Greenberg Interview Sep 2012

BG: You are
listening to Greenburg News with your host Brian Greenburg at WNJC
1360AM, now newly syndicated on WIFI 1460AM. We have an excellent
show.  I’m
going to talk to the six people who actually watched the political
convention. But we can talk about it. … There’s an election in
November and for those of you who are going to participate, we have
some insight.  We have with us Vox
Day, a libertarian political columnist and the author of The Return
of the Great Depression
. Known as the Internet Superintelligence,
he was one of the few economics writers to correctly predict the
financial crisis of 2008. Residing in Italy…anyway Vox, welcome to
Greenburg News.
VD: Thank you, sir.
BG: So, where are you
in Italy by the way?
VD: I’m up in the
BG: The more civilized
part of the country, is that it?
VD: Well it all
depends on how you want to look at civilization. I quite like it in
the South as well. But yeah there’s a little bit more structure and
business and that sort of thing, in the North.
BG: So, they’re next
in line too to go broke, after Spain goes down?
VD: I think it’s
possible but there have been a lot of people that want to go back to the
Lira, have wanted to go back to the Lira pretty much since the Euro
got stuck on them.
BG: What happened,
people wake up in the middle of the night and all of a sudden people
have a different currency?
VD: Pretty much.
There was a process and we were here when it happened and it was
basically like having about 20 percent inflation overnight. All the
businesses rounded up and so the official exchange rate really
got bumped up. What you actually paid was more than the official
exchange rate that was supposed to happen. As a result, tourism was
really down and it became much more difficult for Italian companies
to compete because they were no longer a low-cost producer.
BG: You know there’s
something bizarre about this. And of course people know about the
Euro, but its much worse than that, it’s the impact of Brussels’
government, and what I mean by that is I was recently in Portugal,
visiting Lisbon, and I heard that before I got there…this
story…and I thought nah, they didn’t commit economic suicide but in
fact that’s what happened to their fishing industry. They had
150,000 ships and now they have none.
VD: Yeah, the EU has
been unmitigated disaster for most countries in Europe. The problem
is it has been very good for the political class…
BG: For Germany.
VD: Not so much the
everyday, average German. The Germans have done fine because the
Germans work hard, and they’re smart, and they tend to do fairly well
no matter what happens. But, the real problem is that all the
political class and the media and the academics have been bought
off by the flow of taxpayer money from the different countries
to…it all goes through the European Commission who then doles out
the money to all the people who will continue to push for it. But
that whole process is really broken down because it doesn’t matter
how many people you pay off, once things get bad enough they’re not
going to be convinced by the various politicians and academics and
journalists who are on the payroll of the European Union somehow.
BG: But let me ask
you, if you’re Portuguese…country goes back to the 1,100’s and
you’ve had a history over 900 years, going on 1,000 years, of
fishing…the lifeblood of the nation and some idiot in Brussels says
disband because you have an unfair advantage and they do…
VD: The problem is the
fisherman doesn’t really have a choice, its not like the fisherman
wants to do anything but Brussels is paying for a large fishing
police and they are physically preventing people from doing anything.
You see the same thing in England, for example, where people who
have been selling fruit and oranges and that sort of thing in pounds
rather than kilos for hundreds of years, they’re suddenly being shut
down and then they’re not allowed to sell, by the British police,
unless they sell in kilos the way that they are dictated to sell
BG: So the way that I
look at this situation, depression is imminent in Europe.
VD: Oh, its already
here, the depression is already here in the States.

BG: No things are
happy here, didn’t you hear? Its all good.
VD: (laughs)
BG: When you’re out of
the country sometimes things can get skewed.
VD: Yeah, the thing
that people don’t understand, and the thing that people don’t realize,
is that no one ever defined economic depressions by utilizing
official GDP statistics released by the Bureau of Economic Analysis
until after, well after, the Great Depression. And so to say that we
don’t have a depression because GDP is positive is a fundamental
misunderstanding of what a depression is. And so the fact that the
government statisticians can find a way of claiming that we still
have economic growth when there’s something like 15,000,000 American
families on food stamps, and the fact that we don’t have people lining
up to go to soup kitchens and stuff. Instead of that we have people
spending money on their government funded debit cards but the
principle is the same.
BG: You know a
statistic that doesn’t get picked up is the amount of people who have
become “long-term disabled” since the Great Recession
VD: Right.
BG: Nearly 4,000,000
people, I think its almost twice the amount of people who were
long-term disabled in this country, you know nearly doubled in the
last 3 years. Its unbelievable. And basically they are hiding the
people on their, they’re just warehousing them.
VD: Well, that’s
why I think it doesn’t make much sense to look at the various
unemployment statistics because all of them are gamed in various
ways. In the book that you referenced, The Return of the Great
, I have a chapter that is called “No One Knows
Anything” and one of the things that it indicates and goes
through in some detail is showing how the various statistics are
gamed, and how they are, by their own metrics, completely inaccurate.
And so I think its much more interesting and useful, even though
still misleading, but the employment population ratio is a much more
meaningful indicator because that just simply looks at how many
people are employed out of the total population. And you can see
there, much more easily, the negative state of the economy than you
can when you’re just looking at the unemployment numbers because
their definition of unemployed allows them to take people out of the
work force then claim that they are neither employed nor unemployed.
BG: Well here’s a
definition, we can technically be at full employment if, in essence,
we were to stop the bleeding of new people getting unemployed and
just allowed the benefits to run out on the existing workforce who
were collecting, or unemployed workforce. And if all these people
are collecting were to go past the 99 weeks or whatever they’re
collecting now, we could say we’re at full employment.
VD: Because the number
is gamed because they don’t count unemployment… unemployment does
not mean you are not employed, it means you are not employed and you
are not actively seeking for a job or collecting unemployment
benefits. It’s just absolutely ludicrous.
BG: It is bull, but
besides even that how about the devastation of young people today,
which I want to blame them in a minute, but just as far as the pure
numbers where, what is it one in two, are in effect not employed in
their…either not employed or out of work in the last three years?
VD: Far be it from me
to claim that young people are anything but stupid. There’s nothing
that I find more annoying.  And speaking as someone who used to be
young, I remember I was young and that’s why I know that young people
are stupid, because I was too.
BG: I think the
problem is this: when I went to college my tuition was $1,000 a year,
so if I screwed up I’m out of pocket $1,000. If I would have taken
basket weaving and I spend $4,000 in my example and I graduated and
found there’s no jobs, I’m out four grand. But today the mistakes are
not $4,000 they’re $100,000 and they’re studying majors where they
don’t…in other words you have to be a lot smarter or more savvy or
much more savvier and that’s not saying blame the students, the 18
year olds, because the parents should be there guiding them to a
major where there’s a prospect of employment.
VD: The problem is
really multi-fold because if you look, I mean yes, young people are
stupid, but on the other hand they’ve also been lied to, you know?
BG: Right.
VD: Even if you’re
studying a good solid major…I read a really remarkable statistic
the other day about PhDs back in the 1950’s or something pretty much
if you got a PhD you were immediately employed. And nowadays the
number of people who get a PhD and are able to find a position is
well below 20 percent and so these are people who are playing the game the
right way but they’re playing the 1950’s game 60 years later. And
nobody realizes that.
BG: Well its, well
that’s again all the people have been taught is education is the key
to success. It doesn’t matter what youstudy, just study education.
By the way, have you ever looked into people who pursued becoming a
priest, the seminaries? And how many seminary graduates can’t find a
pulpit and walk around with thousands of dollars in debt as a result?
The numbers are staggering. Its a statistic you should explore…
But let me ask you, you
mentioned about depression. How do you define a depression as
opposed to a recession we’ve had in other periods of time?
VD: The correct
definition of a depression is very simple, it means a
reduction in the amount of economic activity. And so there’s many
different ways you can look at that and simply looking at the
employment population ratio is one easy way to do it. And another
easy way to do it is to look at industrial output. All the Fed’s
beige book numbers and stuff, those have been turning
negative for some time now, they’ve been up and down. But the most,
I mean, its kind of like the famous Supreme Court decision about
pornography, in the past a depression was when a people felt they
were in a depression. And so if you look at the social
mood, if you look at the crime statistics, if you look at the
diseases and people getting sick and that sort of thing, and if you
look at military conflict, those are all things that tend to coincide
with depressions. If you look around at the state of the world
right now, you can see the world is in a depression. In fact the
world is in a bigger global depression then it was in the 1920’s
because what most people don’t realize is that except for Germany and
the USA there really was no Great Depression in France or in England, and Japan was actually in a major economic boom at the time because
they had taken of Manchuria. If you look at their GNP statistics
from the time they were experiencing growth of like 15 percent per year. And
so now what we’re seeing is Europe is in depression, Japan is in
depression, China appears to have now entered it, and USA is in it.
We’re experiencing it, we’re getting towards the end of the beginning.
People are still pretending that we’re not. They’re still talking
about the slow recovery and that sort of thing, but its all nonsense.
BG: So now that we’ve
defined that things are not good out there and there’s now talk
of…they’re going back to the well. They’re going to do QE3.
VD: Mm hmm.
BG: The well is not
really generated anything of substance, obviously, in the past, but
that’s central bankers know so they gotta do what they know.
VD: Well, its not just
all that they know, its also what is necessary for the banks. See
what people don’t understand is quantitative easing is not about
saving the economy, quantitative easing is about giving the banks and
the large financial institutions a relatively soft landing as the
economy goes into depression. So what they’re attempting to do is
basically continue to transfer assets from the taxpayer to the banks
in order to keep them from completely failing and going under.
If you’re coming at it
from the world of the banker it makes perfect sense. They’re trying
to defend the survival of the global financial system but the problem
is the whole thing is going to come down sooner or later. Does it
makes sense to prop it up for a while? From some people’s
perspective, yes. But in terms of if you’re looking at it from what
is best for the economy as a whole, obviously it is best for the
bankrupt institutions to go bankrupt so that what remains of their
good assets can be used to rebuild.
BG: Right, and what
people fail to realize is by bailing out these banks and keeping the
status quo you have people making capital investment decisions based
on the perception that things are not that bad and then taking on
debt and otherwise investments that if the reality were perceived
correctly they would in no way be taking on any kind of risk.
VD: Well sure, look at
all the money that went into Facebook and how much of that got
reallocated and blown away. The problem is that it’s a very simple
problem at heart. The problem is that once you start pretending that
something has value that it does not and then you start having people
make decisions based on that, it’s basically like having a small
problem in your engine.  If you don’t stop the car and fix the problem
in the engine eventually you’re going to crack the block and do
something really bad to the engine. So what we’ve had is pretense
piled upon pretense piled upon fraud piled upon fraud and so now the
entire financial system is one massive collection of contradictions
and illusions, and then you pile on that all the bad decisions that
people are making on the basis of those illusions and you have
something like we all pretend that Facebook is worth whatever billion
and then…how can we even pretend the market is giving us any
information about pricing when Facebook is worth 200 billion
one day and a month later 30 billion.
BG: That was the big
hype. Those people should go to jail.
VD: I’m not sure about
that because with Facebook everybody was pretending. I don’t think
anyone needed to particularly lie about it. I don’t follow this
stuff closely and I knew there was no way Facebook was
worth what people were bidding it at but the problem is because the
retail, the mom and pop retail investor, with the exception of their
401(k) have completely exited the stock market. If you look at the
volume of S&P 500 or NYSE the volume of stocks traded is about one-third of what it was five years ago.
BG: Actually if you
count for the high volume trading…
VD: …which is like
75 percent of it. So, it’s already one-third, so if you take away three-quarters of that, there is no market anymore. Talking about the market is at 14,000 or
whatever is totally irrelevant and no longer has any meaning and
that’s what I meant about how everything has become an illusion.  And eventually the veil is going to slip and that’s when its probably not
going to be very pleasant for everybody.
BG: Let me ask you,
first of all let’s assign a timeframe. When do you think that veil
does slip?
VD: I have uniformly
been tremendously unsuccessful at anticipating time frames; I’m
always early. One of the reasons why…
BG: You were there in
VD: I was honestly, I have expected all this sort of stuff
since about 1997, ’98, so the fact that the whole process has gone on
this long astounds me. And even in 2008, when I knew that the Fed was
trying to paper over the gap in private credit by substituting public
credit, I looked at the charts and thought they can’t possibly do
this for more than two years, well its four years now and they’re still doing
it. They actually doubled the amount of federal debt in four years.
Who would have imagined that would even be possible? But, anyhow, I
think that I do not see that it is possible for it to continue
another four years. I would anticipate that at some time in the next
presidential term that its all going to have to come to a head,
probably because of China.
BG: And why because of
China? What is it China is going to do that is going to bring about
this collapse?
VD: Because I think
that China is going to be completely unable to continue this whole
process of propping up the US Treasury. When we
talk about frauds and illusions, most of the economic growth in China
is an illusion. If you look at the steel statistics China…
BG: There’re no real
statistics in China. You can look at electricity usage but thats
about the only statistic you can rely on for anything.
VD: You can also look
at the steel stuff because those are sales. I have a friend who works for one of the big Russian ones and
they look at where…they know who they’re selling steel to and how
much they’re selling. And for years they have been selling more and more and more to
China, but what’s come out is that China hasn’t been using that stuff
because they are building up this big powerful infrastructure,
they’ve basically been building these ghost cities that no one lives
BG: I was in China a
couple years ago and basically what they call whooping cranes, you go
to any city and any town, there were these cranes clustered together
and empty high-rises.
VD: Right.
BG: So now they’re
ghost towns. But China is a command-controlled economy. The
government says, when you got the crash in ’08, “banks lend
money” and that’s what banks did. To whomever and whatever.
VD: Right.
BG: And this was then two years ago and they only started having inflation stated to creep
in, for instance their rent expenses going up 20 percent a year. And food
costs were going up 15 percent a year. So this is, that’s like the big
problem. The cities can survive because they were growing at the
time, but half the people live on $3 a day.
VD: Yeah, when that
whole process over there starts to break down, which there are
already numerous signs of it according to various things that I’ve
read. Then the jig is essentially up because right now the idea that
China is going to somehow grow us out of this is pretty much the last
fig leaf for me. Nobody’s counting on Europe to rescue America.
BG: They’re broke.
They’re worse than we are.
VD: Right. And all
the Americans…well that’s not quite true. America’s financial
situation is actually worse than Greece’s, its just that America can
always count on Japan and China to keep buying their debt. But
that’s what I was saying, once China or Japan no longer feels they’re
able to do that, then that’s when America suddenly starts looking at
the same situation that Greece is.
BG: Right, there’s no
one there to repatriate. So now the next step, all right, this thing
breaks down. So what does that mean “break down?” What
kinds of, do we go into a depression or a deflation or an inflation?
BG: The way I look at
it, the things you hold dear, like a college education, healthcare,
transportation, buying a car, those things will cost more then ever.
And the things you don’t need…
VD: Yeah, and they’ll
cost more than ever whether you call it
BG: Right, that’s one
byproduct, but the overall is it going to be like the 30’s where a
dollar is dear, or will it be like Argentina?
VD: I suspect its
going to be more the former, this is something that we have…I call
it the 53 trillion dollar question…
BG: (laughs)
VD: …because that’s
how much total credit market debt outstanding there is. And so a lot
of people think we’re going to inflate our way out of it by
increasing the money supply but the problem is the money supply is nine
trillion. So in order to get rid of the debt by inflation you have
to basically run inflation at about, what is that, about five times.
BG: To bring up to the
quantity of paper in order to elapse the amount of debt.
VD: Yeah, I don’t see
that happening especially when we already know, if you look at
the…when the FDIC closes a bank down we actually get to see how
many of the assets they reported were actually worthless. And I
calculate that about 40 to 45 percent of all the assets being held by the
banks, at a certain value, about 40 to 45 percent of them are worthless. So
what’s going to happen is that when all that stuff…basically all
that debts going to get disavowed, its going to get written off. So
that’s going to cause a lot of problems when, because of other debts
and stuff that are predicated on somebody paying that. Kinda like
the whole sub-prime issue.
BG: Mm hmm
VD: And so, at that
point that’s when you start seeing some major problems. I think
what’s going to have to happen is the banking, the entire banking
system will probably get nationalized. That’s usually what happens.
BG: Right, well sure
when the banks are broke and they’ll just seize up.
VD: Right, I think
that everyone’s going to lose their 401(k)s, that all of the money in
the stock market and stuff, and that sort of stuff, that will all get
seized and then there’s going to…
BG: The government
will directly take people’s 401(k) money?
VD: Yeah, I think
that’s fairly obvious.
BG: It’ll be like
Hungary or wherever?
VD: Yeah, it’s an
easy way to do it and it’s going to be easy to come up with some kind
of promises to make up for it. Its much easier to grab people’s
stock market assets for whatever they might be worth rather than to
take their bank account because people actually need their bank, they
need their money and their bank accounts to survive. And so, when I
think about these things I usually try to think about them from the
perspective of, okay what if I am…
BG: I’m the government
and I’m broke, what am I going to do?
VD: Right, what am I
going to do in order to….I mean they’ve got two problems. Number one, they
need to try to protect as much of the status quo as possible, because
they like the status quo, they’re in charge, they’re living large,
they want to preserve it. But they also know that they can’t piss
the entire population off. That’s when revolutions happen.
BG: Its better for
them to piss off the people of wealth because they’re much smaller
VD: Right, the thing
that is very hard for people to understand is that there’s a huge
difference between the super-wealthy elite and just kinda your
average wealthy…I drive 2 nice cars, I’m retired and I have a
membership at the nice country club.
BG: Right.
VD: There’s a lot more
of the wealthy than the super-wealthy and the two groups have very
little in common. And so, I mean I realize there are a lot of people
who are very nervous and paranoid, and maybe even rightly so.
Certainly the fact that Homeland Security and practically every
government agency seems to be buying hundreds of thousands of, if not
millions of, ammo rounds is not encouraging. And it’s
not encouraging that Obama has been claiming the right to assassinate
any American citizen that he personally designates an enemy.
BG: Right. I wanna go
back to this issue about the government seizing assets. So how, if
you’re a private citizen, how do you protect your retirement assets?
VD: You gotta sell
out. I know there’s a penalty…
BG: So you’re
saying…now even if you roll to a Roth IRA you’re still in trouble,
you’re saying they’ll grab the Roth IRA as well?
VD: You’ve got to get
completely out of the markets. Ann Barnhardt had a very good piece
on this. There’s a very important case the other day. It was
dealing with the company called Sentinel, a financial institution
called Sentinel…
BG: Mm hmm
VD: …and they did
the same thing that John Corzine and MF Global
did. Which is they made some mistakes, they made some bad bets, they
ran out of money, they got called on their margin.
BG: Right.
VD: So then what they
did is they took out a loan using their client’s assets as…what do
you call it? Not leverage…
BG: Collateral.
VD: Collateral.
Spaced out on that, sorry. So anyhow, they used their customer’s
assets as collateral and then they made more bad bets
and lost that.
BG: Right. Well sure,
if you’re a loser once you’ll be a loser twice.
VD: Right. And so,
at this point they’re gambling desperately.
BG: Right, they’re
doubling down. The guy lost everything at the casino and he wants to
make it up on the next big hit.
VD: Exactly. So
anyhow, they lose of course and now they’re bankrupt. But, all
the depositors’ assets are gone.
BG: Right.
VD: Same thing with MF
Global a couple years later. I think, so anyhow they’ve still got
some assets left overall. In bankruptcy…
BG: Right.
VD: …bankruptcy
court, when big companies go bankrupt they’ve all got some assets
BG: Sure.
VD: Well, the judge
comes and says the people with the first…the customers are saying hey, our money…this is our money, it’s supposed to be separate,
we’ve got all kinds of contracts saying its our money, we should have first claim on whatever assets are left. But the judge
decided that the folks who loaned the money against those people’s
assets actually came first.
BG: They came first,
right. Not the people who’s money was stolen, but rather someone who
had to lend against stolen money.
VD: Exactly.
BG: Which I thought
you couldn’t do that.
VD: Well, you might
have thought that but you’d be wrong.
BG: So that rule has
VD: Right.
BG: So let me ask you,
where do you put your money then?
VD: Not in
the market. You probably want to put it with some small local
institution or put it into some kind of physical assets, whether it
be land or gold or, you know, just….those are still things that can
be taken away from you but at least there’s a chance you might
notice.   You know if you’ve
got your money in a Roth IRA with Citi
Bank, or worse, Bank of America, it could be gone for years before
they bother to tell you.
BG: You
think you have money there and it’s really not there?
VD: Precisely. That’s
exactly what happened to the people at Sentinel, that’s exactly what
happened to people who were at MF Global.
BG: But actually, if
you just transfer your assets every year, from one institution to the
next, wouldn’t that, you know, isn’t that a way of beating the system
as well?
VD: Well, only if
things go down one at a time though.
BG: Oh I see, they all
go down at once…
VD: But what I was
saying is that I think is…you asked me what’s going to happen when
the whole system locks up. And what I think is going to happen when
the whole system locks up…and again this is what I would do if I
was dictator for a day…they will take everything and then they will
promise to pay it out as part of Social Security.
BG: So, right, if you
want the security you have to buy treasury bonds. Something like
they did in Hungary or whatever.
VD: Yeah, there’s
always a way of doing it that sounds a lot less….that sounds less
unpleasant than, “Oh, guess what, all your stuff is gone and if
you’re lucky maybe we’ll throw you a handout here and there.”
BG: Right.
VD: You know, now and then. And the problem is that’s the good
outcome. That’s assuming we’ve got folks in charge
who actually mean well and who would really like to pick up the
pieces in a relatively positive way.
BG: Right.
VD: Obviously history
tells us that generally when you have a complete
breakdown and that sort of thing, you either get chaos, division and
separation, like we saw in Yugoslavia, like we saw in the Soviet
Union, or you get the man on the white horse riding in and everyone
says Hail Mussolini and then six years later you’re fighting some
stupid war trying to create an empire in Abyssinia.
Well, we’re always fighting a stupid war so that’s, you know…
Yeah, at least for Americans its really nothing new in that sense.
BG: Its just another
day at the office.
VD: My concern is that
because of…40 years ago or so even 30 years ago, America was kind
of two different countries. You had the South and you had everywhere else.
VD: No doubt that
there are still…I’m sure there’s still plenty of people across the
South who are just patiently waiting for Round Two. But, now there’s
more like five or six distinct nations, not necessarily blood-nations, but
very distinct groups that, in times of severe economic stress, are not
likely to stick together but are likely to stick together against
everyone else. You’ve got the Hispanic population, you’ve got the
black population, you’ve got the Muslim population, you’ve got the
South, you’ve got the sort of mid-west/middle class sort
of thing and then you’ve got the coasts. Its not too hard to imagine
all of those different groups separating and basically wanting to go
their own way and attempt to fix the challenges…attempt to fix the
problems and meet the challenges by themselves in their own way
rather than as one giant 310 million strong country.
BG: So in essence you
see the nation breaking apart?
VD: Yeah, all empires
break apart.
BG: Right.
VD: And the more
diversity that you have the faster you’re going to break apart and
the more severe the stresses are. And so the whole melting pot
concept has always been complete garbage. It was a romantic idea of
a British Jew who came to Britain from Russia. It had
nothing to do with anything relating to the American experience
whatsoever. And we’ve seen time and time again we’ve seen…look
what we’re seeing in Europe right now, the whole European Union thing
was supposed to be an idea to create a European people, but I can
tell you that is simply not happening in any way.
BG: That was just a
wet dream of political…the politicians and the academics.
VD: Of course,
but what I’m saying is that we’re actually seeing much
stronger…we’re seeing the rise of national interest in places it hasn’t been for centuries. I mean, Scotland is on the verge of
demanding independence.
BG: I got to tell you
this incident, I didn’t realize that you say this about Scotland.
I’m at the casinos down at Atlantic City last weekend. These two
Scots were extremely drunk were sitting in the…they were in the
VD: Wait, wait,
wait…I find that very hard to believe, some Scots were drinking
BG: Yeah, now there’s
drinking and then there’s like under the table drinking…
VD: (laughs)
BG: …where they’re
literally, they’re holding up the floor lest it fall down kind of
VD: Right.
BG: So, but let me
make my point is so this woman says, she couldn’t tell an accent from
a hole in the wall, so anyway she says, “Are you German?”
The guy wanted to just about kill her.  He got up off the
floor and he started, he was like ready…he had to be held back just
about because this woman thought he was German.
VD: It
could have been worse, he could have called him English.
BG: That’s true, too,
but I guess people have a problem with the Germans because they’re
blaming Germany for the whole debacle, so Germany does have a part to
play in this. Or German corporations.
VD: I really enjoyed the last time that England
played Germany they had this chant going that was, “Two world
wars and one world cup, doo dah doo dah!”
Well hey, at least they got a world cup.
Anyhow, I think that we’re going to start seeing some of the same
stressors that affected the Soviet Union, that affected Yugoslavia,
that are now affecting Europe, that are also affecting Great Brittan.
I think that we’re going to start seeing them become…I mean right
now its still very early and I think that most people would think
that I was kind of crazy to point it out but you know, when I was
warning about the stresses to the global financial system in 2002
and people all thought that was crazy until six years later when
suddenly Henry Paulson is on his knees begging Nancy Pelosi to give
him lots of money so there won’t be tanks in the streets.
BG: So, there is no place to hide from this…this coming tsunami, is
VD: No, I mean that’s
why I like Italy because its kind of pre-collapsed. I like living in a
culture where people already know how to live in elements of complete
corruption and chaos.
BG: (laughs)
VD: You know, its
nothing new to them, they don’t care.
BG: People still
haven’t figured out how in this country…the reason why I wanted to
bring you on to talk about Romney…and people haven’t figured out
that the politicians that there still is some semblance that when
they speak to you, you really should listen to what they have to say.
VD: The thing
that’s a little bit frightening about Romney is that…previously I
really didn’t really think much of him, I mean I’m not a really big
fan of Mormons, I’m not a big fan of flip-floppy liberal Republicans,
but that’s all stuff that is within the framework of things you can
deal with, you know?
BG: Right.
VD: But I mean, “ooh
a politician lied and changed his position”!  This is hardly news. But what is very troubling to me is the way
he and his team behaved at the Republican National Convention
because…and this is why, it’s not because I support Ron Paul
(although I do), it’s because everything that he did was totally
unnecessary. He did not have to bend and break the rules and change
them. He did not have to do things like…
BG: He didn’t have to
stifle dissent.
VD: Precisely. There
was absolutely no need for him to stifle any of that, he simply did
it because he couldn’t stand it. And I think in a time when the
country is facing some of the most severe stresses that it has
probably seen since the Civil War the last thing that you need is a
President who cannot tolerate dissent. Because, if you’ve got…
BG: He’ll start
locking up half the population…or siccing the IRS on them, they’ll load
up and be like, “Volunteer to join the IRS and round up your
VD: Yeah, I just I
have the feeling that if the situation gets much worse and Romney is
the President, that he is going to react in precisely the wrong way,
and he’s going to take a bad situation and exacerbate it.
BG: Well, this is a
guy who comes from Wall Street. Wall Street owns the government.
They’re the ones who created this mess by foisting their desires on
the government and he’s, you know…but Wall Street’s finger prints
are everywhere. We have what was her name this
what was the other woman, Kagen, who served on the board of directors
of Goldman Sachs. Their finger prints are everywhere.
VD: But that’s why I
think that we know that Romney’s going to win the election because
although Obama, I and others have referred to him as President
Goldman Sachs….
BG: Right.
VD: But that’s just
because he kept trying to appoint people from Goldman Sachs to the
Cabinet but…
BG: Well he’s trying
to reward, return the favor.
VD: Right, but that’s
the difference, he’s trying to return the banker’s favor but he’s not
a banker himself.
BG: No.
VD: And so I think
that the fact that the Republicans are putting up a true member of
the club versus somebody who is merely friendly to the club, probably
tells us who is likely to win in November, that’s why I was willing
to go out on a limb and predict that Romney will win, back in the
middle of August when the New York Times and Nate Silver and all the
professional pollers were saying that Obama is like 75 percent likely to
win, or whatever. We’ll see.
BG: As they say you
always got to follow the money trail and clearly the money trail is
finding its way to Romney.
VD: Right.
BG: Is this turn of
events and leaders, as Doug Casey once remarked, going from Caligula
to Nero?
VD: I don’t…no, I
mean Romney is not a Nero figure, in any way. And really,
Obama’s not a Caligula, Obama just wants to hang out and do
BG: He wants to play
golf. I think…if you had wrote this or I read this elsewhere but
comparing the two its: Obama he enjoys the trappings of power…
VD: Right.
BG: Whereas Romney
enjoys the power.
VD: Yeah, that was
something that I wrote.
BG: There you go…see
I pay attention to you.
VD: (laughs)
BG: I thought that was
just a great line…and that was how really disturbing because that’s
who these people are. I mean…Obama has plenty of bad ideas but…
VD: And that was
before the Republican National Convention so…
BG: Yes.
VD: Now that we’ve got
somebody who like is really organized and is willing to work hard and
doesn’t tolerate dissent. That’s just…I’d frankly prefer the pot-smoking golfer.
BG: Or
cocaine or the bisexual golfer.
VD: As long as he’s
not working, you know.
BG: That is true. But
then he appoints…either one is obviously a bad choice because then
he just appoints all these bureaucrats to make decisions in
VD: I’m not voting for
Obama or Romney…
BG: That is true.
VD: The point is that if its not Caligula to Nero it may well be out
of the frying pan and into the fire.
BG: Yeah. What’s bad is that you’re having, you’re being someone who’s “a
free market person” which is like, “war is peace.”
And the “free market” will be blamed for what comes next.
It is a result of capitalism that will generate all the coming
VD: I don’t know that it makes…I’m not terribly concerned about where
the blame is going to be apportioned. There’s going to be no
shortage of it.
BG: Right.
VD: The important
thing for people is just to be building up contacts in their
communities and making sure that they have some resources so that if
they can’t access their bank account for a week or month that they
have the resources to get by on their own. And that’s the important
thing and people are doing that. There’s a reason why gun sales are
up and ammo sales are up. People understand that something is
coming and they are attempting to do their best to prepare in
whatever small way they can for it. The problem is you
can’t…you can never adequately prepare for the unknown, but what
you can do is at least be sure that you’re in your local community,
and with your friends and family.  People understand, hey look, when
things go bad, if there’s tough times, we have to stick together and
we have to help each other. Human civilization has survived
everything that the idiocy and evil of Man has ever thrown at it and
it will survive this too.
BG: How many years of
darkness do you think we’ll be entering into?
VD: I couldn’t
possibly say. The only thing that I’m certain about is that we’ve
pretty much reached the end of the American system.
BG: The personal, the
pursuit of happiness kind of system?
VD: Yeah I think that
that is coming to…rapidly coming to an end. What comes next? I
don’t know. Who in the last days of Rome predicted France and the
Holy Roman Empire and England or even what happened in
Constantinople? These are things that we cannot reasonable expect to
foresee, but we can expect is that every day the sun is going to
rise, it’s going to rain sooner or later, and we still have to answer
to God for our actions.
BG: And the wheel is
round…where there’s an action there’s a reaction. What’s occurred
there’s payment…a payment day is coming. But I just want to get
back to this point. This is the most disturbing that you’ve said
today which is…I have a feeling of comfort but, I understand about
reaching into accounts but, you’re saying anybody holding any bank,
any money in any security institution, doesn’t have to be necessarily
in stocks it could be sitting in cash, that that’s all fair game for
the government? Or that these institutions will just disappear?
VD: I don’t think that
they will mess with cash in the bank, not initially. Even in places
like Argentina and Greece, at most what they’ve done is
told you that you can’t take more than a certain amount out at any
time. Frankly, that’s pretty much the way that it is in the US
already. You can take it out but they still have to file reports and
whatnot. The mechanism is already set up for that kind of stuff and
it has been for 20 or 30 years, ever since the War on Drugs.
BG: So, now let me ask
you, is this the Great Conspiracy, or is it just the product of
VD: Hmmm. To be
honest I think both. I don’t think that there are that many people who really want to crash it. If you’re part of the elite and you’ve
been living large off it for 50 years, why do you want to bring it to
an end? People that are really focused on the, “Oh Bill
Clinton…” I mean, the whole thing about Obama wanting to
become a dictator, we’ve heard that about Bill Clinton and I’m sure
people were hearing it about Richard Nixon.
BG: Right.
VD: The reality is
that most people really want to protect the status quo. Now there are people who want to create a big one world government and stuff,
but crashing the USA is not actually a very effective way of doing
that when the USA was the main mechanism for creating it in the first
BG: Right. You’re
killing the goose.
VD: There is
something to the whole divide and conquer thing, but you don’t need
to divide and conquer when you just go ahead and you buy the
Senate and get them to pass a treaty.
BG: Right, you do
whatever you want to do, but ultimately you’re ah…but let me ask
you, on the one hand you’re doing what
you want to do as far as big business, but about the explosion of
social services and social benefits, is that just something to add to
placate the masses?
VD: They have to do that because if they don’t then we’d already be
living in Yugoslavia.
BG: Right, there’d be
uprisings and all that.
VD: Yeah, things would
probably be fine in some places, but in other places it would be
completely unlivable. That’s what they’re seeing in Greece…that’s
what got Greece in trouble in the first place, they were paying
everybody to do nothing.
BG: (laughs)
VD: The social
services is… that’s the bread in the bread and
BG: The bread and the
VD: Precisely.
BG: By the way
Vox, I blew off all my other guests because I’m having so much
fun talking to you, by the way.
VD: You’re too kind.
BG: We have about five
minutes left to wrap up so I just want to leave something positive
with our listeners and I think I want to reiterate how you button
down for the coming storm.
VD: Well, I think that
you have to look at the main things that you need. The main things
that you need are: food, water, and you want to be
around good, trustworthy God-fearing people, you want to have some
means of protecting yourself and your family and your surroundings.
So, its just basically going back to basics and not living in this
modern way of assuming that I don’t need to have anything, I’ll just
go down to the shops and pick it up today.
BG: So you think
people should start building something to secure foodstuffs?
VD: I think this
is one area where Mitt Romney might be a good role model. If I
understand correctly Mormons are expected to keep a year’s
supply of food and water and so forth. That’s not a bad idea. If
nothing else you can get by on your dry beans and Evian.
take it that requires a lot of storage to put something for a year?
VD: It’s not as
bad as…doesn’t take up as much space as you might think but, and
its not as expensive as you might think. This is the sort of thing
where maybe instead of going to Disneyland, you set yourself up so if
there are issues you’re not quite as worried about it right away.
BG: You make the
investment and you put away the money and you figure out the
security and all that.
VD: The stock market’s at relative highs on super low volume. You
might as well take your money out and get something for it rather
than just watch it go down, when the market starts crashing.
BG: You mentioned
about buying land but land looks like, like everything, real estate
is very much overinflated…
VD: Sure.
BG: Do you think land
will also decline?
VD: It might but its
not going to disappear into nothing like Facebook.
BG: (laughs)
VD: At the end of the
day you can still build a house on it.
BG: But that land
could sit there for a long time to come before you could do something
with it…you could have cash tied up in the value.
VD: But what you have
to understand is that in times of economic depression its all about
asset protection. Its not about making money. You know what I mean?
Economic booms are when you want to leverage and grow and all that
sort of thing. What works while….what your objective is and what
your focus is in times of economic growth should not be your
objectives in times of… yes, there are people who are trying
to profit on it there are people who are trying to short Facebook or
short Apple or whatever but the problem is that even if you make the
right call it doesn’t matter if your broker goes out of business.
BG: You have to worry
about the brokerage, the brokerage firm?
VD: Right, exactly.
BG: Then you got real
issues there. Hey, by the way does your book address those issues?
The Return of the Great Depression
VD: Oh, some of them,
its a little bit more…my focus tends to be a little bit more
theoretical and abstract than particularly practical. But I’ve been
told that a lot of people who are into the practical side of it
nevertheless like it because they like things being put into context
so that it makes sense to them, rather than just sort of this, “Well
here’s this dark cloud and we don’t know why and we don’t know what.”
BG: Right. Like any doctor, you want them to analyze why you have the
condition that you have and then that way you can make adjustments.
VD: Precisely.
BG: Hey with that Vox,
we’ve run out of time. Vox Day, just a pleasure. Really appreciate
your time. Libertarian political columnist. Get his book, The
Return of the Great Depression

NB: Thanks very much to MC and BD for the transcript.