Great podcast on LewRockwell.com.
The Great Default or Hyperinflation?
What happens when the money stops? When the checks bounce? We don’t know because we haven’t seen this before.
Herb Stein, Stein’s Law is true. If something can’t go on it has a tendency to stop.
Much, I believe, of the politics for the next 20 to 25 years of the West is going to be centered on the issue of who takes the hit. And the jockeying, the political jockeying that will go on, and the guilt manipulation that will be attempted, is going to center around the issue of who gets the old maid, who does not get paid off.
Now if the central banks go to hyperinflation, everybody is destroyed. Including the banks. They distribute the default without respect to race color or creed.
My personal opinion is, at some point, the major central banks are going to try to stop it, take what they hope is a temporary recession, which probably won’t be so temporary, and they will try to get the thing started up again. But I don’t see the West being destroyed in complete hyperinflation because there is no cure. Because on the other side they have to go back to a new currency anyway, so the big losers in that case are the banks because they get the debts paid off in worthless money and they are decapitalized by hyperinflation.
So my opinion is they will try to find a way to not go to hyperinflation. But then it has to be one form or another of default.
Rothbard was right in his whole career,in that he kept saying, “there is no neutral tax. there is no honest government. You cannot trust the government’s money system. At some point, those who put their trust in it are going to suffer enormous consequences. And decade after decade, as we get tighter into this lobster trap, of Keynesian welfare state fiat money economy, it becomes obvious to more and more people that the system cannot go on.
On Ron Paul:
And that, I think, is the great advantage of what we have seen with Ron Paul’s candidacy, in that he has really clearly gottent his message out to a significant number of people who have never heard this before. He has made Bernanke and the Federal Reserve a political matter. And that’s never happened…And I don’t think that Bernanke or any of his successors will ever be able to get that issue out of the political dialogue. Because every crisis, a significant number of people are going to say, “its the Fed”.
The American entrepreneurial spirit vs. violence:
I think 8 words are for the Americans: the first four words are “Live and let live”, and the second four are “Let’s make a deal”. That historically has kept the American from revolutionary violence. Because the average American figures that if he works hard enough, or if he knows somebody, or if he at least gets lucky, he can make a deal, and he can pull himself up, if not by the bootstraps, at least by community support.
There hasn’t been the radical class rivaly in the United States. The free market has enabled talented people to climb up and be highly successful.
My general hope is that the people will take it out on Congress instead of eachother. Political protest. Even with the Occupy Wallstreet people, there was not violence. They weren’t taking to the streets. I think America’s commitment to the free market, and the vision of the free market, that says I think I can make something of myself…the non-Marxist, non-Communist history of this country is, I would call a kind of escape valve. And so I am hopeful it will not turn to violence the way it has in Europe. I could be wrong. And there might be certain cities where that is not true. But I think generally Americans tend not to take to the streets, they take to politics, or try to beat the system… And I think that’s the right attitude to take.