September 9, 2025 • 22 mins
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History is clear—empires fall when debt takes over. From Rome to Spain to modern America, reckless spending always ends the same way. In this episode, Chris breaks down:
Apple Podcasts: https://podcasts.apple.com/us/podcast/watchdog-on-wall-street-with-chris-markowski/id570687608
Spotify: https://open.spotify.com/show/2PtgPvJvqc2gkpGIkNMR5i
WATCH and SUBSCRIBE on:
https://www.youtube.com/@WatchdogOnWallstreet/featured
History is clear—empires fall when debt takes over. From Rome to Spain to modern America, reckless spending always ends the same way. In this episode, Chris breaks down:
- Why John Adams, Cicero, and even Churchill warned us about debt centuries ago
- How $37 trillion in debt and rising interest costs could spark a U.S. crisis
- Why “modern monetary theory” is nothing but a dangerous lie
- What past collapses teach us about our own future
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
Destroyed by debt? Is that going to be our fate?
John Adams. There are two ways to conquer and enslave
a country. One is by the sword, the other is
by debt Cicero. The budget should be balanced, the treasury
should be refilled, public debts should be reduced, the arrogance
(00:39):
of officialdom should be tempered and controlled, and the assistance
to foreign lands by the aid of our own resources
should be curtailed. Benjamin Franklin. If you know how to
spend lesson you get, you've got the philosopher's stone. When
you run in debt, you give another power over your liberty.
(00:59):
Milton Freeman. The government solution to a problem is usually
as bad as the problem. Governments never learn, only people learn.
Even Churchill. I can tend for a nation to try
to tax itself in a prosperities like a man standing
in a bucket trying to lift themselves up by the handle.
And every new administration, not excluding ourselves, arrives in power
(01:20):
with bright and benevolent ideas of using public money to
do good, and when the money has been spent, they'res
surprised to find that the good has not been done.
I wrote a piece back in twenty twelve and titled
no Risk, and I want to get into it in
(01:40):
a little bit. I saw a piece by a very
prominent economists. Now I go off on economists all the time,
and I've been critical of this gentleman Ken Rogoff in
the past, but he is He's done some pretty darn
(02:03):
good work. His analysis of the Great Recession was good,
but again it was like a how shall I put it,
It was, you know, coming in after the fact. Okay,
it was you know, the the after the fact, coming
in and analyzing everything that went on when quite frankly,
(02:29):
we knew what was going to happen. I think maybe
Ken is growing. And let's say again, he's a he's
a very smart guy. He could take a look at
his education and the Ivy League schools that he went to,
his Grand Master chess champion as well. Obviously he's got
(02:49):
a very high processor speed, very smart guy. The one
thing is missing. One thing is missing with Ken Rogoff.
Like most economists out there, they've never done anything outside
of being an economist. And to me, it's important that
you've actually had to actually go out there and play
the game, so to speak. Does that make sense? Again,
(03:13):
I made this comparison before, Like with the economists, it's like,
may get all the theories. They can read everything and
anything on the economy, all this good stuff. And again
it's like akin to reading every book written. Let's say,
let's you read every book written to say, Ted Williams
wrote a book on hitting a baseball, and Mickey Mantle
and Babe Ruth and you read them all and you
(03:36):
studied them and you became a PhD In hitting a
fastball and hitting a curve. But you never pick up
a bat, never pick up a bat. And that that's
pretty much across the board. And that's kind of the
world we're living nowadays. People that like to be experts
in things. In the same notes, what's ruining baseball? As
far as I'm concerned, the analytics department. Wait a second,
(03:59):
I got a man on second in third right now,
we're down by a run. No oubts. Gee, I don't
know you know, maybe we don't try to hit the
three run home run. Maybe we just try to get
a run across. Maybe bunt who knows anyway, throw that aside.
Rogue Off just put out a piece and lengthy piece
(04:23):
echoing many of the sentiments that we've been trying to
get across for some time here on the sometime. You
can go back and read my piece. It's just one
I just pulled up from June of twenty twelve, he writes.
He talks about how the United States has always been,
you know, we can borrow our way out of trouble
(04:45):
again and again and again. We use debt better than
anybody else, more vigorously than any other country the entire world.
Whether it be our wars, whether it be our war
on COVID, whether it be our war on poverty, war
on drugs, recessions, whatever it may be, we borrow and
(05:10):
borrow and borrow. It was actually being interviewed today and
I went off on a bit of a rant talking
about how, you know, our fiscal situation and how quite frankly,
you know, when we want to have a war, we
decided to go to war, we should be raising taxes.
We should be raising taxes or selling war bonds. I
(05:31):
remember the whole war on terror started with George W. Bush,
and I was scratching my head at the time. He's
basically telling everybody, Hey, keep on living, go out there,
go shopping, keep living your lives. All this stuff. I said,
you're going to start this big war here, and you
don't think that maybe we should have a collective sacrifice
of some sort as a nation, pull everybody together. We
(05:52):
already was was together at that point in time. Yeah,
that didn't last anyway. Hey, even Eisenhower. Eisenhower raised was
he the last person or raise taxes because of conflict?
He raised taxes for the Korean wharf. I'm not mistaken anyway.
Rogueoff goes on a rant here. He's the past few
years of cast serious doubt on these assumptions that we
(06:16):
can continue to borrow and borrow and spend and spend
for starters. Bond markets have become far less submissive, and
long term interest rates have risen sharply on ten and
thirty year treasury bonds. For a big debtor like the
United States. The gross US debt is now nearly thirty
seven trillion, roughly as large as that of all other
(06:36):
major advanced economies combined. These higher rates can hurt When
the average rate paid rises by one percent, that translates
to three hundred and seventy billion more in annual interest
payments that the government must make. We spent eight hundred
and fifty billion dollars on defense in twenty twenty four,
(07:01):
more than any other country in the world, but we
spent one hundred and eighty billion dollars on interest payments. Again,
statements that we have made here on the point we've
talked about here on the program. Talks about Trump and
his efforts to place blame for the high rates on
(07:23):
the Federal Reserve. Again, he's a little bit kinder in
the way he states things. He says they're deeply misleading.
I've said, basically, they're bullshit because they are. The Federal
Reserve controls the overnight borrowing rate, but longer term rates
are set by vast global markets. The Fed sets the
(07:45):
overnight rate too low, and the markets expect inflation to rise,
long term rates will rise. Also. After all, unexpectedly high
inflation is effectively a form of partial default. We've talked
about this before here on the program. Since people are
getting paid back. You're getting repaid in dollars that are
(08:06):
worth less. The purchasing power has been debased. We're all
dealing with that as a nation. If investors come to
expect high inflation, they're going to naturally require a higher
return to compensate. Now, the reason why there's a central bank,
(08:28):
one of the reasons why to have a central bank
is to say that inflation will be tamed. They're going
to do what they can to keep that down and
then keep allowed for interest rates to stay down. If
the Trump administration undermines fed independence, borrowing costs are going
to go up. Period the end. It is what it is.
(08:50):
Skepticism about the safety of holding Treasury debt has led
to related doubts about the US dollar. For decades, a
dollar status as the global reserve currency has conferred lower
interest rates on US borrowing, reducing them by perhaps one
half to one percent. But with the United States taking
(09:11):
on such extraordinary levels of debt, the dollar no longer
looks unassailable, particularly amid other uncertainty about US policy and
the near term, Global central banks and foreign investors may
decide to limit their total holdings of US dollars over
the medium and longer term, the dollar could lose market
share to the Chinese one, and I don't think that
that's so likely to happen anytime soon. The euro or
(09:34):
even crypto currency. Either way, foreign demand for US debt
will shrink, putting further upward pressure on US interest rates
and making the math of digging out of the debt
hole even more daunting. Now again, this Steve mirin Fellow
that scares the crap out of me that Donald Trump appointed.
(09:58):
He's well, he's had. Of Donald Trump's economic advisors. He
had this thing called the marral Lago Accord, where we
could selectively default on our payments to the foreign central
banks and treasuries that hold trillions of US dollars. They
talked about that. Now, I'm going to remind you the
(10:23):
President of the United States has had his experience with
defaults and bankruptcies. I hope and pray that he recognizes
that the United States is not a casino or a
hotel in Atlantic city. With long term interest rates up sharply,
public debt nearing its post World War two peak, foreign
(10:43):
investors becoming more skittish, and politicians showing little appetite reigning
in fresh borrowing, the possibility of a once in a
century US debt crisis no longer seems far fetched. Debt
and financial crisis tend to occur precisely when a country's
fiscal situation is already precarious, its interest rates are high,
its political situation is paralyzed, and a shock catches policymakers
(11:07):
on the back foot. Now we already checked three of
those boxes. Allys missing is the shock. Even if the
country avoids an outright debt crisis, a sharp erosion of
confidence and its crediworthiness would have profound consequences, to say
the least. And again, we can go back, go back
to spending, go back to Reagan and Reagan's you know,
(11:29):
deficit spending, and again should have dynamic, should have changed
after we bankrupted the Soviet Union. It didn't. Dick Cheney
once said to George W. Bush, say, you know, Reagan
proved deficits don't matter. Both parties do this, and it's
(11:54):
it's patently absurd your mind. You Biden ran a budget
deficit of one point eight trillion, six point four percent
of GDP except for the the financial crisis in the
first year of the pandemic. That was a peacetime record. Again,
beat his own six point one percent the year before. Again, Trump,
(12:17):
big beautiful bill. We're told at how wonderful it all is.
But we've got six to seven percent deficit, six to
seven percent for the rest of the decade. Again, we're told,
we point this out, we're a bunch of pannikins, right,
we're panicking. We shouldn't think about this, and we're going
to grow our way out of this situation. Okay, you
(12:42):
want to rely on that, you want to count on that,
I most certainly don't anyway. Perhoup, most of modern history
brogue offf RTEs. It was thought that prudent government debt
management involved bringing down the ratio of debt to GDP
during quickit prairiods of growth in order to basically store
(13:05):
fiscal ammunition for the next crisis. Rainy Day fund Right
and the eighteen hundreds of United Kingdom used debt to
fight one war after another, taking advantage of the time
in between to repair its finances. Likewise, although the US
debt to GDP ratio was very high during World War Two,
it quickly declined in the years that followed. Since the
United States had just fought to world wars. Policymakers feared
(13:28):
there might be yet another to pay for. The Korean
War was right. Eisenhower raised taxes instead of relying mainly
on debt. Okay, again, even though there was low interest
rates after the global financial crisis. This is when all
of these wizards of smart economists out there, again never
(13:51):
done anything in their entire lives that we run a business,
started coming up with ideas like modern monetary theory and
we can just keep borrowing and spending and borrowing and spending.
You had Laurence Summers write a paper and say that
interest rates would stay low in definitely because the factors
such as adverse demographics and low productivity growth and chronically
(14:16):
weak global demand. Paul Kirkman, Yeah, we love her. We
love making fun of Paul. Here on the program, he
basically said we could just keep printing and spending as
much as we wanted to. In fact, he thought the
bailouts for the Great Recession were too small. And again
it's embraced by politicians like Bernie Sanders and aoch At.
(14:38):
None of this matters. We can keep spending and keep
handing out more money Themember Nancy Pelosi talking about all
of the handouts and giveaways and what a wonderful investment
was and how it was going to grow our economy.
Right the Great Repression, How and went a debt crisis
in the United States couldn't fold? Is now the thirty
(14:59):
seven trillion dollar question. In one scenario, the trigger will
be a collapse of confidence by investors in US treasuries,
call a crack in the bond market. Bond vigilantes Jamie
Diamond talked about this sun spike and interest rates. That again,
what we got a problem here debt crisis is akin
(15:23):
they build up steam quietly for what seems like forever
before erupting. Investors growing fears about the safety of their
money could cause a gradual rise in treasury bond yields
over many months or years. Again, something like this most
certainly would hit housing prices, It would most certainly hit
(15:45):
stock prices as well. Would make doing business a hell
of a lot more difficult. Again, we could print our
way out of the situation. One of the things that
we can do keep printunting again, which is essentially is
a default because again you're paying back money money you
(16:06):
owe with money that's worth less. Actually FDR did that
when he messed around with the global peg to the
dollar to gold back in the nineteen thirties. Financial repression
is another way. I've talked about this here on the program.
It's where the government, you know, pulls a Luca Brasi,
(16:27):
starts calling up various different financial institutions, said you better
be buying our paper right now. Again, that's what a
lot of Europe did when they ran into the European
debt crisis. Again, just force pension funds, force insurance companies,
force banks to hold a hell of a lot more debt.
(16:49):
I actually, you know, blew the lid open on this.
One only only person report on this, only one fact
that the Treasury Department of the United States actually came
up with an idea where they would summarily take over
retirement accounts and basically say, hey, here's another retirement system
(17:09):
that we're putting into place, basically taken over four one
ks all of these things and basically saying that you
had to own government debt in them. Yeah. Yeah, there's
actually Treasury papers on this. I'm not kidding. Another way,
and I think they're thinking about this as well, is
use cryptomania and have that dollar stable coins now dollar
(17:31):
stable coins again. The legislation that was just passed by
Congress basically says that US based dollar stable coins have
to hold a mix of treasury debt and federally guaranteed
bank deposits. And they're thinking ahead again, this financial repression
(17:56):
that they want to put into place. I'm gonna go
to my piece that I wrote back in twenty twenty
twelve to this, and it's going after Tim Geidner at
the period of time and the spending that was taking place,
(18:18):
and you know the fact that it actually was it
was funny. He was asked Timmy Geidner, remember was a
Treasury secretary at the time, and Paul Ryan. Paul Ryan
asked Timmy Geitner why the Obama administration is not making
any attempt to solve the long term debt problem. And
Geidner's response, you're right to say, we're not coming before
(18:39):
you today to say we have a deaf, definitive solution
to that long term problem. What we do know is
we don't like yours. Again, we was asked as well,
he said, if we don't deal with these debt problems,
we're going to be grease in two years. Geidner responded,
there's no risk of that, and I you know, one
(19:01):
of the rules that we have here at the Watchdog
on Wall Street is when somebody on Wall Street or
some politician responds with no risk, there's plenty of risk,
without a doubt, there's a lot of risk. Again, and
(19:22):
I'm looking at this piece I wrote, then you look
at the numbers from that point in time and how
much worse they are today. And again making given Timmy
Geidner issues right now, such as Timmy Geitner, again, it's
both parties. It's both elephants and donkeys for crying out loud,
and it's it's ugly. I mean it's it really is.
And you take a look at at what was done. Again,
(19:44):
you have to take a look at history, and you
know throughout history how things you know were handled. And
you know, again you want to print your way out
of the situation, you end up with the Zimbabwe type
of situation or a Venezuela type of situation. Again, this
(20:04):
is throughout history. I said this. The Roman issued a
gold coin called the Orus. The face value of the
original coin equated to the market value of gold in it.
The Romans, much like the United States and other nations
today spent money haphazardly that they didn't have public subsidies,
military expenditures, public works, and a huge government bureocracy. The
(20:26):
rulers of the Roman Empire raised taxes and minted more
coins to pay their bills. Coins were issued with less gold,
and over time people lost faith in the currency. Chinese
rulers started using issuing paper money a little over one
thousand years ago. They too, realized that they could buy
a lot of stuff if they printed a lot of money,
which is exactly what they did. Eventually, people caught on
(20:49):
that the paper money had no value, and prices rose.
In order to keep up the scam, the rulers ordered
death for people who would not accept it. Even nations
huge gold and silver reserves spent beyond their means, sixteenth
century Spain was able to garner significant quantities of the
metals from the New World. King Philip the Second managed
(21:11):
to spend it all and then some sound familiar wars
shovel ready palaces. He defaulted on his debt four times,
even though revenue doubled during his reign. When the fifteen
seventy six, when his revenue was up by more than
fifty percent, his debt jumped by one third. His bankruptcy.
(21:34):
His last bankruptcy occurred when peak gold shipments were coming
to Spain. Again, that there's constant examples of this, and
this idea that this time it could be different is insane.
We are still in a very very good position as
far as the world is concerned. I'm going to keep
(21:56):
beating this drum here on the program in the hopes
that maybe people will wake up to this and start
voting accordingly. And what I mean is, yeah, yeah, you
have to stop voting for stuff. Have to stop voting
for stuff we can afford. You've got to stop cheering
(22:17):
on all the warmongers that want to constantly send money
all over the globe. You got to start putting people
into positions of power that actually want to deal with
the problem. I'm prepared for it, My clients are prepared.
Most people aren't. Watchdog on Wall Street dot Com
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
Destroyed by debt? Is that going to be our fate?
John Adams. There are two ways to conquer and enslave
a country. One is by the sword, the other is
by debt Cicero. The budget should be balanced, the treasury
should be refilled, public debts should be reduced, the arrogance
(00:39):
of officialdom should be tempered and controlled, and the assistance
to foreign lands by the aid of our own resources
should be curtailed. Benjamin Franklin. If you know how to
spend lesson you get, you've got the philosopher's stone. When
you run in debt, you give another power over your liberty.
(00:59):
Milton Freeman. The government solution to a problem is usually
as bad as the problem. Governments never learn, only people learn.
Even Churchill. I can tend for a nation to try
to tax itself in a prosperities like a man standing
in a bucket trying to lift themselves up by the handle.
And every new administration, not excluding ourselves, arrives in power
(01:20):
with bright and benevolent ideas of using public money to
do good, and when the money has been spent, they'res
surprised to find that the good has not been done.
I wrote a piece back in twenty twelve and titled
no Risk, and I want to get into it in
(01:40):
a little bit. I saw a piece by a very
prominent economists. Now I go off on economists all the time,
and I've been critical of this gentleman Ken Rogoff in
the past, but he is He's done some pretty darn
(02:03):
good work. His analysis of the Great Recession was good,
but again it was like a how shall I put it,
It was, you know, coming in after the fact. Okay,
it was you know, the the after the fact, coming
in and analyzing everything that went on when quite frankly,
(02:29):
we knew what was going to happen. I think maybe
Ken is growing. And let's say again, he's a he's
a very smart guy. He could take a look at
his education and the Ivy League schools that he went to,
his Grand Master chess champion as well. Obviously he's got
(02:49):
a very high processor speed, very smart guy. The one
thing is missing. One thing is missing with Ken Rogoff.
Like most economists out there, they've never done anything outside
of being an economist. And to me, it's important that
you've actually had to actually go out there and play
the game, so to speak. Does that make sense? Again,
(03:13):
I made this comparison before, Like with the economists, it's like,
may get all the theories. They can read everything and
anything on the economy, all this good stuff. And again
it's like akin to reading every book written. Let's say,
let's you read every book written to say, Ted Williams
wrote a book on hitting a baseball, and Mickey Mantle
and Babe Ruth and you read them all and you
(03:36):
studied them and you became a PhD In hitting a
fastball and hitting a curve. But you never pick up
a bat, never pick up a bat. And that that's
pretty much across the board. And that's kind of the
world we're living nowadays. People that like to be experts
in things. In the same notes, what's ruining baseball? As
far as I'm concerned, the analytics department. Wait a second,
(03:59):
I got a man on second in third right now,
we're down by a run. No oubts. Gee, I don't
know you know, maybe we don't try to hit the
three run home run. Maybe we just try to get
a run across. Maybe bunt who knows anyway, throw that aside.
Rogue Off just put out a piece and lengthy piece
(04:23):
echoing many of the sentiments that we've been trying to
get across for some time here on the sometime. You
can go back and read my piece. It's just one
I just pulled up from June of twenty twelve, he writes.
He talks about how the United States has always been,
you know, we can borrow our way out of trouble
(04:45):
again and again and again. We use debt better than
anybody else, more vigorously than any other country the entire world.
Whether it be our wars, whether it be our war
on COVID, whether it be our war on poverty, war
on drugs, recessions, whatever it may be, we borrow and
(05:10):
borrow and borrow. It was actually being interviewed today and
I went off on a bit of a rant talking
about how, you know, our fiscal situation and how quite frankly,
you know, when we want to have a war, we
decided to go to war, we should be raising taxes.
We should be raising taxes or selling war bonds. I
(05:31):
remember the whole war on terror started with George W. Bush,
and I was scratching my head at the time. He's
basically telling everybody, Hey, keep on living, go out there,
go shopping, keep living your lives. All this stuff. I said,
you're going to start this big war here, and you
don't think that maybe we should have a collective sacrifice
of some sort as a nation, pull everybody together. We
(05:52):
already was was together at that point in time. Yeah,
that didn't last anyway. Hey, even Eisenhower. Eisenhower raised was
he the last person or raise taxes because of conflict?
He raised taxes for the Korean wharf. I'm not mistaken anyway.
Rogueoff goes on a rant here. He's the past few
years of cast serious doubt on these assumptions that we
(06:16):
can continue to borrow and borrow and spend and spend
for starters. Bond markets have become far less submissive, and
long term interest rates have risen sharply on ten and
thirty year treasury bonds. For a big debtor like the
United States. The gross US debt is now nearly thirty
seven trillion, roughly as large as that of all other
(06:36):
major advanced economies combined. These higher rates can hurt When
the average rate paid rises by one percent, that translates
to three hundred and seventy billion more in annual interest
payments that the government must make. We spent eight hundred
and fifty billion dollars on defense in twenty twenty four,
(07:01):
more than any other country in the world, but we
spent one hundred and eighty billion dollars on interest payments. Again,
statements that we have made here on the point we've
talked about here on the program. Talks about Trump and
his efforts to place blame for the high rates on
(07:23):
the Federal Reserve. Again, he's a little bit kinder in
the way he states things. He says they're deeply misleading.
I've said, basically, they're bullshit because they are. The Federal
Reserve controls the overnight borrowing rate, but longer term rates
are set by vast global markets. The Fed sets the
(07:45):
overnight rate too low, and the markets expect inflation to rise,
long term rates will rise. Also. After all, unexpectedly high
inflation is effectively a form of partial default. We've talked
about this before here on the program. Since people are
getting paid back. You're getting repaid in dollars that are
(08:06):
worth less. The purchasing power has been debased. We're all
dealing with that as a nation. If investors come to
expect high inflation, they're going to naturally require a higher
return to compensate. Now, the reason why there's a central bank,
(08:28):
one of the reasons why to have a central bank
is to say that inflation will be tamed. They're going
to do what they can to keep that down and
then keep allowed for interest rates to stay down. If
the Trump administration undermines fed independence, borrowing costs are going
to go up. Period the end. It is what it is.
(08:50):
Skepticism about the safety of holding Treasury debt has led
to related doubts about the US dollar. For decades, a
dollar status as the global reserve currency has conferred lower
interest rates on US borrowing, reducing them by perhaps one
half to one percent. But with the United States taking
(09:11):
on such extraordinary levels of debt, the dollar no longer
looks unassailable, particularly amid other uncertainty about US policy and
the near term, Global central banks and foreign investors may
decide to limit their total holdings of US dollars over
the medium and longer term, the dollar could lose market
share to the Chinese one, and I don't think that
that's so likely to happen anytime soon. The euro or
(09:34):
even crypto currency. Either way, foreign demand for US debt
will shrink, putting further upward pressure on US interest rates
and making the math of digging out of the debt
hole even more daunting. Now again, this Steve mirin Fellow
that scares the crap out of me that Donald Trump appointed.
(09:58):
He's well, he's had. Of Donald Trump's economic advisors. He
had this thing called the marral Lago Accord, where we
could selectively default on our payments to the foreign central
banks and treasuries that hold trillions of US dollars. They
talked about that. Now, I'm going to remind you the
(10:23):
President of the United States has had his experience with
defaults and bankruptcies. I hope and pray that he recognizes
that the United States is not a casino or a
hotel in Atlantic city. With long term interest rates up sharply,
public debt nearing its post World War two peak, foreign
(10:43):
investors becoming more skittish, and politicians showing little appetite reigning
in fresh borrowing, the possibility of a once in a
century US debt crisis no longer seems far fetched. Debt
and financial crisis tend to occur precisely when a country's
fiscal situation is already precarious, its interest rates are high,
its political situation is paralyzed, and a shock catches policymakers
(11:07):
on the back foot. Now we already checked three of
those boxes. Allys missing is the shock. Even if the
country avoids an outright debt crisis, a sharp erosion of
confidence and its crediworthiness would have profound consequences, to say
the least. And again, we can go back, go back
to spending, go back to Reagan and Reagan's you know,
(11:29):
deficit spending, and again should have dynamic, should have changed
after we bankrupted the Soviet Union. It didn't. Dick Cheney
once said to George W. Bush, say, you know, Reagan
proved deficits don't matter. Both parties do this, and it's
(11:54):
it's patently absurd your mind. You Biden ran a budget
deficit of one point eight trillion, six point four percent
of GDP except for the the financial crisis in the
first year of the pandemic. That was a peacetime record. Again,
beat his own six point one percent the year before. Again, Trump,
(12:17):
big beautiful bill. We're told at how wonderful it all is.
But we've got six to seven percent deficit, six to
seven percent for the rest of the decade. Again, we're told,
we point this out, we're a bunch of pannikins, right,
we're panicking. We shouldn't think about this, and we're going
to grow our way out of this situation. Okay, you
(12:42):
want to rely on that, you want to count on that,
I most certainly don't anyway. Perhoup, most of modern history
brogue offf RTEs. It was thought that prudent government debt
management involved bringing down the ratio of debt to GDP
during quickit prairiods of growth in order to basically store
(13:05):
fiscal ammunition for the next crisis. Rainy Day fund Right
and the eighteen hundreds of United Kingdom used debt to
fight one war after another, taking advantage of the time
in between to repair its finances. Likewise, although the US
debt to GDP ratio was very high during World War Two,
it quickly declined in the years that followed. Since the
United States had just fought to world wars. Policymakers feared
(13:28):
there might be yet another to pay for. The Korean
War was right. Eisenhower raised taxes instead of relying mainly
on debt. Okay, again, even though there was low interest
rates after the global financial crisis. This is when all
of these wizards of smart economists out there, again never
(13:51):
done anything in their entire lives that we run a business,
started coming up with ideas like modern monetary theory and
we can just keep borrowing and spending and borrowing and spending.
You had Laurence Summers write a paper and say that
interest rates would stay low in definitely because the factors
such as adverse demographics and low productivity growth and chronically
(14:16):
weak global demand. Paul Kirkman, Yeah, we love her. We
love making fun of Paul. Here on the program, he
basically said we could just keep printing and spending as
much as we wanted to. In fact, he thought the
bailouts for the Great Recession were too small. And again
it's embraced by politicians like Bernie Sanders and aoch At.
(14:38):
None of this matters. We can keep spending and keep
handing out more money Themember Nancy Pelosi talking about all
of the handouts and giveaways and what a wonderful investment
was and how it was going to grow our economy.
Right the Great Repression, How and went a debt crisis
in the United States couldn't fold? Is now the thirty
(14:59):
seven trillion dollar question. In one scenario, the trigger will
be a collapse of confidence by investors in US treasuries,
call a crack in the bond market. Bond vigilantes Jamie
Diamond talked about this sun spike and interest rates. That again,
what we got a problem here debt crisis is akin
(15:23):
they build up steam quietly for what seems like forever
before erupting. Investors growing fears about the safety of their
money could cause a gradual rise in treasury bond yields
over many months or years. Again, something like this most
certainly would hit housing prices, It would most certainly hit
(15:45):
stock prices as well. Would make doing business a hell
of a lot more difficult. Again, we could print our
way out of the situation. One of the things that
we can do keep printunting again, which is essentially is
a default because again you're paying back money money you
(16:06):
owe with money that's worth less. Actually FDR did that
when he messed around with the global peg to the
dollar to gold back in the nineteen thirties. Financial repression
is another way. I've talked about this here on the program.
It's where the government, you know, pulls a Luca Brasi,
(16:27):
starts calling up various different financial institutions, said you better
be buying our paper right now. Again, that's what a
lot of Europe did when they ran into the European
debt crisis. Again, just force pension funds, force insurance companies,
force banks to hold a hell of a lot more debt.
(16:49):
I actually, you know, blew the lid open on this.
One only only person report on this, only one fact
that the Treasury Department of the United States actually came
up with an idea where they would summarily take over
retirement accounts and basically say, hey, here's another retirement system
(17:09):
that we're putting into place, basically taken over four one
ks all of these things and basically saying that you
had to own government debt in them. Yeah. Yeah, there's
actually Treasury papers on this. I'm not kidding. Another way,
and I think they're thinking about this as well, is
use cryptomania and have that dollar stable coins now dollar
(17:31):
stable coins again. The legislation that was just passed by
Congress basically says that US based dollar stable coins have
to hold a mix of treasury debt and federally guaranteed
bank deposits. And they're thinking ahead again, this financial repression
(17:56):
that they want to put into place. I'm gonna go
to my piece that I wrote back in twenty twenty
twelve to this, and it's going after Tim Geidner at
the period of time and the spending that was taking place,
(18:18):
and you know the fact that it actually was it
was funny. He was asked Timmy Geidner, remember was a
Treasury secretary at the time, and Paul Ryan. Paul Ryan
asked Timmy Geitner why the Obama administration is not making
any attempt to solve the long term debt problem. And
Geidner's response, you're right to say, we're not coming before
(18:39):
you today to say we have a deaf, definitive solution
to that long term problem. What we do know is
we don't like yours. Again, we was asked as well,
he said, if we don't deal with these debt problems,
we're going to be grease in two years. Geidner responded,
there's no risk of that, and I you know, one
(19:01):
of the rules that we have here at the Watchdog
on Wall Street is when somebody on Wall Street or
some politician responds with no risk, there's plenty of risk,
without a doubt, there's a lot of risk. Again, and
(19:22):
I'm looking at this piece I wrote, then you look
at the numbers from that point in time and how
much worse they are today. And again making given Timmy
Geidner issues right now, such as Timmy Geitner, again, it's
both parties. It's both elephants and donkeys for crying out loud,
and it's it's ugly. I mean it's it really is.
And you take a look at at what was done. Again,
(19:44):
you have to take a look at history, and you
know throughout history how things you know were handled. And
you know, again you want to print your way out
of the situation, you end up with the Zimbabwe type
of situation or a Venezuela type of situation. Again, this
(20:04):
is throughout history. I said this. The Roman issued a
gold coin called the Orus. The face value of the
original coin equated to the market value of gold in it.
The Romans, much like the United States and other nations
today spent money haphazardly that they didn't have public subsidies,
military expenditures, public works, and a huge government bureocracy. The
(20:26):
rulers of the Roman Empire raised taxes and minted more
coins to pay their bills. Coins were issued with less gold,
and over time people lost faith in the currency. Chinese
rulers started using issuing paper money a little over one
thousand years ago. They too, realized that they could buy
a lot of stuff if they printed a lot of money,
which is exactly what they did. Eventually, people caught on
(20:49):
that the paper money had no value, and prices rose.
In order to keep up the scam, the rulers ordered
death for people who would not accept it. Even nations
huge gold and silver reserves spent beyond their means, sixteenth
century Spain was able to garner significant quantities of the
metals from the New World. King Philip the Second managed
(21:11):
to spend it all and then some sound familiar wars
shovel ready palaces. He defaulted on his debt four times,
even though revenue doubled during his reign. When the fifteen
seventy six, when his revenue was up by more than
fifty percent, his debt jumped by one third. His bankruptcy.
(21:34):
His last bankruptcy occurred when peak gold shipments were coming
to Spain. Again, that there's constant examples of this, and
this idea that this time it could be different is insane.
We are still in a very very good position as
far as the world is concerned. I'm going to keep
(21:56):
beating this drum here on the program in the hopes
that maybe people will wake up to this and start
voting accordingly. And what I mean is, yeah, yeah, you
have to stop voting for stuff. Have to stop voting
for stuff we can afford. You've got to stop cheering
(22:17):
on all the warmongers that want to constantly send money
all over the globe. You got to start putting people
into positions of power that actually want to deal with
the problem. I'm prepared for it, My clients are prepared.
Most people aren't. Watchdog on Wall Street dot Com
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