Holistic Survival
Welcome! If this is your first time visiting Jason Hartman's website, please read this page to learn more about what we do here. You may also be interested in receiving updates from our podcast via RSS or via email if you prefer. If you have any questions about financial survival feel free to contact us anytime! Thanks!

HS 204 – “The Great Withdrawal” with Craig R. Smith

Bookmark and Share

Craig R. Smith is the Chairman of Swiss America and author of, “The Great Withdrawal: How the Progressives’ 100-Year Debasement of America and the Dollar Ends. He joins the show to give good examples of progressives today. Smith explains how important the next Election cycle is to the future of the world. He thinks this can be the end of Progressivism if the Democrats keep getting their way. The conversation then shifts to how American citizens can decentralize and diversify their lives to survive and prosper. Smith shares some ways that people can protect themselves and their families in today’s shaky, vulnerable economy. Find out more about Craig Smith at www.craigrsmith.com. Buy gold from him at www.buygold.com.

[iframe style=”border:none;margin-bottom:20px;” src=”http://html5-player.libsyn.com/embed/episode/id/2690050/height/100/width/480/thumbnail/yes/theme/standard” height=”50″ width=”480″ scrolling=”no” allowfullscreen webkitallowfullscreen mozallowfullscreen oallowfullscreen msallowfullscreen]

Narrator: Welcome to the Holistic Survival Show with Jason Hartman. The economic storm brewing around the world is set to spill into all aspects of our lives. Are you prepared? Where are you going to turn for the critical life skills necessary for you to survive and prosper? The Holistic Survival Show is your family’s insurance for a better life. Jason will teach you to think independently, to understand threats and how to create the ultimate action plan. Sudden change or worst case scenario, you’ll be ready. Welcome to Holistic Survival, your key resource for protecting the people, places and profits you care about in uncertain times. Ladies and gentlemen, your host, Jason Hartman.

Jason Hartman: Welcome to the Holistic Survival Show. This is your host Jason Hartman, where we talk about protecting the people places and profits you care about in these uncertain times. We have a great interview for you today. And we will be back with that in less than 60 seconds on the Holistic Survival Show. And by the way, be sure to visit our website at HolisticSurvival.com. You can subscribe to our blog, which is totally free, has loads of great information, and there’s just a lot of good content for you on the site, so make sure you take advantage of that at HolisticSurvival.com. We’ll be right back.

Start of Interview with Craig R. Smith

Jason Hartman: It’s my pleasure to welcome Craig R. Smith to the show. He’s chairman of Swiss America – you’ve probably heard of that company. He’s also author of The Great Withdrawal: How the Progressives’ 100-Year Debasement of America and the Dollar Ends. Craig, welcome, how are you today?

Craig R. Smith: Jason, I’m doing great. Thanks for having me.

Jason Hartman: Good. The pleasure is all mine. Hey, are you coming to us from the greater Phoenix area?

Craig R. Smith: I am, indeed. I’m actually on the east side of Camelback Mountain right now.

Jason Hartman: Fantastic. We’re both in the Valley of the Sun then where we’ve got this magnificent weather. So, what are some good examples of progressivism today and what it’s doing to our country?

Craig R. Smith: Well, when Lowell and I sat down and wrote the book, we went back historically and looked at progressivism and what its real nature is. And probably a better way to put it, Jason, would be to talk about collectivism. Whether it’s Stalinism, Leninism, communism, Maoism, Marxism, all the isms. . .

Jason Hartman: Obamaism.

Craig R. Smith: Yeah, all the collectives believe that the collective is more important than the individual. And we believe that it’s the individual and their personal freedom and their personal liberty that allows them to be creative to make the nation a greater nation. And of course, we first saw this occur in 1912 when our first openly progressive politician by the name of Woodrow Wilson who was the president of Princeton University at the time became our president. And he was very vocal about it. He believed in having federal income tax and he believed in many open policies to, if you will, help other people.

Well, there is only one problem. The federal income tax have been found unconstitutional several times by our Supreme Court. So, if something is unconstitutional, well, by golly, let’s just change the Constitution and next thing you know we have the 16th amendment. And that set the stage on top of creating a federal reserve system which is a central bank and then we can go into the other changes that he made. Set the stage for Franklin Roosevelt who during The Great Depression recalled gold, basically put work programs into place. Again, the collective puts social security into place to make sure the people that were in trouble had somebody to protect their retirement. And then of course Mr. Johnson came along in 1964 with The Great Society.

So, while I don’t believe that they’re evil, nefarious people that are trying to destroy the nation by their progressivism, unfortunately their intentions are good but the net outcomes of progressivism has always been negative, and that’s why we’re trying to change that direction through the book.

Jason Hartman: You know, I’m not even sure if their intentions actually are good. People like to give them the benefit of a doubt, but history and geography have proven that everywhere on the planet and every time in history, their policies don’t work, they make people weaker, they destroy countries. And if you want an example of it right here in the US, just look at Detroit, look at any other place – and talk about a misnomer, progressives with the most regressive policies on earth – any of those places are in bad shape – they’re in terrible shape.

Craig R. Smith: Well, it’s funny that you bring Detroit up because as we were finishing our book, Detroit filed bankruptcy and we actually had to go back and beg the printer to give us an extra 2 weeks. And we actually start the book off in the great city of Detroit where originally 296,000 workers were pumping out an incredible amount of productivity of America and then a gentleman by the name of Mayor Coleman Young, an openly progressive person, literally embraced unions and so and so forth and the outcome. Detroit, all of its population is left.

And you’re right, Jason, if you look at world history, there is not one ism, if you will, that has ever survived that has gone onto greatness like we did in The United States of America. And that’s why we believe progressivism, if it’s not stopped, the end is a loss of freedom, a loss of liberty, and unfortunately a destruction of our US dollar which around the world is considered to be reserve currency and the crème de la crème.

Jason Hartman: So why do you say ism, though? I mean, conservatism is an ism.

Craig R. Smith: Yeah, I guess that’s a very fair thing to say. I guess I’d have to say conservatism, though, believes in the individual. When you talk about socialism or progressivism or liberalism, the liberals couldn’t really call themselves liberals anymore because, really, if you go back 100 years ago what we considered liberals are conservative today – small government, personal responsibility, that was the liberal approach in America.

And I think that what progressives have done is really allow the nation to believe or lead people to believe that we’re supposed to help one another. Well, I agree in helping each other. I love when Barack Obama quoted “I’m my brother’s keeper”. Little does he forget that was quoted by a murderer who just killed his brother. But that being set aside. . .

Jason Hartman: Who said that by the way?

Craig R. Smith: Kane and Abel. But here’s what’s interesting. I believe in helping my fellow brother out, but not at the end of a gun barrel of an IRS agent or at the end of a government that says I want 50% of your income, so if you don’t want to help people, I’m gonna force you to help people. Years ago, the churches and charities and neighbors and friends took care of one another. I mean, I have a 93 year old gentleman who’s a client of the firm for years and he went through The Great Depression and he remembers when neighbors took care of neighbors. I mean, people didn’t die on the street of hunger.

Jason Hartman: I don’t know about that. I mean, what era are you talking about?

Craig R. Smith: I’m talking about 1929 through 1938.

Jason Hartman: Okay, during the depression then? Well, we had Wilson before that and then we were in the middle of FDR. . .

Craig R. Smith: I’m saying when we as a nation did not have a huge government taking care of cradle to grave mentality thinking people, we didn’t have people dying in the streets. And I think most people think if we don’t have health care for everybody and welfare for everybody and unemployment. . .

Jason Hartman: I think we should have free Netflix for everybody, too. People are entitled to watch movies.

Craig R. Smith: It’s kind of like what we did with unemployment. And a book we wrote years ago called Crashing the Dollar, we site the examples of up in Sweden where they used to have 5 years unemployment. Then they cut it back to 3 years, guess what? They found out people went back to work in 3 years. They cut it back to 2 years, now it’s all the way down to a year. Well, we in America did just the opposite. We extend it to 99 weeks, then when that ran out people went on disability.

Jason Hartman: We’ve never had so many disabled people in America. This is the new thing – it’s the disability industrial complex.

Craig R. Smith: And really that is a progressive idea. That is an idea that comes from the progressive side of the social security that comes through SSI. And look, social security was a well-intentioned program. But, Jason, the mathematics of it don’t work. They can’t work and that’s why they’re broke.

Jason Hartman: First of all, why are you willing to use their terms, Craig? I mean, the word “progressive” to me is a positive word. That should mean more moving forward or advancing progress. Who doesn’t want progress, right? Yet, they have commandeered that word and their policies are regressive. I mean, they don’t create progress. Obama wants us driving a proletariat car as Thomas Woods calls it which I think is a great way to put it. This is just ridiculous. It’s cronyism that goes on. It’s absurd.

Craig R. Smith: Indeed. And I suppose I call them what they call themselves because it’s kind of like in discussing with you if I were to bring up a term proletariat car while I’m doing the Neil Cavuto Show, I suspect it probably wouldn’t go over very well.

Jason Hartman: I don’t know. Neil wouldn’t disagree with you too much.

Craig R. Smith: I’m sure off the air he wouldn’t.

Jason Hartman: If it were Katie Couric, yes, if she knew what it meant.

Craig R. Smith: I doubt I’d be invited back. But nevertheless, I use their terms only because of this. In my book, there’s hundreds of footnotes. And we quote them and we look at their materials and we look at their programs. And as you said earlier, they failed, they don’t work. And this is what I don’t think Americans think. I think so many people believe that if the rich pay enough taxes, well hey, guess what, if you take every single dollar of every single rich person next year on all their income, I mean that would just about cover half the deficit every year.

Jason Hartman: It won’t work. Taxation won’t work obviously. There’s not enough to tax.

Craig R. Smith: No. We have to go back to how this nation was built and we need to change the systems. Welfare is on a crash course to destruction – Medicaid and Medicare. This new entitlement, Obamacare if you will, the Affordable Care Act, you know as well as I do, Jason, it is already failing, it could fail, it could single-handedly bankrupt this nation if we’re not very careful.

Jason Hartman: Well, let’s talk about that for a moment. Several things here – first of all, you won’t believe who I had on the show last week. I couldn’t believe it either, but Mr. Noam Chomsky himself. So, one of the things he was saying, and he cut my interview a little bit short, I think I was grilling him a little too hard and I don’t think he had answers to my questions, but one of the things he was saying is he was defending all the various stimulus omnibus plans and the money printing and so forth, saying that they’re working and they worked – that’s exactly what we should have done – we did the right thing. And that can be debated. I don’t think we did the right thing. I think we should stop letting the government pick winners and losers and let the market sort them out. And it’ll happen a lot faster and things will rebound a lot faster if we do it that way. But the question is how much is enough?

I said to Noam if you believe we should just stimulate, stimulate, stimulate, then why not print up $1 million for every American citizen and even the non-citizens? Heck, why don’t we just give it to everybody? Maybe everybody in the world we should give $1 million to. 7 billion times $1 million and then they’ll go and spend that million dollars that we just handed them for no reason and won’t that just create this utopian economy? Aren’t there consequences?

Craig R. Smith: And you and I know the answer and you and I know that Noam is not on solid ground

Jason Hartman: Here’s what he cites. Just before you go on, let me just give you some of his ammunition. He says, look, the inflation is low, the economy is improving. . .

Craig R. Smith: By whose definition?

Jason Hartman: I agree with you, but it’s still a lot lower than it should be, Craig. It seems like the inflation would have hit much more severely by now by all mathematical standards. I mean, look, are you better off than you were $5 trillion ago? Well, seemingly, but there’s a lag time. And I mean, it seems like we should have more inflation by now. How are they keeping that genie in the box or that Pandora in the box I should say?

Craig R. Smith: Well, let’s first start with the premise. Because I think you’re absolutely right. The fed’s balance sheet’s about $4 trillion right now. And there’s been several other trillion dollars spent here and there and another increase in our debt, and what do we have for it? Well, if you look at the official number of the BLS which is 7.1% unemployment, you and I both know it’s closer to 14 to 15 percent if we count the u6 sense of the number, the underemployed or those who have just stopped looking. Okay, let’s look at real GDP. If you adjust GDP. . .They’re all talking about now, wow, all of a sudden it’s 2.8%, well I would argue we have negative growth right now, not positive.

Jason Hartman: After inflation you’re correct, sure.

Craig R. Smith: For Chomsky to be able to say that stimulus has worked, he is incorrect. You are exactly right. We went back – and again, we can’t prove this because this is theory – but we looked at what would happen if we had just stopped at the $887 billion, put it in the economy and then just sat back and allowed private business. . .Because keep in mind that $3 trillion or $4 trillion at the fed balance sheet has been expanded. That’s sitting on corporate balance sheets now and on bank balance sheets. That money’s available – it’s just not coming into the system.
Why isn’t it? Because it’s not a matter of not enough money or not enough stimulus. It’s a matter of confidence. No business owner has confidence to take that money off his balance sheet. I’m a perfect example of it. I mean, I have a considerable amount of money sitting in the bank for an expansion program. And when Mr. Obama took office and I watched him ram health care through, we’re still sitting on that money, Jason, because I don’t know what the next curveball is this guy’s gonna throw at me from Washington.

So, what Chomsky has to realize is you can print all the money in the world, but unless you have confidence in an economy, you’re not gonna see it spent. And Mr. Barack Obama has done more to erode the confidence that business people have in this nation than any president that I can think of, including Jimmy Carter. And that’s why we don’t have growth.

That’s why you don’t have expansion of the economy, not because their husband plays stimulus. It’s because we have horrible policy coming out of Washington, D. C. It’s always blaming the other guy and then we have the gridlock when the republicans dig in. And it takes a leader to break those log jams like we saw with Tip O’Neill and Ronald Reagan or we saw with Bill Clinton and Newt Gingrich. You don’t see that with Barack Obama and John Boehner. And I don’t think it’s a direct result of John Boehner’s fault.

Jason Hartman: No, I agree. Obama thinks he’s the emperor or something. I mean, it’s ridiculous. He won’t work with people. He somehow gives speeches and convinces his supporters, who will refuse to see any evidence whatsoever of reality, that he’s this reasonable guy, yet he plays dirty – he plays like a Chicago thug.

Craig R. Smith: Completely. I mean, if you look at the cronyism – and you mentioned it earlier – the crony capitalism that has gone on during this administration – and look, we’ve had it in all administrations – George Bush had it, Bill Clinton had it. . .

Jason Hartman: It all exists. The only question is will the government be larger and then will the crony capitalism be larger or will it be smaller and there will be less of it?

Craig R. Smith: Exactly. And that’s what my concern is, Jason, and you know this because you studied it. Whenever the government gets this big, it squeezes the private sector. Now, is the private sector gonna do better things with the money than the government’s gonna do? Of course it is because you have accountability and you have success and failure. And like you said, this administration’s into picking winners and losers. I was not a proponent of the tarp.

Jason Hartman: Actually, we should change it. We should say, Craig, they’re into picking supporters and losers.

Craig R. Smith: Well, I find it very ironic now that they’re banging on Jamie Dimon for a $13 billion fine when they forced him to buy the bank that caused the problem in the first place.

Jason Hartman: A lot of those things are window dressing anyway. They’re like watching a wrestling match on TV. They’re all stages.

Craig R. Smith: Sure. And it comes in one hand and goes out the other. But a perfect example – and this will show you why the confidence has been so devastated, Jason, and this is a perfect example – bonds for years have been known as the gentleman’s investment. And why have they been? Because bonds were always 100% guaranteed. If you owed a bond, a bond always paid. The worst that happened, you had to hold it the duration of the bond but you always got paid.

Jason Hartman: Are you talking about government bonds or any bond?

Craig R. Smith: I’m talking about corporate bonds because you were protected by the underlying asset.

Jason Hartman: Not if you own GM.

Craig R. Smith: Well, that’s what I’m talking about. Now, General Motors has got bond holders. And what does Mr. Obama do? He walks in, and with the swipe of a pen, he wipes the bondholders out, takes care of all of his bodies over at the UAW who are giving him plenty of money for his 2012 campaign, and for the first time in American history, the government fiat wiped out bondholders and now you wonder why people don’t want to make investments in certain companies for fear that the government can walk in and wipe out their investments? That’s a perfect example of why we don’t have the confidence in this presidency to encourage this economy to grow. And until he moves on, you’re gonna see it this way, Jason. It’s just that simple.

Jason Hartman: But, Craig, all those bondholders that have those GM bonds, they’re just these super rich investors, right?

Craig R. Smith: That’s right.

Jason Hartman: They don’t need the money.

Craig R. Smith: Yeah, they were trust babies to begin with there. You didn’t earn it. I mean, the government helped you earn it for Pete’s sake. And that whole sense of thinking is what’s hurt us. And so why do I call on progressives? Okay, I guess you can call them Marxisms, I guess you can call them Leninists. Matter of fact, I’m starting to hear more people starting to refer to them as communist and not getting the blowback that you used to get. But the reality is that’s what they are. And I know I’m preaching to the choir here, but if you look at the planks in the Communist Manifesto, we’ve fulfilled all of them. And what did Lenin say? The cap stone of a great socialist society will be when we mandate health care provided by the government. Well, Mr. Obama just put that cap stone into place, did he not?

Jason Hartman: Yep.

Craig R. Smith: So, we’re just pointing out the obvious in the book. And what we point out in the book is that, look, there are ways to change this. We hear all the time about separation of church and state, right? We’ve got to separate the church from the state. Okay, without that we can’t. . .Well, how about separation of economy and state? How about separation of money and state or business or state or commerce and state or science and state?

Jason Hartman: Very good. I love those slogans. Those are great. Separation of economy and state, that would be great. Let me ask you this, though. I think we all know the problem – it’s pretty severe, actually probably more severe than it’s ever been. What can Americans do to decentralize and diversify their lives and survive and hopefully thrive during this time?

Craig R. Smith: On a personal basis?

Jason Hartman: Personal.

Craig R. Smith: Well, on a personal basis, obviously in the case of your money, you diversify. You have a portion of your money in real estate, in bonds, in stocks, in gold, in cash. I mean, you well diversify yourself and not have all your eggs in one basket. As it relates to being a citizen, you want to demand out of your politicians things like a national sales tax versus a federal income tax which is unconstitutional. Or, for sure, we should be demanding a balanced budget amendment. Can you imagine if we had a balanced budget amendment?

Jason Hartman: Yeah. Let me give you the argument against that, though. A lot of these wars are completely fabricated, too. I mean, thank you, Vladimir Putin, by the way, for keeping us out of another one about a month and a half ago. War mongers McCain and Obama were going at it, waiting for their kickback from the military industrial complex. This is like absurd the way they were on the war path and Putin just put an end to it. It was great.

I mean, the balance budget amendment, I agree with you – on the surface it seems like a great idea. But businesses and individuals use that in a prudent manner sometimes hopefully and governments could even potentially use it in a prudent manner, too, to grow the economy and grow their businesspeople and individuals to grow their lives. I mean, debt can be used very strategically. Of course, the government won’t do it that way. We know this because what governments do is they pander to voters to buy votes and they don’t do the best thing for the country. They do the best thing to get them and their cronies elected or hold power. Even Hugo Chavez was known for that in Venezuela. He did a lot of handouts and the people liked him although they never really looked at the fact that the reason the whole country is so bored is because of him on the macro level.

Craig R. Smith: It’s interesting that you say that because that is, in essence, the problem. I mean, Alan Greenspan created a situation early on where he realized that perpetual prosperity was possible by manipulating the money system. I mean, we talk about the Chinese manipulated the Yuan and the RMB, that’s nothing compared to what our federal reserve does. And they wanted perpetual prosperity so people could live – like you said, at a certain point everybody should have Netflix and this and that. The reality is you can’t have perpetual prosperity. Economies are like a set of lungs. They breathe in, they breathe out. They breathe in, they breathe out. You have to have recessions and contractions.

And going back to your point, debt, when used properly, and subsequently paid back, can do phenomenal things. And you’re absolutely right – put it in the private sector. A guy goes and borrows $50 million, he buys a piece of property, he builds a factory on it, he fills it with people, they produce things, that’s what’s called creating wealth. And when he’s productive enough, he pays back that $50 million. The government could do that, Jason, but they don’t. Why? You answered it. Because they buy political favors. Instead of taking the money and paying it back to where it belongs, they spend more of it because they buy more votes.

And until we break that cycle of money and politics, it’s gonna continue – nothing’s gonna change. And that’s why I believe it starts with a balanced budget amendment where they can’t borrow money, where they have to live within their means or a national sales tax where you base it off consumption and you encourage people to save because the accumulation of capital allows people to build together.

Look, I’m not one of these guys that believes we shouldn’t have any government. But I believe the government should be very limited to the scope that the Constitution laid out. And when you look at that Constitution, and again, I know I’m preaching to the choir here, people say it was written 200 and something odd years ago, it’s not applicable, it is perfect in every way in my opinion. And when it’s brought together with free markets and capitalism and the rule of law. . .And there is where we’re missing because a Madoff can go do something and get away with it for years and not be put in jail, a bank can go rip somebody off and not be put in jail, an illegal could come across the border and not be put in jail.
If we just enforce the laws we have on the books, Jason, and we go back to the Constitution and we allow free markets – and if some guy breaks the rules and he cheats somebody, he goes to jail – you do that, this country will be just fine. But when we stopped enforcing the laws, stopped enforcing the constitution, and quite frankly started ignoring the Constitution, that was the beginning of what’s got us to $17 trillion worth of short term debt, and now we’re over $88 trillion worth of long term liability. I mean, it’s gonna break.

Jason Hartman: Just so you know, that $88 trillion number, some say it’s as high as $220 trillion. So, he’s unfunded mandates we have coming in the future. And it is unbelievable. I mean, mathematically, I don’t know how we’re ever gonna get out of it. However, I do have a question for you on that. What is the likelihood of recession, deflation, inflation? How do you see this working out?

Craig R. Smith: Well, what we clearly have to have is inflation. And I would argue that we are on the Weimar Republic path. You said how come it hasn’t happened yet? How come inflation hasn’t come back into the system yet? Part of it’s because of the way we calculate the number. Gasoline prices can double. But if your computer drops in half, we’ve had no inflation. So, keep in mind, in Weimar Germany and the years 1921-1922, there were very productive years in Germany – full employment, very low inflation, and then 1923 the money created velocity. Money started coming out and started getting into the system.

That’s why in a program I did this morning, I said the biggest challenge Janet Yellen’s gonna have is trying to drain the $4 trillion out of the system. And she’s not gonna be able to. And that’s why we believe that hyperinflation – the term hyperinflation means a 50% increase in the price of goods and services over a 30 calendar day period, I’m not sure we’re going to see that. But are we gonna see 18-19% inflation? The 14-15% that we saw during the Carter administration? You better believe it and then some.

Is it gonna come in 2013, probably not. But by ’14 and ’15, you can assure yourself because, look, the other day the Chinese said we are now gonna put together the people’s money and we want to start to compete in the international currency markets. And let me tell you, we lose our reserve currency status, it’s game over for The United States as it relates to inflation. Because then you would have to print everybody money and then you will have hyperinflation like we had in Weimar, Germany. So, let’s not think just because we’ve gotten away with it for a few years since 2008-2009 means we can get away with it for much longer.

Jason Hartman: Yeah, well, that certainly seems true. I just wonder though how long we can maintain our debt rating, our reserve currency status. I mean, what do you think? Are we in for another downgrade?

Craig R. Smith: I believe we are. And I believe when we went from triple A to double A plus – keep in mind, a triple A, that means you have 0 risk in lending money for these people – when you go to double A plus, that means now there’s risk in lending money to America – and I believe we’re going to A plus or double A, one of the two. And let me tell you why. Because the rating agencies made it very clear in 2011. The reason they downgraded us is because we didn’t come out of there with a viable plan of how to reduce our deficits.

Now, we have a sequester, it kicked in, which, by the way, Mr. Obama’s taking credit for that he said would be the end of the world and it wasn’t the end of the world – it actually cut our deficits in half. But they are looking for a real plan. If we go to credit agencies or we come out of this next budget battle which will be February 7th, and we say here’s the plan. And it’s a viable plan and it’s gonna create growth and reduction of deficits and reduction of government spending, we’ll probably go back to triple A. But if we don’t have a realistic plan, we’re going to continue to be downgraded.

And, Jason, as sure as I’m sitting here, when I saw that announcement the other day about the Chinese wanting to take the people’s money and have it compete on a reserve currency basis and they’ve been buying thousands of metric tons of gold over the last 4 or 5 years, don’t kid yourself. The United States of America, we are the reserve currency of the world. We’re the first debtor nation to ever have that connotation. And we’re the largest debtor in the world.

And let me tell you. When you’re in debt like we are, there’s 3 ways to deal with it. You either restructure it to where you can handle it, you default on it, which we’ve seen South American countries do, or you inflate your way out of it. And I happen to believe we’re going to inflate our way out of it, lose our reserve currency status, and we’ll be trading oil and the other commodities and various currencies. You’ll have Russian rubles being traded for Chinese RMB and you’ll see Brazilian real being traded for US dollars. And then America is gonna have to compete in the currency markets and we’re not going to be able to because how do you compete when you’ve got the type of debt that we have?

Now, what saves us in all this is we’re still the greatest economy in the world. But don’t kid ourselves to think we can hold onto that if we stay on this track. And that’s why things have to change. That’s why I’m doing this program with you. That’s why I wrote the book. Thank God for programs like yours that are talking about this because there’s still a chance to fix it. But we better move quickly, because if we don’t it’s gonna break.

Jason Hartman: How bad do you think inflation could get? Like, what kind of percentage? Do you think it could be worse than Carter? And I think the worst officially under Carter was about 14% or so.

Craig R. Smith: Yeah, 14 or 15 percent.

Jason Hartman: That was the official number, which means the real number was probably 8 points higher than that. Maybe it was 20%.

Craig R. Smith: I think we could easily see inflation rates, legitimately, run at 20 to 25 percent on a yearly basis. Now, here’s the problem. How did Mr. Reagan deal with that? He allowed Volcker to raise interest rates to 22% and stopped the inflation.

Jason Hartman: He broke the back.

Craig R. Smith: Once inflation gets started this time, it’s not gonna be that simple because if we raise interest rates with only $17 trillion in immediate debt, my gosh, all of our revenue’s gonna go to pay the debt bill. That’s why I happen to believe we’re gonna inflate our way out of this. And I wrote a report called The Uses of Inflation and a book a couple of years ago called The Inflation Deception. Most people don’t realize that inflation steals from the masses in a way that not 1 in a million can realize it happened until it’s already happened. That’s what Linen said. He said it was a very, very wonderful tool because inflation steals from people.

Now, what we’ve been doing, Jason, over the last 6 years, 5 years, is we’ve been using financial repression. And that’s where our rate of interest that we pay a depositor at a bank which is, what, a quarter of a percent now, and we have inflation rates of – what do they say – the official rate is 1 ½ percent or whatever, the difference of that is going directly into the pockets of the banks and your United States government and coming right out of the pockets of the average American.

Financial repression is nothing new. It was used after the second world war and set us up for the Carter years of inflation. That’s why I think it’s gonna be way worse this time.

Jason Hartman: It’s very interesting that the Federal Reserve and the IRS were created right around the same time, 100 years ago.

Craig R. Smith: Same year.

Jason Hartman: Oh, so exactly 100 years ago. So, it was 1913 for both. I thought the IRS came a little bit later than that, but whatever. So, it was the same year they created both of them. Yet, if you really think about it, when you have a central bank that can create money out of thin air, there’s no reason to have an income tax because you can just simply use inflation as the tax. The government can spend irresponsibly and just print more money and devalue all the money currently in circulation and in savings and they can tax people that way.

Now, what we have is we have a double taxation system where you have an income tax that doesn’t recognize inflation properly, and then you have an inflation tax through the treasury and the federal reserve. It’s just silly that we have both.

Craig R. Smith: Oh, that’s correct. It’s funny you bring that up. In our book, The Inflation Deception, we talk about I believe his name was Rummel, he was one of our Federal Reserve chairpeople in the late 40s-early 50s and he published a white paper entitled “Taxes are Obsolete for Revenue”. And his argument is what we just laid out, Jason. He said we don’t have any need for an income tax. We can just do it through the creation of money. But at the time, we were on a gold standard. So, if you just take us off the gold standard, we don’t need a federal income tax. We’ll just do it by using inflation as the tax.

Well, the only problem is we are off the gold standard now. So, you’re absolutely right. There is no need for income tax when you’re not on a gold standard. And that’s why, if you’re a member, it was Richard Nixon who did two things that I will never forgive him for. Number one, he created the EPA for Pete’s sake. Two, he closed the gold window which he was given no choice of because you cannot continue to expand a welfare state under a gold standard. The two are incompatible. One has to give.

Jason Hartman: Very good points, very good points. Well, folks, invest for this, be careful, be prudent. One of the strategies I like is own commodities with long term fixed rate debt against them. My choice is real estate, yours is probably gold. But either way, you’ve got to have some hedge against inflation.

Craig R. Smith: I like real estate a lot as well. And I know prices have been depressed, but I agree with you completely because you’re shorting the dollar which is gonna go lower and you’re going long a commodity of real estate that will always ultimately go up. And that was a great strategy in the 70s. People made a lot of money. And, as you remember, inflation ravaged the stock investments of the 70s and made people over in real estate fortunes. So, I agree with that completely and I do believe in gold because gold is a currency and I think we are gonna be challenged on a currency basis.

And just so you know, for your listeners, Jason, I told you this earlier, if people would like to call 800-289-2646, that’s the number over at Swiss America, 800-289-2646, mention that they were listening to your broadcast, and they will send you a complimentary copy of the book The Great Withdrawal. There’s no obligation, no expense. If you want information on products we have, great. Just ask the guy, he’ll put it in the packet. They’ll pay the postage and everything.

All I’m trying to do, I got the publisher to print 10,000 copies for me to do this with because I’m trying to get the message out. You see, I’m 59 years old right now, Jason. My grandchildren are gonna be faced with this. My children are already faced with this. And I decided that if I can’t leave my country in better shape to my children than I received it, what kind of man am I? So, I’m preparing my own family to make sure they’re in that shape. I’m hopeful through my book I can do it throughout the entire nation.

Now, people say you’re crazy. You’re one man. It can’t be done. I don’t know – with people like you that are helping in getting the word out, I think we can turn the thing around before it’s too late – I really do.

Jason Hartman: Good stuff. Well, Craig R. Smith, thank you so much for joining us today and thank you for talking about the book. Folks, get your free copy there and appreciate you coming on. And just keep getting the word out.

Craig R. Smith: Thank you, Jason. It’s great to be with you.

Female: You know, sometimes I think of Jason Hartman as a walking encyclopedia on the subject of creating wealth.

Male: Well, you’re probably not far off from the truth, Penny, because Jason actually has a 3 book set on creating wealth that comes with 60 digital download audios.

Female: Yes, Jason has that unique ability to make you understand investing the way it should be. It’s a world where anything less than 26% annual return is disappointing.

Male: I love how he actually shows us that we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.

Female: We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns, safely and securely.

Male: I also like how he teaches you to protect the equity in your home before it disappears, and how to outsource your debt obligations to the government.

Female: And the entire set of advanced strategies for wealth creation is being offered at a savings of $94.

Male: That’s right. And to get your Creating Wealth Encyclopedia Series, complete with over 60 hours of audio, and 3 books, just go to JasonHartman.com/store.

Female: If you want to be able to sit back and collect checks every month, just like a banker, Jason’s Creating Wealth Encyclopedia Series is for you.

Narrator: Thank you for joining us today for the Holistic Survival Show, protecting the people, places and profits you care about in uncertain times. Be sure to listen to our Creating Wealth Show which focuses on exploiting the financial and wealth creation opportunities in today’s economy. Learn more at www.JasonHartman.com or search “Jason Hartman” on iTunes. This show is produced by The Hartman Media Company, offering very general guidelines and information. Opinions of guests are their own and none of the content should be considered individual advice. If you require personalized advice, please consult an appropriate professional. Information deemed reliable, but not guaranteed.

Transcribed by Ralph

The Holistic Survival Team


Episode: 204

Guest: Craig R. Smith

iTunes: Stream Episode

Tags: , , , ,