Here are the excerpts.   Read, understand, and get ready.

“So, the problem, and the real problem that we have, of course, is now that the bubble has burst — first from the stock market, now the real-estate market — and now that we’re having this massive recession, which is just getting started, we’ve barely gotten a taste of it. But, unfortunately, all the blame is on the free market. All the blame is on capitalism. It’s because there wasn’t enough regulation. There was too much greed. Right?

And Alan Greenspan, or, not Alan Greenspan. President Bush, in one of his speeches, said that Wall Street got drunk. And he was right, they were drunk. So was Main Street. The whole country was drunk. But what he doesn’t point out is, where’d they get the alcohol? Why were they drunk?

Obviously, Greenspan poured the alcohol, the Fed got everybody drunk, and the government helped out with their moral hazards, and the tax codes, and all the incentives and disincentives they put in — all the various ways that they interfered with the free market and removed the necessary balances that would have existed, that would have kept all this from happening.

We’ve always had greedy people. Everybody’s been greedy, not just Wall Street. But all of a sudden everybody was greedy all at the same time? Can’t they understand there’s a trigger for this, there’s a reason that everybody acted this way?

Normally, when people are greedy, they’re also fearful of loss, and people’s fear of loss overcomes their greed and checks their behavior. But what the government did, repeatedly, was try to remove the fear — they tried to make speculating as riskless as possible.

First, they provided us with almost costless money with which to speculate. And then they created the idea or the Greenspan Put. But whenever there’s a problem, don’t worry, the government is going to rescue you.

The government’s not going to let the stock market go down. The government’s not going to let your bets go bad, so go ahead and keep placing them. That was the idea, that was the mentality. It was nothing that the free market did.

In fact, the only entities that needed more regulations were the ones that the government created, Freddie and Fannie.

I mean, if Freddie and Fannie didn’t have a government guarantee, they wouldn’t have needed any regulation because the market would have regulated them. People would have looked at their balance sheet and said, “Hey, you don’t have any capital, you can’t guarantee these mortgages, who are you kidding?” And they never could have expanded the way they did.

It was only because the government stood behind them that people didn’t care. People said, “Oh, the government will never let Fannie and Freddie go bankrupt.” And they were right, they didn’t.

That was the question. We didn’t know. When I wrote Crash Proof and I said they were going to go bankrupt, I didn’t know the answer to that question. I said, we don’t know: is the government going to let them fail or is the government going to stand behind them? And I knew the worst thing was that they stood behind them.

It would have been much better had George Bush said, “You know what, we had no guarantee, we told you. In fact, on the prospectuses, when you bought the securities, on the front page it said, ‘These securities are not guaranteed by the US government’.” So the US government could have said, “We told you we didn’t guarantee them and we don’t.”

Now, a lot of people would have been pissed, a lot of people would have lost money, but it would have been better than what we did. Because we didn’t make the losses go away, we just postponed them. We just put them on the backs of American taxpayers, or more realistically, holders of US dollars…………………………..

The US government, we don’t pay our bills. We’re like Bernie Madoff. People loan us money. How do we pay it back? We borrow more.

If somebody came to Bernie Madoff a couple years ago and wanted their money, they got it. Why did they get it? Because they were able to take in new money. They found another sucker who didn’t know it was a Ponzi scheme.

Same thing the US government does. Every time a bond matures, we just go sell another one. And every time we need to pay interest on the national debt, we go borrow that too. Well, it works until nobody wants to lend us any more money, then we’re going to have to default, just like Bernie did.

And there’s only two ways we can default. We just legitimately don’t pay, or we print money. That’s it. There’s only two ways to repudiate your debt. There’s no way we’re going to pay the debt; the Chinese have to know that, and we’re going to figure that out.

…………………………………………The free market was getting the blame for a problem that was created by the government.

And, what’s happening now, of course, is the government is using this economic crisis, that they caused, to get even bigger, to grow their power, to expand, to come to our rescue, to save us from the evil forces of capitalism with government, with socialism.

And when you listen to Barack Obama — I listened to his most recent speech, and a lot of what he said was true.

He talked about the fact that we need a genuine economy, we can’t have a false prosperity, we can’t have a prosperity based on debt and spending, we need to have a sound foundation. All that was true, but then, of course, everything else he said was wrong.

He wants the US economy to have a sound foundation, but he wants to be the one that builds it. He thinks the government can erect a sound foundation; that central government planning can replace the market; that resources can be allocated efficiently by politicians who want to get votes, as opposed to entrepreneurs who are looking for profits. He wants to replace the invisible hand with the hand of the state. And he thinks that he can do it better.

The problem is, sure, we had a phony economy, that’s true. We had a phony economy because of the government. Because the government undermined our productive capacity, undermined our ability to save, undermined our ability to manufacture, and nurtured and cultivated the consumer bubble that, this service sector economy that we had, that’s now collapsed. And it’s not government that’s going to restore it. We need free-market forces.

The government right now — everything that they’re doing — what is the government trying to do right now? They want to bail people out and they want to stimulate.

Well, the bailouts are the worst thing that you can do, because they want to bail out companies that should fail, that should be bankrupted. Bankruptcy is a good thing. It’s the way the market cleanses the economy of companies that shouldn’t be there.

Why shouldn’t they be there? Because they’re not generating profits; they are not effectively utilizing resources. Those resources need to be freed up. Right now they’re being held hostage. We need to free them up so that we can use them productively……………..the government is rewarding the incompetent people and keeping them in business and they’re punishing all the competent people.

…………………….what is it that the government is trying to do with the stimulus? The government is trying to recreate the conditions that led to the crisis. Because when they talk about stimulating the economy, they’re not talking about stimulating economic growth. They’re talking about stimulating spending.

They want us going back to the auto showrooms, back to the malls, and buying more stuff. And they want us going deeper into debt to pay for it. And if we’re not willing to accumulate the debt on our own, well, then the government will do it for us. As if this is a secret.

If they could just spend enough money, then the economy’s just going to magically grow again. And that’s all nonsense. The only reason it worked before — and it really didn’t work — was because we were able to borrow the money from the rest of the world and spend it.

……………………….There are a whole host of Americans employed doing things that they really shouldn’t do, because, you know what, we’re too broke to patronize their businesses. We need more Americans making stuff, producing things.

And, in order to have American labor available for productive capacity, they have to leave where they are right now. If somebody has to lose their job in the service sector in order to get a job in goods production…

And, of course, in order to get a job in goods production, we need capital. You can’t produce anything without machines, without tools. Where’s that stuff going to come from? You can’t just wave a wand.

You’re going to have to have savings. Somebody’s going to have to be able to borrow the money to make those investments, which means Americans are going to have to save their money. Or we’re going to have to convince somebody in another country to take their savings and invest it in America, not just lend it to us.

…………………………….Art Laffer said that, that my nervousness about all the debt was wrong.

And he said historically America borrowed a lot of money in the 1800s, and it was not a problem; we ran huge current account or deficits, or we borrowed a lot of money and the economy was in great shape. So, therefore, my criticism of our debt was wrong. Well, what Art didn’t understand or didn’t appreciate was the difference between what we did with the money.

Back then, we borrowed money to make investments, to build infrastructure, to build factories, to build farms, to build a productive economy. We invested the money; we didn’t just spend it on stuff.

And when you borrow money and you invest in productive capacity, you have a real asset and the asset can generate revenue. If we built a factory that manufactured widgets, we could sell the widgets to the British and to the French, and earn enough money to pay back the money they loaned us — and the interest.

And we became the world’s wealthiest economy because we borrowed to produce. What we’ve done recently is we’ve borrowed to consume. We didn’t produce anything. We borrowed money and bought trinkets. We bought depreciating consumer goods. So how can we possibly pay the money back? We didn’t acquire any income-producing assets to pay the money back.

“We borrowed money and bought trinkets.”

So, if we’re going to rebuild a viable economy, and if we don’t have our own savings, we’re going to have to convince the Chinese and the Japanese to build factories here. Well, why would they want to do that? With the high regulations that we have right now, with the high taxes that we have right now, we’re just not competitive.

So, the only way that we’re ever going to rebuild a sound economy in the United States is, number one, we’re going to have to stop all the stimulus and stop the bailouts and let the free market work.

We have to understand that what’s happening right now is not the problem, it’s the solution. The problem was the bubble blowing up, not the deflation. We have to allow the pain, no matter how unpleasant it is. We have to understand that anything we do to delay this is going to make it worse.

When you have President Obama talking about how everything is different than George Bush, how his administration is change — we’re doing it differently. He hasn’t changed anything. He’s doing exactly what Bush did. He inherited the same situation, only worse, and he’s doing the same thing, only worse.

………………………But, so the combination of Obama/Bernanke is way worse than Bush/Greenspan, but it’s the same philosophy. Nothing has changed. This might as well be the third Bush term. He is doing the same exact stuff.

The rhetoric is a little bit different, but the policies are all the same, the ideas are all the same: that economic growth is a function of people spending money and that we need more government to stimulate the economy; that we should bail out the people who fail and punish the people who succeed. And that we should have no interest rate. The Fed should be cranking out money.

What we need — not only do we need to allow the companies to fail and allow Americans to stop spending. The credit crunch is a good thing. The fact that credit is being denied to American consumers is a good thing, because credit is scarce, it’s not unlimited. It’s a function of savings.

And if we want to have a real economy, if we want to have production, then savings need to go to producers. Well, they’re not going to go to producers if they’re squandered by consumers. They’re not going to go to producers if the government is borrowing all the money.

So what do we need? We need the government to eliminate the deficit and go to a surplus. We need the government to stop spending money and depleting our savings. We need consumers to stop spending money and rebuild their savings. We need a recession. We need it. We need one badly.

And what the government has to do is fess up and let us know, yes, this is the price we pay for years of indulgence and reckless spending; now comes the sacrifice, now comes the penance, we’re going to have to take this recession. And there’s nothing the government can do about it.

The only thing the government can do about it is to acknowledge to the American public that the government is a burden on the economy. And in good times, maybe we can tolerate that burden, but in bad times, there’s no way.

“The only thing the government can do about it is to acknowledge to the American public that the government is a burden on the economy.”

And that the only way we’re going to rebuild this economy is with a smaller government, not with a bigger government.

And we need sound money. Unfortunately, we need high interest rates. We’re getting the opposite. Instead of getting higher interest rates and smaller government, we’re getting lower interest rates and bigger government.

We’re getting inflation and we’re getting deficit spending and we’re getting stimulus, and we’re not going to have any different results this time around. So, if you liked what Bush/Greenspan did to the economy, then you’ll love what this pair does. But it’s not going to be any better. It’s going to be a bigger disaster.

What is the crisis that they’re setting up? Because we are right now suffering the consequences of the economic stimulus and the bailouts of 2001 and 2002 and 2003. If we would have had a more severe recession, we would not be in this mess today.

So, the question is, what are going to be the consequences of what we’re doing now?

And what I think is going to happen is that, ultimately, people like the Chinese and the rest of the world — the Saudis and the Japanese and everybody else — they’re going to figure this out, and they’re not going to want to play this game any more. We’ve got them conned right now.

………………………….Right now, we’re creating a lot of inflation. A lot of people are talking about, “Oh, there’s not inflation, it’s deflation.” That’s all nonsense. Real-estate prices are falling because they’re too high. Stock prices are falling. But that’s not deflation. That’s just falling prices. There is no contraction of the money supply, it’s growing like crazy.

“And this crisis is going to end up being a currency crisis.”

But the expansion of the money supply is not immediately showing up in rising prices for commodities or consumer goods, because there are other temporary factors that are pushing prices down at the same time inflation is pushing prices up. You’ve got deleveraging; you’ve got bankruptcies, going-out-of-business sales; you’ve got a lot of companies liquidating their inventory; and you have the dollar strong.

And what happened was, paradoxically, when this crisis began, money flowed into America instead of fleeing America, which it will do ultimately. Can you imagine there’s a giant explosion and everybody’s running towards the blast? That’s what’s going on.

And when people look around the world and they say, “Well, people are coming to America because as bad as it is every place else, it’s so much worse here.” That’s nonsense. That’s just what they’re saying to explain it. Just like they tried to justify the real-estate bubble or the Internet bubble. That’s all nonsense.

The reason it’s so bad in the rest of the world is because they loaned us so much money and we can’t pay them back, and now they’re losing, based on their bad loans.

And what’s really causing the global credit crunch is that we’re borrowing so much money right now, we’re crowding out everybody else. The fact that people are loaning us so much money means that private businesses around the world can’t get capital. Why? Because it’s all going to the US government, that’s why.

So the world is suffering, not because our economy is collapsing, but because they’re foolishly trying to prop it up.

And when they figure this out, then we’re going to get a real economic crisis. Because when the dollar starts to plunge — and it will — then we’re going to see prices rising, sharply, for consumer goods, and interest rates rising.

And if we think we have problems now, wait till we see how much worse they get when we throw rising consumer prices and rising interest rates into the mix. And there’s nothing the government’s going to be able to do about it.

Right now, unemployed people are getting the benefit of lower prices. Imagine when you’re out of work and your prices are going up, because that’s what’s going to happen. And then this is going to be a real economic crisis and then we’re going to be in for very, very difficult choices.

And, unfortunately, the worst-case scenario is one that is looking increasingly more likely, which is hyperinflation. And if we get that, that’s where nobody will lend us money.

And, so, the Fed buys all the bonds in order to keep interest rates down and to maintain deficit spending. And, then, the velocity money really starts to pick up. Nobody is going to want our money — not even American citizens will want our money and they will try to spend it as quickly as they can.

The government might try to keep it together a little bit longer, with regulation. Maybe we’ll have capital controls. Maybe they’ll make it illegal for American citizens to do what I’m doing with my clients right now — buying foreign currencies, foreign stocks. Maybe they’ll make it illegal to buy gold.

As prices really start to contract, to escalate, private parties will try to make contracts with payment in gold or other currencies. Maybe the government will make that illegal. There might be stores or people that actually don’t want to accept dollars because their value is dropping too rapidly. The government will make that illegal.

And that means that we’ll have a black market. That means if you want to buy something, you’ll have to buy it on the black market, just like they did in the Soviet Union. The only reason you could buy anything there was because you bought it illegally.

A lot of these things are going to happen. I think early on, probably even in Barack Obama’s first term of office, I think we’re going to have price controls.

I think prices will be rising so rapidly, maybe even by next year, that they’re going to impose price controls on a number of products; probably energy, probably gasoline, probably milk, bread. And we’re repeating all the mistakes of the 1930s. We might as well repeat the mistakes of the 1970s.

And, so, when they put on price controls, what’s that going to mean? Shortages, power blackouts, long lines for gas, long lines for food. A lot of things are going to happen, I just mention that. Everybody now, of course, is talking about the 1930s and saying, “Oh, no, we can’t repeat the mistakes of the ’30s.” Well, that’s exactly what we’re doing.

“And we’re repeating all the mistakes of the 1930s. We might as well repeat the mistakes of the 1970s.”

The popular notion is that we had a depression because Hoover was so irresponsible that he trusted the free market and he did nothing, and because he did nothing we had a depression. And then Roosevelt rode to the rescue and saved the day with big government.

Well, the reality, of course, is that we had a depression because, (a) we had a Federal Reserve that was too easy in the 1920s and created a boom.

And then when the boom bust, Hoover ignored the good advice of his secretary to the treasury — which maybe is the last time the secretary to the treasury ever gave anybody any good advice. And instead of allowing the free market to work, he came up with all kinds of crazy things to bail people out and to prop things up and to distort prices and fix wages and all kinds of things that created the depression.

And then Roosevelt came in and proceeded to make it worse. And everything that Roosevelt did exacerbated it and made the depression great.

And we eventually got out of it after the Second World War. But how can anybody say that we got out of it because of Roosevelt? We got out of it despite Roosevelt. We would have got out of it a lot faster had Roosevelt not just expanded the failed policies of Hoover.

And that’s very similar to what’s happening now. You got Bush, who is the Hoover now of this generation, who is now associated with the free market, who is nothing like the free market. And now we have Barack Obama, like Roosevelt, coming in to save the economy with big government. Of course, the government is already huge. Maybe he hasn’t figured that out.

When Hoover left office, I think the federal budget was about four billion dollars. That was the whole thing. And Roosevelt doubled it to about eight billion. Now we’re at three trillion. Three trillion. That means the government is huge.

And, of course, when Roosevelt came in, we had a sound economy, beneath the surface. We had a productive economy, we saved, we made stuff, we exported. We didn’t have a huge social-welfare state — nobody got checks from the government — we were in much better shape. If they did that much damage to a sound economy, imagine what they could do with the one we got now.

Plus, back then, we had real money. We were on the gold standard. Now look at us. Look at the problems we had in the 1970s. Still, we had a fundamentally sound economy then. We had a bubble in the ’60s. Same thing, the same stock-market bubble. We printed too much money, we went to Vietnam. We fought the war in Vietnam, we went to the moon, we had the war on poverty. The government created too much money and they gave us the 1970s. That was the payback for the 1960s.

But when Reagan came in and when Volcker came in, we actually got some sensible policies. We shrank government and we raised interest rates; we went for sound money and smaller government. When Reagan came in it was, “The government is the problem.” Now, Barack Obama is, “The government’s the solution.” It’s night and day.

………………………………..Right now, because the world lends us so much money, there’s a capital shortage. Wouldn’t the world be better off investing their savings productively in their own countries, rather than just giving their savings to us? Wouldn’t they be better off enjoying the fruits of their own labor, rather than laboring while we enjoy the fruits? It’s obvious. And it’s going to happen.”

“The Money Masters is a profound movie that, really, every American should see. Anyone that considers themselves a patriot and that is concerned about the direction this country appears to be heading, needs to see this movie. History is repeating itself. It’s a historical documentary, free from conspiracy theories and party rhetoric of any kind. It doesn’t contain any fear mongering either, but if you listen carefully, you’ll see the parallels to today. It’s funny that it was made in 1995! VK.”

“Even though it’s long, I’m going to have to replay it. It is so full of information and historical quotes – unbelievable research and I can’t believe I’ve never come across it prior to this evening. I’ve sent it out to the tea party leaders around the state and hope that they will all watch it. It will help them to understand what it is we’re fighting against. A.”

“The video The Money Masters was made in 1995 and is much more relevant today than when it was filmed.

 The Fed is fingered as the culprit in our huge national debt and increasing national poverty. The way out lies in reforming the banking system.

V