One-on-One with Paul Craig Roberts #2
By Greg Hunter’s USAWatchdog.com
Former Assistant Treasury Secretary Paul Craig Roberts says, “The last thing the banks want is a rise in interest rates that would drive down the values of their holdings and reveal large losses masked by rigged interest rates.” The Libor rate rigging scandal was all about keeping the financial system and the big banks from failing. Forget prosecuting the perpetrators because Roberts says, “The minute those interest rates go up, the loss to people will just dwarf the interest rate loss.” Fraud is now part of the system that keeps it from crashing. Roberts has a PhD and was responsible for economic policy at the Treasury. He says, “We are probably headed for a crash anyway because I don’t think they can maintain this forever.” Join Greg Hunter as he goes One-on-One with Paul Craig Roberts.
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
Absolutely fascinating interview Greg. Well done. It scares the willies out of me. I am amazed at how matter-of-factly Dr. Roberts can explain the enormity of the situation and do it so calmly. The idea that those responsible for the rate rigging will explain their actions not as criminal but as saving the system tells me how truly distorted our sense of morality and responsibility, as a nation, has fallen.
I believe your comment in the interview, “We have to have fraud in the system to keep the system from imploding” hits the nail squarely. It also reminds me to keep preparing. If we are at the point, and it appears we are, that the financial system of the country and/ or world is kept afloat by tricks and scams, the inevitable end game must be close at hand.
Keep up the good work.
Thank you Robert and Mitch!
Greg
Mr. Roberts is right. This house of cards is built to protect the fraud. This is what happens when you intertwine my money, your money and the banks money. I find this akin to a married couple that mixes money and when divorce happens the other wonders, “where the hell has all the money gone?”
Thank You, Greg and Paul
Hi!, Patrons Of USAWatchdog Et Al:
Schizophenia may be one of the most potent definitions of OUR present Fed. Policies structured around the lowering of interest rates that benefit the Big Bankers but imposses income losses upon the masses of smaller investors who market their funds to the banks, in order to insulate their retriement incomes from inflation etc.? The White House incumbants scramble to make US believe in their economic recovery policies. All the while the present administration allows the present low interest rates to rob away the expectations of millions of investors such as retirees who during their working years programmed themselves to believe they could count on certain chosen investment instruments’ interest rates to cushion their loss of incomes during their retiement years. Now being taken from them to help the Big Banks’ interbank loans at cheap rates among themseles with almost FREE purchasing media; all the while at the same time these Big Banks plus OUR White House monitor consumer responses to the economy in a false, delusional hope that the economy will revive itself though these investors have been robbed of spending power stimulus via their low interest rate policies that drag on and on. In response to this obvious loss of massive spending power by consumers, the Fed will eventually entertain QE3 in my opinion, in a spastic attempt to re-energize OUR economy; though loss of interest rate buying power plus too few jobs’ income tax receipts outmatches their vain attempts to stimulate powerfully enough to bring the economy back to former generative scale. Should the Fed. raise interest rates to a sustainable level for consumer retirees to capture enough increased income to revive their economic spending powers to that degree, the cost to the Fed. & associated Big Banks holding more than one quintillion dollars worth of derivitives will break them all which is what they fear. This causes them to do what they can to hold down interest rates in order to avoid bankruptcy themselves. In this inordinate process both consumers of all stripes and OUR economy is being held hostage to the degenerative options faced by both the Fed. & the Big Banks. Now, following the laws of cause & effect, should these circumstances create a liquidation of major holdings in the US Stock Markets by the millions of baby boomers, in order for them to raise living capital, look out below; because nobody at that time will know where the bottom of the Stock Markets will be is my opinion. This is OUR ship of STATE & OUR responsibility too then to pick up the pieces of Humpty Dumpty for reassembly whenever He falls to pieces?!
RUSS SMITH, CALIFORNIA
[email protected]
Russ, at some point in time the market will react to the reality on the ground, but until then, CNBC will continue to announce a bull behind every tree. Nice thinking, appreciated. Art B.
Greg… You say “Bring on a new system.” The people that corrupted this one already have it prepared.
David Prezioso,
You are probably right–good point! Thank you.
Greg
Thanks very much for this incredibly informative interview! I’m truly stunned by all of this. It would seem that savers (those who do the right thing) must be thrown under the bus for this big Ponzi scheme to function. However, in my view, there are huge negative consequences of this financial repression that will eventually materialize. One of the more significant of which is whether pension funds, retirement plans etc will be able to deliver in this environment of negative rates. And with a massive number of boomers moving closer to retirement, this rate rigging is sowing the seeds for a new crisis. In fact, will the boomers ever be able to retire? And what about the effect that boomers working forever will have on job prospects for the younger generation? – they are the ones who are really paying the price for this, assuming the whole thing doesn’t collapse, which I believe it will.
Yes John you are correct. I hope you are protecting yourself financially.
Greg
Many boomers will probably not retire and die penniless. A lot of my boomer relatives have been ‘up to their eyeballs in debt’ their whole lives! One still rents his house and he’ll be 60 this year! He could’ve bought that house many times over. The Boomers were ‘programmed’ to buy everything on credit, and did! Now that bubble is deflating and they’ll be left with nearly nothing. My boomer relatives don’t even seem to comprehend how foolish they were. Reminds me of the Three Littles Pigs nursery rhyme. You’re litrerally safer keeping your savings in a pile of bricks than Pension Funds.
FRAUD TO SAVE THE SYSTEM FROM COLLAPSE
Murder the murderers to keep them from murdering
Steal from the thieves to keep them from stealing
Greg, Mr. Roberts understand that its always been rigged, his words not mine. What was mind boggling was the fact that even after the scandal came to light Mr. Roberts believes the “rigging” will not be stopped but continued because the FED’s policy is for low rates.
Art,
The market participants will stop it. Who in their right mind will make a bet on interest rates based on Libor? The lawsuits will also throw a big wet blanket on the party. Remember Libor is used in $800 trillion in global transactions, if the big banks are responsible for just 1/10th of one percent that’s $800 billion and I think the total cost will be much greater than that.
Greg
Good digging! A smelly mess is it not? Is there any way you can gain up his mic? Or perhaps compress the audio track and post it as an mp3. I’d like to use this to explain the situation to people.
If you can get him back on, ask him if government getting out of the way of competing currencies might provide a path to defuse this bomb or at least limit the blast an how far down would he thind we’d have to go for the present players to entertain suggestions of that sort?
cm1,
Good question, thank you.
Greg
Yes Dr. Roberts is a brilliant man with an incredible amount of experience and deep ‘understanding’ of the bigger picture. The BEST way us and the country to benefit from his knowlege… is ‘to let the man speak’ without so much theatric interruption. Its amazing that he can keep his train of thought and composure with that going on..
….”Moderated”, you mean censored, correct?
Why don’t you speak English and truthfully?
anonymous,
No. I mean moderated. I am not going to allow someone to come on this site and make false accusations without back up. I also do not allow comments that tears down any religion. That includes but limited to religions such as Muslim, Jew, Hindu, Buddhist, or Christian. If you want to spew hate, please go someplace else. And if you are so proud of what you are saying why not use your real name instead of hiding behind “anonymous?”
Greg
Well done Greg!
Very few sites hold themselves to any standard of decency.
I am often disturbed by the ouright hate I find on many blog sites.
Thank you Dave. I am always open to alternate views and discourse but not hate. That is very unproductive and folks cannot really learn anything from it.
Greg
Greg,
I’ve been reading your post for quite a while and I appreciate the simplicity in the way you explain the current issues. I am a small business owner in CA and have been in business for almost 20 years, I do not see a future for the middle class or small businesses in the USA any longer (Especially CA). The costs and regulations keep going up and small business is no longer able to pass on those costs or reduce expenses. For the past three years i have been supporting my company financially as we have been operating at a loss, but from what I see coming why would any business owner continue in that fashion. I beleive a lot of small business owners are in the same boat as I am in and I forsee a lot of business closing or going bankrupt right along with the municipalities, states and governments.
The financial and political system is rigged to beenefit the few and people are waking up to the daily barrage of theft and corruption, but nothing can be done about it. We have no way out of this mess except a full blown “crash” because the elected officials cater to the freeloaders and they represent to large of a majority to fight so nothing can ever be changed. Anyone wanting to make change in this country is unable to doo so because it is not popular. Even a full blown financial crisis won’t solve our problems because at that point even more people will plead for a gov’t entity to help them out.
I have no suggestions other than to hoard gold, silver, food and some form of power.
Thank you for sharing your analysis and for your comment!! I am happy you are taking steps to protect your family financially.
Greg
exceptional interview
Thank you Charles and welcome to the comment section. Please record your thoughts here anytime.
Greg
awwww come on greg, can’t even hear the guy. got may speakers cranked and you are coming across just fine, but your guest is just not hitting the audible minimum.
so, from the text:
really! forget prosecuting the pertetrators because the loss to the people is going to be devastating……..but we are probably headed for a crash anyway….
!
in other words, forget about justice. new paradigm, fraud is good.
so much for phd’s. go to college, lose your mind.
G Johnson,
His audio may be a little low but it sounds pretty even on my system. I don’t think he’s saying we should not have justice, Roberts is saying the price is going to be so high the people in power will not prosecute because the system will collapse if they do. That, in and of itself, is very troubling to me and tells me we are very close to the edge. Thank you for your comment I am always trying to improve.
Greg
ok, he says that we may collapse if we prosecute, and will most likely collapse if we don’t. actually true. as long as the fed remains, nothing will stop the end of the dollar as we know it.
another thing about righteous prosecution is that the quantity of perpetrators is immense and highly placed. from crooked banksters and corporate heads to military top brass to most of the legislative branch, the judicial branch, the executive branch (going back to…oh, say lbj), the justice department itself, fbi, sec, cia, nsa, media moguls,ama,aba,state and local government bureaucracies, law enforcement and on and on and on. totally corrupt and anticonstitutionally treasonous beyond reckoning.
so, who wants to get it started? 🙂
so, too big to stop? maybe, but the alternative is not pretty.
G,Johnson,
Sounds like a plan!
Greg
Greg, thanks for the excellent interview with Mr. Roberts. Perhaps a follow up interview with him exploring how to reenact Glass-Steagall and break up the too big to fail banks would be even more interesting. Thanks again and keep up the good work.
Phil,
Good idea I’ll keep that in mind!! Thank you.
Greg
Mr Roberts said that reenacting the Glass Steagal act would be a long term solution but would not address the disastrous effects of unwinding the current situation.
Perhaps we should follow the Icelandic approach here.
Frosty,
I am for that my friend!!! If we would have done that in 2008 we would be in a real recovery by now. Yes it would have been rough, but what is coming has been made far worse by the bailouts!!
Thank you.
Greg
The emotional spin added by Greg was unproductive.
Marslinger,
Thank you the feedback.
Greg
Yes I too have to agee with Marslinger
You go, Greg! You get more outraged every week and I appreciate you speaking out. Its been great watching your awakening.
ABR,
Thank you for your kind words and for supporting USAWatchdog.com.
Greg
Greg, what an excellent interview. Mr. Roberts puts it out their for all to see and hear. The banksters have put the world at risk and we the middle class and below will have to pay the piper. Thankyou for sticking to you assertion that Fraud is now part of the system that keepsit from crashing.
Thank you Larry Carter. Hope you make many more comments.
Greg
Present financial problem solutions
1. Low interest rates only gave free money to big banks who do not use it to invest in jobs but make speculative plays whose losses require even more bailout money. If we have 0% rates they should be available to anyone.
2. Social programs such as unemployment, disability and student loans are too loose and are not monitored. These discourage the work ethic and produce no tax revenue or improvement to our country’s infrastructure.
Solution
1. Mark worthless paper derivatives and loans backed by the gov to market.
In effect this would devalue the dollar (declaring bankruptcy). This will require a new currency based on gold as no one will want the old dollar anyway. Increase interest rates to 2+% to encourage savings that will be used for worthwhile investments.
2. Replace the whole horrible income tax with a flat tax or a VAT (value added tax).
3. Eliminate ALL unnecessary gov spending. This includes a 50% cut in wasteful military spending and lavish life-time health-care, pension, etc. benefits for congressmen many of whom only serve one term. Investigate and monitor fraudulent disability claims.
4. Outlaw any monetary payments (bribes) by lobbyists to sitting members of congress and limit campaign contributions to $10,000. Corporations and any other financial groups may not contribute. In fact, limit all campaign activity to 2 months before the elections as they do in Europe.
5. Bring back WPA projects to provide useful jobs that will both provide income and improve broken down bridges, highways, etc. This will restore pride to the unemployed and get them off their couch potato asses.
Brovo James!
Greg
VAT is a horrible idea. They just upped it in Spain to around 21 or 22%. It hits the poor and middle class disproportionately hard. It’s slavery by another name!
Thank you Greg and thank you, again, Dr. Roberts!
This site is BY FAR the BEST online.
—–
MEANWHILE, the plug that will eventually be pulled (not mentioned until 18:50 min. in VIDEO) is the U.S. DOLLAR, I believe.
More than 50% of US Government debt outstanding is owned by foreign nations/investors. When the rush comes from foreigners to leave the Dollar (Israel/Syria/Iran war?), then accountability for long-term U.S. reckless neoliberal deregulation will surface.
Truth, like a bubble lodged under water, never disappears. Eventually, truth — in this case — will surface via desertion of the U.S. Dollar.
Yes, Henry this party will end badly and abruptly!!
Greg
The problem behind it all can be summed up in one word: usury. All of the world’s religions have warned against its operation and of how it will serve to bring the rich against the poor and eventually even brother against brother.
We failed to take heed of this wisdom of the ages and now, like little children, we cry pitifully about the possibility of having to suffer the inevitable consequences of having done so.
Hopefully, after we suffer through what is now to come, we will have grown into adults who are knowledgeable enough understand that we can live and prosper without turning over control of our medium of exchange to a handful of men to issue as debt and payable at interest.
Hopefully we will not accept a digital, debt driven, global fiat currency as a replacement for our failed, debt driven national fiat currencies and start the same ball rolling from a new point in time.
Mr. Roberts has given his all. A few years back he was going to give up speaking out. I e-mail him and told him he must keep up the good fight. He e-mailed this country boy back and has been on point for a long time.
Mr. Robert could of sailed away, but stayed with the common man. PEACE
Bob,
I called him a good guy for a reason and you have highlighted it. Thank you!
Greg
Greg,what we’re witnessing is what I call “managed collapse”- they know how to rig the system! Our tax collecting system is going global..you will see that VAT and user fee tax come into being- the stage is set,between LIBOR and Obama’s Health Care deal….its a quinella for those finacial institutions who have bankrupted the entire globe- the world runs on debt,the larger the debt the better it is for those global-dynastic-banking-families,everything else is a mere distraction for them!!!!!
I was really disturbed by Paul Craig Roberts’ lack of moral outrage at the fixing of the LIBOR. And then I realized that he was one of the bureaucrats that sat high in the U.S. Treasury Department and watched a lot of the bankster activity going on during his tenure, and probably just got used to it.
Roberts just snickered when Greg, rightfully, displayed some moral indignation when Roberts casually claimed, essentially, that the rigging of the worldwide interest rates was just business as usual. “Hey, don’t get excited, its just the way things are done in the financial world.”
Here’s this guy, describing an enormous financial crime, as though it was nothing to be upset about. I totally agree with Greg that something is terribly wrong with the worldwide financial system when it’s very foundation, interest rates, are manipulated against all the laws, rules and regulations that are in place,supposedly, to prevent these very kind criminal activities from occurring.
What was Congress thinking when they rescinded the Glass-Steagall Act? The corruption in our political system is just as pervasive as that in the financial system.
Well, I do appreciate Roberts sharing his understanding of how this corrupted system works, but I note an underlying comfort and complacency about the situation, probably attributable to a large pension income that is guaranteed for a lifetime, at taxpayer expense.
And so goes the world.
Walter Hunt,
As he said he is not condoning what is and has gone on. Dr. Roberts is just lifting the vale to let us know what is likely to transpire in the back rooms of government. I have to admit I personally am outrages at this whole mess caused by the bankers and regulators who turned a blind eye to crime. Thank you for your views your point is well made and well taken.
Greg
There is no conscience left among those in power.
The issue is how long will this be dragged on till it cant be hand held anymore. Till then those who are doing the right thing would loose, and those who are doing the wrong thing would loot.
Hi Greg. I’ve been following the financial crisis since 2008. I have no training in economics, but slowly I have been learning enough to understand vastly more than I did before. I have to say that this interview with Dr. Roberts is one of the best I have seen lately. His insight as to why this is allowed to happen is almost hard to believe. Basically the fraudsters hijacked the system and everyone else. Our economy has a gun pointed at it that can go off any minute. It’s as brilliant as it is evil.
George,
Love this line “It’s as brilliant as it is evil.” You are correct and I hope you come back and comment again. Welcome.
Greg
The elite set the stage for the removal of debt and the return of bullion based currency in REAL-TIME when the fixed peg of $35/oz was severed in 1971. They cannot finish the job and implement bullion based currency by way of any top-down process, however. A top-down process would be too powerful and abrupt which would crash the dollar. The elite are simply relegated to their prescribed role of “carrying the stick” at this point. It’s up to a market driven , organic process to monetize gold …. bottom-up. Follow the script. The bankers have done well playing out the roles of the “necessary evils”. REAL-TIME has been key to revitalizing gold as a currency. It now has the classical store values of history combined with the instant global liquidity of any national fiat currency.
Look to Nov or Dec 2012, when the Feds will give gold ‘Tier 1′ status again. This means that it’s as good as cash for the banks’ deposits. In my opinion this is being driven by JPMorgan, who made a whole lotta room for gold in their vaults a few years back.
Excellent and very clear interview. Mr Roberts focused somewhat on the effect of an interest rate rise on the value of assets. Perhaps a more balanced observation might have been to include the countervailing effect on liabilities.
In the falling interest rate environment that has prevailed since 1982, through Mr. Roberts’ own time at the US Treasury Department, the effect on corporate balance sheets has been the wholesale destruction of capital since most corporations were “encouraged” to grow or die. They bought into the hype of the efficient balance sheet and loaded up with debt.
What this says to me is that the sooner we have a return to sanity and probity the better it will be for everyone. This means that the system we have at the moment and have had since 1694 in the UK and since 1913 in the US must be recognised as a criminal enterprise and steps taken to arrange its demise. These steps have been detailed in the United States by Dr. Ron Paul. They include a return to the use of gold and silver in the monetary system and a regime of competing currencies while removing legal tender status from the Federal Reserve System’s currency.
That said I would like to comment on Dr. Paul’s Plan to Restore America which I believe is a work of pure genius. It will open the door to the changes we seek.
In order to emphasise the positive effect Dr. Paul’s Plan will have on the American economy let me quote from the speech given by President Obama in Kansas, his mother’s home State, to kick off his Presidential campaign and frame the issues he will address. Here is the quote:
“I think about a company based in Warroad, Minnesota. It’s called Marvin Windows and Doors. During the recession, Marvin’s competitors closed dozens of plants, let hundreds of workers go. But Marvin’s did not lay off a single one of their 4,000 or so employees—not one. In fact, they’ve only laid off workers once in over a hundred years. Mr. Marvin’s grandfather even kept his eight employees during the Great Depression.
Now, at Marvin’s when times get tough, the workers agree to give up some perks and some pay, and so do the owners. As one owner said, “You can’t grow if you’re cutting your lifeblood—and that’s the skills and experience your workforce delivers.” For the CEO of Marvin’s, it’s about the community. He said, “These are people we went to school with. We go to church with them. We see them in the same restaurants. Indeed, a lot of us have married local girls and boys. We could be anywhere, but we are in Warroad.”
Here is the speech printed out and in video format: http://www.barackobama.com/fair-shot/full
The quotation I have taken from his speech focuses on a company that is obviously not unionised although President Obama neglects to mention that fact. Since it is a private family owned company its financials are not available but it is reasonable to assume that it is not dependent on government largesse of any sort. Here is the company’s website:
http://www.marvin.com/ and its Linked in page: http://www.linkedin.com/company/marvin-windows-and-doors
President Obama says that this is the kind of company on which America is built. This is absolutely true, it was founded in 1912. It is also a company that has likely not depended on government assistance throughout its entire life least of all to get started.
It is this kind of company that WILL restore the American economy, providing jobs for millions of Americans and it is this kind of company that Dr. Paul’s Plan to Restore America is directly aimed at, to help them prosper not with government handouts but by instituting the fiscal, monetary and regulatory policies that will liberate the initiative and creativity of American businesses and American workers.
It is impossible to analyse in detail every policy that is indicated in Dr. Paul’s Plan but I will address one broad objective and describe how it will affect the economy in a very productive way.
The first objective in the Plan is to cut $1 trillion from the Federal budget in one year and to balance the budget in three years. Leaving aside the actual items that will be cut and how they will affect the present working of the economy I wish simply to focus on the monetary effect of these cuts and the broad effect on all businesses like Marvin’s Windows and Doors that will benefit from them. This is a critical point because it will also highlight a little known fact about how the actions of the Federal Reserve are presently having the opposite effect on these businesses than the one ostensibly intended by President Obama and others like Paul Krugman who advocate these actions.
In cutting $1 trillion from the Federal budget the first obvious effect will be the reduction by this amount in the borrowing requirement of the Federal Government through the agency of the Federal Reserve.
Leaving aside Quantitative Easing, the Federal Reserve provides funding for the Federal Government through its open market operations in conjunction with the investment banks who are authorised as primary dealers for this purpose. In order to facilitate this activity the Fed offers these dealers an opportunity to make a risk free speculation, in effect a guaranteed profit.
By doing this the Fed ensures that there will always be buyers for its Treasury debt and it also knows that the effect of these operations will be a continuous reduction in the interest rates and at the same time a continuous increase in the money supply which according to the Quantity Theory of Money should cause inflation in the economy. This is what the Fed has been doing very aggressively for the past four or five years in order to ignite inflation in the economy.
What has been happening is that the major banks have been focusing on this activity to generate profits and increase their capital in order to avoid further difficulties. Since the banks’ funds have been flowing downhill into the bond market to meet Federal borrowing requirements it means they have not been available to small and medium enterprises (SME) in the wider economy. This is what Dr. Paul means when he says that the economy will not be adversely affected by the reduction in Federal spending because the same amount will then be available to the SMEs to generate activity in the private economy where it will be used more efficiently.
However this is not the only effect these spending cuts will have.
As indicated above the effect of these open market operations has been a steady fall in interest rates for the past thirty years. Now as anyone who is familiar with the bond markets will know, a reduction in interest rates results in an increase in the market value of the bond. This means that all companies carrying long term debt have seen their liabilities increase steadily over that period. This has reduced their competitiveness and in many cases where they have not used conservative accounting principles they have experienced a destruction of their capital due to paying dividends that were not justified by a real increase in their shareholders’ equity. This means that many companies today are actually bankrupt but have not realised they are because they have not marked their liabilities to market.
In a recent report in the UK the accounting firm Ernst & Young reported that no less than one in three companies were in this condition and should have been placed in administration by the banks but were not.
http://www.telegraph.co.uk/finance/economics/9310805/Zombie-…
The report did not single out the open market operations of the Bank of England and the consequent falling interest rate environment but it is clear that this is the root cause once it is understood. If this is happening in the UK then it is certainly happening in the US.
Therefore by eliminating the borrowing demands of the US Treasury from the market there will not only be an increase in credit available for businesses but also these policies will put an end to the falling interest rate environment and lead to true market interest rates which will reduce the market value of all long term debt and therefore long term liabilities.
I believe President Paul will appoint Jim Grant to be the Chairman of the Federal Reserve and he is the founder of Grant’s Interest Rate Observer: http://www.grantspub.com/about/jim.cfm He understands exactly what to do.
When we add to this major VERY positive change in policy, Dr. Paul’s deregulation plans, his intent to reduce the corporate tax rate to 15% and his opening the door to the repatriation of all profits being held offshore, thought to be in the trillion dollar range, without any tax consequences it is very likely there will be an extraordinary increase in business activity and a commensurate increase in jobs in the private sector. This is not something any kind of government financed infrastructure plan would ever deliver.
The private business sector is I believe the real focus of Dr. Paul’s Plan to Restore America and I believe it will succeed beyond anyone’s imagination. This is why I believe Nassim Taleb the author of the Black Swan has been so firm in his support for Dr. Paul. He gets it.
Thank you David for the analysis and content!
Greg
G’day Greg, what a great interview with Paul Craig Roberts. It was encouraging to see your rage explode at the acknowledgement of this fraud from the TBTF banks & the Fed, & I sure agree with your rage & disbelief. Mr. Roberts stated that all USD backed assets would devalue as the demand for USD’s wanes, my question to you then Greg is, where does that then leave the investors who are holding gold stocks, ETF’s & bullion especially, who have been looking for a safe haven away from this corruption ? Cheers, Ian. I look forward to you response, thankyou for your great work.
Ian,
That depends on the gold stock and where it is kept. You can have a great investment and then MF Global can happen. Lots of folks on the site are big fans of physical metal and I think that is one reason why. You can make monster gains it you hold the right mining stock in the right place.
Greg
Greg, you’re right Dr. Roberts is a good guy. I think he smerked when you got upset because you expresssed what he’s been looking for from average americans for a long time. They did try to take them down in 08, the problem was not as many americans were as upset as you expressed when he told you the game is rigged. These are smart evil people in very high places. Only God knows who’ll wins. I just hope it’s not as painful as it can be. Too many people wrapped up in sports, american idol, dancing with the stars, etc. More of them should be on your site getting a real education.
Wow! Ed
Thank you for the kind words and comment.
Greg
I with you Greg. The system is rotten to the core, more than corrupt. I see the disgust in your face and hear it in your voice. Again, I’m with you, let it fall. Uphold the rule of law – it is there for a reason. Without integrity, honor, responsibility, accountability and trust we are nothing, nothing but a hollowed out rotten core. Look at us, our country, our rotten system and the rotten people who we’ve put in charge of it. The faster it all comes crashing down the faster we can rebuild it. Rebuild we must, and rebuild we will. Our foundation will be the US Constitution and our guidelines will be The Federalist Papers. Yes, pull the pin. We’ll survive and be better off for it.
LSW,
Were going down any way. Let’s plan it and control it as best as we can, but we are going down anyway. Thank you for weighing in here!
Greg
Greg:
Great job with the interview. No one can ever accuse you of doing a 60 Minutes fluff piece. He is right, though. The banks have become one big gun pointed at the head of the people. It is terrorism with class. It is just like when congress was told that there would be martial law declared if TARP was not passed. It seemed that Dr. Roberts was telling it from the view of those inside the beltway and how they rationalize their actions to get through the day. It is like so many other situations. You rationalize actions away until one day you look up and the water is up to your neck, and you have nowhere to go. Honesty is a hard thing to legislate.
Best wishes,
Brad
Thanks brad for the comment and analysis if the interview.
Greg
Brillant Greg! Just plain brillant interview. Fascinating and totally repulsive at the same time. Low interest rates to perpetuity in order to save this fractional reserve monetary system that parasites the masses to their death. I had a hard time understanding why some of the still AAA Euro Nations Bonds were selling at negative interest rates recently. That explains it all!!! Negative interest bonds: The end of the road is near.
Gold has to go much, much higher and soon…
It will when it attains ‘Tier 1’ (same as cash for deposits) status. Then the banks will rig it to the upside to bail themselves out of their predicament.
“The only cure for the patient is death”. Slingshot.
I do not believe that Glass-Steagall can help us or any other
law, executive or legislative, because it is all a lie. The point has been reached where the cure is worse than the disease.
If that is the case, will it matter who we vote for in November? I say it don’t. It’s all a sham.
Greg, you have done a great service in trying to warn others of the disaster that will engulf the whole world. You would be welcomed in my camp, anytime.
Groundbreaking interview, Greg. Very important information about how people in our government see things and what their motives are. It’s odd, isn’t it? They believe considerations of the ‘greatest good’ lead to justifications of deceit and fraud. They are missing the point. They can only see the emergencies surrounding them. They don’t see the gorilla. In fact, these problems are not accidental, nor are they the result of idiocy. They are being created intentionally, and repeated throughout many generations, specifically for the purpose of destroying these nations, or reducing them to servitude. If our people are guilty of anything, it is a weakness of will in determining our own destiny.
Robert,
Love this, “They believe considerations of the ‘greatest good’ lead to justifications of deceit and fraud. They are missing the point.” Thank you
Wow Greg thank you for the best and most powerful financial interview I have ever seen!
I watch everything I can outside of the msm and it’s not only what is being said in your interview, but who is saying it.
Paul Craig Roberts is brilliant! So insightful.
THIS SHOULD BE HEADLINES ON ALL NEWSPAPERS AND TV NEWS NOW!!!
I started buying silver because of Max Keiser 4 years ago and this interview has justified every once I have swapped my paper(plastic in Australia)for.
Thank you for your excellent reporting and interviews.
Cheers Wayne
Thank you Wayne for your comment and positive feedback.
Greg
Love listening to Dr. Roberts. Hope all these commenters are going to his site and reading all past columns. His 9/11 commentary is just mind boggling how matter-of-factly he lists all the things that had to occur for the government’s conspired fairy tale explanation of that event. Greg you are correct when you say fraud is necessary to keep this fraudulent amerika going, just in a hell of a lot more ways than just rigging interest rates.
Mr. Roberts is right on about the Glass Steagall Act and Mr. Sinclair about the uptick rule.
This is what I believe about bank derivatives, the state of them and what they accomplish:
Summary first: IRS derivatives encourage: bond holders to hold giving the impression of confidence, contributing to keep inflation from running away and contributing to interest rates declining.
According to Mr. Paul Craig Roberts as interviewed on USAWatchdog.com, IRS (interest rate swaps) constitute about 80% of bank derivatives. Thanks to that interview I believe I now know how they control or help keep rates down with them:
A bonder holder may feel rates are as low as they can go. Meaning he fears depreciation of his bond in dollar terms. The bank may see a spike in rates indicating selling force and he recognizes it for what it is, as indicated above. The bank offers the bond seller a deal. Keep your bond and I (the bank) will give you a variable rate in return for your fixed rate. If the bond holder agrees the value on his bond will remain fixed at where it is today because if rates do rise I (the bank) will pay more interest thus securing value in dollar terms of the bond. The bond holder can hold his bond without fear of depreciation and he doesn’t have to worry about what to do with his money if he had sold the bond (and for sovereigns like China that is no small amount or concern) – so he agrees. It is easy and he feels he has the best of both worlds (better return if rates rise and locked in todays value of his bond. Plus for a sovereign like China if they freed up all that cash and went hunting for alternatives (like shares or commodities) to the bonds they may well cause inflation to spike. I can only imagine what that freed up money would do to my gold shares.
I think the bank always fixed LIBOR to suit policy and I wonder if the outing of Barclays is a signal of change to come: in that they will now let rates rise with the reasoning that LIBOR is fixed and is again market driven. Up until now at least it was easy for them to make certain rates do not rise and actually profit from all those IRS derivatives. The bank may also have been indirectly keeping a lid on inflation at the same time as explained above and also giving the world the impression that there is still confidence in the U.S. dollar.
Other forces like the use of other currencies used in global transactions replacing U.S. Dollars, may force rates higher and/or bond holders who begin to realize the bank cannot go good for any substantial interest rate rise and they too begin to sell in spite of the IRS they have in hand.
In the last number of years, must thought interest rates would go up. In that case if you owe money the motive is to lock in a fixed rate because you expected rates to rise. If you have money and purchased bonds and expect rates to rise, your motive is to switch from a fixed rate to a variable rate so as to gain from larger interest payments and because of the variability you would also preserve the current market value of your bonds. The banks gained from both while rates dropped ever lower.
In those that owed money (loans) there is no market and thus the amount of the loan payable doesn’t change because of rate changes. He did an interest rate swap (IRS) expecting to lock in current rates. Rates didn’t rise, they went lower meaning the borrower is paying a higher rate then what is now the current rate, without any compensation for appreciation if he were holding a bond. If anything the bank may show some appreciation for holding the loan and extra interest income to booth.
Those that have money and have bonds as a result have the exact opposite desire and that is to lock in a variable rate. When rates rise he will get higher interest income and since if it is a variable rate he should maintain the market value of his bond at whatever it was the day he signed a deal for an IRS. Here to the banks profited with ever declining interest rates. As rates went down that interest to the bond holder also went down and the bank was receiving the higher fixed rate. But at least the bond holder sees his bond appreciate in value as rates drop. So in that respect as rates drop, the bond holder isn’t losing as much as the borrower. What he did was insure his bonds from losing value if rates went up, in which case he also would receive higher interest payments – kind of like having your cake and eating it to.
By setting interest rates lower and through IRS deals, banks have managed to profit from borrower and lender (bond holders) alike.
Many borrowers are ready to sue for their loses due to rate setting. What do you suppose the banks will do as soon as the dust settles on these lawsuits and the borrowers are back into a variable rate loans again? I suspect the rates will rise.
How to deal with the bond holders if rates are to rise? The biggest worry there must be if they decided to sell, which would put down pressure on the U.S. Dollar and up pressure on inflation and interest rates. The Yen is strengthening while the Renminbi is pegged to the dollar and I have not heard anything about de-pegging in years now. The attempt at de-pegging would have helped to devalue the dollar. If China already had IRS contracts then devaluing the dollar would have made higher rates likely easier to pay and China would be no further ahead in purchasing power at least. The IRS protected the dollar value of their U.S. Bonds but not the purchasing power, with a devalued/devaluing dollar. Maybe this is why the Chinese are so eager and also encouraging citizens, to buy gold.
So in conclusion to what to do with bond holders: I suppose pay those higher variable rates but with a devalued currency – equilibrium.
Yes, the system is based on fraud. Isn’t that the essence of fractional reserve banking. I agree generally with Dr Robert’s assessemnt although I am more skeptical in regards to government regulation. The core problem is not “deregulation.” We have plenty of regulations. Indeed, we have are too much government meddling. The core of the problem is the fiat money. If the global economy were on free market based monetary system ( ie gold and silver) all the speculation and corruption that brought on this economic collapse would not have occurred.
Greg thanks for you endeavors.
I view the vast worldwide monetization after WW2 as a basis for conquest of nation states.
The very nature of interest rates that are calculated to benefit the intermediaries are inflationary.
Coupled with growth of consumer credit which by it’s nature is expansionary therefore inflationary,
the dilemma truly is what sort of a system do we want. Is small really as
beautiful as stated so eloquently by E.F. Schumacher? Or does the answer
lie within the tenets of the Austrian school of economics?
As other people have mentioned have the PTB already decided for us?
I think personally,I will pray for confusion in the ranks of the unjust and
for justice to prevail.
Stanman,
i pray for justice as well my friend.
Greg
Hey Gregg,
Great job. My question is very straightforward…….When do you honestly think the implosion will occur? End of 2012 or beginning of 2013……? Most financial collaspes happen in the Fall. Now of course I’m not going to hold your feet to the fire….Just want your honest opinion, thats all….Thanks and PLEASE KEEP UP THE GREAT WORK.
Darren
Darren,
I and many others say the implosion started in 2008 and we have been bottom bouncing on a plateau. Look for the crash to intensify and after that we will find another lower plateau. It is anybodies guess when the next sudden downturn starts. Everybody should be ready now.
Greg
Great interview. As an aside, he was difficult but not impossible to hear.
The one thing I found a bit troubling is that he sees a return to pre Clinton era GS regulatory environment as a sort of solution, albeit an unacceptably painful one in terms of political will. Elimination of Glass Steagall merely exacerbated the problem. If banks always had to be 100pct reserved against deposits and the reserves were in specie, would we care now about rising rates or any regulations outside of the enforcement of the contract that says the bank has to hold the reserves against the deposits? I realize I am not saying anything new here, I am just a bit concerned about whether the real problem is being properly identified. It is always easier to cry out for more regulation, but perhaps instead what we really need is to eliminate the government involvement in the money and have them focused on the enforcement of private contracts like bank deposits.
Adam,
The folks that want zero regulation must also believe in bankruptcy–they don’t. These banks should have gone bankrupt in 2008. Yes, I mean bankrupt. We saved the top and told everybody else top to pound sand. You cannot have the wild, wild west in investing and an unlimited back-stop by taxpayers. That’s what Glass-Steagall did. Investment banks could make any wild investment they wanted, but if it went bust the bank went into receivership. Commercial banks got FDIC insurance, and because they did, they were restricted. Now, you have banks like JP Morgan with FDIC back-up and $70 trillion in derivative bets. You cannot have it both ways on this. I am for capitalism and I am also for bankruptcy for the incompetent and over leveraged. Thank you for your comment.
Greg
Greg- What a public service to have Dr. Roberts on! No wonder his former colleagues in the Treasury Dept. dislike him for he lets the cat out of the bag and tells it like it is. This is not hard to understand but the facts are kept from the public.
Yes Vicki,
He tells it like it is and has been ostracized by his contemporaries. He holds a PhD in economics was a former Assistant Treasury Secretary. Dr. Roberts knows what he’s talking about. Protect you and you family. Think Cyprus and plan accordingly. That’s your crystal ball into the future. Thank you for the kind words and support.
Greg