March 10, 2018 - Freedomain Radio - Stefan Molyneux
29:14
4023 America's Economic Future. Prepare Yourself.
▶️ Donate Now: http://www.freedomainradio.com/donate▶️ Sign Up For Our Newsletter: http://www.fdrurl.com/newsletterWhile many people have celebrated gains in the stock market and government employment numbers which paint a rosy economic picture - America's economic future is not good. Stefan Molyneux looks at the economic Sword of Damocles which hangs over the head of every American and the tragic amount of suffering that will occur when the system 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
So here's an interesting thesis I wanted to run past you.
Let's do a little bit of background on the U.S. economy and where it stands, and then I'll tell you what I think is going to happen in fairly short order.
So we have the three major tripods of the Sword of Damocles that hangs over the neck of the U.S. taxpayers, particularly the unborn taxpayers who are basically sold off And the auction of international banksters, while still gleams in their daddy's eyes, we have consumer debt, corporate debt, and government debt.
And they're all going... Through the roof.
There are other indications of leverage or margin.
So margin debt. So this is the debt that you borrow against if you want to buy a bunch of stock, right?
So you have a portfolio and you say, okay, well, I'll borrow against that portfolio in order to buy more stock.
So that margin debt has hit a record of $642.8 billion.
That's... Quite a lot of money, even by government standards.
And so there is a blow-off in margin debt that mirrors the blow-off in the stock prices.
So since February of 2016, so two years and a little bit, It has increased by $170 billion, and that is very intense.
So the $643 billion in margin debt is more than double the level of margin debt back in the day when I had co-founded a tech company in the Techmania peak.
So this is more than double the level of margin debt at the Techmania peak, and it's over 15 times the amount of margin debt Just before the famous stock market crash of 1987.
Now, of course, big corporations are borrowing a lot, partly because, of course, the Fed is keeping interest rates so low, and they want big government spending and big government debt because a lot of government spending is big corporate welfare, right? They get these big government contracts.
They want the government to borrow more so that They can reap the rewards of that.
And this is another reason why major corporations don't talk about government debt, particularly media corporations, because they are expecting benefits from all of this kind of stuff.
So they want all of this debt fire hose to continue so that they can continue to post their wonderfully great quarterly results.
A couple of other bubbles that are important to understand.
The oxymoronically named higher education bubble.
Okay. Two out of three lies aren't bad.
It's not higher. It's, in fact, much more primitive.
It's not education. It's indoctrination, but it certainly is a bubble.
And this is a business model.
That requires... See, it's not enough to just pillage the unborn.
You also have to lie to your average economically uninformed 18-year-old about the imaginary value of the university education, the disaster that awaits him should he fail to get educated, and the value of the debt that he's taking on.
So, of course, it seems as men have vanished from education, there seems to be more and more financial illiteracy and...
So basically, you lie a lot to these kids.
So you give them the propaganda about their need for propaganda.
You pay for their own left...
You get them to pay for their own leftist indoctrination.
It's a pretty good deal.
So these 18-year-olds are given a basic lie because in the past, 10% of the population went to university.
It was the top 10% of the cognitive elite, and they did very well.
Not as a result of university primarily, but as a result of being intelligent to begin with.
And now, of course, it's 40%, 50% of people going to university, and they imagine they're going to gain all the same rewards as the people who were smart who went earlier.
And, well, newsflash, they won't.
Getting on the basketball team doesn't make you taller and getting into university doesn't make you smarter.
It just makes you more indebted and it's actually going to lower.
Your market value after university, not just because you have to ask for additional pay to pay off the debt that provides no value to your employer, but also because you've been programmed to be resentful and hostile towards the free market, towards bosses, towards voluntary transactions of every kind, and therefore you're going to go not just with high salary demands as a result of needing to pay off a debt, but also because you come with a massive amount of lefty attitude towards having to work for a living.
So you are not Very favored in the market.
It is a terrible, terrible idea.
So, why do universities offer all of this?
Well, because the government backs the student loans.
Which means if the student fails to pay off the loan, shouldn't laugh, it's actually a tragedy.
If the student fails to pay off the loan, then the government will backstop it.
And that's pretty terrible.
So, federal student loan debt is...
I don't know, it just feels like almost yesterday.
Time is so fast these days.
It feels like almost yesterday. It was just around a trillion.
Now, I don't know, it's hard to calculate.
1.4 trillion, 1.5 trillion, all of this kind of stuff is going down.
Another one, also fueling a lot of corporate overextension, auto loan.
Auto loan debt is somewhere around 1.2 trillion dollars at the moment.
So consumer debt, of course, is high.
Corporate debt, government debt.
We basically have refashioned or reshaped the modern U.S. economy to be almost entirely debt dependent.
In fact, human life on this planet has become largely debt dependent.
The average amount of debt per man, woman, and child living on the planet at the moment is over 30,000 U.S. dollars per person.
Per person. Pro tip, not many people have that kind of money.
So we have inflated the human population based on debt.
And when the debt comes due, carnage will ensue.
That is as certain as sunrise.
That which cannot continue mathematically will not continue.
So everyone's dependent on this debt.
Everybody's invested in this debt.
And nobody has much of an incentive to point it out.
I mean, other than the alternative media.
So, the economy has been growing to some degree, of course, as a result of debt.
So, in the US, just over the last decade.
GDP, nominal GDP, went from just under $15 trillion to a little over $19 trillion.
Again, a lot of that is debt-fueled, right?
If you print money or you create money or you borrow money or you sell bonds, all of which is two different sides or four different sides of the same hellish spinning coin, you know, the kind of coins that they put over the eyes of dead people in the past.
So when the government prints a bunch of money, gives it to people on welfare, then those people on welfare spend it.
And when they spend it, this generates economic activity, which looks like growth.
Well, I guess it is kind of like growth in the same way that a tumor is like growth.
It's just not the same as a muscle.
In fact, it has quite the opposite effect in the long run.
So the economy has, quote, grown.
And so what has happened?
Well, so over the past decade in America, the economy's grown, you know, $4-5 trillion, but the national debt has gone up twice as fast.
It has doubled from $10 trillion to, I think, a little over $20 trillion at the moment.
So you've got, in the U.S., the economy growing at a rate of about 2.5% a year, but the government debt is growing at about 6% a year, at a minimum, probably more.
So for a little bit of a time flash, June 1970, I was knee-high to a grasshopper and the federal debt held by the public was $275 billion.
Not bad. Not a small number, but from the founding of America to 1970, 188 years, well, it took that long to accumulate $275 billion.
So that's 9,776 weeks, and the U.S. government had borrowed about $28,000 per average per week.
So that's from George Washington, first president, to June 1970, the U.S. government had borrowed about $28,000 per week.
Now, just recently, the U.S. Treasury was selling $258 billion worth of government debt.
That was in a single week. In a single week.
So the U.S. government scheduled debt emission just in a single week.
Was nearly equal to the entire borrowing of the nation's first 188 years and its first 37 presidents.
Now, price level today, as a result, of course, of shortly after 1970, Nixon took the U.S. off the gold standard, which allowed for free reign money printing, the cocaine of government power.
The price index or price levels today are five times higher.
This is measured by GDP deflation.
So in today's purchasing power dollars, the 1970 debt figure would be about $1.2 trillion.
So yeah, there's been some inflation for sure.
June 1970, the Fed's balance sheet was a mere $55 billion.
And that was after they'd had 56 years of a license to print money.
So over the next 48 years, right, 1970 to this year, 2018, was truly astounding.
It's sort of like you have a big bottle full of Diet Coke, and you feed a bunch of fiat currency Mentos into it, and you get this massive eruption that comes out of after that.
So, in the 48 years since 1970, the Fed's balance sheet has erupted and increased 82 times, almost 10% per year over the course of almost a half century.
So, let's compare this.
June 1970, GDP $1.1 trillion, and it's gone up 18 times to $19.6 trillion.
Well, total public and private debt outstanding back in 1970, $1.58 trillion, and it's expanded by 42 times to $67 trillion at the moment.
Right? Yeah, I understand all of that, right?
GDP has gone up 18%.
Debt has gone up 42.
Sorry, GDP has gone up 18 times.
Debt has gone up 42 times.
Boy, 18%. Wouldn't that be nice?
18 times versus 42 times.
Not going to work.
Not going to work. If this trend goes on for another 10 years, there's going to be 35 trillion of nominal GDP and 150 trillion of total debt.
Come on, people. So, this all came to mind because the U.S. government recently released an annual financial report, its annual financial report for the year 2017.
Now, it collected a lot of money in taxes, but still managed to have a net loss of $1.2 trillion.
$1.2 trillion.
I mean, that's for comparison's sake.
That is, the loss that the American government had in 2017 is larger than the entire Australian economy.
That's a lot of sunscreen and Massive hammers to whack unpleasant creatures in the vicinity.
Another way of looking at it is the U.S. government last year lost $2.2 million per minute.
Per minute. And what's astounding about that is 2017.
No giant new wars, no crippling recessions, no epic financial crash or crisis.
As far as government-run economies go, not the worst economy in history.
In fact, the Treasury Secretary in the introductory letter proudly stated, and I quote, that...
The country enjoyed a pickup in economic growth in 2017.
Unemployment is at its lowest level since February 2001.
Consumer and business confidence are at two-decade highs, and inflation is low and stable.
It's about as rosy and positive as it could possibly be, and they're still losing two-plus million dollars a minute.
Record high income, $3.3 trillion.
Wow. $3.3 trillion.
Wow. That's quite a lot of income, but it doesn't seem to matter.
You see, when the government gets more income, it uses it as collateral to borrow more.
Therefore, more income being paid to the government will never result in lower debt, at least until the mainstream media starts to tell the truth, which is functionally never.
So, in the report that came out just last month, the government reviewed It's assets and liabilities, right?
Like, you know your net worth, right?
You add up all of your assets, your money in the bank, your whatever you've got, your physical assets and so on.
And then you subtract your liabilities, your tax liabilities, your mortgage, your car loans or whatever.
And you end up hopefully with a plus at the end.
And so the government has done the same kind of thing.
And the government's net worth is ridiculously negative, right?
So it had a total income of $3.3 trillion.
Its net worth is minus $20.4 trillion.
Now, why doesn't the mainstream media talk about this?
Well, of course, the mainstream media is funded by advertisements, and those advertisements are paid for by corporations that are significantly reliant on government debt.
Government debt is the conversion of socialized children into privatized profits.
It's a fascism that basically steps on the soft skulls of newborns in order to crush their economic future and pillage them like a bunch of geriatric boomer vampires from any capacity that they might have to achieve a standard of living even close to that which their parents and certainly what their grandparents had, at least in terms of growth.
So the mainstream media of course is relentlessly leftist and therefore doesn't want to tell you about government indebtedness which has largely been run up by leftist social programs because when the crash comes they don't want you to be properly informed about the cause of the crash.
They want you to blame the free market so they can complete their takeover of the economy and fulfill the ten planks of the Communist Party, which have been largely fulfilled in the West as a whole and in America to a large degree already.
See, they don't want you to understand the cause of the crash.
They want you to blame the free market so they can expand the power of the government and crush the last vestiges of the free market.
So that's important to understand.
Now this doesn't even take into account unfunded liabilities, which are promises that you have to pay in the future for which you do not have the cash.
Let's take a little example.
Ida Mae Fuller, a fine lady, so she cashed social security check number one.
Number one. Check number actually 00-000-001.
And that was dated January 31st, 1940.
And she cashed a check worth $22.54.
Now, that's pretty good.
See, she'd only paid $24.75 into...
The retirement program, right?
So she paid, you know, one paycheck or whatever, or a couple of paychecks.
She paid into the program, and then she started collecting.
She paid $24.75 into the program, and then she retired, and she continued to cash her checks until she died, which was January 27th, 1975.
So remember, she paid in $24.75 into the program, but she ended up receiving almost $23,000 back out in payments.
So for those at home calculating, she received 924 times more out of Social Security than she paid into it.
Bit of an extreme case, but the trend remains.
This is not something that can be even remotely Sustainable, obviously.
And this is why when people say, well, I paid into the system.
No, you didn't. Because there's no money in the system.
The money was pillaged and replaced with IOU notes.
There's no money in the system, which is why it's turned into a vampiric system.
You paid into what you were told was a retirement plan.
But it was actually just money that they used in the government to bribe their friends, buy votes, and prop up the Russian ruble for an hour and a half back in 1987.
So it's all complete nonsense and lies.
There's no money there. You're just pillaging the younger generation who are not responsible for the voting decisions you made as adults in the last 40 years or so.
The total present value of future expenditures in excess of future revenues, right?
So how much they promised versus how much they're going to get.
This is just Social Security and Medicare.
It's a shortfall of $49 trillion.
49 trillion dollars.
There's more. I've seen calculations 150 trillion and even higher of all of the unfunded liabilities that the government has, which is how your vote was bribed at the expense of your children's futures.
Well, what can you do?
Well, of course, you can get ready, and I've talked about that before.
But what you can do right now is spread the facts, because everything is being prepared for tyranny.
Everything. This information is kept from you for a couple of reasons.
First of all, the mainstream media doesn't want to do anything that might interfere with leftist social programs, which the Democrats use to buy votes.
Okay. They don't want anything to interfere with that.
That's why the left is really, really keen on gun control, but under Obama did nothing to interfere with the hundreds of billions of dollars of arms sales that the U.S. had around the world.
You know, if you're really concerned with bad people getting a hold of guns, why are you arming dictatorships around the world to slaughter their own citizens and wage war against their neighbors?
But of course, the left doesn't want to interfere with arms sales because arms sales provide the profit, which provide the leverage to borrow to pay for social programs that make people like the left in the same way that a prostitute likes you because you give her money.
So yeah, they don't want to interfere with any of that.
Now, this has happened before a whole bunch of times.
And the way it works in history, you understand, is something like this.
You get a bunch of social programs and the social programs fund...
The children, the breeding of people who are less intelligent, right?
The way that it generally works in a free market is that more intelligent people garner more resources and therefore can have more children.
And less intelligent people garner fewer resources and thus have fewer children.
And that's kind. That's nice.
That's civil. That's humane. There's no force involved.
No one's compelling anyone to do anything.
But what happens as society gets more and more complicated and sophisticated Then what happens is you just need more smarter people and fewer less smart people.
You know, like the jobs that get automated are the easiest jobs.
And so in a free market, you get more and more smart people, fewer and fewer less intelligent people, which accords with the requirements of the market.
It's a very civilized, very productive, very humane way of calibrating intelligence requirements with intelligence supply.
Supply and demand gets calibrated very nicely in a free market.
In a government-run market, it's not really a market, in a socialized system of enforced charity, then you take resources from smart people and you give lots of resources available.
to less intelligent people and specifically you give them resources based upon the least intelligent decisions that they make largely to have children outside of wedlock to maybe not complete high school to not get or hold a job for at least a year which are the three things you need to do to have like a 98% chance of getting into the middle class so the more people make bad decisions the more money you give them and therefore the more people you get who are going to make bad decisions and the way that this happens in history The welfare state was put in Germany in the 1940s,
expanded by Otto Bismarck after he took power in 1871.
And what you then do when you can't pay your bills anymore is you go to war.
And what you do when you go to war is, in general, you have officers and you have the enlisted.
And the officers are more safe and the enlisted are more in danger because the enlisted generally go to the front.
And there were, in fact, very specific IQ tests that were given to the American military, but there are also implicit IQ tests as well.
Do you know the right people?
Did you go to the right schools?
Do you have a certain amount of income?
Do you have a certain amount of social standing, particularly in the remnants of the caste system that existed and still exists in the United Kingdom, in England in particular?
Hello, welcome to my Jump Cut.
So, for example, here is a question or series of questions that were given to potential soldiers or soldiers in World War One to figure out whether they go to the front lines or whether they stay back playing pinocchio with their fellow officers.
Do dogs bark?
I'm going to go with a yes on that one.
Is Cole white?
Yes, and privileged.
I also wanted to mention.
Does a baby cry?
Yes. Can a hat speak?
As if they haven't seen Harry Potter.
We'll go with no. Do hens lay eggs?
Is a stone soft?
I guess it depends whether there's a Roger in front of it.
Is one more than seven?
These are not exactly brain breakers here.
Do the land and sea look just alike?
Are some books black?
Yes, in particular, the upcoming Big Black Book of Communism with 100 million dead.
Does water run uphill?
Sike! It has no legs.
No. Are stamps used on letters?
Ooh, tough one for the younger set there.
Do 100 cents make a dollar?
Are we sure what events will happen next year?
Do ships sail on railroads?
Do stones float in the air?
Pretty easy so far.
May meat be cut with a knife?
Are ledges common?
In mountain districts?
Yes. Does success tend to bring pleasure?
Yes. Are diamonds mined in mid-ocean?
No. Is misuse of money an evil?
Yes. Should criminals forfeit liberty?
Yes, at least under statism.
Is special information usually a disadvantage?
No. Are attempted suicides always fatal?
No keyword there being...
These get a little more tricky.
Are exalted positions held by distinguished men?
Ooh, sexist. Andrew.
Does confusion favor the establishment of order?
No. Is a civil answer contrary to law?
Ooh, see, they've got the word civil in there, but civil can mean civil unrest, civil war, but in this case civil means polite, so no.
Is a dilapidated garment nevertheless clothing?
It is. It's just worn out.
Are textile manufacturers valueless?
Not since Obama left office.
Do thieves commit depredations?
I think they do.
Depredation is a kind of pillaging.
So it's a bit of an archaic use.
I would go with yes on that.
Does close inspection handicap accurate report?
Well, no. And they get a little trickier here.
Do transparent goggles transmit light?
Now, of course, no, because transparent means see-through and they're just receiving light.
More important question, does a transparent Google transmit light?
No, if it's politically biased.
Next, do illiterate men read romances?
No. Is irony connected with blast furnaces?
Well, if you've ever been around a relentlessly ironic person, you may want to put that person in a blast furnace, but no.
Do avalanches ever descend mountains?
Well, of course. Are scythes always swung by swarthy men?
No. Sunburnt?
Yes, in general.
Oh, here's an archaic word.
Do pirates accumulate booty?
Uh, not what you think.
It just means treasure, so yes.
Are intervals of repose appreciated?
Repose means, of course, rest, so yes, this they are.
Are intermittent sounds discontinuous?
Well, yes, it's kind of synonymous in a way.
Is an avocational activity ordinarily pleasurable?
Ah, it's the A that's the key there.
Vocation is what you do for a living.
Avocational means hobby, I think, so I'm going to go with...
Yes, it's pleasurable. Are pernicious pedestrians translucent?
Are pernicious pedestrians translucent?
I don't think it's the pernicious part there.
It's the pedestrians, people who walk.
Translucent means, of course, you can see through them, so no.
Next, are amical relationships disrupted by increased congeniality?
Amical but means friendly, congeniality means getting along, so we're gonna go with no.
Are many nocturnal raids surreptitiously planned?
I'm gonna go with yes because I went to summer camp.
Are milksops likely to perpetrate violent offenses?
No. Are precipitancy and procrastination synonymous?
I don't know. So precipitous means a steep cliff or something like that.
I don't know. Precipitancy?
Don't know what it means.
Procrastination synonymous...
But I'm gonna go with a no.
Just because root word of precipice or precipitous means a steep edge, so maybe if the word's related, I'm gonna go with no.
But let me know if you know that word in the comments below.
I don't! So here you can see, of course, these are the kinds of questions that were being given to determine whether soldiers went to the front lines or planned things in the relative safety of being behind the lines.
So I think it's pretty clear to see.
Now, you could say, well, you know, but these questions, you have to be educated.
It's like, No, you don't, really.
You don't. See, if you love to read, you'll just find ways to read.
And there were lots of lending libraries.
There were lots of people out there you could borrow books from.
They circulated around a lot.
So you could just read and read and read, and you get a hold of a dictionary.
I mean, I used to read a dictionary when I was a kid, so I didn't get too precipitancy, apparently, but...
So you don't have to be educated to learn what this stuff means.
And in fact, education can often lead you astray with some of this stuff.
So this is really Do You Love to Read, which is kind of a proxy for intelligence and curiosity.
So here you can see they're really trying to divide the troops into those who are going to get blown up and those who aren't.
And I think you can see exactly who they want to preserve and who they're willing to burn to the ground.
And so what happens is when you end up with a whole excess of people who aren't smart enough to function efficiently in a modern economy and who are locked into an underclass of the welfare state is that you go to war and you feed all of these people into the front lines and you kill them off.
It is a horrible, brutal culling that happens repeatedly throughout human history and it is the grim shadow of the seeming generosity and benevolence of the welfare state.
And so Well, this can't really happen anymore in the West, at least because there are nuclear weapons, so the elites are taking other approaches, which I've talked about in other contexts and situations, in order to achieve similar ends.
So, this is really important to understand.
Talk about all of this with the people in your life.
Talk about how the government borrows so much.
Talk about all the unfunded liabilities, because everybody needs to understand, or at least enough people need to understand, That when the crash comes, when the government simply cannot pay its bills, that the failure has not been freedom.
The failure has not been voluntarism.
The failure has not been property rights or free trade.
The failure has been state compulsion.
Violence achieves the opposite of its intended goals, particularly in public policy.
