June 20, 2015 - Freedomain Radio - Stefan Molyneux
24:28
3000 The Salvation of Greece. Prepare Yourself Accordingly.
Financial instability has caused a massive bank run in Greece which has resulted in billions of Euros in cash being withdrawn as of Friday night. Despite maneuvering from the Greek Central Bank, the European Central Bank and those in the European Union - this situation is completely unsustainable. So what's next? What can be done in the event of economic collapse to allow Greece a sustainable future? Will Greece stay stick with the Euro? Will Greece leave the European Union?
Those of you on the eternal run from mathematical reality, it is time to listen up.
We have a roadmap for freedom, liberty, success, and sustainability.
For everyone and everything, coming up in just a few moments.
So, what is happening right now in Greece is Greek money is evaporating faster than California dam reservoirs.
Greek bank run was over 3 billion euros of cash was withdrawn through Thursday night.
And the Greek Central Bank, also known as Math Illiterates on Crack, has requested an emergency cash dispensation from the European Central Bank.
This is one day after the European Central Bank granted the latest 1.1 billion euro expansion.
And in an unscheduled session, the European Central Bank did as requested.
However, it gave the Greek government far less than it asked for.
According to market news reports, the ECB gave Greece 1.8 billion euros in additional funds.
So basically, Greek deposits in the banks have declined by 3 billion euros over the past seven days alone.
Now, of course, Friday, this is a Friday during the day over here in North America, but it's the end of the business day in Europe.
Friday alone, there was another 1.2 billion dollars in euros that flowed out from the Greek banks, which means that, of course, this entire emergency loan assistance fund has been used up in a day.
Greece, again, is poised on the abyss.
This is not just a Greek problem.
If we tunnel through the planet, we emerge pretty much in the smog-filled nightmare of China.
China recently has found that two-thirds of its water supply is unfit for human consumption.
I'm sure they can still sell it to Southern California, but it's a little tough for them to drink.
And with the broad Shanghai composite...
Down 13.3% over the week.
This is the most since 2008.
So, to put this in context, Chinese stocks have just lost a trillion dollars in market cap, which is 10% of its entire GDP. I suppose the lesson to be learned here, which is to not only pull Keynes out of his vampire coffin, but drive another stake of Austrian economics through his undying heart, is that it really doesn't add a lot to your long-term GDP to build a bunch of cities in the middle of nowhere and call that economic progress.
Dostoevsky said that the way to drive a man mad was to have him dig a hole and fill it in again.
Dig a hole and fill it in again.
We have yet to approach that level of resistance to encroaching insanity to the point where we will Stop thinking that setting fire to things is equivalent to building new things.
So, what is going on with Greece?
Deposit flight, of course, is running above a billion euros a day.
The European Central Bank is probably going to look to cap increases to support further austerity.
Now, in the past, I've made a lot of fun of Greek supposed austerity, and if you look at the overall graph of Greek government spending, it is down a tiny bit, and it's still far higher than it used to be, particularly when Goldman Sachs helped Greece lie about its finances to get into the European Union and thus attach itself, leech-like, to the actual austerity and productivity of the Germans.
So it has been not a huge crash in government spending, but it is hitting the poor incredibly hard.
So the important thing to remember, of course, is that bailouts are not to the Greek government.
The bailouts are not to the Greek people.
The bailouts are to the European banks as a whole, who've lent a lot of money to Greece.
And if Greece doesn't pay them back, well, The banksters might actually have to go out, put their resume on the street and get some real jobs adding to human productivity rather than handing out money invented by central banks in order for local governments to bribe voters into voting for more fiscal delusion.
So these bailouts, sorry, these emergency funds, these liquidities, these we're going to lend you money so you can pay us back, this extend credit and pretend that such a repayment is occurring.
These are all bailouts to the banks.
Almost everything that is occurring in the financial sector these days are bank bailouts.
And of course the reason why governments need to bail out banks is that governments are the drug users.
And the banks are the suppliers.
And if you're a drug addict, you really don't want your drug supplier to get arrested, especially if there's no backup.
So there's no possibility.
What Reagan did after the savings and loan crisis was send almost a thousand financial executives to jail for fraud.
That, of course, is not going to happen now because you can't piss off the dealers when you're this late in the stage of financial illusion addiction.
So let's have a look at what's happening in Greece and the degree to which it is vicious against the poor.
So many years ago I spoke at a conference in Phoenix and the organizer sprung a speech on me.
And now Steph!
And it's like, okay, well I have been thinking about something for a while and I will link to this below.
But I gave a speech basically saying that people think that Those into the free market, into voluntary trade, into peaceful economic exchange between sovereign individuals, that we somehow hate the poor.
No, that is actually not the case.
We love the poor.
We care about the poor.
We want to protect the poor from exactly what is happening in Greece, which I predicted, gosh, I think this was five years ago or so, when I gave a speech in Phoenix at Ernie Hancock's Freedom.
And I said, well, you know, when the government starts to run out of money, the poor are going to be hit the hardest.
And this prediction was made years ago, and lo and behold, what's happening in Greece?
Well, the poorest households in Greece have lost nearly 86% of their income.
The poorest households in Greece have, since 2008, since the beginning of austerity, have lost 86, almost 86% of their income.
Now, the richest have lost only between 17 and 20 percent of the income.
In other words, we have a negative regressive tax called austerity that shafts the poor disproportionately while letting the rich off the hook disproportionately.
This is exactly what you would expect.
Because the poor have fewer options.
They can't leave.
They're stuck on pensions.
They can't move.
A lot of them, if they're older, they can't get new jobs and so on.
Whereas the rich, of course, you don't want to show off them too much because they'll take their business elsewhere.
They'll shut down.
They'll go overseas.
It's so predictable.
It's happened so many times in history.
But somehow, when we talk about controlling government spending, we on the free market side are called anti-poor.
But we know because We have a little bit more than three minutes ago in the rearview mirror.
We know what happens.
When this stuff goes down, the poor get shafted disproportionately.
Weimar Republic, et al., et al., et al.
So, the tax burden on the poor, since austerity was invoked in Greece, the tax burden on the poor has increased by 337%.
Want to chew that around a little bit, spit out the ball bearings of hope for the Marxist future?
The poor tax burden has increased 337%.
The tax burden on the upper income classes, to be fair, has increased 9%.
And again, to be fair, that is the very highest single-digit increase that could occur.
And this is a result of a study that analyzed 260,000 tax returns income data from 2008 to 2012.
Now, I mean, again, looking at it from the point of view of the bankers, so the bankers will say, yes, it's true that we're vastly increasing taxes on the poor relative to the rich, and we are crushing the income of the poor, but to be fair, the poor do breed slightly more than the rich, and therefore, again, along with pets perhaps and street animals, they do have additional sources of food that aren't available to the rich.
I'm sure that's how the bankers, in their infinite compassion and wisdom, Are approaching the problem.
And this is why it's kind of funny, right?
I mean, because all the populists in town come in and, we're going to tax the rich!
We're going to get the rich!
We're going to make them pay!
And the rich are all like, oh yes, I'm running.
Oh gosh, in fact, me running and pretending not to laugh at this foolishness has almost dislodged my monocle.
I won't be able to compete in Monopoly anymore.
Madness.
Now, of course, there's the public sector and there's the private sector.
And the employees in the private sector have suffered significantly greater losses of income because you can fire people in the private sector.
Well, not in France, but in Greece, you can still do a little bit of that.
And what do you do in the public sector?
They say, aha, we're going to reduce the payroll of the public sector.
And how do they do that?
Well, they encourage early retirement.
Early retirement in the private sector in Greece has increased 14%.
But in the public sector, in the government, stretching the term workers, it has increased by 48% since austerity began.
And in general, everyone who's got 25 years or more in the public sector First of all, I don't know how they get out of bed every morning.
But secondly, they started rushing to early retirement in 2010 because they were afraid that further cuts in wages would erode their pension rights and so on.
So, of course, there have been massive retirements in the Greek public sector.
How is Greece still functioning with all these productive people having left?
I can't even finish that sentence.
So, taxes have been greatly increased, but they've had a regressive effect.
Direct taxes have increased by nearly 53%, indirect taxes only 22%.
Indirect taxes tend to be levied more upon the rich.
Little has been done against tax avoidance and tax evasion.
There's a huge number of doctors in Greece who seem to make depressingly little money.
And also you have to pay a tax if you have a swimming pool.
Very few swimming pools are visible on the tax returns in a weird undead reverse Romulan cloaking effect.
If you fly a helicopter over these rich neighborhoods, they're dotted with blue kidney-shaped tax avoidance mechanisms that never seem to show up when you report this to the government.
So, this is wretched.
And what has happened is that almost one in three Greek households has had to make it through 2012 with an annual income below 7,000 euros.
7,000 euros.
One third of Greek households.
Now, What's happened, of course, is unemployment has risen enormously, from like 7.8% before austerity, or before 2008, to 24, 25, 26%.
Youth unemployment is close to 50%.
Of course, the only way the youth are surviving is by hanging on to their grandmother's pensions, which makes them, I guess, a tad conservative when it comes to cutting pensions.
So...
Banks.
People confuse banks with the free market.
Banking has almost nothing to do with the free market anymore.
A little bit, but very little to do with the free market.
Central banks in particular.
You're forced to use government currency.
You can't compete with government currency.
That's called counterfeiting.
And the idea that central banks have anything to do with the free market is a massive delusion.
Banks used to be, hey, keep my gold because it could get stolen from my house and lend some money out to some businesses so that I get a little rate of return.
on my deposits and, you know, you create jobs so that my kids have a future.
That's, you know, hang on to my money, lend it out a little bit.
But you see, that's work.
Right?
Hanging on to the money, not so much work, just a bunch of vaults and so on.
But actually lending money To businesses in the hopes that they will grow, that takes a lot of work and actually has some risk.
What you want to do is borrow the money from the Fed at a tiny interest rate or a negative interest rate and then buy government bonds at a couple of points and then sit back and call yourself a business genius.
Actually learning about people's businesses and investing, it takes a lot of risk.
It's much easier to go to the government, lend to them, extend and pretend, and then pretend you have a real job.
Like when I was an entrepreneur before I did this show, I was a software entrepreneur for 15 years or so.
And yes, we would have to sit down with the bank and we'd have to get loans sometimes.
We'd have to get credit loans because, you know, cash flow is king in all businesses.
And we had to explain our business.
We had to show business plans and they had to evaluate it and figure out the risk and so on.
That's hard work.
It's an honorable, decent job.
Nothing to do with really what banks do.
Anymore.
Now, banks are just an extension of the government, and they are a class that gets between the citizens and the government, right?
As I think Thomas Sowell, a great economist, has pointed out, governments love to have a pseudo-capitalist class to sit between them and the voters so that when the government screws up, they can say, ah, the bankers, or the media can say, it's the bankers who are the problem, you know, and this is just a distraction.
The real person behind the curtain is the guy with the flag and the gun.
And there's been also reports that Greek...
I guess I use the term workers for government people.
I guess I could use the term journalists.
So Greek journalists were sequestered in Washington and in Greece to help...
Tow the party line when it comes to what the various funds want, the European Central Bank, the IMF, and so on.
So they were told.
They were told, here's how you sell the idea that the debt can be repaid.
Here's how you can sell the idea that austerity works.
And the media hates the limitation or end of government.
See, media, they used to be into investigative journalism.
They used to be into uncovering corruption.
They used to be into that kind of stuff.
Now, they're not in that business.
They're really in the business of delivering you to pharmaceutical company advertising, other kinds of advertising.
But most particularly, reporters, they have developed contacts in the government.
And they tell you what the government is going to do so that you can make business decisions accordingly or political decisions or whatever.
So they have developed these relationships for many decades.
And that's their value.
That's what they bring to the table.
Not their investigative journalism, their skepticism, their criticism, their independent thought and research.
They have cultivated these relationships.
Like the guy who networks and never has a real job.
I can introduce you to...
And so they're into funneling information from the government to the business sector.
Now, if the government shrinks in size or loses power to control the business sector, the business sector will say, well, I don't care who your contacts are because I don't care what these people do.
They don't have the power to affect me anymore.
So reporters hate government going down because it lowers their market value for information.
This is what could be done.
I'm not a big one for giving short-term solutions.
I'm into philosophy, which means I have the same relationship to short-term solutions as a nutritionist has to a heart attack, which is, well, maybe if you'd listened to me 20 years ago.
But I'm going to break that rule and give some suggestions.
If I was the king of the world with Leonardo DiCaprio on the front of the Titanic, not...
And metaphor entirely out of place in this conversation.
So what would I do if I were given in charge of the government?
Well, first of all, you've got to get out of the euro.
You've got to get out of the euro.
Got to get out of the euro!
Because when you're trying to break an addiction, you don't hang out with the addicts.
If you're trying to break your heroin addiction, don't hang out with heroin addicts.
You want to quit drinking, don't hang out at a bar with a bunch of alcoholics.
So, the Western world over is addicted to the morphine of created fiat imaginary currency.
And that has the same relationship to fiscal austerity as it would be to your saving plan if you had the ability to type whatever the hell you want into your own bank account.
Ooh, look!
More money!
Guess I'll go buy stuff!
Hey, why is the price of everything increasing?
It's okay, because my money printing is increasing faster than the price of things, at least in the short run, so my friends, who I give the money to first, do a lot better than those who get shafted later, i.e.
the poor and disenfranchised, which is why those who love the poor or want to help protect the poor must violently oppose fiat currency.
Because the expansion of fiat currency benefits the rich first, at the cost of the poor later, because it takes about 12 to 18, sometimes 24 months for the inflation to get out.
Like the inflation of the price.
So, yes, you've got to get out of the euro because you want to quit your addiction to pseudo-free money, which is really sold on the kidneys of your children's futures.
Of course, you have to deregulate and privatize.
Oh, I know!
Deregulation caused the financial crash.
No, it didn't.
No, no, no, no, no, no.
No, it didn't.
It didn't.
It didn't.
Regulations increased.
Didn't.
Anyway, so, but privatization and deregulation.
I mean, you know, if the government forced everyone to get married, that would be institutionalized rape.
To privatize marriage choices is to say, hey, get married or don't get married, get married to whoever you want, get divorced if you want.
That's called privatization.
The privatization or deregulation of rape is called lovemaking because privatization simply means we're not going to force you to do something.
You can do it by your choice.
I think we all kind of like that liberty.
And the privatization of language is called free speech.
The privatization of theft is called charity.
So, yeah, privatization is a substitution of voluntary interactions for coercive government interactions.
So, maybe you want to scrub that negative ideology put in there by the media, because privatization lowers the value of the media reporters' government relationships, as we talked about earlier.
So, got to get out of the Euro because Germany's always going to be there in a dark alley with a couple of Euros there.
You want some Euros?
We got Euros!
I don't know what that accent that is.
But, you know, they're going to be always out there saying, come back, come back.
We got some free money for you, man.
Free money.
You don't have to make any difficult decisions.
Come on back.
Just this one time.
One more hit.
Then you can go clean.
Then you can go straight.
One more hit.
You want to face a bunch of angry voters?
You want to face a bunch of anemic Greek anarchists who barely have the strength to lift a garbage can up to throw it through a Starbucks window?
You don't want to be doing that.
Come here.
I've got some good stuff.
Good stuff.
You can roll it up.
You can snort it.
You can take it orally.
You can take it through any other orifice you want.
Man, it's going to make all your pain go away.
You won't be able to resist that.
You won't be able to resist.
You've been on this drug for more than 20 years.
Cold turkey.
No association with the pushers.
Get away.
Step back from the euro.
It's crack.
It's not good for you.
And maybe deregulate the economy to the point where it doesn't take 5 steps, 13 days and upwards of 4 months to open a business.
You know, that's not great.
That's not great.
Some guy wants to start making ashtrays out of clay and selling them in Greece, who are still pretty heavy smokers, should not have to go through all that.
It disproportionately targets the poor, the less educated, the less intelligent to have a whole bunch of regulatory barriers.
To starting up businesses.
Nope!
And I don't care.
The people who've already gone through it, too bad.
Sorry, it's unjust and it's wrong.
So, just get out of the business of how to open a business.
Let people buy and sell whatever they want.
And real privatization, real privatization.
Steve Forbes has pointed out, I think it was in 2011, he was at a meeting about deregulation and privatization.
A bunch of Polish people came who had very successful experiences with privatization, wanted to talk to the Greeks, and the Greeks were like, get away, evil Poles!
Well, who's laughing now, right?
I mean, and real privatization is you just, you put the stuff on eBay.
I mean, put the whole DMV, put the whole tax collection department on eBay.
You don't sell it to your friends and then give them monopoly privileges.
That's not privatization.
That's just handing your shakedown contracts to another mafia outfit.
That is not real privatization.
Total open bid, give the money back to the people.
Flat tax.
Were I in charge?
Yeah, deregulation.
Get out of the euro.
Flat tax.
You could have a tax rate in Greece, 10% on individuals, 10% on the other individuals called a business.
So basically 20%, because, you know, if your corporation is paying 10%, that's just 10% less they can pay you in salary.
But so 10%, Of people's income going in taxes.
No deductions!
People say, oh, but that's regressive.
That harms the poor.
No, you know what harms the poor?
336% increase in their taxes versus 9% for the rich.
10% flat tax would be far better than what's happening right now.
Flat tax.
Now, we would then continue to whittle down that flat tax.
I, of course, would love a zero-based tax.
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So yeah, I mean, I would love it if it's like, do you feel like tipping the government today?
That's how things should be working.
But until then, right, you've still got some transition, some obligations.
You can't switch things immediately.
As I said, it's probably going to be a multi-generational change to a truly free society.
But you could at least get taxes way down.
With taxes way down, you would get far more income.
President Reagan reduced the tax rate from the 80s percentage to 70% to 28%.
And that's the top tax rate in the US. During the seven-year Reagan boom, economic growth was almost 4% a year of real growth, and total tax revenues increased by 99.4% during the 1980s.
You cut taxes radically.
And tax receipts go up.
So if you cut your flat tax, you make a flat tax of 10%, which is in place in Bulgaria and some of the other Eastern European countries.
And so 10% flat tax on individuals, 10% flat tax on corporations, you'll get far more money coming in.
And that will be how you could deal with these problems.
And yeah, I mean, You have to privatize the currency, of course, as quickly as humanly possible.
Because if you start to revive the drachma, then people aren't going to believe that you aren't going to just inflate it.
You know, it's like, you know, I'm not going to go to the bar anymore.
I'm going to set up a distillery at home.
It's like, that doesn't mean that you're not an alcoholic.
At all.
People aren't going to trust you.
You have to quit the drug of the pseudo free money ripped from the hides of your children's future.
You simply have to give it up, which means the government has to hand over power of the currency to the free market, whether that's Bitcoin or some other cryptocurrency or whether it's a commodity basket based on oil and gold or whatever it is.
You have to have the government Out of the currency business.
There is no conceivable way a civilization can survive with governments in charge of the money.
As P.G.O. Rourke said, giving money and power to the government is like giving whiskey and car keys to teenage boys.
It simply doesn't work.
You have to separate the state and the economy in the same way you had to separate The state and religion.
It simply doesn't work in combination.
From the Roman Empire forward, debasement of currency for the sake of purchasing the votes of idiots is a constant theme in human society, and we've got to break that cycle.
So, those are my little tips and tricks about how to Free things up in the world, and I will leave you with two thoughts, which aren't mine.
Number one, yes, what I'm saying may be startling to you, but as the saying goes, truth is treason in an empire of lies.
And the last, and I think greatest relevant quote from a philosopher, is the enemy.
has only images and illusions behind which he hides his true motives.
