Bernanke Playing With Fire-Laurence Kotlikoff

KotlikoffBy Greg Hunter’s 

Boston University Economics Professor Laurence Kotlikoff is worried about America’s dire financial situation.  Dr. Kotlikoff says, “The situation is getting worse and worse and worse.  We are running a massive six decade Ponzi scheme, and it’s coming to a real threatening point.”  Dr.Kotlikoff calculates the real government deficit is enormous and it’s growing exponentially.  “It’s $222 trillion.  Last year it was $211 trillion.  We grew the deficit by $11 trillion in one year,” charges Dr. Kotlikoff.  He also says, “We are actually in worse shape than any developed country. . . We are using accounting that would make Bernie Madoff blush.”   Kotlikoff thinks the Federal Reserve could easily lose complete control of inflation and warns, “Ben Bernanke is playing with fire here because we could have a tripling of the price level.”  Join Greg Hunter as he goes One-on-One with Economist Laurence Kotlikoff.

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  1. justin king

    I want my mommy.

    • Greg

      Justin King,
      Those were my thoughts as well after listening to Professor Kotlikoff. Thank you for the humor.

  2. Doctor B

    Interesting interview, Greg. Professor Kotlikoff explains clearly that the U.S. is in trouble, but he also reveals either ignorance or dismissal of real money that many academic economists suffer from. He says that every investment will be in bad shape in the event of a dollar crisis. This is flat out incorrect. Those in the banking and investment establishment are already lining up on the other side of the bond bubble blow-up to profit from coming explosion in commodities prices. For example, why is JP Morgan creating a physical copper fund that will pull 30% of the copper off of the market and hoard it? They are doing this despite shrinking global industrial output that is typically bearish for copper too!

    Prof. K. also misses the point that in order for QE to continue the federal debt MUST grow. The Fed needs the Treasury to issue bonds that it can monetize otherwise there is no more QE. If that happened, the banks would collapse and the dollar would disappear from the global stage because it needs debt to be created. In short, Bernanke has 2 choices, let the dollar implode through a failed debt-creation mechanism or inflate the dollar through greater debt-creation and destroy it that way. The only other possibility is to back the dollar with revalued gold and silver, which would monetize the metals, see prices skyrocket, and … save the dollar.

    • Greg

      Thank you Doctor B for adding your perspective and analysis here.

  3. jc davis

    I love it. The deer on the wall was more distracting then the background noise. one must know his freezer is full.
    With 222 trillion short how why would anyone in the world want to get stuck holding a lot of cash. A good 1 acre of land is much better.
    Thanks Greg.

    • Greg

      JC Davis,
      You are correct that acre of land could feed many families. I hope you live in an area where the growing season is a long one.

      • jc davis

        Presently I live in the city, but have 19 ac 1hr away from any major city.
        Doctor B has a good point on the copper, iv been collecting copper 4 yrs now. silver and copper will become in the highest demand when it becomes money. Mostly copper wire unstripped.

  4. Rob

    Hi Greg!

    Debt is the ball and chain the banking cartel needs to bring all sovereign nations to the table so they can then shackle them to a global electronic currency. The dollar will lose its reserve currency status very soon as 7 currencies take its place as regional reserve currencies of blocks of nations. This should all begin in earnest this year.

    In CHRIST! Rob

  5. therooster

    Gold is money but it has historically had liquidity problems because of FIXED trade values. Now that REAL_TIME gold-as-money floats, the capacity to extinguish debt has heightened the prospect of a market driven effort to monetize personal gold. It can only occur in a bottom-up effort however because the monetization of free floating gold in a top-down fashion would likely result in a fast and furious exiting of the USD. The organic workings of the market must be the instrument of change. All the elite can do to aid the migration is carry the stick …. in inflation of the old to bring in the new. Some evils are necessary, so it seems. Follow “the script”. They do. Do you ?

    • Greg

      Good stuff Rooster. I think at some point Wall Street takes the gold trade parabolic. Who knows when that will be, but as DR. Kotlikoff says, “We are getting to a real threatening point.”

  6. larry english

    No wonder there are so few comments on this guy, becuz he didn’t say anything . The guy you should have on is Rob from the comments above.

  7. AndyB

    Greg: no matter the “real” deficit, unfunded or not, it is painfully clear that the Marxist Cloward-Piven strategy to bankrupt the US through entitlements has worked only too well. Surprisingly, both of the main parties are complicit, not just the Dems. It makes you wonder just who is really in charge. Hmmm.

    • Greg

      I really believe the only thing most can do is prepare as best and as diligently as possible. Preparation will make a great deal of difference in comfort and survival.n Thank you for checking in man!

  8. Troy

    P<P+I=DEBT The system is too broke to fix!

  9. bob

    Gold is expensive right now?? He sure sounded as if NOTHING was a hedge against inflation. No enthusiasm for gold or silver? Maybe buy a house and pay for it with inflated dollars? Good advise. But none to giddy on P.M.s?? Sounds a little fishy to me. What’s his TRUE reason for not recommending gold? Perhaps keep paper bills under the mattress and watch them devalue to ZERO————————

  10. Charles H.

    Hey Greg,

    Again, you prove your worth with interviews such as this one. The picture gets bigger and bigger, clearer and clearer as more knowledgable people are drawn into the canvas of commentary on this site. My thanks to you and Dr. Kotlikoff; although it is hard to be thankful for the Tsunami to come.
    When you watch the documentary of the Christmas Indonesian tsunami – people watched the ocean recede from the shore, and commented ‘how strange’. This corresponds to the time frame we are now in: the warning signs are here. And just like the tourists and indigenous who stood there and marveled: there is a great multitude in America which have no idea of what our political/fiscal fiasco all means. It was not until the ships offshore were tossed like toys in the firth and the wave loomed-up too close to actually run any distance – before people realized the danger. To watch the ensuing death and destruction takes some maturity; and forces deliberation: it also conduces to sober circumspection.
    I also have left the beaten path to pursue a line of occupation that is generally on the fringe of normal endeavor; and I did so because I refused to fit into the Status Quo in order to tell things and do things straight. Mine is a Christian path: and those who stand to defend the faith and the Bible are being despised more and more. So be it. But as such, I understand the world through spiritual underpinnings, which precipitate the other conditions – so that the real causes are spiritual, and the symptoms we see in the world are inferior and subordinate. Yours is an endeavor to warn and save as many people physically and fiscally as possible. Mine is to warn and save spiritually all those in the shadow of Death.
    You are a good guy; and I hope as time goes by, and the picture becomes gradually darker – that you don’t despair, or become embittered. Your replies have been very kind. But I fear that the reality will soon ‘loom up’ like a monstrous tidal-wave, and incalculable destruction of war or patricide will be upon us. America is done: only the fork is lacking. Take good care, my friend. Great interview.

    • Greg

      Thank you Charles for the comment and for adding your analysis.

  11. Ambrose


    Impressive interview with great guest – your video interview is getting better and better everyday.

    When the economy collapses, let’s see who is too big to fail – the Wall Street big banks or our government? I wonder if the old saying, “The Bigger You Are, The Harder You Fall” is still true.


    • Greg

      I think it is still true. I just hope they don’t take the entire world down with them! Thank you for the kind words and support!!!!

  12. justin king

    Looks like Doctor B wins the weekly comments prize.

    • Doctor B

      Thanks, Justin. I’ll take the gold plated tungsten bar, please.

  13. Liquid Motion

    If the Good DOCTOR is making it all starting to sound like a broken record….the repitition of the massive debt issue and the dire state of the USA…its because reality is a bitch. You want someone to say something different …not re-hash what has been said a thousand times. But we are now accustomed to those that side with the FED and preach with lies and falsehoods that we treat anyone with a different story or theme as being not “with it and working with them” …aka MSM. So more of the same is what we expect…which is good because eventually it will become more widespread.
    The analogy of Bernanke “playing with fire” is that of a game I used to play as a child. When we had the opportunity to go swimming, we would play a game of holding your breath under water. The one who could last the longest….was the winner. I recall that eventually the pain got so excrutiating ….when your lungs would burn because they were starved of oxygen. The desire to win was overwhelmed,you would scream to the surface and take the gasp of air that would free you from the cusp of consciousness and blacking out. It hurt but it was shortlived.

    The FED (under BSB)…is literally playing the game until it can play no more (it passes out). It will force the US to the brink of disaster under its modus operandi of extend and pretend, all in the name of ensuring the continuance of its member banks and sustaining a false economy. Another blogger made the observation that the Smart Money is accumulating on the side in anticipation of some future nastiness in order to have some bargaining tools at hand. These subtle moves whilst not market shifting, are strategic. The pieces of the puzzle are shifting across the table and slowly fitting into place.

    The road is narrow but the direction is absolute.

    There is a transition in progress.It will take some time to get there and we cannot escape the pain that is already written into the future history books.

  14. Sean S

    Hi Greg

    Very good interview.

    Some pretty odd comments from people here but that is to be expected.

    Congratulations on bringing to the table an experienced economist that talks sense. They are seemingly few are far between and they are not getting traction in Washington it would seem.

    It really is a breath of fresh air listening to this guy instead of the “gobbledy gook” being disseminated by the likes of Paul Krugman and others of his ilk.

    Unfortunately it is the Mr Krugmans of this world that the politicians (and the zombies in the mainstream media) are listening to because, in part, it is these guys that are giving them the message they want to hear.

    For example here are a few extracts from Mr Paul Krugman from an article he wrote last month (Dec 16) ….

    “At some point someone will announce, in dire tones, that we have a ONE TRILLION DOLLAR deficit.”

    No, I don’t think the people making this pronouncement realize that they sound just like Dr. Evil in the Austin Powers movies.

    “What the Dr. Evil types think, and want you to think, is that the big current deficit is a sign that our fiscal position is completely unsustainable. Sometimes they argue that it means that a debt crisis is just around the corner, although they’ve been predicting that for years and it keeps not happening. (U.S. borrowing costs are near historic lows.) But more often they use the deficit to argue that we can’t afford to maintain programs like Social Security, Medicare and Medicaid. So it’s important to understand that this is completely wrong.”

    “We do indeed have a big budget deficit, and other things equal it would be better if the deficit were a lot smaller. But other things aren’t equal; the deficit is a side-effect of an economic depression, and the first order of business should be to end that depression — which means, among other things, leaving the deficit alone for now.”

    “And you should recognize all the hyped-up talk about the deficit for what it is: yet another disingenuous attempt to scare and bully the body politic into abandoning programs that shield both poor and middle-class Americans from harm.”

    If you want to read the whole article it is here on the NY times web site….

    So rather than deal with the problem responsibly we demonize anyone that dares to offer an assesssment that differs from the line that the left leaning economists like Mr Krugman offer up. This is just so typical of what Mr Krugman does constantly and it is a tactic of the left. Note his comment about borrowing costs being at historic lows. As if we are to believe that this is market driven. What a joke. For example, without going into the issue of the ridiculous Fed rates (“real interest rates” are now negative), if it were not for the Fed now buying so much Treasury issued debt, Government borrowing costs, financed through Treasury issues would be very much higher and they all know it.

    So according to Mr Krugman, people such as Dr. Kotlikoff who clearly have a much different view of the serious economic and financial plight of the USA, are are to be derided, put down and laughed at. So call them Dr Evil from a comedy show or whatever takes your fancy.

    Dr. Kotlikoff’s concerns about inflation are well founded and people do need to protect themselves by holding hard assets that will or are likely to inflate at approximately the true inflation rate over the medium to long term.

    The real issue here is not defining the problem over and over again but coming up with practical solutions. As you have frequently pointed out, the politicians do not want to deal with reality so we mis-define and underplay the true problem instead and just keep putting off the inevitable.

    Dr. Kotlikoff is correct. You cannot deal with this problem just by raising taxes. The hard reality is that Government spending has to be cut significantly. Otherwise, as the US is now doing, you just keep creating money from nothing on a massive scale to pay the bills, seriously diluting the value of the money supply and generating the inevitable highly destructive runaway inflation. The latter is what the Mr Krugmans of this world are now advocating as sound economics. We are all about to find out just how sound!

  15. Jim H

    Hi Greg. Thanks for all you do.
    Did I understand Laurence to say his good friend Bernanke? Should I listen to him at all? That’s the problem with me. I hear certain names and close my ears because I believe certain people are only in this for themselves and their Elite friends and Bernanke seems to be one. My Grandfather sat with me before his passing and tried to explain to me why the American people during the great depression stood outside a fence begging to work for just one day hoping for food for their families when the resources, technology and manpower were still there, all that was missing was money. Should the powers that be ever try that again, I would like to thing we would not be so foolish. My fear though is that we would also quietly march where CNN & FOX tell us to to beg the Greedy for crumbs of bread.

    • Greg

      Sure Jim,
      I think Kotlikoff doesn’t want to sound like it is a personal attack. Nonetheless, Dr. Kotlikoff is making a clear and overt warning that all should listen to and that is we are reaching a “real threatening point.” That is very big for someone in his position. This is not some nut-job conspiracy theorist but a very well respected economist at a major university. He is not scoring any points from Bernanke or the Fed by putting this out there. Thank you for your comment.

  16. Edward Ulysses Cate

    So little changes over time, as illustrated by this old quote:

    You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the government. And, with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.
    George Bernard Shaw (1856–1950)

    • Greg

      Mr. Cates,
      Love the quote!

  17. William Betts

    Just finished a great book that will let your readers know just what the problem is and where this mess is going..The Creature from Jekyll Island by G. Edward Griffin 5th addition. This book lays out just what a piece of crap the FED is and where we are going. Look at gold and silver this morning 1/17/13 the FED with all its problems is messing with the price of gold and silver…… Betts

    • Greg

      Thank you William Betts for the reading suggestion.

  18. JasonEmery

    It is still five and a half months until the Winter Wheat harvest, but it is starting to look like it might be a failed harvest. Corn isn’t looking that much better. The moisture deficit for the western 2/3 of the wheat/corn belt is about as bad as it has ever been. If they don’t get some near record precipitation in the next three months, I think we’ll have our trigger for hyperinflation.

    If the weather turns, I think Bernanke and the other can kickers will hold off hyperinflation for another year or two, but that is about it.

    • Greg

      This is a very important story. Thank you for bringing it up here.

  19. LGC

    Greg, the Professor is ideology wise an East Coast Liberal who has a hard time ignoring reality. He says he is a friend of Ben’s but I don’t think he has spoken to Ben for a long time. Ben would not be too interested in what the Professor has to say. Professor Kotikoff looks to me like he really doesn’t come to his current beliefs and thinking willingly nor happily. My hat is off to him for being willing to discuss the true facts surrounding our(US) present economic circumstances.

    • Greg

      Great analysis of his words and body language!! Dr. Kotlikoff is very brave to speak out. He won’t be winning any friends from the elite by coming out with the truth. Thank you for weighing in.

  20. JRMFL

    What condiment compliments both dog and cat food. We have the a very large price increase coming not simply from inflation, but supply side issues as well.

    Monetary Science rarely adresses this, it is as great a risk.

    Bernanke will never force Congress to do anything other than borrow.

    We are seeing he later stage signs of the type of inflations Germany experienced, Dr. Kotlikoff knows this as he has studied it throughout his career. Any who has not read Jens O. Parsons historical account… please do. You will see parallels that are all too familiar.

    Truly challenging times ahead, perhaps we come out the other side better, then again, perhaps we do not.

    The composition of our present Social and Economic arrangements are very different than at any time in History – at a point in History when we have never been more adept at killing.

    My best to everyone here and thank you again Greg for yet another remarkable interview.

    • Greg

      Thank you JRMFL for weighing in!

  21. Jack

    Hi Greg. Thank you for the work you do.

    • Greg

      Thank you Jack for your support.

  22. Dale H

    I don’t know how you could possibly call yourself a professor of economics and have no view as to the gold and silver market. I bought Prof. K’s book and I agree with him generally, but I think he’s either being very disingenuous here by dodging the gold/silver question when he knows very well it’s going to go up, or he is massively uncurious, for no known reason, about a monetary asset that has gone up 12 years in a row, while simultaneously warning of disaster in every other area. Sorry, Greg, I smell a rat.

  23. tsuki

    A couple of things.

    Maybe it is the Florida effect, but I listened to buying now and paying later with devalued dollars argument for years. Many in my area lost everything. If you can buy and own outright, okay, but check that you have a clear title. I have read stats that up to one third of the MERS titles in Florida were unregistered.

    If you cannot pay 100%, then make as big a down payment as you can. What a lot of people did not take into account was, although you are paying off a mortgage with devalued dollars, you are paying more for utilities, taxes, energy and food.

    The other thing is Social Security. The stats that I have read put the number of recipients at 73 million in 2030 at a total of 1 trillion a year. While I agree that Social Security is a problem because it is invested in worthless TBonds paying a negative interest, I have to ask the question, does a trillion a year to pensioners who will spend it stimulate the economy more that a trillion a year to seven banks to gamble with?

  24. chris1

    Wow . Prof. Kotlikoff. What a treat.
    Thanks for this….!!!!!!!!

  25. Dan Popa

    I am a little confused by this professor and his expertise.
    11 He is friends with Helicopter Ben Bernacke…STRIKE ONE! Bernacke is purposefully destroying the dollar and economy along with Obama to push the reset button and shift wealth from the middle class to the elitists.
    2)He does not know much about the silver market??? Let’s see, silver has been money for how many thousand years? That is laughable.
    3) He was very “easy” on his buddies at the Fed Reserve. Obviously, he is affraid to talk siver / gold as his pals at the Fed despise those assets for us, yet are consuming them themselves.
    My guess is this guy is another liberal blowhard, sorry Greg. He is problay loading up on silver and gold like any person with common sense should be doing. If he is not…well… he is just not that brillant afterall. Obama does not need this guy. He is recking the country very nicely without outside help. Dan

  26. Mark Kellam

    Hello, Greg. We’ve met, but I don’t have time to get into that now, other than to say I’m from Greensboro.
    My question is this…you asked the professor to “break it down”, well; if you could, break down in ?layman’s terms how exactly does America ‘owe’ money? We’re in debt; how, and to who? How can our’ debt’ be so high, unless we are actually borrowing money, when everyone says we’re printing money?

    • Greg

      For example China holds around $2 trillion in our (U.S.)Treasury bonds. We owe them interest and principal. Then fed is currently monetizing our debt to the tune of $95n billion a month in “open-ended” action. It is printing money to buy Treasury notes ($45 billion per month) and it also is printing money to buy mortgage-backed securities ($40 billion per month). This is simply the mistakes and fraud of bankers and is an ongoing bailout of big banks. We also so owe for future commitments such as Medicare and SS. If you account the way a company does for future commitments using something called GAAP (Generally Accepted Accounting Principles you get to the enormous numbers Kotlikoff comes up with. We will never pay this debt and commitments in anything resembling the buying power of today’s U.S. dollar. In simple terms count on inflation and default in many forms here in the U.S. That’s what the rich people are doing.
      I hope this helps you.

  27. dan


    I would suggest you focus one of your upcoming reports on the resurgent propaganda now making its way back to MSM regarding the elimination of the US Constitution.

    See this link as example >

    This is the idea whose time has come. Somehow, in whatever contorted way is necessary, the controlled media and political class choir will be cued to start singing the praises of the need to ditch the US Constitution, much as was tried to ditch the Congress’ resetting of the Debt Ceiling. In fact, the US Constitution will be shown to be the REAL culprit of the Financial crisis, and every other crisis we have and will encounter from now on. You know what comes after they have collected our guns and ditched the Constitution ? If you don’t, now’s a good time to start thinking about it.

    • Greg

      I am writing a post on this on Wednesday. It is not only an outrage this “Constitutional” professor said this but he was allowed to say it on CBS without a rebuttal. Outrageous!!!

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