The only thing nearly as enlightening as reading David Collum’s epic Year In Review is listening to him and Chris Martenson riff about its highlights.
Strap in, grab some eggnog, and listen to this year’s recap:
We are so close to a financial crisis now that we may be way, way past the fail-safe.
We’ve got all these unfunded liabilities that we have to pay or face the consequences of — and they are fantastically enormous.
The pensions are all underfunded — at the top of a financial asset price bubble, mind you.
Social Security is a disaster. And we’re promising so much medical help for everyone that is now profoundly expensive.
There are so many things out there that are unmoored. The Fed is unmoored. The digital world is taking us to this digital gulag, in my opinion — I don’t think I’m being hyperbolic.
I think we’re heading for very, very bad places.
Click the play button below to listen to Chris’ interview with David Collum (84m:24s).
Chris Martenson: Dave Collum, thank you so much for being back with us and all our listeners here today.
Dave Collum: Hey, it's great to be here. This is a tradition I look forward to immensely.
Chris Martenson: Hey, me too. I'm just wondering, based on something you wrote in this year's review, do we need to start with a trigger warning here for any listeners? Maybe remind them that their computer has an off button if they choose?
Dave Collum: Well, you know, I can keep it clean on a podcast. So, it's up to them. I mean, if you take me in a direction that I hammer someone, as I actually said in the review, I said, you know, this is about humor and--humor and sarcasm someone has got to get hurt it might be your turn.
Chris Martenson: Well, you know, what caught me right in part one is cause this come sin two parts of course, was the Limerick King(PH) we follow each other on Twitter, really like the guy. He started with, there was a mad chemist named Dave. His year in review is the rave. With Epstein and Powell and repos most foul his comments are sure to be grave. That's a good--
Dave Collum: I solicited that. I tell limerick king what I'm going to talk about and then I said just whip out a limerick for me. Most years I have Jeff Mackey of CNBC fame rip out some art but his life is remarkably full so I actually had my wife do that, so I tend to open with a limerick and a Mackey original but a Candacy Cornell original this time.
Chris Martenson: Fantastic. You know, as I was reading through this it really feels like this year in review has a very different flavor from the prior ones and I'm wondering if you would be willing to talk about that.
Dave Collum: Yeah, you know, it's when I write this thing it's, I go real deep lizard brain on this, and as I actually spend more time at the opening describing where it comes from and how I write it. I always give an autobiography. There has always been about the author part but I go deeper. I go back to when I was 12 years old. It's only a page and you know it--it is funny. And, but I kind of explain myself in part because of the feel that it was different. So, this year I wrote it and I wrote it in order of importance. So, I picked the section that I thought was most important when I had to write then I picked the second one and the third one.
When I got to the end, and you know, you can't write a year in review in May, right? So, I have to write it all at once and I bang out, this one is 147 pages, right? And so this is kind of writing at the rate of William and Buckley at this point and I got to the end and I looked at it and I go holy cow, the entire thing is about social change. And one of the things that is omitted, and I don't even know if people will be disappointed or happy, there is not much finance actually.
One of the reasons is it feels like we are at the top of something and it feels like we are on the cusp of something. And even if we're not, it is just getting crazier and to document it--to document getting crazier something didn't make sense to me this year. There was stupid IPOs and dumb debt and all that stuff but that has been getting crazier and crazier. At some point you have to say look, this is the pregame. I'm not going to pay attention until the game starts. And so I've got reams of notes and I sorted them and I said look I'm not going to write about this stuff this year. Or I just didn't get to it as my priority.
I don't write about Trump because everyone on the planet is writing about Trump and impeachment and some stuff like that. And so--so I went for the things that I spent a lot of time. So the thing that absolutely passed like a kidney stone for me was literally 32 pages on climate change. The second part I wrote is on Epstein which I think is far more profound than people are giving it credit. And then I go back to share buyback because people are still missing them. That's kind of finance. But my conclusion goes very dark and--and part of it is unsupported in the sense that I go dark in ways you go you didn't write about that. I go yeah, but it's on the cutting room floor and it's bugging the crap out of me. And so, and I think we are heading for a strange future here. And so, as you mentioned in our pregame discussion it is kind of a fourth turning field for me.
Chris Martenson: And this is really what I want to focus on because this has been well central in my thoughts in part as well; listen, bubbles always get crazy towards the end, right? You know, and there are those I have this bad habit of detecting bubbles really early and missing out on a lot of the fun and because I am more of a fundamentalist and it always amazes me how much longer they can go on than seems normal, right? So, the housing bubble I was sure very painfully housing stocks in 2007; it took a while before they turned around and mortgage insurers and all that.
But even here, this is--this is like the third bubble in a row but it is more extreme; it is everywhere and they are doing whatever it takes to keep it going and all of that--and despite all of their best efforts in printing all of these happy, happy stock prices with the help of some Trump tweets, always well timed--you get the sense that there's always something really dark lurking here, as well, and that people are as unhappy and as anxious and as fearful and as polarized as they have ever been.
And so, that to me, is the potential energy in a story like two great static electricity sources, one positive and one negative just sort of building. Hey, look, how great everything is. And things aren't great. Do you feel that I mean you seem to be writing about that gap and I'm wondering why you think that is there at all?
Dave Collum: Well, God, there are so many layers to an onion there. I happened to just this morning catch a quick video of Adam Schiff getting yelled at by guys in the audience being called a liar and stuff.
Chris Martenson: Yeah, that was great.
Dave Collum: Right. It and these were not you know hipsters from Harvard, right? These were salt of the earth type guys, to put it bluntly--but that's a tactic that used to be, let's say, used to be like a year ago or even six months ago was a tactic in my opinion, I'm going to upset some listeners, was a tactic of the left. Right? Disrupt the speaker, interrupt people at dinner, stuff like that. I don't think the right was doing that. And I've been watching for it. I'm sure other people see it and I don't but now you see that. And I, we don't want to see that either at some level, right? I really hate Schiff--I really hate Schiff but when that stuff starts happening, that's a bad sign, even if he's deserving. Right? That's a very bad sign.
Chris Martenson: And what is that a sign of, do you think?
Dave Collum: Well, it's a sign that people are angry and it's a sign that well, it's a sign that politics has gotten completely toxic. I--I was what I call Trump tolerant, so I sort of with a shaky hand pulled the ever for the Donald. In part, because his platform was don't bomb the hell out of other countries. It's why I support Tulsi Gabbard, don't bomb the hell out of other countries. And Trump has kind of been wavering on that. I think he's battling, you know, the Deep State to try not to bomb other countries too much that sort of thing.
So, I think in some sense he is achieving what he set out to do in that he is minimizing it. But there is some bad stuff, right? You know, you watch the war in Yemen, it's just a mess. The further along I got, the more I see him--this is just going to freak out some of your listeners, but I see him as kind of this odd hero figure battling some very bad people and he--and he's such an unlikely package. He is like Colombo is to law enforcement or something. I don't view Trump as an evil person. He has got his idiosyncrasies. He has got his flaws. He has got everything that, I understand why people hate him. But the people he is battling I really find to be much more dangerous.
Chris Martenson: Well, let's--I think the title--
Dave Collum: I don't write about this, ironically. I don't write about this because it's a pandemonium out there.
Chris Martenson: I know, and we're really deep into the belief territory you can tell because the emotions are so high and of course facts and opinions don't really play well in that landscape. That of course, I think has been whipped up by the media, which is doing I think when I look at it from a psy op psych 101 like what they are doing to me seems really obviously designed to fracture and polarize people. So, what's interesting is you see the people show up in their pink hats and you see ANTIFA out there like you know, beating people up on the street; it is sort of the--the retail level.
But you know what I haven't seen, Dave, not once? I haven't seen one organized protest against healthcare costs and the fact that my premiums went up 22% this year. And the healthcare CEOs are raking in 10, 20, 30, 40, 50, 60, 70 million dollars each every year just at the CEO the whole C suite. Who knows what the numbers are, right? It's obscene, it's perverse. If the media chose I'm sure they could whip up some righteous indignation over that travesty and racket but they don’t.
And it feels--it feels rather coordinated to me on that front.
Dave Collum: Yeah, well, I view the media somewhere around the edge of treasonous in many, many ways. I think that they are--I think that they are part of an insidious--I don't want people lying to me from either side, right? There is very few journalists just seem to try to get it right. I have become a super Tucker Carlson fan. He again, is a flawed character in many ways. But I have seen him go after sacred cows on both teams. And I used to hate him so--so somehow people think this is just some--some doctrine that I'm following, you know, some right wing thing that just follows me everywhere I go. I hated Carlson before. So, it was a real conversion for me.
But I think the guy is amazing in many ways. And so, he is one of here few guys, you can't predict which way he is going to go until he goes there and I like that. Then there seems like you know, the Fed is so unmoored. There are so many things out there that are unmoored. The digital world is taking us to this digital gulag in my opinion. I don't think I'm being hyperbolic. I think we're heading for very, very bad places.
Chris Martenson: And, it's not any one thing, right? It's too much debt and ridiculous Fed policies, as well, lurking away on the other side is 80% of the insects are going and we don't know what's happening to all the fish in the ocean but they seem to be getting you know, destroyed and on and on and on. So, I have this theory that humans as an organism; we are evolutionary designed to be reactive and sensitive to our environments which makes a lot of sense particularly for an adaptive species like ours; you need to know when to go to the next valley if you sort of played this one out. And we don't have--there is nowhere to go. There's no next valley and we are sort of playing this one out and we don't really have a plan for that except more, more, more of the same which has gotten us to where we are. I think that's at least part of the anxiety people are feeling is this sense that maybe we are not all going to go to Mars, after all.
Dave Collum: Or none of us. That also applies to the American Empire. A lot of people somehow think American exceptionalism which by the way was a Stalin term, American exceptionalism we build an empire but we had what at the time was unlimited capacity to move west. And so, we had strong immigration programs cause we could populate any amount of territory and not run out and now we have hit California, right? Now you look at California; it is like a tsunami of craziness building up in California everyone is piled up out there. They are doing insane stuff in California in my opinion, politically and socially and we are now at the boundary of our expansion.
Now, again we still have a lot of acreage per capita for a lot of countries and stuff like that but we are also the system is rotting, right? Socialism has totally invaded our thinking. We got an entire generation of younger adults who think socialism is fine. I understand where it came from but I also understand it is a system that has failed without fail, right? Has failed every time.
Chris Martenson: Let me put my view in, which is, I think, we were already running socialism it's just socialism for the .1% that's all.
Dave Collum: So the 2020 elections is going to be: now it's my turn, right? I wrote a lot about modern monetary theory because it is going to be about: now you are going to print money for us; and I understand their anxiety I have written hostilely about bankers and central bankers and corruption but the problem is, I go, but that is going to cause more trouble. That's the problem.
Chris Martenson: I’m sympathetic. I agree that it's going to cause trouble, but I'm sympathetic to it because if you are a young person you say gosh, you have been printing out money and handing it out to Jamie Diamond: why not us? Just put the fire hose this way instead of that way. It's our turn. I get it, right? It's going to be very harsh. Yeah.
Dave Collum: It will sell real well. It will sell brilliantly. It will sell brilliantly because there is truth, right? If Elizabeth Warren by the way, had stayed on let's get the bankers she would be the front runner, right? But so --
Chris Martenson: No, I agree with that. Before we go too much further I got to return to the title -- which is this year's year in review is Epstein didn't Kill Himself which I am so enjoying the memes. So this really broke through. I think this is a seminole thing because it broke through into the larger consciousness. So, I go to all these social media sites like Reddit and there are usually highly allergic in a very corporatized way to conspiracy theories. So, if you go to like the subreddit for news or world news they just poopoo and immediately shut down anything that smells like you know, mentioning that you know kerosene can't melt steel or something like that. But this one broke through.
You now find this meme and all these clever ways that people are spelling out Epstein didn't kill himself in public and all of that; it really broke through because it was just completely obvious that he didn't kill himself, right?
Dave Collum: Right. Totally. Impossible almost, right? Round it to the nearest integer, zero.
Chris Martenson: So my PhD to do a little background on me is in pathology so I do autopsies. We do some stuff. We do some forensic pathology. I can tell you that to break those three hyoid bones I went out and looked online looked at all of the case--let's put it this way--if the police showed up and your wife was found with three broken bones in her neck, you're going to jail for strangulation cause 99.9% chance that is what happened. It is just such a signature injury for strangulation, non a slump hanging off of a bed post. Just completely obvious.
Dave Collum: And there is no bedpost in that cell. There--there is nothing to hang yourself from in that cell. I read all about the various aspects of those, you know safety cells, and there's no posts, no rails, nothing. Your sheets tear, your clothes tear, you cannot kill yourself in one of those cells, there's no doorknob there is no nothing.
Chris Martenson: So, take us through it.
Dave Collum: Let me--so everything is wrong with the Epstein story, right? When I write about it, it is the second topic I wrote about in the hierarchical Collum way and there is the obvious stuff that I think most people know--there are a bunch of pervs. Some people know that Epstein was hired by Bill Barr's father, Bill Barr's father has intelligence connections, right? But people don't know that. Epstein supposedly went to Wall Street and with no bachelor's degree made a billion dollars. You go yea, of course pretty easy to do, right? No one on Wall Street knows him. No one knew him. No one could say there is Epstein wasn't like Madoff. They knew Madoff. But where did Epstein get a billion dollars?
Well, turned out he had one client. Lesley Wexner and Wexner has all these intelligence ties. So, as you and I know there is this woman called Whitney Webb who kind of pulled it all together where it turns out Epstein was has been an asset for intelligence possible multiple intelligence agencies for his entire adult life. There is only Maxwell who I tastelessly nicknamed Jizz, he, her father was Robert Maxwell, one of the most famous Israeli spies of all time. Right? And he fell off a yacht and died right in the middle of something that wasn't very tasteful.
So, it turns out that Webb does this great job of connecting Epstein with this whole idea of the honey trap, the whole idea of compromising politicians and compromising people in power. But then what you do and this is where Michael Krieger said something to me that made sense is that you don't blackmail them per se you just give them more power and so that you compromise them but then you pull them into your fold and you say by the way,we are going to elevate you, we are going to help you here, we are going to help you there etcetera, etcetera. Where this all connects is it turns out the Massad has huge number of former Massad agents populating Silicon Valley.
It appears to me that Israel's remarkable tech industry it is well known that Israel has a great tech industry. Probably sort of 100% intelligence, probably 100% you know, national security and--and so there are subroutines being wedged into various programs stuff like that but Barack is amazingly prominent in Silicon Valley. So, this whole story is this whole story of this web of international intrigue, after Epstein gets convicted of pedophilia hi--his exceedingly prominent associates like Prince Andrew and Barbara Walters and Stephanopoulos and all these people, Charlie Rose, they don't disown him. Right? I mean if you were a public figure and Epstein got convicted of pedophilia you are saying to him hey, Jeff sorry I can't be seen with you now you're toxic. And he was not.
And they sealed up all the cases, how do you do that? So every--these stories where every single shred make no sense. Now, I am going to disagree with one thing that you said and that is and I get the--I don't think he's dead. I think he's in witness protection. Because I don't think you can kill him. It's real simple, right? If he's been collecting dirt on powerful people and not getting assassinated himself, which means therefore he wasn't threatening him with it, right? You get killed if you are threatening people with it. He is sitting in a cell and he is going to say look, get me out of here alive or I release the hounds. That is how Daniels Ellsberg released the pentagon papers. That's what you do. It's called a suicide switch.
And the guy has been doing this for 40 years knows what a suicide switch his. So, if you wanted to off Epstein you couldn’t do it because you trigger a wave of hits flying across the globe. So, you have to protect him. In fact the most dangerous things to them would be if Epstein got whacked by someone who wanted that release to occur. That would be the risky thing. So, I think I staged the whole thing.
The hyoid bone just keeps us chattering which they are happy to say someone offed him, right? We throw it on the Clinton body count and laugh about it, right? That's nothing. They don't care about the--they don't are about offing Epstein in a cell. They care about revealing this massive web of connectivity that goes to the church, goes to the beltways, goes to Silicon Valley, goes to Israel, goes to everywhere. This is a web of people in power and influence and it's massive. I think it's the biggest scandal in history and they are furiously trying to put it away.
Even Prince Andrew's interview--even Prince Andrew's interview makes no sense.
Chris Martenson: That as such a disaster--I don't sweat. What was that? I don't even understand what was--
Dave Collum: I think he had to take one for the team but I don't know how that fits into the plot. There is no logic in it. So, until you can see logic in doing that interview, you don't understand.
Chris Martenson: This is how I know just how dirty this whole thing is--it wasn't until I think two months after he had allegedly killed himself or a month after, the FBI finally raided his island. Which was just sitting there for the whole world to know about. And as far as I know they still haven't gone to his New Mexico ranch. In what world where you have child porn all over the place and by the way, thank you media for making me so mad at you again because the media was always with this underaged women thing. Yeah, we have another name for that child rape.
Dave Collum: Kids.
Chris Martenson: Kids. Underage women. God, NPR did that, New York Times did that.
Dave Collum: An adult petting zoo is what I call it.
Chris Martenson: It's awful but the investigators--
Dave Collum: I love this line I put this line in -- I have to make fun of it I because it's so sad. But I have the--the plane, the plane and then the Ricardo Montalban guy responded he said yes, unshackle the girls. And then there's stuff like how do you seal up a civil case in which the women in the civil case are saying this guy raped me?
Now, I know for a fact that they--the judge in that case is by law required to pass that to the authorities and they didn't. They sealed it and it was the Secretary of--what was the cabinet Secretary he was a cabinet member with Trump? Secretary of Education-it wasn't education something like that though. Yeah, labor. And then, he re--he retires he says okay I'm out of here. He admitted he sealed the case because Epstein was intelligence. And where is this Gizzel Maxwell, right? Why isn’t she being interrogated? Why isn't Gerschwitz under the--the hot lamp? Cause one of the women in the transcripts said Gerschwitz she put right at Gerschwitz.
Chris Martenson: Yeah or Bill Clinton or 100 other people who should all--if this was a year in my pay grade down here you know the FBI would be having us hauled up and put down under oath and taking statements, right?
Dave Collum: They're never going to go. They're never going to do it.
Chris Martenson: Yeah. And that's why I think this is of such importance because it now broke into the public awareness to the point where people are getting oh my gosh there is two sets of rules in play here, obviously. And of course we saw you know we always know that justice is a two tiered system. It is now becoming more obvious and it is really starting to grate on people more and more, right.
Dave Collum: Let me point out one thing and I am not going to divulge I don't know if you got that part yet or not but the question that is well then who is the dead guy in the gurney? I am going to make your readers read it. The dead guy on the gurney there is a theory of who he is that is so funny you will wet yourself when you read it.
Chris Martenson: All right, I'm going to go hunt that down as soon as we are done here because I am super interested in that. I did see the pictures of him allegedly being wheeled out on a gurney and somehow the nose and the ears don't quite line up. All I can think is--
Dave Collum: There is a guy whose nose and ears do line up and you are just going to wet yourself when you see who that is and he died three weeks earlier--he died three weeks earlier--cause unknown.
Chris Martenson: Oh, okay. Well--
Dave Collum: You can search it.
Chris Martenson: I have to go through this crazy sort of thing like oh maybe he died and you know, fell on his face and his nose and his ears got smooshed. I couldn’t make sense of it. They don't line up with him if that is a real picture anyway. So all right well speaking of this two tiered thing you were writing on gold manipulation you wrote that "two employees were put on leave while Jaime Diamond nothing ever happens. A prosecutor closed a five year silver manipulation case abruptly. Five days later he was in private practice defending the very same JPM metals manipulators."
This is just, it is just so blatantly in your face that it is a corrupt system at this point in time and so you spent time sort of chronicling all of it, but it is almost too much to keep up with at this point.
Dave Collum: That again with finance I think I am going to return to the financial topics when stuff starts happening and when the system starts breaking again, then it is going to be pandemonium. Right now, all I can do is write about things that just look wrong and I can write about things that look incredibly risky, and I can write about how a world record awfulness in so many ways. But the average person looks at their 401k and says look, I am up 20% this year. I say go read last year's. It has gotten worse. That's it.
Chris Martenson: Yeah. Yeah. It is just getting worse and worse and, of course, some of that is just sort of bubble dynamics and you know I can't figure out when the plug is going to get pulled on all this. I for one think the fed is just freaking out. I would like to turn now to the whole idea of what is going on with this repo madness. And I think the best explanation I have heard so far just came out recently from Martin Armstrong and he said look, nobody actually has a clue what is going on here right now we just know something's not quite right. All you need to know when the repo market is blowing out is that the four big banks in control of most of it aren't interested I lending to other parties even overnight. That means trust is broken. We don't know what it is in the cheap seats, yet. To me, the Fed is obviously panicking and either lying about it or being ignorant about it. Either way, I don't feel comfortable with any of that stuff. What do you think is going on there?
Dave Collum: Well, I wrote a lot about it I listed all the theories that I have been able to collect over the year and I put out an APB on Twitter and I got a lot of highly authoritative answers that vary all the way from Zero Hedge conspiracy theory to Hillary to Donald to Jaime Diamond shaking down Powell. There is just a gazillion things. So the one that I opened with and then had everyone tell me I was an idiot is that the banking system is an emergent system which means it basically has a mind of its own and -- and once in a while it just goes crazy, right -- it is like when the fish all of a sudden wash up on shore by the hundreds of thousands. No one knows why that happens, right?
And so, every once in a whole the banking system just has a coronary and I think in this case it's not just the banking system it's the shadow banking system. I think you're right. I think Powell is terrified and if he's not, then he really is an idiot but I am suspecting he is terrified. And they keep trying to normalize truly extraordinary behavior, and so this smacks of a tremor, right? This smacks of sort of San Andreas fault stuff and they are trying to furiously put it away. They are trying to find a way to calm it down. But if it is meta stable it is just a matter of time, right? And they say the banking system is stable. They say the banking system is in much better shape because of Dodd Frank blah, blah, blah.
I go okay, right now 39% couldn't have gone like 39% of corporate debt is junk. Now, I'm not sure I'm saying it is rated junk, it is garbage and you got the leverage. But 39% of corporate debt is junk and when that junk goes bidless how is the banking system going to be doing?
Chris Martenson: Well, there's that and there is all the cove light and leverage loans which don't give them a lot of protections.
Dave Collum: It's all crap I mean it's super crap. It's super garbage.
Chris Martenson: Yes and we had the PIS last year and say hey, not for nothing, maybe you should pay attention but one in eight companies is a zombie, meaning it can't even--their operational cash flows don't even cover the interest payments so they have to keep tapping that endless credit market to keep the bid going. So, that is what the Fed is trying to do here to make sure the credit markets are always amply supplied but the longer they do that the more the junk piles up. So, we haven't had a brush fire and I think we are facing an Australian crown fire at this point if anything does get started and they don't want anything to get started. So, everything has to keep going up. It's just such a ridiculous system.
Dave Collum: Why do you think the BIS is so honest? The BIS seems to be the only source of non-Pinocchio like pronouncements. It's a fascinating question cause they are kind of the bank of banks, right? They are the kind of the top of the food chain they should be in subsets that are lords right? But they come out and say stuff you go, whoa--who that should people and it doesn’t.
Chris Martenson: I agree. Some of the best papers I have read came out of the BIS including you know one that said talked about openly the--the ways in which central bank scan hide their tracks so that they can more effectively manipulate currencies cause blah, blah, blah they use proxy agents. Like they make the whole thing out--these are the things we have studied that work well. And so, I'm thinking if the central banks a decade ago were using proxy agents such as JP Morgan at all to go out and manipulate currency markets, what other markets would you think are off limits to central banks who decide that they as a small unelected cabal of people know best what the price of stocks ought to be, gold, currencies, I mean everything. I think they feel they are responsible for setting the prices of everything without studying history and discovering that price setting is not usually an optimal way to go.
Dave Collum: Right. It's the way the Soviets tried; the Soviets set prices right? And--and the Fed things they are in charge of setting prices. The Soviets actually were trying to cheat because what they were doing was setting the prices watching U.S. prices and saying okay we'll just covertly just set our potato rates at the same as the US--and therefore we can kind of fake it. And not recognizing that well maybe potatoes in Russia aren't the same price, right? Maybe the supply and demand curve is different. So, it didn't work. Now, you have the central bank they think they are in charge of climate change. They think they are in charge of, they think they are in charge of Brexit. Then you got that wacky, wacky, wacky Bill Dudley memo that he wrote; the former head of the New York Fed he writes an op ed in the New York Times saying to the extent the President is a risk to the economy it's the Fed's jurisdiction to worry about who is president, right? That was extraordinary.
And then he in the, Wall Street Journal came out, wrote this op ed and said holy cow. This guy is trying to tell us that the Fed is politically independent and then Dudley writes that--the Wall Street Journal was absolutely unambiguous in their shock that Dudley would write that. And then Dudley backed up and said, this is not about the deep state. This is my opinion. There is no cabal. And I am going, dude thou doth protest too much, right? So the question is--why did he do it. Why did he do it? Why did Mark Carney talk about the dollar losing reserve currency status? Why did Dudley talk about--about, you know, overthrowing the President? What is going on?
It's not like Dudley muttered it on stage like Japo did. Dudley edited an op ed.
Chris Martenson: Yeah, which was vetted I'm sure up and down the lines.
Dave Collum: I think the question is you say you are -- the Fed's job is to make sure we have the right President? What a stunning op ed from a former New York Fed president. 2018 that's a doddering old fool he might be an old fool but 2018 is when he stepped down. This is fresh stuff.
Chris Martenson: No, it's clear the Fed is wildly political. Obviously, and they have you know, whatever that nose of the camel went under the proverbial tent the Fed has been getting more and more and more active in interventionist and I get the sense that they feel that they are in charge of everything. They are responsible for setting all prices and that they know what they should be higher, usually. And, they have been absolutely immune. So, I'm on this one man campaign on Twitter to try and bash the Fed. I have quite a few fellow travelers on it.
Dave Collum: There is at least two, then.
Chris Martenson: At least two, right? But here is what I mean why does not one journalist say Mr. Powell, your policies are directly fostering the wealth gap. Right now, five people have as much wealth as half the world. We are wondering, where is the line? Where do you stop? Is it when those five people own 100% of everything. No, how can they? You are not allowed to deny somebody--that is like Ted Bundy denying what he was up to. You can't. You know, the evidence is there plain as day. You print money and you shovel it into the markets and it goes you might as well wire it directly into the .1% bank accounts, right? You might as well. So, he is responsible for that and why does nobody ask him the most simple of questions which is you are playing with social fire here. You are burning people. You are a redistributive organization. You don't create wealth but you do print up purchasing power, which means it came from somewhere where did it come from? Oh, everybody else. And you hand it to who? These guys.
Dave Collum: Here is what would happen--you know what would happen. First of all, he would never expose himself to a real interrogation, right? He would orchestrate it. If he was ever, for example, giving a speech somewhere and they had a you know, let's say questions which I don't think you would ever do. But if someone said that. He would then give an answer that was some canned answer like you know, we got the lowest unemployment, the little guy has been helped by Fed policy. You know what they say. Right? And then you would not get the mic back. And therefore, that would be the final word. That's the problem. You need a scenario where he says it and then you come back you say no, you are full of crap for these three reasons please clarify and he won't expose himself to that.
Chris Martenson: And, if you were a journalist and you asked that question of course you would never be invited back you would be out. You would be out.
Dave Collum: Exactly. Access journalism is the problem.
Chris Martenson: Yeah. Remember it was Janet Yellen who canned, I think it was Pedro Decosta? Just canned him because he dared to ask a question about some insider junk that was not cool where an outside firm was getting early intelligence form the Fed and he tried to corner Janet Yellen with that. She just turned away from being a kind, grandmotherly persona into an iron lady all of a sudden. That was it. He was it. He was out. Done.
Dave Collum: So, I ran a Free Pedro Twitter campaign. I was so mad at that. And I just all day long just venomous tweets Free Pedro blah, blah, blah you skanks. I just was so mad and then at night I got an email from Pedro he said you know, that was really meaningful to me. I appreciate you doing that. But he is now not asking Fed questions. He lost his job. He quit, I think, you got--so, what happened was after that was that was--was the Free Pedro campaign was when the next Fed meeting occurred the head of the Wall Street Journal. The head of the Wall Street Journal walked into Pedro's office said, you're not going. Then Pedro said why? They said, you're not going. So, the--the Wall Street Journal got told DeCostas is not allowed. That is why I did the Free Pedro.
He then set into motion an email I think that day to quit. I think he is at the Peters Institute or something now, but he was so mad and in any event yeah. And I mean he is not even the most militant. But--but you can't do that, right? You are now challenging the elite power structure. You are challenging the people; the one thing they all agree they want to be powerful, but they still want to retain their power, they want to be elite.
By the way, here is a thought on the retaining elite I do not want to talk about impeachment with the exception of one thing; to me the smoking gun on the impeachment trial was Sondland.
Chris Martenson: Was what?
Dave Collum: Sondland. Sondland in the morning gave a speech that basically said Trump and all his buddies are guilty as guilty can be. If you listen to that speech I heard it on the--I heard it. I was driving somewhere I was on a trip or something and I heard it and I go wow that guy just nailed Trump. And then in the afternoon on cross examination he said I don't know anything, I didn't hear anything, I didn't see anything. I just presumed it. The guy was lying. The guy was lying either in the morning or at night. Right? In the afternoon. There's no chance that that same person gave those two--so, if you were a CNN person you heard him hammer Trump. If you were a FOX person, you heard him declare that he knows nothing.
And it was the same guy and I'm going how is that possible? And I realized here is the smoking gun--he gave two sides their talking points. And so, the Democrats could say blah, blah, blah the Republicans could say blah, blah, blah. And--and neither is talking about committing perjury. They each got their talking points. And the reason is because they all agree, whether it's Schiff or whether it is Jordan they want to be re-elected and they got their talking points. There is no way Sondland's testimony makes sense by a normal model. I think he gave up the two sides. It's like the Mueller Report, right? The Mueller Report came out and said not guilty and put this stuff in and both sides screamed about how they won. Mueller Report had, it's like you know, the classic you'll be lucky if you get this person to work for you line. Mueller handed both teams something to talk about.
Chris Martenson: Yeah, what a travesty that report, that was though, I mean two and a half years.
Dave Collum: I think he found nothing. I think the report generally came to the conclusion there was nothing there. And now this Horowitz report stuff. So, you know, Trump is anti-fragile. Every time they attack him and they don't bring him down he gets stronger. So, if you're a Trump hater, this should bother you to no end. Because he is like the guy with the glowing eyes on Star Trek. He is getting stronger and stronger every time they fail to bring him down.
Chris Martenson: Well, I'm just a little bit shocked that the so called Deep State so you got Clapper, Brennan all those people they just openly--openly lying about stuff.
Dave Collum: Comey--
Chris Martenson: And then nothing comes of it. Do you remember, I think it was, I think that the CIA even got caught I think hacking into Senate staffers laptops. I mean domestic spying. Worst of the worst. He lied about it in front of an open committee and then later it turned out he had been lying and nothing happened. He is still an eminent person and I have to watch him on CNN from time to time and it's just it's astonishing to me the level of brazen rule breaking, law breaking criminality that can exist at that level with nothing--no consequences.
Dave Collum: So, here's what's happening. If you--if you go to the conclusion of my annual write up I go super dark and I go through all of this. I go through all of this even though I didn't write about it all because--because I talk about the digital, the digital gulags that they are setting up. Sort of like Milo Yanopolous who is a hateable guy--I find him fascinating. But I understand why people hate him. Certainly, why the left hates him profoundly but they have been able to erase him. This guy was able to find microphones everywhere. They have erased him from the public forum. They took him off Twitter, they took him off Facebook, they took him off Twitter, they took him off everything because they didn't want him there anymore.
And they took off Gavin McGinnis who by the way, was nowhere near as polarizing as he was made out to be. He's gone. He got vaporized. And they boot Roger Stone who, he is hateable from both sides in my opinion. But you can't boot them, right? The next person booted is you. They will say but your opinions are not worthy. I got in that thing where they booted my YouTube. I did a QTR podcast and YouTube booted it. I didn't give a damn, so what.
Chris Martenson: You had many feathers in your cap this year and I think getting banned off of YouTube; that was one of them.
Dave Collum: That was great, wasn't it. They are a bunch of Nazis. And by the way, YouTube is changing and I don't think people have noticed. YouTube has these new rules that says the little guys if they are not earning enough money, we can boot them. You know what that means that it has gone--it's corporate now. It’s not the word you no longer matters. The word you is gone. I know there are videos that used to be on YouTube if you search them you can't find them. What you can find are new stories that have the video in them but they are corporate news stories. So YouTube is no longer about you. This is--this is an encroaching Stalinism. I really don't think I'm being hyperbolic here. And they are controlling us.
I don't think it's just that though cause that's a speech now. We talk through digital, right? We communicate through digital. We don't write letters to the editor anymore we have Facebook, we go to YouTube we go to Twitter and the fact that they can--through the years right Standard Oil, Exxon, U.S. Steel, all of the major industries, they were powerful, right? They built an empire but they were powerful. Never did I feel like they controlled me. And these new companies control me.
It's not that they know everything about me I've long since given up on that.
Chris Martenson: Me too.
Dave Collum: They control me. Here is a story that I tell--in China -- if it is in China now don't think it's not going to make it here. In China, they are talking to a couple of expats they are saying tell us about life in China. They are like oh, it's blah blah blah, a guy says well because of all the camera and facial recognition the other day I crossed the road and by the time I stepped onto the curb I got a text message that said you just j walked we've deducted this much from your bank account. I don't want to live in that world. That's--I don't want to live in a world where if you do 31 in a 30 you get deductive from your bank account.
I don't want to live in a world where they can catch you doing anything, right? We're all married, right? We got someone watching over our shoulder enough we don't need--we don't need a digital overseer, overlord. I want to have to get caught. I don’t want them putting in a car that monitors your driving that perceives your driving is distracted they alert the authorities. I will never buy a Volvo if that's the case. But then the other cars will do it. This is beta testing. This is horrifying to me. We give up civil liberties one at a time, cash right? They want to get rid of cash.
I had a Kaiser Report the other day and I was unaware that Michael Hudson thinks they are going to take negative interest rates before this is done negative 25%. I said it will be a cataclysm if they take interest rates to -25% right? That will be and what is happening in the world right now? Violence is trending. That is the problem. Violence is trending. How many countries in the world are there violent protests, right? Dozens. Hong Kong is getting the press but Portland, Oregon is always flaring up. The Yellow Vests in France, this is first world not third world.
Chris Martenson: Yes.
Dave Collum: Violence is trending. At some point the people say no, I have had enough. And once it starts, how do you stop it? Not only is currency fiat but government is fiat. The government declares they are in charge until the people say oh no you are not. And then they’ve got a problem.
Chris Martenson: Yeah and they are really you know, one of my little quips yesterday on Twitter was I said, if band-aids could cure cancer I would be totally what the Fed is up to. We have these structural issues that papering over with another half trillion of liquidity before year end just can't address, you know. And this is the part that I think is leading to hso much of the stress. And some of it we can just-look, this always happens. In all of the ancient religious texts they had this concept of a jubilee. And, if they had debt based systems where there was interest involved, they understood that over time compounding systems get away from you. So what was a jubilee? It was seven periods of seven. It was 49 years.
And, that's about how long it takes before a compounding system really gets away from you. And here we are approaching in early the 50th year of coming off the gold standard. It has been a fun ride but look what has happened. We are now entrenched into a system where we are compounding our debts more than twice the rate of income growth even on a nominal basis, let alone real. There is nothing you can do about that except to keep lowering rates to get to 0 and then you have to get stupid and say well maybe we just go into negative territories; the linear extrapolation of what you have been up to but everything goes wonky in negative territory cause it doesn't make sense. Because fundamentally it says the productive output of your excess surplus has a negative value, right? What--what kind of--how do you make sense of that? I don't even know what to do with that kind of a decision.
Dave Collum: Time is a thing of value too, right? So time is of negative value--why would I lend someone money to get less back. By the way, there is a [unintelligible] explained who is behind all the negative interest rate loans. I said who is buying those things, right? And it turns out that these bond funds are set up just like equity funds where they are sort of market cap weighted. And so to the extent the equity funds the banks have bigger and bigger proportion because the higher their price the bigger market, more money gets dumped into those shares. And so those virtues cycling off will become a vicious cycle that is through the same thing as the bonds approach zero and the price of the bond goes up. Apparently, what should cross your own it goes bananas.
Chris Martenson: So yeah, this negative interest rates are just insane and -- and that was a really big story coming in through the middle of last year. Seems to have come back a little bit. Yeah, we are still talking 10 trillion in negative yielding interest rates.
So, I want to get to the conclusion of all this though because I do believe in this fourth turning aspect and I think where you went is where my mind and heart has gone which is to say there is--it is going to get darker before it gets better and that is just trend extrapolation for me because people I have -- I have to confess I have lost friends or former friends who have taken on emotional views that I can't--I just can't follow. And I see this gap getting wider and wider and wider between the various parties. And in my mind I now actually begin to understand something that I was reading this article by this Colonel whose job was to foment civil wars and insurrections in various countries. Welcome to the empire.
At any rate, they have this whole model and they characterized it and they said there are eight things you have to do or need to see before you can reliably get some sort of a civil war started or an insurrection going. And his concern was that he saw that the United States had six out of that eight. And I think with this new polarization we are seeing we are up to seven. So, I am beginning to understand, I think, we already have an intellectual civil war. I am starting to see how sides can become so entrenched and separate in their views really there is no reconciliation available until some sort of catharsis. Is that where you are sort of heading with all of this?
Dave Collum: Yeah, yeah, and when you are watching a video and some guys are beating the tar out of ANTIFA and you are rooting for them you realized you are jumping on the train. So, as I'm watching I would scream at Schiff. Which on the one hand I was sympathetic to him I was more alert to this I said Dave if you are rooting for these guys, you are rooting for this armed insurrection approach to life. And, I think we are going there. It will not work well, right? It never does. Revolutions never work out for the little guy. They are always sold to you as we the proletariat, we the people are going to take back our government and then guess what? You and it to a dictator. It never works well with the exception of the American Revolution where we are shaking our shackles from across the pond.
But civil wars don't work out well at all, right? That is where my brain is headed. Totally.
Chris Martenson: There is really no resolution. I don't think to the sort of financial mess we have gotten ourselves into or the fiscal mess or monetary mess. All of these things feel like what we did. Right around 1913 is when we came up with this brilliant idea of sort of hey we can just do this really, really intense fractional reserve thing. It was right about the time oil was coming online and then it worked magically, but correlation is not causation. And it just happened to be that we were not coincidentally going deeper and deeper into debt as we had more and more of this tasty, tasty fuel to do things with. It was a lot of fun.
But now that that is sort of nosed over, and by the way conventional oil peaked years ago and we are replacing it with this ultra-expensive stuff which by the way, doesn't pencil out economically. You know, every shale company I follow is losing money and has already burned a quarter of a trillion dollars. It is not coming back out of the ground. We can throw more money in holes in the ground but that is a different story. So now that this awkward part of the story where we have this entire entrenched system of constant exponential growth of money and credit and claims and we don't have a system that can accommodate that in the real world, so it is really a human derived fantasy model which is fun because it gets to entrench power and it is great.
And the reality of the world which is oh we are it just can't support that level of growth anymore. Combined with the idea that China and India together are coming online to bring forward a billion middle class people to more than eclipse the entire middle classes of both Europe and the United States and their demand on resources, that is the story that I see shaping up coming forward. And nobody knows how to make sense of that. And you know, the status quo is just busy trying to pretend as if we can just persist. That to me is the conflict. Our narrative doesn’t work anymore. Just doesn't work.
Dave Collum: I saw some crazy, I am going to make it up, this is not true. It was something that if the country we will call country X produced no, you know, produced no C02. Let's use C02 as a proxy for economics to the extent that energy burns the economy you burn energy to grow the economy. That country x if they put out no C02 that that would be the equivalent of what China puts out in 10 minutes. Some crazy stat like that. And then, so the tragedy of the commons is taking place on a gargantuan scale as India and China do what we are attempting to for better or worse, whether logical or not, reverse.
Chris Martenson: Well, this has been one of my chief critiques about the climate change movement is that you know, I read these articles that say we need to be zero carbon by 2030 or 2050.
Dave Collum: Right.
Chris Martenson: And, I just pencil that out and I say cool just tell me which half of the people you think should die. Cause we can't feed them, right?
Dave Collum: Or 90%, right?
Chris Martenson: Or 90% which how many which nine out of 10 jobs should go away? It's just the idea that we will just sort of comport ourselves by other means because we have decided that we should be able to use wind towers still misses the fact that if you watch a wind tower getting put up and you see the 100,000 pounds of concrete and steel go into the base and then you see the giant tower go up and a cell and all the blades--there is fossil fuels in every single one of those components just dripping off of it.
Dave Collum: Can you get that back or not from a wind tower? Is the energy negative per milliwatt?
Chris Martenson: I don’t know because we have no closed loop system that says we entirely use the energy from a wind tower to mine and produce all the components. My guess is probably not.
Dave Collum: I would think not.
Chris Martenson: So, it is just such a hyper complex interconnected system like where do you draw the lines in that study?
Dave Collum: The cost of shipping the stuff and everything, right. Exactly.
Chris Martenson: The sandwich the trucker ate, where did that sandwich come from? How about the roads that they drove on? What were those made out of?
Dave Collum: So for your listener, I put in 32 pages on climate change. And I'm not qualified to evaluate climate change, right? You have to be wildly, broadly read and you have to be incredibly smart and diverse and a polymath and all this under the sun and then spend 10,000 hours. Well, what I have tried to do is to adjudicate it like maybe like a judge would adjudicate a case where they are not really qualified either but they just listen to the two sides argue and then say okay, here is my decision.
And the climate change story is a very complex one. One thing that I can guarantee you is that you are being lied to in a profound way in the climate change story. There is so many physics, so much politics, there are so many things, so many vested interests, it is not just Exxon--there is vested interest. $600 billion is being put per year into climate change. $600 billion if you bean counted across all the different stuff.
And so, hypothetically let's say climate change turns out to be a dud, right? I don't doubt that your model, which by the way we first met years and years ago but when we first started communicating you were probably a third of the way through the crash course and I remember you going is anyone even going to listen to this? I said, I think they will. But--but I am a big research depletion hawk and things like that. I totally agree with everything you say about the pollution and the plastic. We don't need to pack everything in plastic. What kind of garbage heap protocol is that? Everything comes in plastic.
But I don't think the climate is going to be our problem. That's my conclusion. And if climate change is a dud, here is the problem--here is the biggest conflict of interest of them all, it is a dud that 600 billion goes poof, right? That 600 billion: departments on campuses, agencies and governments, subsidies for various kinds of energy which I support various kinds of energy. I love the tech, except for Facebook. And I support doing all that. But--but--but the push goes poof if climate change turns out to be a dud. What are the odds of climate change is going to be a dud? By that model? The answer is zero. They are not going to let $600 billion go poof. It's too important.
And so, they are going to lie their ass off. And here as a scientist, and you are a scientist here as a scientist I watch the arguments, I watch for emotional arguments, I watch for database arguments, I watch for plots that are rigging data and plots that are cherry-picking start points and stuff like that. It appears to me that the climate change crowd are the frauds. I'm, the deniers I'm not picking up the lies out of the deniers, I'm not picking up the conflicts out of the deniers at all. I spent a lot of time.
And I could be wrong to really--I haven't read a lot of the primary papers, right? All I have done is looked at the arguments as though it were a Harvard debate club, right? But the specious arguments are coming out of the changers. The ones where I can point to and say that's crap right there. That's crap.
Chris Martenson: Yeah.
Dave Collum: And I read plots for a living, right? My day is staring at plots and trying to tease information out of them. When I see one I go oh man that is just a chart crime right there.
Chris Martenson: Yeah, well you are a scientist, I am a scientist we have spent a lot of time looking at these things and we understand that--that scientists are people and that cherry-picking data is very easy to do. And, confirmation bias is a thing and so you know, as a scientist I am more skeptical of science than most people I think, right?
Dave Collum: Me too, yeah.
Chris Martenson: Particularly in areas where I know there is vested interest so you want to get me started on something like any--any sort of healthcare study I am just immediately suspicious. Oh we analyzed 17000 kids and discovered that there's no negative correlation to screen time. I'm like yeah, I need to know who funded that study.
Dave Collum: It is so easy to screw up one of those studies, too. In polls my god polls oh my god are they corruptible and things like that. You are really, here is the thing that is so frustrating to me is you can reach a point where you believe nobody. You literally believe nobody. And--and Daniel Ellsberg warned Kissinger of that. When Kissinger was about to get top security clearance Ellsberg said Henry you are about to see stuff that is going to be amazing, you are going to be elated and then you are going to be talking to some guy who thinks he knows what he's talking about--but he doesn’t know what you know and then you are going to realize that he is wrong because he didn't know what you know. And then you are going to stop listening to people and then you are going to be a bonehead.
Chris Martenson: That's pretty smart. I like that.
Dave Collum: I'm afraid of reaching a point where someone will say well here is a study. I go, I don’t believe it.
Chris Martenson: Yeah.
Dave Collum: And that's a dangerous place, too. But I'm getting close to that. The whole climate thing is so--I've never seen such a profound conflict of interest. And it's not Exxon, right? Exxon doesn't need to be conflicted. You and I both know they are going to sell whatever oil they can get out of the ground, right?
Chris Martenson: Yeah.
Dave Collum: They're not going to--they're not going to not be able to hawk oil. When--wind power is not going to compete with Exxon. They are not afraid of hydroelectric. They are not afraid of geothermal. Because they know they are the best game in town by a mile as long as--by the way, I read Exxon's 1980--here's one for you.
Chris Martenson: Yeah, I read that, too.
Dave Collum: I read Exxon the 1982 report on climate change?
Chris Martenson: Yeah.
Dave Collum: Did you pick up the one line that was important in there where they mentioned that--that in the worst case scenario so I thought it was a brilliant report. I thought it was incredibly scholarly, balanced and said there is evidence--Exxon knew that climate change was a fraud; no, they were evaluating the published literature. Publicly published literature and trying to figure out what it all means.
But there was one line in there that caught my attention I was like oh, this is a Chris Martenson moment here they said, in the worst case scenario the C02 problem could become a problem before resource depletion. And I'm going, I think that's the first time I've seen a--a big oil company refer to the running out of resource.
Chris Martenson: Yeah.
Dave Collum: You probably have heard it. You probably have heard it cause you know these guys.
Chris Martenson: Yeah, so I was--I served on this UN panel for a while and there was a gentleman there who was a former president of U.S. Shell. It was a couple of years ago when peak oil was dead--peal oil is dead you know the media is just drumming it off.
Dave Collum: Fracking our way to prosperity.
Chris Martenson: So like hey, what do you think about peak oil. He goes oh totally real. Like we were in the business of looking for oil, trust me we know exactly how hard it is to find and we scoured every inch of the globe and there are a few basins where we think there is a little leftover in Africa and maybe down in South America but it is pretty well punched through. So for somebody who is in the biz there is no question about what is happening. None whatsoever.
Dave Collum: You go to the bottom of the Gulf of Mexico to get oil if it is easy to get, right? That's the bottom line you are squeezing the last drops out of a sponge, right? Boy, this is a long time back when it was all about Hubbard's Peak and Matt Simmons. Wow that seems like an eternity ago that peak oil was actually getting the attention. Now it's calm because they found a way to frack us back into oil and, as you have said a million times, the fracking wells don't last and the fields are getting drained.
Now, is it possible there is shale type oil all over the planet that we haven't discovered? Is it possible that stuff exists? Very different price. Very different price.
Chris Martenson: We have uncovered a few of those basins, right? There is the Vacomuerta in Argentina looks pretty good. Russia has got a pretty big play that looks pretty good. So it is there you know, China--
Dave Collum: But it's not unexplored is the point. They've been identified in your opinion?
Chris Martenson: Pretty good sense of it at this point in time. We will probably find some more -- I still think Africa is probably the last big prize. I don’t think it has been picked over the way every other place has. I mean Africa is huge, right? Like basically the size of all the other continents you care about in one. So--
Dave Collum: So, 50 years from now what's happening? Are we--have we somehow bridged to some energy or are we going to be living in a smaller footprint?
Chris Martenson: I'm going with smaller footprint on this one because you know, it is -- the amount of energy we take to--to develop ourselves. Here is where I would suddenly become hopeful instead of pretty cynical. If suddenly you know, our government came out and said hey, look we got a lot of oil because we can still frack some more but it is not infinite. We think there is X quantity. We need X - Y to build out towards this new future and that is what we are using it for. This new future is going to be more local, more electrified, yadda, yadda. Probably looks a little bit like Europe with our green belts and cities and all that stuff, right? Whatever.
At least there's a plan to say we think it is going to take an allotment of energy to build a new thing, a new system and then we use it for that. Then the rest of it go ahead. Put it in your F150 and take your kid an hour away to soccer practice, have at it. But this allotment over here is for getting us into this new future. But we're not doing that.
Dave Collum: So you use the seed corn to plant seeds.
Chris Martenson: Yeah and so--
Dave Collum: So, can we do this can we transition without hitting the nukes? I think we got to do the nukes and the problem is as I see it for us the local boys is that we are not going to hit the nukes fast. And--and China and places like that, are.
Chris Martenson: Well, if we can get the thorium reactors going I would be even more hopeful. China and India are working on it pretty hard that--that seems like a pretty decent fuel cycle. Investigated it a bunch and the lift reactors and stuff like that. There is--there is something there. But again, you would have to get started on it right now. So here is my prediction for the United States, we are not going to get started on anything. We are going to pretend like we can keep driving our F150s and Tahoes and all that other stuff. And then, there is a crisis, right? Somehow. And, we all go oh gosh now we are short on energy but guess what? That's a bad time to start trying to make your plans, right? Because that--
Dave Collum: That's Easter Island right there. Wait a minute we cut down the last tree.
Chris Martenson: Yeah, at that moment you have this towering pile of debt which was all predicated on the infinite future and something that is revealed as a fantasy and so your entire financial system goes into disarray which means I think coming up with a giant capital intensive very technologically interwoven build project that's larger than anything we have ever undertaken. You know, crisis is a bad time to sort of envision and execute something like that. That's how I look at it.
Dave Collum: I totally agree. But the problem is we are so close to a financial crisis now that we may--we may be way, way past the fail safe on--we don't have 50 trillion left in us, in my opinion, to do this without doing some serious damage to the dollar and to the economy and all sorts of stuff. I just don't see it. We got all these unfunded liabilities that we have to pay or--or face the consequences of, and they are enormous. They are fantastically enormous. The pensions are all underfunded. At the top of a bubble, Social Security is a disaster and we promised so much medical help for everyone that is now profoundly expensive.
By the way, you know who is making a fortune in this medical thing? You mentioned it I've been trying to find out where all the money is bleeding and I have made the argument, I think on your podcast before, if you look at pharma, they are profitable but collectively the big ones you don't you can't find unsightly you can't find unseemly profits you find good, healthy profits--the insurance companies are going nuts. The insurance companies are printing money.
They have found a way to make the higher healthcare costs even more profitable.
Chris Martenson: Yeah, I know they are really disgusting, amoral shameful people and I am hoping for the public humiliations to start at some point in the future because it is really awful what they are doing. Just awful.
Dave Collum: Good luck with that one.
Chris Martenson: Yeah, I know. Well, what do you see in the closing moments here--you went dark at the end. You think this gets a little worse before it gets better but what--what are you actually seeing in the next few years coming forward?
Dave Collum: Well, at some option we are going to have a recession and then we are going to find out if Dave is right or wrong on his economic forecasting. I am sort of in the John Hussman club of over valuation and over extended. I see all these guys they said yeah we are going to blow off the top. I don't care about that. If you tell me that in five years we are going to have buildings burning to the ground economically I am happy to step aside now and--and they are kind of talking that way now. The blow off top lingo is the way to say stay invested, don't jump out because this is where you are going to make a lot of money. I go yeah, that's I'm not buying that model.
I think we're going to end up in the next recession whenever it comes and it is way overdue in my opinion we are going to find out where the dead bodies are buried. And the question is, if it is a generic recession, I'm wrong. And I think it's going to be a mean one. I think it's going to be an awful one and I think that people are going to be mad. It is going to have social unrest associated with it because guys are going to go I lost my job again and now you are asking me to bail out the banks again? How is this possible, right? And that is what they are going to try to do. We are not--there is some farmer who said, quit talking down to us. We are smarter than you think.
And that's correct. That is, our collective wisdom is unbelievable. We are reading this year about how the Syrian chlorine gas attacks were a fraud. I wrote about that last year. Twitter totally debunked them, right? The populous knows this stuff now. You can't miss this stuff if you are paying attention. And now, all of a sudden, it is like we know Comey and these guys have lied their asses off. The Horowitz report is not a shock to me, not a shock to you.
Chris Martenson: Nope.
Dave Collum: We knew they were lying and at some point, at some point Joe Sixpack says that's it. I've had enough and I don’t know what happens. I don’t know what happens. I keep thinking you are going to tell me because you are so much more sort of up to speed on this social societal stuff. But I can't picture how it--it is sort of like a person with stage four liver cancer. You go, what next? I go, you're going to die. Right? And you can't wrap your brain around it.
Chris Martenson: Well, here is the thing. You mentioned a government by fiat and it is by the consent of the government of course we have been fairly willing with our consent for a long time but that can break quickly like that school of fish turning left. And then we have a system of money by fiat. And it is really a faith based system and credit really operates on trust. Well, we don’t have that is the general theme here to me is this loss of trust. And it is that erosion of the institutional trust. In fact, it's worse than that. People now trust the healthcare executives are going to be greedy, shameful pigs who are going to do everything they can to screw them right or wrong, right? We know that.
Dave Collum: And the media is letting us down. That is the thing that is bothering me the most, the media is letting us down completely. And that--that bothers me to no end because they are kind of the sheriffs on the beat. They are supposed to be out there watching and writing their Woodward and Bernstein. There are some good ones like Cheryl Atkinson, but there are some that are so bad.
And this is where Trump is correct when he attacks the media. Now, it the people hate Trump again, I get it but the media is awful. And they're constitutionally protected. They don't deserve the protections. Get them on the bench, bring someone off the bench and give them a shot. Here by the way some guy--Starbucks, you want greed? The Starbucks CEO just got offered a $50 million bonus if his shares three years from now have been 80% of the S&P irrespective of whether it is up or down. And here is the offer I would make, I would find a smart potential CEO and here is the deal--we will give you a job. You work for free. The Starbucks has reached these metrics has nothing to do with share price. Share price is cancer to the system.
You give the CEO a chance. You say you are going to work for free for three years and if you get these metrics of wealth creation to this level you get to keep the job but you are going to work for free until then. And there would be people with a deal I'll take it, I'll take it, I'll take it. You don't have to give a guy a huge salary and a $50 billion bonus. Some people would just love that job.
Chris Martenson: I would love that job.
Dave Collum: I would hate it actually I would be so incompetent. But there's people who would say great. I don’t' need money I need a company. I would run a company right? So, the reason he is getting a $50 million bonus regardless of what the share price does as long as he beats the other guy; think of how much corruption that is going to create. Think how much the insider crap and buybacks of something he is going to do because he has got a $50 million bogey he is going to hit and he will rig it until he hits it. There is no chance he cares about the shareholders, long-term he will get the share price that is not long-term. Someone is going to get screwed if you pump the price up. We know that's true.
I want a person who runs companies well. I don’t want a person who--who just focuses on share price. Share price is a false indicator.
Chris Martenson: And as we've seen, the reason I think this is going to be a barn burner of a recession--it's not really a recession. A recession is a business cycle this is a credit cycle that is going to burn itself out. And when credit cycles end it is like lights out, right? All those C suite decisions like how many shares we are going to buy back? Well, they just decide that afternoon no more. And you know, all sorts of things that were sort of running flawlessly and forward grind miserably into reverse. It was really fast. That was my learning from the last two bubbles when Pets.com closes its doors down it happens pretty much overnight and everybody is fired. Right? It's really fast. Whereas in a normal recession the business cycle starts to turn and Ford says well, maybe we got a little too much inventory. Just takes money to sort of wind things down in mothball stuff and make painful firing decisions. But when your credit runs out and you are a zombie company its lights out that next day. It's over right?
Dave Collum: Yeah, 10% of the S&P, 14% are said to be zombies. 14 that's a James Grant number. 14% of those major companies are said to be zombies, meaning their cash flow doesn't pay the interest on their debt. Those are going to be auctioned off on the courthouse steps when we hit the next--and as you--as you pointed credit cycles--you ended up in... I'm not afraid of deflation. I am afraid of a deflationary collapse. Deflation is fine. If we had let deflation do its thing we would be in great shape. But no, we don't. But a deflationary collapse is a disaster, right? That’s Great Depression 2.0. We're not tough like we were in the 30s.
Chris Martenson: No, but you know what? I know some people are trying to be tough cause they see it coming. There is a little bit of a movement out there amongst at least the people I hang with to become more resilient and in great shape and learn how to grow a few things in your garden because we might need to bring those skills back here on this next one.
My summary is a pox on both houses and shape on the institution that is failing us so badly be it the Fed or the media. But that’s really on us, you know. Those are self-inflicted wounds at this point in time. So, you know, I guess I'm okay if those chips have to fall where they are going to have and it's just you know, hopefully it's not too bad.
My fear is that it is too bad and that you now, it once things really begin to correct and go into collapse the financial system. That is when politicians bring out their worst sides. They blame China, say it was Russia. They just make crap up and next thing you know there are missiles flying different sort of a nuke. I’m really worried about that possible outcome because listen the DNC had a chance to say wow, we put up probably the single worst person in the universe and they actually lost to Donald Trump. We need to look in the mirror and not do that again. And instead they just--
Dave Collum: They are talking about bringing her back.
Chris Martenson: And, instead oh God, please. And instead they said oh must have been Russia and came up with this whole thing that was easily debunked by people with a functioning computer inside of minutes and somehow that evaded the entire superstructure of commentators and journalists and it is just a mystery to me. Anyway, if we lack the ability to have even that level of introspection around these things, I don't I'm not too positive for how we are going to respond when the next crisis starts.
Dave Collum: No. I totally agree. So, they are--I think that is what the Fed sees. So, if I am going to give them credit by the way, watch out this is a totally tangential thing but the world hasn't picked up on this one. There was a model put out by the St. Louis Fed for a change in various reserve habits and what the Fed proposed to do was to let--was to let banks sell non reserve assets to the Fed at will, and that would encourage them to keep their reserves to a minimum. It was put forth by a guy named David Andolfatto, who is actually supposed to debate and he bailed on me, he unfollowed me on Twitter he didn't like the fact that I have been hammering the Fed relentlessly.
What they are trying to do they are trying to give the banks the power to be at will. And it has gotten no press the Andolfatto trade model. It has gotten no press. Now he got mad at me when he was saying look what they will do is they will sell their treasuries they will take their excess reserves and they'll buy treasuries. Now, I think the model was it will allow them to then unwind the balance sheet cause the excess reserves are used by the treasury so the Fed can keep selling into the marketplace. But I said: but David, what they are going to do is they are not going to buy treasuries. The excess reserves are just going to be used to leverage up elsewhere and they will become non excess by statute they don't lend reserves, they lend against reserves when you have excess reserves you have excess lending capacity, and they will do that instead you got to lever up the system. He got mad. But watch for that because I think they are going to have QE on demand is what I would call that model. I wrote quite a bit about that. And it got no press. Got no press that I can see but I think it's coming.
Chris Martenson: Well, it's just you know we are going to try more and more crazy things anything to keep this whole thing sort of going. Of course, without a plan a master plan that says hey if we do keep this all going here is how it resolves. Here is where the growth returns, here is when we finally pay stuff down. It is never a good time to pay stuff down during an expansion hey why should we and then when the correction comes hey now is a terrible time. It is always a terrible time. So, you just keep pushing this further and further.
Eventually, the big math problem here is people go oh, $300 trillion of debt versus 12 times that in unfunded liabilities and all of those only make sense if we can have a future that's larger than the present. Well, how do you get a larger future? Oh, you gotta burn more oil. You got to make more cars. Got to build more houses. Takes resources.
So, sooner or later people go oh, we don't even have the resources to make this square the circle in this story. That is just so painfully obvious to me. I don't know why it isn't--
Dave Collum: So, I quoted you when you said, I think it was not too long ago, actually, where you said we have doubled our global oil consumption since the 1990s. How many more doublings do we have left? And that is exactly right. To the extent that doubling the oil consumption is-is not only a proxy for doubling the economy but it is a mandate for doubling the economy, right? You burn oil to--to grow the economy. You can't keep doubling, right?
I go all the way back to the original Crash Course where you hit a puddle in the infield in the stadium that drilled the in field by noon, right? You can't keep doubling. The exponential function, the Albert Bartlett moment, it doesn't work and that's the--the great insight of the crash course is nothing--nothing that is exponential is sustainable.
Chris Martenson: Right. Well, thank you for that and it's--listen we're out of time. Let's do this again. Let's do it again soon. We have a lot more to talk about. This has been an absolutely fascinating romp and thank you so much for, of course, taking the time. It's a real public service, I think, writing your year in review. This one is a doozy it is really good. I think people actually need to spend some time with it and to think through not just what are the implications if this fourth turning comes as it seems to be coming and what are the social implications of that but also what are the responses to that going to be. Ho war they going to personally -- you know, what actions are you going to take nothing? Something. A lot here to chew on, a lot to consider and it is funny, too. So thanks for making it many moments of levity in there. Great quotes. It’s perfect.
Dave Collum: Cool. You're welcome and thank you for having me.
Chris Martenson: All right, Dave until next time. People you can find the year in review of course, at Peak Prosperity and we will have a link right at the bottom of this podcast, so take it, read it, read it over a couple of mornings and let's have a great conversation about it at the site. Dave, thanks again.
Dave Collum: You bet. Thank you.