airports they even have cash sniffing dogs. | |
| They're trying to make it so you can't even get out of the US with any assets right now. | |
| And people are starting to really sense that. | |
| And it's really just crazy. | |
| And a lot of people I don't think are going to believe what's going to happen in the next few years in the US. I hope it turns out a lot better than it looks like it's going right now. | |
| But even here in Mexico, I live in Mexico, and a lot of people say a lot of things about Mexico like it's dangerous here and stuff. | |
| And a lot of it's just complete. | |
| It's not. It's not at all. | |
| But the media is trying to make it look that way. | |
| And of course, if there is any problems here, it's all caused by the U.S. war on freedom, which they call the war on drugs. | |
| But I always say, you know, that fence on the U.S. border, I think that's to keep Americans in at some point. | |
| It's going to turn, yeah. The whole lasers are going to turn from south to north at some point. | |
| And everyone's going to be like, oh, that's why that's there. | |
| Absolutely. Yeah. It's unbelievable. | |
| Yeah, I think you're right. | |
| I think there is a lot of panicking anxiety in the American media and a desperate flight into shallow entertainment and distraction and lots of noise, you know, that sound and fury that signifies nothing. | |
| And, you know, part of me, I feel this affection, you know, for... | |
| The general population or whatever. | |
| It's like, you know, I feel like I'm holding out some seeds to a squirrel that's very skittish. | |
| You know, these seeds of knowledge saying, you know, it's okay. | |
| Come, come and have a bite. | |
| It's going to be fine. You know, it might taste a little funny going down, but you'll be a lot better off when you've eaten it. | |
| And the other part of me is like, oh, you dumb bastards. | |
| I wish you'd listened to me 20 years ago, and then maybe we could have averted all of this. | |
| So I sort of have this duality, and at least I've got it down to a duality, which I consider progress. | |
| But I sort of veer a little bit between these two things. | |
| And that, of course, doesn't help me feed the squirrel, but that's the way it is. | |
| Yeah, I went through similar sort of feelings. | |
| When I first started this newsletter, the reason I did it was for the same reason. | |
| I just really wanted to help people and sort of just get some of this knowledge out there. | |
| And the funny thing is that every single person who subscribes to our newsletter, they send me an email as soon as they subscribe and they go, I just subscribed, I love your newsletter, and I believe in everything that you say. | |
| And it's like... Oh, well, that's good. | |
| I'm trying to get out there to some people who don't know about this stuff, but none of those people, of course, subscribe. | |
| And I always say, we'll probably get this huge influx of people subscribing right after all of this stuff has happened, right? | |
| And it's usually just the case, unfortunately, that most people... | |
| I've heard terms, psychiatric terms, what do they call that when they... | |
| Not denial, but they have... | |
| I forget the term, but anyway, for whatever reason, the majority of people don't seem to be able to see these things until it's too late. | |
| I think as long as the talking head on their TV news station, which in Canada is the government news station, which should be super obvious to people, but it isn't, as long as he says everything's okay, I mean, I've always believed, and you know this, I'll keep it really brief, but it's because personal conflict. | |
| Human beings are not driven mostly by abstracts. | |
| You know, crazy idiots like you and I may be more driven by abstracts than most people, but most people are driven by personal conflict, getting along with people, not rocking the boat in their personal lives. | |
| And you start talking about dismantling the state, you know, you've got your brother works for the Department of Defense, your sister is a teacher. | |
| You know, your great aunt is an administrator at the Social Security Network. | |
| And you're basically saying to these people, listen, your parasite's feeding off a blood trough coming down from the ultimate mafia in the sky. | |
| And, you know, that can make for a pretty testy and difficult Thanksgiving dinner. | |
| And so I think people are more avoiding horizontal criticism among everybody who's bound into the system. | |
| And that's certainly been the case with me. | |
| I mean, over the years, the friendships that I've had... | |
| Where I sort of speak truth to power and people who are dependent on that power, of course, there's a lot of personal conflict and lost friendships over that stuff. | |
| And I think that's what people are doing. | |
| And at some point, it's going to become more uncomfortable to stay in the system than it is going to be to change it. | |
| Hopefully that won't be too late. | |
| But I think that's when the real transition is going to occur. | |
| Yeah, that's a good point. | |
| I just recently started deleting a lot of my friends off Facebook. | |
| When the Canadian election, I'm from Canada originally, I was born in Edmonton and I lived in Vancouver for a while and then I defected about eight years ago. | |
| But recently, there was a Canadian election, and so I still have a lot of friends in Canada, and I used that as a time where I could really out all of my violent friends, all the people who contribute or participate in criminal enterprises. | |
| I went on Facebook that day, and one of my friends said, oh, I just voted, and I was deleting. | |
| Hey, I'm voting too, just more peacefully. | |
| Another person said, oh, get out there and vote. | |
| I'm like, oh, he's trying to incite people into getting involved with this criminal enterprise. | |
| Delete. A few of them responded, hey, why'd you delete me? | |
| I tried to explain it to them. | |
| I said, well, you just said that you're involved in this criminal enterprise that uses force and coercion to make people do things that you want them to do, which is completely... | |
| against everything that I'm for, a very unethical and immoral thing to do. | |
| Some of them actually got it, a little bit at least. | |
| I have some decent friends and so I added them back and a whole bunch of other ones they just didn't reply and I understand they just don't get it. | |
| Life's too short and I found that as well. | |
| I don't want to hang around these people who don't think about the repercussions of their actions. | |
| Life's too short. I just bought a place down at Doug Casey's place in Argentina, which I highly recommend if you have any opportunity to do so. | |
| I call it Galt's Gulch. | |
| It's the only real Galt's Gulch and it's just all people like Doug Casey and people like that. | |
| You know, you go down there and you can just have these dinners where you don't have to explain these sorts of things. | |
| Yeah, you're not biting your tongue. You're not getting that Klingon forehead pulse going on. | |
| Should I say it? | |
| Yeah. Yeah, that's the way to go. | |
| Well, listen, I want to make sure that I let you get back to your day. | |
| It looks quite nice outside. | |
| So, dollarvigilante.com. | |
| Jeff Burwick, I really, really do appreciate your time. | |
| It's been very stimulating. Please, please, please go and check out His newsletters, they are high, high quality. | |
| And they could save your money. | |
| They could save your skin. | |
| They could save your assets. And they certainly can help save your sanity. | |
| Because, you know, as the Boy Scouts say, preparation. | |
| And Hamlet, I guess, preparation is everything. | |
| So thank you so much for your time, Jeff. | |
| I hope we can talk again soon. Oh, I hope so, too. | |
| Thank you very much. Take care. |