CW 291: Fractional Reserve Banking & Fiscal Cliffs with G. Edward Griffin Bestselling Author of ‘The Creature from Jekyll Island’

Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self made multimillionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and South 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating wealth show. This is your host, Jason Hartman. And this is episode number 291. I wanted to get one final episode out here before Christmas and wish all of you a very merry Christmas for this episode. My monologue portion will be very short, but our guest today will be G. Edward Griffin. It is the second time we've had Mr. Griffin on the show and you probably know his name, he's very famous. He wrote the book entitled the Creature from Jekyll island, which, which is really the most exhaustive work I know of on the Federal Reserve System and what it portends for our future and what he really to some extent not only wrote about but actually predicted in that book so many years ago. It's just a fantastic book. In this interview it's going to be, I just have to warn you because of course we already recorded it. I recorded it just last week. So it is a very fresh interview, but wanted to get it up right away because we talk about the fiscal cliff and some of you listeners have asked that we talk about that a little bit. And the interview starts out, it's pretty negative for a decent part of it, but it just all of this negativity and all of these bad, dirty dealings when it comes to the Federal Reserve, Wall street government, et cetera, et cetera, they only benefit us if we're following my plan of denominating our assets in things, in commodities and packaged commodities, in little rental houses and apartment buildings, and denominating our liabilities in ever more debased, devalued fiat dollars or any fiat currency from around the world that has the same exact set of factors that the United States is experiencing. And we get these long fixed rate mortgages. I mean, what better formula could there possibly be to build wealth than that, than my formula, the one I call the ultimate Investing equation. You denominate your assets in things, things that have universal need, things that are not indexed just to one currency, that is the dollar. You outsource the obligations, the 30 year fixed rate debt to tenants. You have a set of laws and customs that has been around for centuries, if not millennia. These are very old simplistic concepts and laws and they, they run pretty much the same from state to state. And we invest in markets that are very favorable, of course to landlords. So that's another great thing. We outsource our debts to tenants. We don't pay our own debts. The debt is constantly devalued through inflation. The old example I used to give in my Creating wealth seminars and I got to bring this back, I don't talk about it enough anymore. But take this simple concept. Sometimes you can get a 10 year interest only loan and that would actually be my favorite loan. Assuming you don't have to pay too much of a premium in interest rate for it. Well really that premium is outsourced to the tenant anyway. But the 10 year interest only fixed rate loan, after year 10, in year 11, it starts to amortize where it's still a fixed rate loan for the next 20 years, but you pay principal and interest after the first 10 year initial interest only period. So here's the example. Say you were to buy 10 single family homes through our network. You buy them in say three different cities. So you're diversified geographically. These are all areas where you're buying at or below the cost of construction. You're basically getting the land for free. And you look at all your mortgage interest statements and you know, we're right on the verge of 2013. Hey, by the way folks, I guess the Mayan calendar ended and we're all still here, right? You know, another doom and gloom thing we didn't have to worry about is the, the ending of the Mayan calendar. Just a few days ago on December20, I put a great comic up on our Facebook page. So on Facebook, search Jason Hartman.com on Facebook and you will see a fantastic, really cute little comic strip about the ending of the Mayan calendar. I promise you'll love it. Just go like the JasonArtman.com Facebook page and you'll see that little comic. It's, it's, it's very clever about the ending of the Mayan calendar.

You'll love it.

But anyway, so we get these fixed rate mortgages, 10 of them in this example, or maybe it's just one, and it's an apartment building. Either way. And we've got $1 million in interest only debt today. And that interest only debt we get. Our first mortgage statement say it's in February of 2013 by the time we close on these deals and we own these 10 properties and we have leveraged them hopefully. And our mortgage statements, all 10 of them combined together, we add them all up and it says we owe $1 million. So in 10 years, let's take a look at three different inflation rates. How much money you'll owe in real dollars, in constant dollars, not nominal dollars. Because remember the reason I use the interest only loan as the example that your mortgage statements 10 years from now, in February of 2022 or sorry, February of 2023, those mortgage statements still say you owe $1 million because it's an interest only loan, so you didn't pay any principal. But at three different rates of inflation. Now the first one I'm going to use is 5.1%. Why do I pick 5.1%? See, if you're, if you're silly enough to believe the official statistics about inflation and you believe what the government is telling you, then you would think inflation is around 3% or some silly crazy low ball number like that, depending on which CPI index you use. Consumer Price Index. You know, there are multiple CPIs. Just to make things even more confusing, there's the CPI urban, there's different CPIs. Okay, then there's the core rate which is the rate that strips out food energy because it's too volatile. And that's a complete misnomer because I don't know anybody who can live without food or energy. Certainly we all need food and certainly the cost of energy is in every single thing we buy. So these are all bogus. But 5.1% is the official number that happened between 1972. Why do I pick that year? Well, what happened the year before in 1971, you know, if you're a regular listener, we went off the gold standard, right? Nixon closed the gold window. And that's when spending got really ridiculous because the government no longer had any sort of tether. They could just basically print money and create electronic money into existence through the Federal Reserve System, the Treasury. But from, from 1972 to 2002, if you got a 30 year mortgage in and had it in those years, the official understated. Okay, and they really started understating this. I did an old show about this where I talked a lot about Paul Volcker and I shared a news clip from Bloomberg News and it was really awesome because it really showed how they, they really, really started manipulating the numbers hard in the late 70s. And you know, of course we had the Jimmy Carter era when we had the inept President Carter who drove us into very high inflation. And Paul Volcker, the Federal Reserve chair at the time, was said to be the person who really broke the back of inflation. But it was painful to do. Now, how did he break the back of inflation? Well, he did it by raising rates and tightening the money supply. And of course, everybody knows that was, that was a very tough time, you know, when the word stagflation was coined. Okay. And when the misery index was coined. Well, that's a time when you, oddly enough, have. Because this is counter to the concept of the Phillips Curve. And by the way, we should really talk about the Phillips Curve more on the show. And, you know, maybe I'll do a whole episode on that. But for now you can go to Wikipedia and just read about the Phillips Curve. And while you're there, it wouldn't hurt to read about the Weimar Republic and just type in the word of inflation, because I love. If you type the word inflation into Wikipedia, you see this picture from the Weimar Republic, post World War I Germany, where you see a woman shoveling the marks, the German marks, into a fire, into a furnace, because it was cheaper to actually just burn the currency, if you can believe that. Can you imagine just burning hundred dollar bills? Or maybe by then we'll have thousand or million dollar bills, who knows? Just burning them rather than buying firewood with the money because it was cheaper to get the energy out of the actual paper to keep warm, rather than exchanging the ever so worthless paper for money or for current. Exchanging it for firewood, exchanging the currency for firewood. So there you go, an example of inflation. So the Official inflation rate, 1972-2002, 5.1%. Okay. That's why I'm going with that number. My belief of the current inflation rate, 10%, 9 or 10%, I think it's probably 10% pretty easily, especially with real estate prices having inflated and rents having inflated so much over the past year and a half, two years, 10% is my number right now, currently where we're at. And I believe it is entirely possible that in the next 10 years we could see 20% inflation. So I'm giving you three examples here. And if you want to write down some numbers, because these numbers are going to blow your mind as to how you really, really get rich investing in income, property, following my plan, the numbers are 5.1% 10% and then 20%. Now, there's no academic definition of hyperinflation. I've had many guests on the show talk about their fears of hyperinflation on prior episodes. And most people think of hyperinflation, although there's no academic definition as something like thousands of percent. And that's still much lower than Zimbabwe type inflation. I guess that would be comparable to Argentinian Argentine inflation. That would be hyperinflation. But none of these examples are hyperinflation. They're just, you know, they're just reasonable amounts of inflation. 5.1%, 10% and 20%. So here's what happens to that million dollars that you owe that you borrow today and your tenants repay for you. In fact, they repay you this mortgage, hopefully with positive cash flow. So they're not only going to pay your mortgage, your property taxes and your insurance and maybe your association fees. Well, they're also going to pay you a bonus just for keeping them around. It's called positive cash flow. And the government's going to give you some huge tax breaks if you qualify for all those tax breaks. And we've talked about that on prior shows. So here it is. You ready folks? That $1 million, remember 2023, February of 2023, on your interest only loan, you get your statement, it still says you owe a million dollars, but in real dollars. At 5.1 inflation, which has already happened, you only owe $608,000. So you've basically had inflation pay off almost $400,000 of your debt. And all along the way you've had hopefully positive cash flow. The asset itself has appreciated. You've enjoyed the benefits of leverage on that asset, which is slightly different than the concept I'm talking about here of the term I coined. The phrase I coined inflation induced debt destruction, something that even very sophisticated people just don't understand. Even the gold bugs, they don't get it. They get it about inflation, they get it about the Federal Reserve, treasury, government, etc. They get it about world uncertainty, wars and things like that. But they don't get, they don't understand inflation induced debt destruction. They think their gold will save them because their gold is a store of wealth, a defensive strategy, something that will hold value. But we're talking about an offensive strategy where you're going to win the game. There are different ways to play life. One way to play life is playing not to lose. Well, the gold bugs are playing not to lose. And hey, that's a lot better than losing. They're far more Aware than the average everyday person who is walking into Merrill lynch or Ameriprise or any of these stupid financial services firms and buying a modern portfolio theory bunch of crap of stocks, bonds and mutual funds and making Wall street rich. They're much more aware than that. But they still don't really get it at the highest level like we do as listeners here. Then the second example, 10% inflation. Let's just say we have 10% and it's 10 years and we get our interest only mortgage statement in 2023. And in real dollars, well, in nominal dollars it still says we owe what, $1 million. But in real dollars we only owe $385,000. So inflation there has repaid or paid off well over $600,000 of our mortgages. Now what about 20%? Wow, is this exciting. See, you know, when you follow my plan, you really should vote for people like Obama and Nancy Pelosi and Jerry Brown, the Governor of California, the recycled moonbeam governor, idiot of California, unions, sellout, spending scumbag. Not that I have an opinion about this or anything, but all of these people are really just making us richer, okay? So I don't know why I don't like them. I guess my philosophy overcomes my own personal greed. Maybe I should really shut up and just be happy that they're running things and messing things up because they're creating a lot more inflation with their spending. So at 20% inflation, it's 2023. You get your mortgage statement, it still says you owe $1 million, and that's in nominal dollars. But in real dollars, with the benefits of inflation induced debt destruction, you only owe 161,000, just over $161,000. So inflation has repaid or paid off about $840,000 of your debt for free. Wow. That is the power of inflation induced debt destruction. Now let me give you one more example. And this example is not based on any of these higher inflation rates. It's based on something that has already happened in real life based on a third official statistics, not my statistics, not what I believe. This is what the government reported, which in my belief has massively understated. Let's go back to that first number, 5.1%. But instead of looking at a 10 year example, this time I want to drag it out over the life of a 30 year mortgage. Okay, well now let's fast forward. It's 2013. By the time you acquire the properties and you get the mortgages in place, then 10 years, 2023, then it's 2033 and it's 2043 before you make the last payments on these mortgages and God forbid, don't you dare pay them off early because if you do, the only time to pay things off early and really worry about paying your debt down is number one, if it's consumer debt, okay, if it's not high quality long term fixed rate, investment grade debt, or if you were in a deflationary environment. Because what happens when does my whole plan backfire? Well, my plan could backfire in a deflationary environment if you believe the two deflationists that are out there. Because pretty much everybody else says inflation, but Harry Dent in a convoluted way says deflation. Although it's pretty convoluted, frankly. You know, I was listening to him on someone else's show on, well, Porter Stansberry show and he was asking him some pretty good questions, I thought, you know, he's still convoluted about this deflation thing. And Bob Proctor, who's also been on both of those, have been on my show. Harry Dent's been on twice. Go listen to the prior episodes and you can hear what they have to say. But if you listen to either of them, they're going to say, well, deflation, okay, fine, well then your debt actually increases in value and so does your dollar. So your dollar would increase in value, your debt would increase in value or burden. It would be good for the lender. Now the lender in a deflationary environment, they would say, don't pay us off, don't pay us off, don't pay us off early, keep the loan. But a borrower in a, in a deflationary environment, they want to pay things off because that, that mortgage is becoming more expensive essentially. But in reality, we all know what happens. Leverage. You know, I used to think leverage cuts both ways. It really doesn't. Because in a deflationary environment, guess what would happen? People would start just walking away from their mortgages. Exactly what they've been doing for the last few years. And I saw them do this in the 90s. You know, this is nothing new folks. The concept of short sales. I mean, I remember in 2004, 2005, I was talking about short sales and workouts and people looked at me like, what are you talking about? I don't even know what that is. Well, I experienced that for seven years in the 90s as a traditional real estate agent doing short sales for my own clients in Irvine, California and the surrounding cities. Okay, when I worked for ReMax and so in a deflationary environment, if a mortgage became onerous, what would people, they just walk away. That's the implicit back door that everybody has on these mortgages. But you know, back to my example, go with the understated official statistics. 5.1% now a 30 year mortgage, that $1 million mortgage, or mortgages, if there's say 10 of them, for example, is only, you're only paying back $224,863.

Based on the inflation induced debt destruction. Now I do have to make the disclaimer. It's a little more complex than these examples. Because you're paying your mortgage monthly, you don't pay it in one lump sum. Although on the interest only examples you really kind of do. Because at the end of the 10 year interest only period, you owe a fixed amount, you owe the same original nominal dollar principal balance of those mortgages. And on the 30 year example, because the loan starts amortizing in year 11, it's a little more complex. You have to really dice it up along the way, month by month, year by year, etc. But it's good enough. You get the concept of the incredible, incredible power that you can obtain by using inflation induced debt destruction. Incredibly powerful. And when we hear from G. Edward Griffin, you're going to hear some pretty ominous stuff here in a few minutes. And I say, hey, bring it on. Because I've positioned my portfolio and hopefully you've positioned your portfolio to benefit from the perfect storm. And commodity values, I didn't even mention that commodity values go up in inflationary environments. And we own a whole bunch of commodities, don't we? We own packaged commodities, as I call them. That's my phrase for it. I also call it assembled commodities. And these are all the raw material ingredients that go into a house or an apartment building, glass, steel, lumber, labor, energy, petroleum products, copper wire, etc. You know, all of those commodities and they're not indexed just to the dollar. They're traded globally. They're traded in every currency on earth and needed by every human being on Earth. Because every human being has three common needs. And you know what? They are the three things every human being needs. Maslow taught us this. Maslow's hierarchy of needs. Food, clothing and shelter. Those are the three basic human needs. When those needs are met, we move up Maslow's hierarchy to another thing. Then we want love, we want recognition, we want esteem. There's all sorts of things. And you know what? I think Maslow actually left a few things out. I Think, Maslow, the top of the hierarchy is self actualization. And self actualization, you know, I'm all for that. I think it's great. But I think it's kind of, well, kind of arrogant. And I guess that's why I'm not an atheist, because self is not what it's all about. I think there is spiritual actualization, actualization in God. And, you know, I'm not becoming religious on you here or anything. Okay. This is a not a religious show, but I think there's more than just the self to actualize. Okay. There is a spiritual actualization also. So if I were Maslow, I'd put one more rung at the top of that hierarchy. Okay. And I don't know where does financial actualization fit in on there? Maybe that's what we're doing here. And they help move you up that hierarchy of needs so you can actualize your potential more quickly and more readily and in more ways. Financial success just gives us options, and that's what we want to provide here on the show for you. Options, options, options. So before we go to our guest, G. Edward Griffin, the author of the Creature from Jekyll island, we will be up with him in just a moment. But I wanted to mention a nice little Christmas gift I have for you. A little promotion. Everything in the store@jasonhartman.com everything there. We've got a huge discount. I don't think we've ever done anything like this before. But if you want to gain a little more education before the end of the year, here is your opportunity to grab any of our products. And all you do is you go to jasonhartman.comproducts products or you go to jasonartman.com and click on products. And you can have anything there for several more days through the end of the year at half price. Any product there, half price. It's a blanket deal on any of the products in our store. 50% off. And here is your promo code. It's easy to remember it's Christmas, so just type in Christmas as the promo code when you're checking out. And 50% half off discount will be applied to any of the products in the store. All right, well, happy shopping, happy holidays, merry Christmas, and I'm looking forward to a great 2013 with all of you. And thank you so much for being in our listener family and thank you so much for your support and being our clients and for the faith that you have in us throughout the year. We really, really appreciate it and we certainly will never take it for granted. So let's go to our guest, G. Edward Griffin. And we will be back with that in just a moment.

Now you can get Jason's Creating wealth in Today's Economy home study course. All the knowledge and education revealed in a nine hour day of the Creating wealth bootcamp created in a home study course for you to dive into at your convenience. For more details, go to jasonhartman.com.

It'S my pleasure to welcome the very distinguished G. Edward Griffin to the show. He has been a guest previously, he was on a couple of years ago. And of course, I'm sure most of you are familiar with his seminal work on the subject of the Federal Reserve entitled the Creature from Jekyll Island. Just a fantastic book. He's of course a writer, a documentary film producer, and has many successful titles to his credit. He's also listed in who's who in America and is well known on many, many topics ranging from medical research to political and socioeconomic Federal Reserve type topics. And it's just a pleasure to have him back. How are you today?

I'm doing very well, Jason. Thanks for inviting me on the show.

Well, the pleasure is all mine. So you're coming to us from Thousand Oaks today, right?

Right.

Fantastic.

Southern California.

Yep, yep. My old stomping ground. I grew up in West LA and lived in Orange county for many, many years after that. So the fiscal cliff is the hot topic nowadays. Tell us what your thoughts are.

Well, yeah, the fiscal cliff, of course, is just a catchphrase. It's just a, it's a new way of describing something that's been going on for a long time, which is that the economy is tanking. So they make it sound like this is something brand new. Well, it's not. It's just a continuation of the fact that these politicians who we are trusting to fix this problem are the very same group, by and large, that created the problem in the first place. And so naturally, their only fix is more of the same. That, in a nutshell is how I look at it. The basic problem is that they have created too much money.

Years ago, they created the Federal Reserve System and, and gave this group of private bankers, this cartel of banks, which the Federal Reserve really is. And they gave them the power to create the nation's money without anything to back it, which means without no limitation, there's nothing limiting the amount of money that they can create whatever they want to create for their own political or economic advantage. And of course, they're always saying they're doing this for America. They're doing this for the economy. They're doing this for you folks. But the fact is, it's a cartel, a banking cartel, and they're creating money hand over fist, and they're pushing it, trying to push it into the economy so they can collect interest on it. See, that's the name of the game. It's not that they spend the money for their own purposes, but they push it into the economy and they lend it. They appear to lend it to the government, and they lend it to corporations, and they lend it to you and me, and they collect interest on this money that they created out of nothing, which is a pretty good scam, really. Basically, when you look at it, that's what banking is. It's one of the greatest scams of all time. But it's all dressed up in pinstripe suits and they drive around in limousines and, you know, they speak about being a conservative banker and all that sort of thing, but it's basically one of the biggest scams in the world. And when they get the government involved in it to protect them, to bail them out at the taxpayer's expense, you've got not only a scam, but you've got a fraud. Now that is of gigantic proportions because the whole thing is merely a means of plundering the average person. That's my take on it. And so now it just gets worse and worse and worse. And finally they say, well, let's call it something that will make it sound dramatic. They call it the fiscal cliff. They've been on the fiscal cliff for 50 years, but now they decided to say we're on the cliff. And they're trying to, in a way, justify draconian measures, tax increases, creation of more money. In other words, more of the same. And they're trying to scare people into thinking that this is good. Now, just continue administering this dying drug addict, keep giving him more drugs, and that'll take care of everything.

Yeah. And I just want to have you make a distinction, if you would. When you say banking is a scam, you're really referring to fractional reserve banking, the modern form of banking. I mean, the concept of basic banking, legitimate banking isn't a scam in and of itself where people deposit money and borrow money and things like that.

Yeah, I'm glad you made that distinction, Jason. Yeah, I should have said that. We're talking about modern banking as the way it really is in the world, not the way it should be, or the way it could be, or in some cases, even the way it was There were a few cases in history where we did have honest banking, but the truth of the matter is those instances are very rare because banking by its very nature is just a great temptation for fraud. And almost from the very beginning, we're going back centuries now, as banking evolved, it has almost always been based on fraudulent practices. And from almost from the very beginning, it went from deposit banking into fractional reserve banking. And that's when everything starts to fall apart. And perhaps your listeners need a little definition of fractional reserve banking. And basically that simply means that the banks don't have reserves for the money that the, that they loan out. In other words, they're lending out paper money, they're lending out electronic.

It's even better than that.

It's electronic, electronic money.

We're not even constrained by having to print anything anymore. Now it's a click of the mouse.

It doesn't even cost paper and ink anymore. It's just whatever it costs for the electricity to create a little imprint in a chip somewhere. So that's the kind of money that's actually being used today. And it's imaginary, it doesn't really exist. It's just a system of debits and credits and numbers and phantom figures and so forth. And so the whole world is running on this ruse. It's a mirage. And so there's no limit to the number of these little digits they can create. And it used to be that they could only create enough money as they had gold or silver in the vault, to back it up. Something tangible, something that took human effort to produce, something that had value built into it. And therefore money supply was always limited based upon the amount of bullion that backed it. And it was a very, very good thing because it prevented all kinds of mischief. You know, it slowed down expansion of business and production and all that sort of thing. Yes, that's true. And people might say, yeah, but so that slowed down the boom cycle. Well, yes, it did. In fact, it prevented a boom cycle. And that meant there was no crash cycle either. So even though the growth of the economy might have been slower under a sound banking system, there would have been no crashes either. This whole boom bust cycle that's been plaguing mankind for hundreds of years is just impossible when you've got true honest banking where reserves are required and the money supply cannot be expanded any faster than the reserves. So that's what they mean by fractional reserve banking, is that really. It's another way of saying no reserve banking. Because the fraction started off in the beginning well, we'll keep 50% of this in reserve and we can then create the other 50% out of nothing. And then they said, well that works. We'll only keep 40% and create 60% out of nothing. And that worked. So we'll only keep 30% and so forth. So now today it's zero percent. And that's what fractional reserve always turns out to be is 0, the 0 fraction. Because the temptation to go further and further and further is just too great and too profitable for the scammers.

So what's really happening with fractional reserve lending then is that money is created out of thin air. It's lent into existence.

That's right. That's right. It's based on debt. With real honest banking, or what I would call honest banking. The old style concept money would be based on a supply of gold or silver bullion. But now all it's based on is a piece of paper which contains a borrower's signature. The borrower says, let's just, in this case, let's call it the government. That would be the biggest borrower of all. The government comes in and says, here's a bond or a Treasury note or certificate. And it's basically an iou, Says we, the government promise to tax the American people until they're dead in order to get the money to pay back this loan to the Federal Reserve. And so that's an iou, and they're pledging our productivity to pay back that loan. And most Americans think, oh, that's wonderful. We don't have to pay taxes on that. They can just borrow the money. They don't realize that their own productivity is on the line behind it. So that's how the loan is created. The Federal Reserve creates the money out of nothing and gives it to the federal government based on that government bond or certificate of some kind, an iou. And then the government then spends the money into circulation and it's left with that bond, that debt behind. Well, you know, 30 days later, 60 days later, or a year later, the bond is due and the government said supposed to pay it back plus interest. Well, they don't have the money to pay it back plus interest because they're still spending more than they're taking in in taxes. And so what do they do? They just go out and borrow more money to cover the repayment of the older loan plus interest. And that's basically why the national debt just keeps growing and growing and growing is because they always. It's a Chapanzi scheme, really. They Always are having to create, create new money to cover the debt for the old debt, you know, the money for the old debt. I should say.

Doesn't it seem just on the political or the spending side of the spectrum that that is so incredibly selfish for the current generation to spend the money and make the future generations slaves to debt. What's just amazing to me is that on the, on the left side of the political spectrum, that's the group that says they're compassionate and they want to help people. But what they want to do really is take today and have government sponsored health care, have this entitlement program, that entitlement program and they tax for it. And most people notice taxes. You know, that's something that there are so many groups against, hit more taxes and so forth. But there are very few groups against inflation and against the Federal Reserve and the way the banking cartel works. But you know, many of them talk about taxes and the problem of higher taxes. But it just seems very selfish to me that someone would just vote themselves more today and just say, hey, we'll enslave the next couple of generations. Kids will be born with kids, $200,000 debt on their head that must somehow be repaid either through taxes, inflation or productivity. And I don't know about you, but I don't see it coming from productivity. We don't know. We don't have a monopoly on the industrial world anymore like we used to.

Right? Right. And eventually this system destroys productivity. Productivity is actually going down because people are being put out of work, industries are closing, productivity is going down. So you're quite right. I might question the word selfish. Are they being selfish? I think that's too kind a word. I think they're criminal because everybody knows who's in this game. They know that this debt is not going to be paid back in terms of paying out money. This debt that they're creating now cannot be paid back. It's so big and it's expanding so rapidly. It's a Ponzi. Can you close out a Ponzi game? No, you can't make a Ponzi scheme work. It destroys itself. It just falls apart at some point. It's the end of the game, it's over. And that's where we're headed. It's not that the younger generation is going to have to pay back this debt in terms of writing a check or sending in new taxes or something like that. It's just that the economy is going to collapse. It'll be over and all that will be Left will be the state. The state will be left to provide food, clothing and shelter for all the hungry, starving people and provide education, provide health care, provide everything, because the economy won't be able to do it. And so where we're really headed is much worse than just a bad economy.

The state, of course, can't do it either. I mean, I know you know that.

No, they can't. But they can require people to pretend like they're doing it. In other words, they'll regiment everybody. It'll be like living in a huge army camp. It's like everybody in the army, you all have rank, you all get food as long as you take orders. And there will be those with higher rank. There'll be the generals, the captains, the lieutenants, the sergeants, the corporals, and then all the, you know, all the privates down here taking orders and saluting their superiors. And, you know, it just a system of complete compulsion. Collectivism is the better word for it. And that's where it's headed. It's not even an issue of money anymore. The economy will be gone. It'll be a totally regimented society. And when you think about that, it's even more frightening than the fact of economic crisis.

Sure it is. It's partially 1984, not completely, but, you know, certainly it's Orwellian in a lot of ways. But you, you know, here's the thing I want to ask you, and we all know that this is a complete scam. It's a total Ponzi scheme. It's just massive crookery on a global banking scale. We know that, my listeners and I couldn't agree more with you. Okay? However, the question really becomes a question of when. It becomes a question of kicking the can down the road. And obviously they've been successful, the powers that be. It kicking the can down the road. Well, I guess you could start at 1913, and then you could start at the FDR era and the New Deal, and then you could go to the LBJ era and the Great Society, and then, then you could go to 1971, which, you know, untethered them and allowed them to do whatever they want coming off the gold standard. But, you know, the question is, is it possible that they can just keep kicking the can down the road for decades longer? And this is why I say that, because logically, it's impossible. We, of course, look at history. We say every fiat money society has had a collapse. Every fiat currency, none, none has ever survived. But the difference we have was we have the biggest Military on earth. We have the reserve currency, but we should, of course, lose that status with our profligate behavior. But we've got the ability to push the world around through the military mostly, and also through the fact that we've got the biggest. And I know this is completely dysfunctional, but we've got the largest economy by far and the largest consumer base by far. So everybody will always want us as a customer for their exports, even if we pay back in fake money, which ultimately loses value. I mean, you know, China and Japan have to understand this. Of course they do. You know, the question is, when? When will this Ponzi scheme. When will the chickens come home to roost?

Well, that's a good question. As you were describing that so well, I was thinking, how do you deal with this analogy of the kicking of the can? And this suddenly dawned on me that every time they kick the can, this little piece of the can flies off. And by the time they've kicked it so many times, there's no can left. That's the point. When we use that analogy, kicking the can down the road, it sort of implies that somewhere or other we've got to stop doing that and solve the problem and fix it and, you know, deal with reality. When the fact is that these people, these politicians have no intention of ever stopping this process until the can is gone, there is no way to fix it. That's what I was talking about a moment ago. The whole game changes. It's no longer about the can. It's no longer about the economy. It's a question of just pure survival. And that's where the state is all supreme and it'll provide all food, clothing, shelter and so forth. And you'll live, you'll be able to function as long as you're good boys and girls and don't question authority. And that's where it's going and that's where the can is going. And we won't even recognize it anymore. It's not the can, it's a chain.

Well, why does it have to go there ultimately? I mean, the powers that be may want it to go there so they can exert more control over people. In fact, there may be some grand design that this is part of the plan. It's almost like a false flag, if you will, although it's not false. But they created the problem just so they can come in and in quotes, solve the problem and justify extreme measures like martial law. And, you know, when you look at the incarceration rate in the United States, I Mean, this is just appalling that prison has become a business in this country and it is scary. There are some many laws. John Stossel did a very interesting show on this and you probably saw it. It was about how nobody can possibly know the law anymore. Edward I was brought up and my mother, I remember her saying this as I was a child. Ignorance of the law is no excuse. You're not allowed to be ignorant of the law. You have to obey it anyway. That's a pretty legitimate statement in the 1950s. Now I didn't grow up in the 50s, but I'm just saying, you know, back in the Leave it to Beaver era, the world was very simple, you know, when I look at those old TV shows. But nowadays nobody can possibly know the laws. Everybody's breaking some abstract law, especially if you're a business owner.

Yeah, well, the underlying issue there is why are they doing this? What's the motive? And I think that different groups have different motives from the political side. I don't think it's that the politicians are most of the ones that we vote for, at least who are themselves selected by others less public. The reality is that our politicians are servants to much more powerful forces. And that's not the voter, the ones who provide the campaign funding and the media attention that gets them elected and so forth, the elite groups and so forth. But anyway, the politicians that we vote for and that we see visibly, I don't think they have any for the most part. They're not conspirators. They're not trying to create this super collectivist state. They're just following the path of least resistance. The ones that. The path that feathers their nest. They're making money, they're getting prestige, they get all the benefits, you know, and they don't care. They're just totally ruthless people and well, I'm going to get my money and retire as a. As they don't care about anybody else. They're worthless individuals. They're like, this is a show. So I won't use a word that came to mind.

Right. I know though. I get it. I agree.

The kindest thing I could say is that many of these people are slime bags. That's what we call them. Used to call anyway. So that's the politician then. We've got those at the top, you know, the ones who are clustering in the Council on Foreign Relations and the real. The master planners that are creating policy. I think it's a little different with them. I think they do have an ideology. I think they're trying to create this one world government. They call it the New World Order. That's their fond word for it. I think they really do want to change society. They're human engineers. They want to regiment people to follow orders, be nice citizens and team players and don't rock the boat because they really think that's the best for society. And they know that that requires people to make decisions on behalf of the masses, smart people like themselves. And so somebody's got to do that. And they just appoint themselves. I think it's kind of an ego trip for them. And everybody's got their different reason for allowing the system to be demolished and evolve into something else. You mentioned one little group. Obviously it's clear that there's a big industry in prisons now. People are making money operating prisons. So there's their motive. On and on and on. Everybody has got their own selfish reasons and meanwhile the country goes to hell in a handbasket.

Let me take a brief pause. We'll be back in just a minute.

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Well, I want to ask you two more to cover two more areas, if we can. The first area I want to talk about is what should someone do? What are some real concrete action steps? I assume you're going to start say things like buy gold and silver. However, I'm not sure I want to just hear what your take is on that, you know, financially, what should someone do?

Sure. Well, I think we have to be clear that there is a short term view and a long term view in regard to that question. The short term, if we're just thinking of the next few years, maybe the next decade, we just try and avoid the consequences as best we can and get out of the way of this locomotive that's coming down the track. Just get off the track, you know. And so if it's the short term, obviously you want to protect your wealth. If you have any and most people have a little bit. And whatever they have, it's worth protecting. If you have anything in savings, anything in, you know, like CDs or in a savings account or even in an insurance contract, insurance policy that's going to pay off in terms of dollars. Anything that's denominated in Federal Reserve notes is very suspect. I mean, that value is going down, down, down, and will continue to do so, in my view, until it's worthless. So the smart thing to do is to get out of dollars and into something else that's not going to depreciate in value into something that takes human effort to produce and something that is fairly widely in demand even under conditions of depression. And what would that be? Well, we know historically that's gold and silver, but you can't eat gold and silver, as they say, even though I recommend that everybody use gold and silver as a storehouse of value to protect their savings from this inflationary effect. But then I would think people should look in terms of stockpiling some food. If you're in business, load up on inventories. You know, if you have enough money, buy a warehouse full of cheap white wine or something like that. Something that.

Cigarettes and vodka and bullets. Those three things.

Yes. So it's pretty simple when you think about it. But it's not easy because it takes a radical departure from the way we were raised. You know, our, our parents and our grandparents always said, save your money, put it in a savings account and then you get a job with a corporation and a nice retirement plan and everything will be fine. Well, that doesn't work anymore. But anyway, even so, you might be able to preserve your savings for short term. But you know, if the process we've been talking about continues on the long term, it won't make any difference because you're going to be in the same boat with everyone else. And in fact, when everything really gets bad, it's quite possible that it's always been in revolutionary times, at least in modern times of revolution, in terms of the people's revolution, Marxist type revolutions, those with money have been the first ones to be prosecuted and to be the victims of all the hungry and the poor and the resentful and the envious. They say, look, see that rich guy over there? He's the problem. He created all this. We were all working and starving and he was hoarding gold and silver. And look, he's driving around in a big nice car and we're hungry. Go get him. You know what happened.

Yeah, that's true. But not really. When they have the government to protect them, the inner circle, they, they control the laws and the military and the ability to inflict violence and the ability.

Oh, yes, but Jason. Yeah, but I'm not talking about the elite.

Yeah, right.

I'm talking about people like you and me.

Right, okay.

People who are just trying to, you know, get out of the way and protect themselves. Oh, you're absolutely right. The elite, the rulers of the thing, you know, of course they're, they're living behind the walls and they've got security forces all around them and helicopters and all that sort of thing.

But for the rest of us, I guess maybe one of the lessons is there is live a somewhat low key lifestyle, don't flaunt your wealth so that when the such and such hits the fan, if you will, people aren't coming to you thinking, this is someone I've got to get even with if it really gets that bad. See, I think the way this will all play out is just a slow, there's that quote, I don't know, I want say, to say it's Oliver Wendell Holmes or something, but how does the universe end? Not with a bang, but with a whimper. You know, I just think it's this, we slowly descend into this apathy and inflation and people just gradually become poorer and poorer and they sort of come to accept it when it happens gradually, it's when it's not too sudden and shocking. And that's why I think of the, of the six ways that I've identified to get out of the mess, the most likely and politically expedient is just to inflate their way out. And each generation sort of doesn't remember in some ways how good the last generation had it. I think this generation, if they think they're going to retire and be playing golf on beautiful golf courses and going on cruise vacations around the world, I think they're. There's smoking dope, you know, I mean, it's just not going to happen that way for most people. It will for some, of course, but it's just going to be this slow kind of acceptance of a lesser life. Now the one part that kind of hides it, though, other than inflation being this slow giving away of prosperity, is technology. The technology keeps getting better and you can argue. I had Bill Waddle on the show and he talked about, he did this great video, this show about how the poor have it so much better than they've ever had it. They've all got iPhones and iPads and $200 tennis shoes and cool cars sometimes and things like that. So it's sort of. I don't know, it's sort of hard to reconcile. Kind of not always sure which way it's really going. Your thoughts on that?

Well, I think that's true. There's technology is always working in the opposite direction of inflation and economic depression.

It's a deflationary force, no question.

Yeah. So that's a positive force. And I think we can expect that to continue up to a point. But when finally industry itself, you know, the producer of this technology, is beginning to struggle under the strain of this, then. Then I think that it probably won't continue. I don't really know. And I have another thought on that. A couple of thoughts, actually. One is that I know that I was shocked to find out recently that a lot of these people you see that are in the bread lines, while they're standing in the bread lines waiting for their welfare, they're on their iPhone.

They're talking on their iPhone. Yeah, the new one, the iPhone 5. Yeah.

And I found out that governments issue those to these people.

Well, the Obama phone, you mean?

Yeah, the Obama phone. Yeah. And so we're paying for that, too. That's not really a sign that, you know, that even the poor are living better. It just means that the government is plundering the productive people even more in order to distribute it to the poor. Well, that's basically what I'm talking about. Everything will come from the government. And if you're good and you follow orders and don't make waves, you'll get your iPhone. If you're not, you may not even get your breakfast, you know, so. Well, anyway, that's my view on it. And my final thought is that we're talking about something here, really, that's more important than economic welfare, economic status, or how well you live physically. We're talking about freedom itself. And I don't care how many iPhones you've got, if you're not free as a human being, you're not free to do what you want, to say what you think. Think to go where you want to go, to work at, what you want to do to handle the affairs of your own life. And what good is an iPhone, for God's sake? You know? So I think that people get too focused on the economic aspect of it, and without realizing that, this thing is drifting into a nightmare of totalitarianism.

It sure looks that way. In many, many ways. It definitely does. Well, the other question I wanted to just ask you is what do you think will ultimately happen with this, this show? I, you know, I, I'd call it really a show made for primetime TV with countdowns and so forth on the fiscal cliff. I love the way the media just hypes this stuff. You know, that. I mean, we went off the fiscal cliff years ago, but. But now it's a big deal all of a sudden. And, and, you know, you didn't hear about this before the election, oddly, at least I didn't. It was, it was right after the election we started talking about it, and it just shows how small the attention span of the American media consumer is. There's only six stories in the news, and that's all you can. That's all you can comprehend, as if nothing else is going on in the world. But what do you think they'll do? Inflate more, Raise taxes, print more money, usual.

Well, I know what they're going to do. They're going to do the same thing they've always done, and that is they're going to inflate more. Yes, of course, that's their, that's their primary tool. That's the only thing they can do instantly, just by raising their hands and voting for it. That can be done. And there's the money. Voila. So, you see, they've solved the problem. They've got the money now. Everybody's got the money. And of course, inflation just ramps up a little bit more. So in other words, they'll kick the can down the road a little bit more, or what's left of the can. And yes, they will raise taxes, and then probably, in my view, they'll cut tax later and they'll say, wow, you see, we beat this one.

It's back and forth, back and forth, it's theater. But basically the trend will be in the same direction. It has always been more and more money created out of nothing. More and more government control and power over our lives and less and less freedom.

And the people who get burned are all the people that have been doing the quote, unquote right thing for so many years, saving money. Their savings is under attack. You own stocks, the value of your portfolio is under attack. Bonds, even worse, very much under attack. And it's just so unfair that the people doing the right thing, you know, living a prudent life, not spending all of their money, saving it for the future, taking care of themselves, being responsible, those are the ones getting burned the most. And everybody else seems to get a free handout.

That's right. It's not fair because it's not designed to be fair. It's designed to be totally unfair. It's designed to take money from the average person and redistribute it to not the poor, but to the wealthy.

To the wealthy insiders, the banksters.

Yes, yes. That's what I mean by the. The politically favored class. Not the people who have made a lot of money by working hard and saving and doing good, you know, making right decisions and so forth. That's not what I'm talking. I'm talking about the politically favored wealthy.

It's just really, really amazing what goes on in our world. It's amazing we've come to this. Do you think the Federal Reserve will go on forever and this will. It just. Will they ever be knocked out of power? I mean, you know, you can't talk about auditing the Fed, God forbid. You can't even talk about auditing the gold in Fort Knox. It's just these things are like verboten in our society. It's amazing. They so obviously need to be discussed and exposed.

Well, the trend is happening right now. There's more awareness of the Federal Reserve than there ever has been. And that momentum is accelerating. I'm pretty happy to see that. But still, at the present time, the forces that are beholden to the Fed, which are all the money forces, are still firmly in control. They still firmly control Congress and the Senate and all the political, the coercive parts of society, they still control. And so I think what's going to happen while this movement of awareness and opposition is growing and I. Let me interrupt for a moment. I think eventually we, and I say we, those of us who understand what's going on and really want to see an end to this nonsense, I think we are going to win. But that's not going to be next year. It's going to be probably another, maybe a generation away. But it's moving and so that's encouraging. But in the meantime. The meantime is that these guys are firmly in the saddle and the Federal Reserve may go away, but not in essence. It may change its name, in other words. I think what they're trying to do is push us into a new monetary system, a new currency, possibly in North America. They're trying to create something similar to the euro in Europe or the Amero. Yeah, the Amero, yes. Which would be the currency common to the United States, Canada and Mexico. And. But that'll be basically no different from what we have. It'll just be regional rather than national. It'll still be fiat money. Still be controlled by the same international banks, the same elite. Nothing really changes except the appearance. And then ultimately, they want to merge the Amaro and the euro and the Pacific currencies and the Middle Eastern currencies, merge them all into one international single currency, possibly called the bancor, and then that'll be the end of the road as far as they're concerned, because that's what they want.

Right. Do you know. Do you know what I call a global fiat currency? I have a name for it. I call it. I call it Checkmate.

We're done.

If that happens, they have literally control over everybody on the planet, and they can determine the value of your money, and they can determine what you can afford to buy and what you can't afford to buy, and that is world domination. Checkmate, a global fiat currency.

It's a very good name for it. Yes.

It's a scary thought.

Well, that's where they want to go, and they've been very clear about that for at least two decades. You know, they've been willing. In fact, this was clear. Clear right after World War II. They, you know, Bretton woods, they discussed this sort of thing. They knew what they wanted to create, and they've not, not deviated one bit in all those years.

Yeah, yeah, that's. They're moving toward the business plan, but they've got so many problems with the Euro that, I don't know, I think that's may put their plans on hold for a while.

Yeah, yeah.

It says it's falling apart.

Gonna be rough. Well, there's gonna be a lot of civil unrest. And that's what I'm saying, is that when this thing starts, starts to unravel, it always leads to a series of events that ends up with total state control. And one of the intervening stages is civil unrest. When there are riots in the streets and buildings burning, people will say, oh, please, let's have martial law. Please, let's have it.

Yeah, help save me. Save me from myself, my neighbors. Yeah, yeah.

That's just part of the process. So that's where we're headed. But fortunately, I really believe that ultimately we're going to turn this around and return to sound banking. That is, if people like you and me and we all do our job and continue to inform our fellow citizens, then it can be turned around.

Well, maybe that's a good place to close then, because, you know, we've talked about some pretty negative things on this interview today. I mean, are you ultimately an optimist? Do you think it can be Turned around.

Oh, I know it will be. And perhaps that is a good place to end. The only negative part is that it's not going to happen real soon. You know, it's taken 100 years to convert this country from a real republic into this democratic dictatorship that it is now. And so you can't reverse that process in, you know, four years or the next election. It might take 100 years, but I think it can be done in less time than that. But it's not going to happen real quickly. But the fact that we are laying the foundation right now, the awareness, the understanding, a blueprint for a better way we're creating all of that now, that will ultimately prevail. And that's a very encouraging thought to me. Even though I. No doubt I will not be alive to see it, I can't. In my mind's eye right now, I can see it unfolding. And I know that it's something that I'm helping to create. And I. I take a great deal of pleasure in that thought.

Yeah, I do, too. So, you know, thank you for making everybody so aware. I mean, your book has been such a hot seller. And I remember when someone recommended it to me about, I don't know, 13 years ago maybe. And it's just a perennially great, great book. The Creature from Jekyll Island. And before we started recording this show today, we discussed the possibility of having you come and speak at one of our events. Your calendar was booked during the time of our Meet the Masters event, which is coming up in Southern California. But, Mr. Griffin, we would love to have you speak at an upcoming event of ours. So we will definitely make that happen in the future. And when your schedule works and our schedule works, we'll get something planned.

Okay, thank you very much. I appreciate that.

Yeah. And give out your website before we go.

Well, yes, we have a couple of websites. We have a commercial website where we sell things. We have books and recordings, and that's easy to remember. It's called the reality zone. It's realityzone.com we have about a hundred different items there. And.

Website is where we talk about the ideological and philosophical base of the problem, and we talk a lot about solutions there and how to fix this and what it will take. And that's where I hope people will take an interest. Freedom Force international.org and that's a.org freedomforceinternational.org well, good. That's. That's where the action hits. That's where the rubber hits the road. If we want to change anything, which I'm sure most of your listeners do, that's where they should come and they'll find the blueprint there. And, and I think, I think most people will be very excited at the, at the thinking that went into how we're going to turn this around.

Fantastic. Well, J. Edward Griffin, thank you for joining us today and we really appreciate having you on the show and look forward to having you back in the future.

Thank you, Jason. I'm looking forward to that.

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