Aug. 20, 2017 - Freedomain Radio - Stefan Molyneux
09:50
3797 Global Debt Crisis. Prepare Yourself Accordingly.
What unspoken crisis could drastically impact the life of just about every human being on planet earth - and could happen in the very near future? Stefan Molyneux once again shines a spotlight on the global debt crisis and speculated what will happen when the system inevitability collapses.Your support is essential to Freedomain Radio, which is 100% funded by viewers like you. Please support the show by making a one time donation or signing up for a monthly recurring donation at: http://www.freedomainradio.com/donate
Hey everybody, Stefan Wallen, you can feed the main radio.
Hope you're doing well. Welcome to your daily argument.
Today I'm going to offer up to you the true fiscal kryptonite that tends to stop leftists and social justice warriors in their tracks because they have all these mad utopian schemes involving infinite imaginary money.
And one of the ways that you can stop this madness in its tracks is simply to say...
Okay, how's the debt going to be paid off?
How is the deficit going to be closed?
And no, don't listen to them talk about just this magical tax, like these airborne vampires you can release to suck the jugulars of the rich and enrich everyone else.
Won't work. Won't even close.
You could tax all the rich in the world at 100%.
It would cover little more than a couple of days of deficit spending.
So... How is it going to be paid off?
Because this is what's happening in the West, for sure.
It's actually happening in the Middle Eastern countries as well, in the OPEC countries.
The OPEC countries have been funding their societies, which basically hang off oil revenues after they stole all of the oil companies from the West after the Second World War.
But the oil-producing countries in the Middle East have been subsidizing all of their social engineering and socialism with debt, which is not good.
Obviously, fundamentally, next up, Venezuela, but with additional ideologies.
And in America, debt has been how everything is fueled these days.
Debt has been what has wallpapered over the supposed recovery after the 07-08 crisis.
A housing crash and Americans are now saving less than they have at any time except right before the 07-08 crash.
And this is really, really bad.
People, their real incomes are stagnating or declining.
Their costs, particularly under Obamacare, are going up.
I've read reports now people are paying more for health care insurance than for their mortgage.
And I guess then they'll hope to get sick and live at the hospital.
That's their housing option.
It's absolutely terrible. And this debt is something that is kind of invisible to most people.
It is another one of these IQ tests.
You know, figure out who's actually worth talking to and who is just making, you know, self-satisfying virtue signaling noises with their yappy holes.
Just ask people, okay, how's the debt going to be paid off?
What is the debt at? What is the unfunded liabilities?
Just in the United States, well north of $150 trillion or close to A little bit less than 10 times GDP. If you look at the world as a whole, this came out relatively recently.
Global debt is $217 trillion.
Well, more by now. This is a little bit old.
$217 trillion. That is 327% of global GDP. And this just went up $50 trillion over the last decade.
And that is complete madness.
You can't possibly sustain any of this.
Look at U.S. debt, right?
Since the Federal Reserve, since fiat currency, type whatever you want into your own bank account and run them printing presses as long as you can buy votes with them.
Since the Federal Reserve was created in 1913, American national debt, U.S. national debt, has increased 5,000 times.
I shouldn't laugh, but it's like, why not 10,000?
What's the matter with you? Don't you have any ambition?
Don't you have any scope?
Don't you have any vision?
Why not 100,000?
Why not a trillion? I mean, it's complete madness.
And this, of course, is going on in the European Union as well, which is one of the reasons why Brexit was a good idea, should it ever come to pass.
But the European Central Bank has stepped in to halt the basic economic collapses of Spain and Italy and a bunch of other countries.
They're propping up a bunch of zombie companies with all of these low interest rates and money printing and so on.
And this is terrible.
And so people who were like, well, we should do this and we should do that and we have single payers, like, how are you going to pay off the debt?
And, I mean, what is there to do with the debt?
Well, you can either default, which means you simply, quote, declare bankruptcy and you're not going to pay off the debt.
That's One solution, which will cause a complete crash of the banking sector and all that, which you know, as a fairly predatory sector on the jugular of the productive classes, banksters to me are not one of my treasured groups of human beings in the world.
Interestingly enough, I was just reading this morning that two interesting developments in the banking sector and financial sectors.
Number one is that artificial intelligence is now out-trading human traders in terms of profitability, which means that, you know, don't think all this automation is just to do with low-rent jobs or minimum wage jobs or menial labor and so on.
There's a lot of automation that is coming to higher skilled, higher IQ occupations.
And can you imagine?
I mean, the overhead of having fallible, often cocaine-addicted and hooker-addicted human beings that you have to pay millions of dollars of bonuses to just to affect your trades, replacing those with AI is so ridiculously efficient that I think this may be the first domino to fall, thus releasing these predatory math geniuses to perhaps go back to building bridges and doing other useful things for humanity.
And in Sweden, they are looking at automating the tellers and basically automating all but the most complex customer requirements in banks.
It's great. So now even a teller who speaks fluent Swedish and understands the culture, her job or his job is going to vanish.
So you know what? The best thing to do is import a bunch of people who don't speak your language from the third world because they're just going to fit right into an increasingly automated environment.
Ah, madness.
So... You can either just default, which is to stop paying your debt.
It causes a complete crash of the banking system.
That's going to be tough. It won't be particularly tough for many individuals because this reset is going to happen one way or another.
It will be very tough for banks, though, and it will be very tough for governments because, of course, governments prop up and bail out the banking sector because the banking sector props up and bails out the government, right?
It's a mutually dependent addiction to paper money situation.
And so that will be tough, but banks won't have access to, you know, mad money, and governments won't have access to credit for a while if governments default.
And so they'll actually have to start living within their means, which means that they're going to have to start saying no to people who voted for stuff they weren't willing to pay taxes for, right?
The boomers. And that's going to be a challenge for people.
I think challenges are fun.
I think challenges are interesting. I think challenges are good.
And it's still easier than going to war.
So for all the people who are going to whine and complain, well, Western men had to go to war many times over the last hundred years.
And if other people have to take the brunt for bad fiscal policy, I don't think men are going back to war this time.
I think that ship has sailed Dunkirk-style.
So the other thing you can do, of course, is you can try and print your way out of debt.
Just print, print, print. Run the printing presses, create as much money as you want, and then you have to artificially hold down interest rates, because, of course, if you print a lot of money, then each dollar becomes worth less, which means that people are going to be paid in the future with dollars that are worth less than now, which means they have to raise interest rates.
You have to artificially drive down interest rates.
And that's a complete disaster.
Then you end up with a Weimar-style or Zimbabwe-style or French Revolution-style hyperinflation, which wipes out the middle class and promotes what's called extremism, which sometimes can just be realism on either side of the political side.
And, of course, the other thing you can do is struggle to pay off the debt.
And that, of course, has become mathematically impossible.
Now the debt has soared well north of 100% of GDP. In many countries, you simply can't do that as an option.
So what's interesting is that in the free market this problem would be solved because if people are borrowing too much money then the pool of capital available to lend diminishes and as the supply of capital diminishes the price for capital which is interest rates increases which Diminishes people's desire to borrow, right? If you can borrow at 3%, lots of people are going to borrow.
If the interest rates go to 9% or 10% or 15%, then fewer people are going to borrow.
So the market regulates itself beautifully if it's allowed to function.
Of course, the whole point of government is they won't allow the market to function because when the market functions, government power is reduced and government is seen as a predatory overhead on human productivity for the most part.
And so that's a beautiful thing that the free market does, is regulate the relationship between saving and spending through interest rates in particular, right?
If people are saving too much money and not spending, then interest rates are going to go down for lending because there's an excess of capital to lend.
And that's great because that stimulates the economy in the here and now.
You don't need some Federal Reserve or something like that to keep the economy functioning at an even keel.
Just let the market do its job.
But they've cut this all off.
All of the interest rate signals that are supposed to regulate the market have been destroyed by central banking.
Like 99.9% of people live in a world that's covered by a central bank.
And you remember the old rock, paper, scissors game?
I think the best way to understand it is...
To think, you know, the earth is a big rock, and if you remember how the game works, you've got rock, and fiat currency is paper, and paper covers rock.
Paper crushes rock.
That is the way of fiat currency.
It is a harsh lesson to learn, but we'll get through it, and we'll be far more sober and wise on the other side.
