August 15, 1971: The Day We Wanted a Life We Couldn't Afford

Chris Martenson with PeakProsperity.com joined The Glenn Beck Program today to talk about the federal reserve raising interest rates and its primary concern: its own credibility.

"Everybody I talked to says, Look, I like falling prices. That's not what the fed is targeting when it's worried about deflation. They have a different thing they're worried about, where prices rising or falling is the symptom, but the cause is what they're concerned about. And the cause is either our credit markets are expanding, or they're contracting," Martenson said.

To put the problem into context, Martenson quoted Austrian economist Ludwig von Mises:

There's no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later, as a final and total catastrophe of the currency system involved.

"These things have all been building for a really long time, Glenn. And I think if we had to, if we wanted to put our finger on something, we would say August 15th, 1971, when the United States abandoned the gold standard for the world, that's really where all of this started. And these imbalances are enormous now," Martenson said.

For fundamentals on the dangers of manipulating credit markets and currencies, read Martenson article, Money Under Fire: A Reminder of the Great Wealth Transfer Underway.

Listen to this segment from The Glenn Beck Program:

Below is a rush transcript of this segment, it might contain errors:

GLENN: Well, as I'm reading the news, China is being negotiated. I mean, I want to put the good spin on this. Donald Trump is obviously negotiating with China. And China has responded saying it's -- the One-China policy will not be a part of any negotiation. And if you want to threaten us with that, all negotiations and future partnership will be over. They're taking a hard-lined stand, and so is Donald Trump. It's kind of a white knuckle kind of thing, quite honestly.

Russia is now our new best friend, and the Russian ruble is going through the roof. Oil is starting to go up. And this week, we are expecting the fed to raise interest rates. And Christmas Martenson is here. He is with peakprosperity.com. He is a guy who I think really understands the economy and understands the history of the currency war and the gold standard and trade and can kind of help explain -- because I think we're going to need a real basis of -- of history and knowledge to be able to talk our friends down from crazy tree in the coming months and years.

Chris, welcome to the program. How are you?

CHRIS: Glenn, I'm doing really well. It's a real pleasure to be back with you and all your listeners.

GLENN: So tell me, Chris, what you're thinking the fed will do this week and how it's going to affect us.

CHRIS: Well, they're going to have to raise rates because they're behind the curve here. The fed cares about their credibility, as much as everything. Remember, we have a lot of academics sort of at the helm of the fed. And, of course, to them, credibility is like the most important thing to preserve.

So they have to raise. And it's a very weird environment to be raising rates in. It's certainly created a lot of boost to the dollar. The dollar strengthened a lot lately. But we're seeing a lot of strengthening in the price of oil as well. And a lot of signs, Glenn, of weakening in the overall global economy. The stock market, notwithstanding. The trade data is looking iffy.

GLENN: Okay. So if the dollar -- if we raise the interest rates, that will boost the dollar. And if we boost the dollar, that actually hurts the job front at home and hurts prices at home. Right?

CHRIS: Yes. Except for the prices at home. Typically if the dollar is stronger, we'd be able to buy the BMWs cheaper.

GLENN: Okay.

CHRIS: But a rising dollar is not good for corporate profits in the United States. A little over 40 percent of all revenues from US companies are derived not in the United States. From overseas. So --

GLENN: And it makes -- it makes it harder for other countries to buy our products because our dollar is stronger. And them coming over here and buying our products is, it's more expensive.

CHRIS: Right. So typically what happens when your currency gets stronger, your trade, your exports go down, and your imports start to go up. Because you can afford more from other people. They can afford less of your stuff. That is the substance of the charge that Donald Trump has put against China, that they're a currency manipulator, by which he means they're keeping their currency much weaker than it should be because if the Chinese currency strengthened, then their exports would slow down. Their imports would rise. That would help to balance things.

STU: Right.

CHRIS: So that's his charge there.

GLENN: And it would be good if we didn't have an imbalance and everything else, you know, what it cost to employ people in America. If we could even get close on that level with China, which we could never -- they employ slaves -- but it's good for the person that's walking into Walmart and buying their stuff for the Chinese dollar to be -- or the Chinese yuan to be low and have them devalue. But it's really bad on jobs because they're not buying any of our stuff.

CHRIS: Very little of it.

GLENN: So it's a -- so it's a balance. What I'm trying to get to is, trade and the devaluing or the raising of interest rates especially in an economy as fragile as ours is, is really a very nuanced and delicate dance. And you play it wrong, and the thing spirals out of control.

CHRIS: Well, and that's exactly right. And this should be termed I think as much as anything, the age of imbalances.

So we're talking about an imbalance of trade between China and the United States, but there are similar imbalances that exist within the Eurozone with Italy needing a lot more money than it's got and Germany sort of providing it. And then, air quotes here, balancing it out by creating these massive imbalances in their central banking system inside the country.

These things have all been building for a really long time, Glenn. And I think if we had to, if we wanted to put our finger on something, we would say August 15th, 1971, when the United States abandoned the gold standard for the world, that's really where all of this started. And these imbalances are enormous now.

GLENN: Well, that's when we all started we wanted a life we couldn't afford.

So the United States did that. But we convinced the rest of the world that we'll continue to buy your stuff. So it will be good for you. But we all said -- all of us -- we want more stuff than we can afford if we base our dollar or our currencies on gold. Is that accurate?

CHRIS: It is. Because gold provides a set of restraints that you just can't get around. And if you can't get around those restraints, well, sometimes you get to live beyond your means. But very soon thereafter, you have to live below your means. The world collectively kind of said, "We don't like that below our means part. How can we just forever live above our means?" That's how these imbalances got started. And it's a very human thing, Glenn. We've seen this so many times in history. And here we are again.

GLENN: So we are worried now, if the fed raises their interest rates, that would indicate that they are worried more about inflation than deflation. And deflation is -- is bad. Because everything is -- is worthless. And becomes so cheap, you would think that this is really good. But I'm trying to figure out why it is really bad. And it is. Why is deflation something that they're trying to stay away from, at the fed?

CHRIS: Well, this is a more subtle argument because the way that it's presented to us in the newspapers is that inflation is rising prices and deflation is falling prices. And I can't find anybody who -- well, what's wrong with falling prices? I love buying stuff cheaper. Right?

GLENN: Unless you're selling your house.

CHRIS: Well, unless you're selling your house. Of course.

GLENN: Yeah.

CHRIS: But generally speaking, if you're buying a house, you would prefer to buy one that's cheaper rather than more expensive.

GLENN: Yes, yes.

CHRIS: So everybody I talked to says, "Look, I like falling prices." That's not what the fed is targeting when it's worried about deflation. They have a different thing they're worried about, where prices rising or falling is the symptom, but the cause is what they're concerned about. And the cause is either our credit markets are expanding, or they're contracting.

When they're expanding, which gives us inflation, everything kind of works. You know, governments can continue to run deficits and big banks can do crazy dumb things. And it all seems to work out the opposite though, Glenn, when credit is falling. That's also known as 2009 in the United States. It is deeply scary. What works in forward doesn't work at all in reverse. The whole system shudders and threatens to collapse. It's a really scary moment. So we have a system that either expands --

GLENN: Wait. Wait. Wait. Is that because what I have as collateral is no longer worth as much so I can't get credit, or why is that?

CHRIS: Well, let's take a simple example. We just have a bank, you and I, and all we're doing is making real estate loans. And, you know, we're taking in one dollar and basically loaning nine more dollars back out because that's how our symptom operates. And we loan those $9 out to somebody who's bought a house. And if that house goes up in value, that person will be able to sell their house, service that mortgage before they do, and maybe buy a bigger house, and we'll loan them nine more dollars. Expanding is easy. But as soon as that person can't sell that house for what we've loaned the money them to, then lest all they have to lose is one dollar out of that nine that we loan them, and our entire capital stock of our business, our bank, is now wiped out.

So you can't have even tiny, tiny contractions in the credit system without really impairing and sometimes destroying the banking system itself. And that's what the fed cares about. Because let's remember, the federal reserve is not really federal. It's a private entity. It's got a charter from the US government. And it operates a very nice monopoly. But its first set of clients always is the banks. So if the banking system is happy and expanding, the fed is happy.

GLENN: Okay. So they're not worried about deflation. They're worried about the bank. But by doing what they've done, they are throwing caution to the wind by printing 7 trillion dollars' worth of currency. Never been done before in the history of the world. And expecting that hyperinflation won't happen. How can we have printed that much money and not had the problem of the Weimar Republic? What's the difference?

CHRIS: The difference is that today we have these really so-called robust financial markets. So I was just at a wealth conference on Monday of last weekend. That question was asked: Hey, where is this inflation? Well, it's in the financial markets. We see highly, highly inflated stock and bond markets. We see inflated real estate markets, especially on the top end.

Now, Glenn, who got that money when the fed printed all those trillions? Well, it kind of went to the upper .1 percent. So guess what, buying a Gulfstream 650 is a very expensive proposition. High-end art, very large diamonds, these all went up extraordinarily in price. So we have seen the beginnings of inflation. It just didn't show up in eggs and milk this time because the fed didn't print and give it to people. They printed and gave it to a financial system.

GLENN: So is that a savior for us?

CHRIS: Well, it's -- I think it's provided temporary appearance of relief. But when those rich people, when those concentrations of money decide, "I don't want another Gulfstream 650, I'm worried about the value of the currency," all of that currency rushes through what are very tiny little doors trying to get into real stuff again and away from paper stuff.

GLENN: And that's why real estate -- that's why art -- I mean, I've looked at the art -- we just sold I think one of the most expensive paintings I think ever. Again, was like $85 million for one piece of art. And I explained that as the people at the very top have so much money, they don't know what to do with it. They know that everything is overvalued. But it's like looking at a -- looking at a -- at a -- at a bill at a very nice restaurant that didn't have any prices on the -- on the menu. And you're looking at the bill, and you're thinking, "How the hell did we get here?" Well, I've got to make the broccoli now $35 a head because I've already priced the meat so far out, that the broccoli is looking like a deal. So the art is looking like a deal, even at $85 million, compared to where everything else is priced. Is that accurate, do you think?

CHRIS: It is. It's what happens when too much money is printed and put into a market. Things get crazy priced. And we saw that for tulips in the 1600s in Holland. And we've seen it with pieces of swampland in Florida. We've seen it over and over again. And the bubbles always have the same self-reinforcing mental map on the way up. It makes sense.

People go, "Well, the last guy paid 79 million. I paid 85. Somebody surely is going to pay me 100 million for this piece of art." That's all self-reinforcing on the way up, and we don't know why. But eventually, there's a pin that that bubble finds. And when it bursts, then you discover what the true value of things is, and things go down very quickly at that point.

GLENN: Chris, you talk to people in your business -- and I have -- this is the reason you work for me on these things now because I couldn't find somebody like you.

Everybody in your business will say, "It's -- no, we have systems now, and it's not going to be that way. And you don't to have worry about those things." No one will tell you what you're saying to me, that this is going to burst and it's going to be you will.

CHRIS: Well, you know, if it's not going to burst, we have to believe in the four most dangerous words in human investing history, which is, "This time it's different."

GLENN: It's different.

CHRIS: It's not different. It's never different. I'm seeing the exact same psychology. Rationalizations. Post-facto rationalizations that people make. "Oh, here's why that -- here's why we had this Trump rally." You know.

To me, it's much easier to understand where we are if you see that we've got a very scared set of central planners. They've worked themselves into a multi-decade corner. They don't know what to do. So they print.

And you can find this story in Roman times. You can find it in the first --

GLENN: Every time.

CHRIS: -- paper money in China. You can find it all throughout history. And it boils down through this, Glenn, it's very simple, humans would rather take a little risk today, instead of some pain today, in the hopes that things turn out better in the future. But we always go down the same path.

GLENN: Real quick, I only have 30 seconds: Are we going to see a hyperinflation situation like the Weimar Republic? Do you think we're going to see that? If so, are we going to see it in the next four years?

CHRIS: We're going to see it at some point. It could come at any time. It will happen at some point. And I think that the best quote on this comes from Ludwig von Mises. He's an Austrian economist. And he said, "There's no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later, as a final and total catastrophe of the currency system involved."

GLENN: Chris, thank you very much.

Peakprosperity.com. And Chris explains all of this and can help you through it and everything else. Peakprosperity.com. Chris Martenson, thank you for being on. And we'll have Chris in the studio with us hopefully several times next year to kind of really lay things out. Because I -- I want to show you what's coming and show you how the whole system works. And Chris is going to be instrumental in that.

Featured Image: Fine standard 400 oz gold bars. Photo Credit: Andrzej Barabasz (Chepry)

Apparel company The North Face recently stated that it would no longer make jackets for oil and gas companies because it doesn't want to be associated with the fossil fuel industry. In response, Colorado-based oil and gas company Liberty Oilfield Services rented full billboard ads to remind The North Face of the truth: "Globally, 60% of all clothing fibers are made out of oil and gas. For North Face, it is likely 90% or more."

Liberty CEO Chris Wright joined Glenn Beck on the radio program Tuesday to discuss just how much of our economy — beyond outdoor apparel and energy — wouldn't exist in a world without fossil fuels. And he warns that many companies are now deeming this truth to be "controversial."

"I have been for years, trying to get a real, honest dialogue about energy going," Chris told Glenn. "So we took this opportunity to point out that North Face jackets are ... almost completely made out of oil and gas. How can you choose not to associate with the essential material your equipment [is] made out of? So we put a billboard up ... the billboard says, 'That North Face puffer looks good on you. And it was made from fossil fuels.'"

"Most billboard companies did not want to run that billboard. They thought it was controversial," he added. "And Facebook put a hold on our brief video just saying the jacket looks good, this is what it's made out of. In today's world, that is controversial."

Watch the video below to catch more of the conversation:

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

During a lecture at the Yale School of Medicine's Child Study Center, a New York City-based psychiatrist told students and faculty that she fantasizes about "unloading a revolver into the head of any white person that got in my way," among several other shockingly race-hating statements.

In April, Dr. Aruna Khilanani — a New York-based forensic psychiatrist and psychoanalyst — delivered the talk called "The Psychopathic Problem of the White Mind" virtually as part of the Yale School of Medicine's "Child Study Center Grand Rounds," a lecture program for "trainees in child psychiatry, psychology, and social work, faculty, clinicians, and scientists."

On the radio program Monday, Glenn Beck shared several quotes from an audio recording of the lecture provided by Bari Weiss, a former opinion writer and editor for the New York Times.

Here are a few of Khilanani's statements from the audio:

  • "This is the cost of talking to white people at all. The cost of your own life, as they suck you dry. There are no good apples out there. White people make my blood boil."
  • "I had fantasies of unloading a revolver into the head of any white person that got in my way, burying their body, and wiping my bloody hands as I walked away relatively guiltless with a bounce in my step. Like I did the world a f***ing favor."
  • "White people are out of their minds. And they have been for a long time."
  • "White people feel that we are bullying them when we bring up race. They feel that we should be thanking them for all that they have done for us. They are confused, and so are we. We keep forgetting that directly talking about race is a waste of our breath."
  • "We are asking a demented, violent predator who thinks that they are a saint or a superhero, to accept responsibility. It ain't gonna happen. They have five holes in their brain. It's like banging your head against a brick wall. It's just like sort of not a good idea."

"We must take a stand. We must speak out, because this is evil," Glenn said in response to Khilanani's shocking lecture. "I don't care who you voted for, you know this is evil."

Watch the video below for more details:

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

The prices of our houses and food are already rising fast, but they will skyrocket to record highs if we don't fix the problem soon. So what's causing the inflation?

On the radio program this week, Glenn Beck said he doesn't believe it's the fault of our loggers, farmers, or truckers — many of them are really struggling. But the big corporations that control these industries are making record profits, all while the Biden administration is making some very odd decisions that could make the crises even worse.

Watch the video below for more details:

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

The crisis at the border continues to worsen, with the U.S. Border Patrol recently releasing some shocking statistics that illuminate just how bad the situation has become. But Texas Governor Greg Abbott (R) is doing everything he can to prevent any additional unlawful crossings into the Lone Star State.

Abbott joined Glenn Beck on the radio program Wednesday to describe recent action he has taken to ensure that those who do cross into Texas illegally know they came to the "wrong state."

After noting that both President Joe Biden and Vice President Kamala Harris "have completely abandoned post as it concerns the Texas border," Abbott explained how "Texas is stepping up" to combat the flood of dangerous gangs and cartels, human traffickers and drugs he says are pouring into border communities.

"Beginning in March, I deployed a thousand Texas Department of Public Safety officers to the border. I deployed the National Guard to the border. And they made well over a thousand arrests of some of these criminals we talked about. They've apprehended more than 33,000 illegal immigrants coming across the border." Abbott said. "But because of the way the Biden administration has abandoned the border, we are now elevating our game. What I did yesterday, in response to more than a dozen counties along the border ... I granted their request for a disaster declaration," he added.

Abbott went on to describe how his disaster declaration gives Texas the authority to toughen penalties for lawbreakers, including criminal trespassing, smuggling, and human trafficking.

"We're going to begin arresting everybody coming across the border and charging them with criminal trespass and putting them in jail. They are coming in here, thinking they'll get the Biden free-ride, and go wherever they want to go. Not in the state of Texas. We'll start arresting them right and left, and putting them behind bars, and saying they came in to the wrong state."

Asked by Glenn if he is prepared for the inevitable "media onslaught", Abbott simply answered, "We're prepared to see a reduction in the number of people coming across the border — because Texas is enforcing the law, period."

Watch the video clip below for more:


Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.