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tv   Book Discussion on The Crash of 2016  CSPAN  December 21, 2013 8:45pm-10:01pm EST

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briefly but engage a with making with negotiators that may convey a certain event message but cannot convey a yes or no? >> ask the audience heard. are we negotiating with the right people why when the defense minister goes with the supreme leader why we make headlines with the deputy foreign minister? ultimately one of those questions that what we risk by not answering that question is we are caught in a good cop for bad cop for plausible deniability with our partners. fake you very much for your attendance.
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[applause] [inaudible conversations] [applause] is that better? [laughter] [applause]
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but can you hear me? not good microphones. fate q.. every petty but i very honored to be here. but to get into this you will recall a couple years ago in the american dream alexander hamilton's 11-point plan. in 1781 those put into place put into place with the secretary of the treasury.
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there is a trade system of our economy that pretty much work to solve the but part of that book has of filibusters to cite a letter the hand delivered copy to all colleagues because we all felt at that time is that the things that were done in the book not only poll america back from the addition of the crash of 2008 from that industrial powerhouse that we once had. the bad news is, all lots of democrats actually had good
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legislation from that house and obama pushed a lot and all were republican filibusters in the senate that was very unfortunate. don't need this to be totally partisan there were a number of democrats that were not on board but we need to would knowledge says the supreme court which is the next book that i am working on right now. [laughter] they decided it is constitutional, we have a doctrine of free speech that they have corporations and better people in the political role. so take that out of the partisan crowd. that leads us to a the crash of 2016.
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of was a science fiction in jokey i used it amazing stories like jack palance might and it is a brilliant exercise its fiction and i remember one story that has stuck with me. we went looking for this story errant could not find a. this is before the internet. it is more from memory than reading it to you but my recollection was now keep in mind as i was seven or eight years old in the early '60s
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this is before anybody had seen the back side of the mood and in the story so the first to go into orbit around the moon fairy is all this suspense. what is the back side by? could it be? might it be a jungle? nobody has ever seen it. so as it goes around the front side they prepare for
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radio silence it will block the radio waves they get to the backside and they turn off the transmitter to save power and a look out the window. it is like oh my god. then the debate about the guys is should we tell them? is virtually turns into a fist fight. ultimately day decided not to tell them it looks like the front side because what they saw on the backside backside, remember the old roller-coaster made by that to buy for? they saw the two by fours
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holding up the canvas so the front side was a canvas superstructure that held into place. were not sure people are ready for this. [laughter] that is the perfect metaphor for our economy. it looks great. the stock market has doubled. isn't it wonderful? literally. it is mindboggling. the corporations show we did a time in the history of earth in the united states.
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as it turns out everything is not wonderful. but what we have seen and since a 1980 wages have lent the first of all, what were we expecting as he came into the reagan revolution? with the new deal economic system along with the crash and why. whenever the face the economist will tell you is
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at as productivity increases let's define productivity first. basically 1% working to produce goods or services it is productivity goes up but whoever hires that labor so productivity is a function of profit. but historically what we have seen there are bumps along the way. like eli whitney added to a the cotton ginned and the.com bubble but by and large from the george
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washington did registration the roughly 200 year period as productivity went up to reach his went up with it. as they got more efficient they were rewarded with more efficiency in the 18th-century they're working 84 hour weeks by 1900 it was 60 hour weeks '20s it was 50 or wreaks by the '50s we institutionalize the 50 hour week. so what we have seen is the workload has gone down with wages going up but quality of life has gone up. during the '50s, '60s and '70s the first time in american history three
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consecutive decades it of gdp growth over 3.2% the richest middle-class in the history of the world and also in the neighborhood of equity of 88,000. most of that was people's homes but people had wealth. just like the man worked in the shop for 40 years he wanted to be a history professor actually he joint during the war and ended when he was thin basic trading when he came back she wanted to get the ph.d. in history and in the midst of that and two years sent to college career she was pregnant which was not anticipated it went to work
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in the us steel mill. but my dad ended up getting a good job at a tool and die shop that was a union shop. because it was a union shop he had middle-class treatment. he did not have college educations but could raise four boys and is able to buy a house with a loan backed by the federal government as a veteran at 3%. it was paid off by the time he died. he bought a new car every three years said he had equity in his car. he took a vacation old 74 weeks per year. he had a pension when he
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retired with their permit it guaranteed in, he'd do it his thirties would it would be and planned for it and when he died my mom continued to get the pension and he had health insurance his entire life and so did i.. i remember when the doctor did house calls. . .
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>> i remember in 1966, page 77 in the book, so i'll just read this little bit to you. i remembered this, and, again, this was, you know, before the internet, and so we couldn't find this on the internet, which was so frustrating. we ended up going on ebuy and buying two years of time magazine going through them one at a time until we found it.
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[laughter] in 1966, "time" magazine talked about the society. america was the greatest creditor nation in the world. we are now the larger debtor, the largest manufacturer of goods, and now the larger importer, were the largest exporter, largest importer of raw materials to make finished goods, and now we are the largest exporter. we've gone from first world country to third world country in a short amount of time. for "time" magazine, they did the math, extrapolated it out. you know, given how as productivity has gone up from the george washington administration to 1966 to the lyndon johnson administration, all during that time, productivity and wages go up with it, or working hours has gone down or both, so what is going to be in the year 2000?
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what will life be like. if productivity goes up, every reason to believe it's going to. you know, i remember at msu, there was a giant computer, half the size of the room, giant stack of cards in it, four tran and it was just cool stuff, and, you know, everybody knew, like, productivity's increasing. robots are coming, you know, all this stuff. what's 2000 going to be like? i will read to you from time magazine. by 2000, machines will produce so much that in the united states, that everyone in the united states will, in effect, be independently wealthy. with government benefits, even nonworking families have an annual income of 30-40,000, and how to use leisure meaningfully is a major problem. this is the big issue. how are we going to use our leisure. i should point out that $40,000 in 1966 dollars is $260,000 in
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today's dollar. so, you know, basically, what "thyme" said was either we're going to be working 20 hours a week and making a hundred grand or working 40 hours a week and making $260,000 a year, and the fact of the matter is that if wages had dpolled productivity -- productivity continued to increase since 1980. if waged followed productivity, that's where we'd be. that's how different the middle class of 1966 was from the middle class of 1935, and how different, frankly, the middle class of 1935 was from that of 1900. this is simple math they were doing. this was not weird stuff. remember the jetsons? i mean, you know, there was a cartoon about this, after this "time" article came out, around that time, hey, what's his name, george jetson and wife, jane, and george goes to sprocket, and
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he gets out the chair and pushes the button. that's tough work that he's got to do, and makes enough money that jane can charge the shopping malls, right? that's what we'd have if wages followed productivity, but instead, starting in roughly 1980, wages flattened out. average wages at that time were around $25,000 a year. you recall "time" said $30,000 a year. average wages at $25,000, and they still are, right now. you'd hear the income in the united states is over $41,000, but that's household. look at worker income, it's around 25,000, where it was in 1980 or roughly what it was. it's lower than it was.
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so first, what happened, people needed to maintain their lifestyle, wanted to maintain lifestyles, and people expected next year it will be better. it was an aberration. next year, they will not take everything from us; right? first, you know, at that time, in 1980 #, we were mostly a nation of single wage earner households, mostly dad working, some mom worked, but basically one person could earn money and the other could raise the kids and keep the family. the first thing that happened was mom went to work. there was a extraordinary infusion of women into the workplace, and that helped people maintain their starn of living moving up that household income, but that was not enough. productivity continued to increase, wages were so flat, and, in fact, women were paid 70% of what men were paid, and it was hard to find enough jobs,
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ect., ect., and then people started, at that point, people had, you know, tens of thousands, in some cases, hundreds of thousands of dollars of equity in their homes, and they started taking the ceo my out of the homes, started boar ring against their houses, refinancing their houses in the 1990s, and in the early 2000s, and when they had tapped out the houses, then they went to the credit cards. i remember the first credit card i got. it was in the early 1970s, probably around 75, 75 i would have been 24 years old, owned a small business in michigan. i don't remember the exact year it was, but around there, and what i remember about is that i had never been able to qualify for credit card, and i had made more money than my dad ever made. we had 18 people working for us, so proud of myself, and the measure of my success was that
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american express gave me a credit card; right? that's how hard it was to get a credit card. i had to make more than my dad did at the age of 24 or 25, whatever it was. now, and credit card debt was meaningless. nobody carried any kind of substantial balance on their credit card. it was, you u -- you know, crazy. credit cards is not a reinvolving line of credit. if you want credit, go with your house, and if you can't, borrow money. credit card? depending on whose numbers you use, 25,000-30,000 a person in the united states. first, we wiped out our houses to try to maintain -- to try to keep -- as if our wages were going up with productivity, to keep ourselves on that line, that wages were flat. women went to work, tapped out the houses, the credit cards, and then we tapped out our kids; right? i -- you know, i remember -- i graduated from college -- i went
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to two different colleges, and i was able to, for the time i went there, i was -- this was in the late 60s, i was able to put myself through college working as a waiter, a dishwasher, and a cook at various days of the week at bob's big boy in east lansing, pumped gas and changed brake pads and changing tires. i worked as a d.j. on the weekend as wtim, playing country music, and -- [laughter] i mean, this is you know, and i didn't know anybody who had -- i knew one person, one guy who had student debt because he was working on his master's degree in mathematics who borrowed money for the graduates degree, but, basically, you would, you know, my mom actually graduated from michigan state university in 48, i think it was, 46, must have been 48 or 49, just before
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she met my dad, and she paid her way through college by working as a life guard in michigan in the summers. a life guard! once a year. paid for college. all living expenses. i mean, this is -- her mother was broke. my mom's father, my grandfather, died when she was 13 years old. her mother was the city clerk in michigan, and she made just, you know, basic, you know, basically nothing. anyhow, the jetson's dream got robbed. we done got robbed. people have aceps -- sense of this, of what happened, you know, from george washington to ronald reagan, productivity wages went together, and when reagan came in with reaganomics, wages flattened, and productivity went up. well, that gap produce two
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things, on the one hand, and enormous amount of debt that i described to you, that credit card debt, home debt, that trillion dollars in student debt that when i was a kid -- when i was a kid back in the day, we didn't know about student -- right? seriously; right? go out to california, go to college for free. this, by the way, was not a new idea. abe lincoln start the land grant colleges like michigan state university where i went briefly. abe lincoln had the idea everybody should be going to school free. they were land grant colleges, gave them land to work that land and pay for the tuition of the students, cut the trees, grow cows, which is what they did at msu, corn, whatever. you know, and it was not a unique idea to abe lincoln. thomas jefferson on his tombstone, the guy who, you know, was president of the united states twice from 1800 to 1808 -- 9 --
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1801-1809 technically, he wrote his own epitaph, did not say he was president of the united states. he was not the most proud of it, but he was, but he was most proud of in addition to be being author of independence -- but what he was most proud of that he was the founder of the university of virginia, america's first free college. anybody could go to college. anybody cogold to the university of virginia if you passed the entrance exam and demonstrate they were people going to college. anyhow, people know. people know that we've been robbed. oh, in that gap is that, for the middle class, and correspondedly, wealth at the top 1%, and corporate coffers offshore, but a mind boggling amount of wealth, that hundred thousand a year that would be
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making right now or 150,000 a year that you make right now. that's not in our hands, not middle class' hands, but in the hands of the top 100 of 1%. people know. now, iraq, and i'm not changing topics here. paraphernalia -- paraphernalia thetically, iraq is where western civilization started. the oldest written story was written in what was then called smair ya, and it's the story of how king rose up, and wanted to build a city, needed a lot of wood, and at that time, iraq was covered with ports, and show went out and there was a guard
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guarding, and so he went out killedded him, and then cut down the forest and used the wood to make the mighty city, and the city was built. in fact, we saw the remains of it, and built an airport space over it during the war with iraq, by accident, but, you know. the -- looking around, where it did go, and when they said what's next, he was seriously upset about this, and, okay, that's it. i'm going to destroy, and he turned the land, destroyed the landfill so it was no longer fertile, salted the earth essentially. well, really what it is is the story of the first atilt at why
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large scale irrigation taking the river and running it out into the field and irrigating them and then the water would evaporate leaving behind silt and salt and after two or three or four or ten generations, the land is useless because there was so much salt in it which is why iraq is a desert. it was a warning to future generations, but anyway, the point is from 7,000 years ago in iraq until 2002 when we invaded iraq, or 2003, there's never been in the history of country been a suicide bomber, never. thousands of years, all civilization on earth, never been a suicide bomber, never so much dispair that somebody figured, i'll kill myself to make a point. now, of course, happening every day, and that's the whole discussion and topic, but it's come home to america.
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joe stack, in february of 2010, a femme low by the name of joe stack, a small businessman down in dallas, and he had been laid off a couple jobs and wasn't making it well, and started his own company, and he was having problems, and had failed to deduct taxes, and he owed money to the irs, threatened him, and he finally spanned. he was a pilot, private pilot, went out, got in the airplane, took off to the georgetown airport and flew into the irs tax collection office where he killed -- flew into the side of the building in downtown dallas where the irs was, killed a fellow by the name of burden hunter who we remember as a good guy. he was just there doing his job, a government employee, a good man, and joe stack, of course, died too.
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joe was our first suicide bomber, and there it was. he left behind a screen. he said, his brother actually said, joe seemed like one of us ducks floating down the river, we just didn't realize he was paddling furiously under the water. looks okay on the surface, but what you don't know is that what used to be equity, what used to be people's retirement in their r homes is now a $70,000 mortgage, a $200,000 mortgage. the cars in the driveway that were paid for are half paid for and now are just leased. you know, what kids who are coming to visit home from college, you know, used to be going to college preparing for a family and career out of college, and now they are anticipating a 20 or hundred
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thousand debt out of college and putting out of the family and meaningful lifer until they are in their 30s or 40s because they are so this debt to the top 1%. anyhow, joe said, and he said, i remember reading about the target crash before the great depression. there were wealthy bankers and businessmen jumping from the windows when they realized they screwed up and lost everything. it's iranic how far we have come in this country. this is a suicide note. isn't it ironic how far we've come in 60 years in the country we know how to fix the economic problem, they just steal from the middle class to cover their asses and call it business as usual. why is it thugs commit atrocities, and when it's time for the train to crash under the weight of gluttony and stupidity, the full force of the federal government has no difficulty coming to the aid within days, if not hours?
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yet the at the same time, the joke we call the american medical system, and drug and insurance companies murder tens of thousands of people a year, and leaders do not see that as important as bailing out their vile, rich cronies? the communism creed from each according to his ability to each according to his need, the capitalist creed, each to his gullibility, to each according to his greed. i would say to you, and he ended it saying, i can only hope the numbers are too big to be ignored and the americans wake up in revolt. it will take nothing less. >> what page is that? >> this is on page -- in the introduction, page xx in the book. [laughter] i would submit to you that the shootings we've seen since joe stack, many of them, are
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actually suicide. equivalent of suicide, mass shootings, go into the schools, navy yard, shopping centers, whatever, shooting up people waiting to be killed. that there is -- that we are experiencing the kind of, not, you know, not the stress iraq is would be, you know, iraq has gone through hell, you know, five million refugees, but we're experiencing a stretch that is frankly, for many americans unimaginable, and i would add that i think that the tea party and occupy movement are symptoms of it as joe stack and the shooters. that's not to attach any value to any of them as good or bad but say this is a social phenomena we didn't have before, or when we did have it, it was in 1929. when franklin roosevelt came
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into office in 1933, won the election of 332, inaugurated march of 3 # 3, when he came into office, there was an occupy movement. there were people on the front lob of the white house down to the river. this was 1933, and they said, we can't wait until 1940 to get our hundred dollar bonus. we need the money now because we are broke, and so, you know, fdr came into office in the middle of a massive ownership movement, and i think that it was one of the major things that motivated him to change. how did this change come about? how did it happen that we forgot the lessons of the 1930s?
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we know how to make banks stable from the george washington administration to the franklin roosevelt administration, the united states had never gone more than a panic, never more than 15 years, but from 1933 until 2007, we had no major banking panics. why was that? because in 1933 they passed the glass stege l act, regulated banks and turnedded it into a nice boring profession, a part of the ged. the fire economy, finance, insurance, and real estate was, seven, eight, nine, ten percent of the economy historically, and now it's over 35%, or in the neighborhood of 35%. manufacturing used to be 35% of the economy or gdp, roughly, about a third, and now it's around 11%. this was prerating them now.
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how does this happen? what provided the template for this? in many ways, it started out when rachel carson called for a balance spring in the late 60s, and these two books galvanized america. suddenly, people were horrified. you know, the silent spring was adt, about how it was killing the insects, would have a spring with no birds and no bees, no sounds of insects, no birds chirping because they were being thin they could not survive, so thin and insects were dying. they talked about how the auto industry had everything else and people were dying, and just, you know, hey, let's do something about this. they were an attorney, one of the largest clients, the tobacco
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industry, but he, you know, worked for other people, but he was one of these kind of very genteel southern gentleman from virginia, handled upscale cases, came from a wealthy family, soft spoken, a gentleman in the true sense of it. he was concern about the social class and concerned about the future of america. a lot of these guys had read that in 1951-52, russell kirk wrote "the conservative mind," the bible that animated goldwater and william f. buckley, and the conservative mind back in the early 50s, russell kirk, going all the way back to sir edman bushing, and they were a brit who was a conservative who ultimately supported the american revolution, but the father of conservative movements abroad. he was the man who says it does
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me no harm -- see, he thought only a certain class should be allowed to vote, for example, does me no harm if a man is allowed to engauge in a provings, and hair hairdresser,t it -- society considers violation, such a man and govern to vote, so, anyhow, russell kirk with chapters about the wonders of sir edmond burke. it the class was wealthy, they get uppity. that was not ad -- a good thing for america. this was a value for americans, for many americans, have a stable seat, but if it's too wealth, society gets unstable. at the time when louis wrote a memo, it was unstable. you have the birth control legal
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for 11 years at that point. you had the women's movement going full tilt, you had african-americans who had now had the voting rights act in, te sieve rights act, and, you know, school integration was happening, and you had young people saying, hell no, i won't go to vietnam. you had cities burning. america is radical transformation, or it appeared that way, at least to people like powell. we got to get, you know, russell kirk warned about this 20 years ago. berk worned about it in 1798. we have to do something about it. he wrote a long memo to his neighbor and close friend who was the president of the american u.s. chamber of commerce, and in it, he said, he pointed, points out to ralph
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nader and rachel carson, as i recall, the american spirit of the times, the american population, we're losing them, going off, going radical. business has historically not been involved in politics, which was true. we've got to get in the game. if we don't, we have people like ralph nader telling us what to do, and that won't be a good thing. how do we do? first, we have to control public opinion, create think tanks. who will constantly turn out papers reflecting our point of view so our point of view is out there in the market place competing with nader and rachel carson. secondly, we have to get some control of the media, whether it's by buying it or influencing it. third, we need to get our people in the schools. we need to be teaching in the schools, influencing the textbooks, have conservatives and professors in the colleges. we need to take control of the
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courses. he went through this long list of basically all the institutions, and, of course, the institution of governance, get people elected to the house, the senate, get them op the supreme court, and, you know, all of it, and out of in memo, and, by the way, a few months after the memo, richard nixon put him on the supreme court, and then we started getting decisions like buckley that said money is actually not money. first national bank said that corporations are people. he was long dead before citizens united came in 2010, but citizens united merged in it too and put it on steroids. anyhow, louis powell, after the memo, what came out of that was the american legislative exchange counsel, friends helped start that, famously said, you know, i don't want everybody to vote. elections are not verbatim. elections are not won by the
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majority of the people, they never have been, and at any time in history, and, in fact, candidly, as voting populist goes down, our elections go up. end of quote. google that on youtube. he was one of the heads of the reagan campaign at that time, and there's been a campaign since 1980 to reduce the number of people voting. he started the american exchange counsel, taking control of the foundation, the cato institute, several very wealthy guys started the heritage foundation, and a number of think tanks came from this, the federalist society came, arguably came out of this, which, you know, the majority justices in the yaits, and majority of judges in the united states and law schools heavily influenced, and so all
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this stuff, you know, came about, and, in fact, back in the 70s after powell was on the supreme court, there was a guy who worked in richard nixon's white house who proposed a television system -- not a network at that time, just quick video pieces and send them out by airplane on everything on tape back then. couldn't digitally deliver things. deliver them to tv stations all over the country to get the message out, called g.o.p. tv. his name was roger hail, and now he runs fox news. this created the political infrastructure for these changes that allowed top 1 #%, the corporates to take control, and diminish the wealth, and therefore, the power of the middle class, and tamp down owl
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that rebellion and craziness in the 50s and 70s, and so people just went back to work. their spouses went to work, started working harder and worked two jobs and worked three jobs, and pretty soon, they were not politically active anymore, and their kids were wiped out, and, you know, they are not showing up to protest, and protests just aren't happening. and then how do you destroy the middle class? ken way running the company called enron, a ponzi scheme, over 800 companies as i recall, and among the companies, they would move all the pockets into one set of companies, the losses into other companies, and then the companies that held the losses would, you know, make them invisible, and the companies that held the profits
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are the ones they had stock in, took the stock options, paid low capital gains rates on it making millions of dollars, blah blah, the whole scam. enron's desperately wanting in the business of creating commodities. now, commodities, at that point in time, were heavily regulated by the commodity futures, or by the commodity futures trading board, whatever it's called in washington, d.c., and most were traded on the chicago commodities exchange, a transparent system, and there's a reason for commodities and futures exchanges. if you're a farmer and somebody else is a baker, and you have no idea what kind of year this will be in terms of growing wheat, it makes sense for the farmer to sell half crop in advance at a particular price knowing he loses money if there's a good crop, but not wiped out if there's a drought. it makes sense for the baker to buy half the crop at a certain price knowing he may have been able to get it cheaper, but he may have had to pay a lot more. there's stability in place over the course of the years.
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you have things whether it's pork bellies for bacon or whether it's, you know, wheat or whether it's cement, oil, and airlines, you know, what are counter party trades, the producers and buyers and users, and ken way wanted to do this with emergency. he aggressively started lobbying wendy grahm, ahead of the regulating this, and she finally said, okay, cool. you can do commodity, trade futures and energy. really doesn't make sense. it may be arguably a little bit, but, so, they got that, left, joined the directors of enron. her husband was the united states senator from texas. now, ken, and i can't draw a direct line between the two, but can infer, he very much wanted his own bank because the banks were catching on to the ponzi
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scheme. if he had his own bank, oh, oh -- [laughter] there had always been a wall of separation between commercial banks and banks that had, you know, put your checkbook in, your paycheck into, and you keep your savings account, and they'll write you a mortgage, and gambling banks, brokerage houses, called investment banks. there was a wall of separation between them. there were tight rules op who could own a bank, and, so, he says, do away with that, and it's passed, and it goes away, and they are very, very happy, and thenmented to trade in
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commodities, be #u -- but what about trading commodities that don't exist? what about delivering a thousand bushels of wheat to you at the end of the year, you say, i'll deliver -- i'll bet with you that at the end of the year i'll have a thousand bushels. i bet george the farmer has a thousand bushels of wheat, and then imil bets with somebody else that my bet is bad, and raffle there bets that bill's bet is bad, and then mary bets that bill, and each bet is a bet on a bet, and they have underlying physical thing they
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pushed through congress and signed, but the modernization act said it doesn't have to go through the chicago board of trade or counter party or transparent, and he can just have a couple guys in the back room doing it. in fact, have the banks doing it. we went, now, when i laid the numbers out, this is mind boggling. the gross domestic product of the united states is roughly 15 trillion, a thousand billion dollars, a million, million dollars, roughly 15 trillion dollars. the gross domestic product -- all economic activity, all buying, all selling, all manufacturing, everything. government activity, everything. $15 trillion. the gdp of the entire planet is
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65 trillion. basically, we invent this new form of lateralized debt obligation, these derivatives, these belts that were basedded on something that had an underlying value, mortgages originally, although derivatives were on other things, but they were the primary one because you can't see a mortgage; right? drive down the street, and there's corn, that guy doesn't, but you drive down the street, you have nod -- no idea what people's mortgages are. that's a thing the banks could work that nobody could see. it was not like oil or pork bellies. let's do this on mortgages. they started taking these underlying mortgages, bundling a thousand of them together, slicing them up into pieces, and slice and say, okay, here's a slice, you own this. somebody's going to buy insurance. they are going to bet on whether or not that is going to go bad, and somebody else will bet on that bet and somebody else bet
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on that bet and that bet, and every time the bet is doubled; right? or increasing. went went from none of this stuff at the time reagan was in office, there was none, virtually none in 2000, certainly under a trillion dollars, to -- keep in mind the gdp of the planet is $65 trillion. in 2008, there was, according to the bank of international settlement, between 800 and 900 trillion dollars worth of these derivatives out there in unregulated markets. i argue this is just like monopoly money; right? it's dollars. every time they make a bet, they just take a little one-hundredth of 1% slice off the top, and there's a dozen people on wall street who made over a billion dollars each last year. banks make millions of dollars a
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week. the crash happened, went from 800 trillion to 500 trillion, but we're back up to 800 trillion dollars. why 2016? why? i'm going to wrap up here, okay -- keep going? okay, i'll wrap up in the next five to ten minutes in case. why did i suggest 2016? well, because we are still in the crash of 2006, 2007, 2008. in 1927, there was a huge real estate bubble going on all druse the united states. it was most aggressively happening, and there was a huge hurricane that came through florida, wiped it out, and basically burst the bubble. struck by 0 -- 30%, and that started the ball rolling that led to the great crash.
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when the financial times reported, housing dropped over 30% in one quarter, i went on air taking everything i have and moving it out of the stock market, and i'm not an investment adviser, but i just wanted you to know, and to this day, you have people calling into the show saying, thank god you said that. for two years, people laughed at me, how stay tuned i was, and then in 2008, and the market fell in half. hey, what i was seeing was 1927 all over again. we got into the crash. what happened the last time the crash happened was it got so bad and so much pain and everybody figure the out it was a giant con job by the bankers and industrials, that there was enough political will to reinvent america, to reboot the country, and, you know, you
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quote in the book here, the "new york times" front page story is everybody in congress is overwhelmed in the first two weeks of the roosevelt administration, do what he says, make it happen. roosevelt made the employer of last resort, crazy we have unemployment. we'll hire people, put people back to work. the best welfare program is a job. he put people -- the wpa, ccc, and all these other, you know, alphabet letter agencies. so let me just pause for a second and interject something here. arnold is said to is said -- i can't find original quote, but i find people quoting him, so it's probably it, but doesn't matter, he's said to have said when the last man who remembers the horror of the last great war dies, the next great war becomes
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inevitable. you remember the glories of war, but the people who remember the horrors, they are dead. they are not telling the stories. if you look at the history, and neil howell and i forget, but did a brilliant job of this which we acknowledge and credit in the book, generation, look at the history, you see roughly every 80 years the people who remembered how badly we screwed up in the 1920s, for example, nay were not around to talk back in 1999. if they were, they were talking like this and nobody was listening to them because they just some old fart; right? [laughter] unfortunately. tragic. same was true of in 1920 when warren harding ran for election
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on the twin platform of i'm going to drop that 91% income tax rate down to 25% in 1921, and its slogan was -- this was the campaign slogan, was more business in government, less government in business. get the government out of regulation. aggressively deregulated. that was -- that is and the giant tax cut kicked off the roars 20 #s and led to the crash of 1929 like reagan did the same thing in the 1980s, set the stage, and then grahm pushed it over. far more resilient in 2000 than 1930, much larger economy and integrated world economy, but it sets the stage of the crash of 2008, and, in fact, in the 1920s, people didn't remember the exact same thing that happened, real estate bubble in 1857, and the great crash of
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1856-57 led to the civil war, and people didn't remember there was the exact same thing in 1769-77 and, in fact, it was so bad that the biggest corporation on earth was having a crisis british east india company, having a crisis, and they petitioned parliament, british parliament, who were all stockholders. petitioned them for the largest tax cuts in the history of the world, huge tax cut. sitting on 16 million tons of tea, and, you know, billions of dollars give us a jiecht tax cult. we paid tax on this. it's inventory. we paid taxes. all the sellers up and down the east coast of the united states, because everybody in america drank tea back then. coffee came about as a result of
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this, of this, the boston tea party is what led to america becoming a nation of coffee drinkers. we were so mad at the british tea company. they petitioned for the largest tax break in history, and the act was that, a huge tax cut, and so the east india company imported tee to the united states at incredibly low prices with the explosive intention of running out of business the thousands, tens of thousands of mom and pop tea shops. it was basically a giant walmart effort, and the people were so upset, so angry about this that they said, not in our lifetime. drey dressed like indians, went into the harbor, boarded the ship, and dumped a million dollars worth of tea in today's dollars. that led to the ports agent of 1774, where they decided if you
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don't pay the city of boston doesn't pay the companies back, that million dollars, we close the port to commerce, which then led to, you know, a lot of contentious, leading to the boston massacre, to the shot heard around the world, and the revolution, and, in fact, the year before the boston tea party comes, jefferson wrote a booklet on how to be good british st'ses. after the boston tea party? he was thinking about the declaration of independence. [laughter] enough of this, you know? ny how, we have cycles, and we are in that cycle right now. the thing that happened when obama came into office, if president obama came into office a year later, and we had three years of herbert hoover doing nothing and the economy just melting down, austerity, the
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name of the game, 1929 #-1931, balanced budgets, and roosevelt ran on balancing the budget. he ignoredded that in office, thank god, but, you know, we had three years where we saw what a disaster it was. as a consequence of that, people were ready for fdr. it was just in a few months, there was not the popular will. it was a shame he didn't come into office a year later. he only had 1 weeks until scott brown came in and filibusteredded. they opposed structural changes, were not able to get through. pelosi pass the great legislation in the house, filibustered in the senate, so the structural stuff, reagan stopping the enforcement of the appty trust agent, you remember
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this, strip malls and shopping centers were havens of small locally owned businesses. you remember that the downtown of every town was local family owned businesses, some for generations, and not that way anymore. reagan stopped enforcing, and if we were to start enforcing the antitrust act, if we were to reinstate glass and separate commercial banking from gambling banking so they can't take your paycheck deposit and gamble with it on wall street, do that and undo graham's terrible legislation and end this phony bologna derivative market and bring back a manufacturing to the united states by changing our trade policy back to what alexander hamilton put in place in 1793 and stood until the beginning of the reagan revolution, the nation trade is
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a toc at that time in the 80s and 1990s to nafta and wto and all these other nafta, shafta, all these new things, and go back to the fundmentals. we don't have to call up sweden, say, how do you run a country? we did this in this country. in fact, we've done it three times since 1776. we made three year cycles, and out of each one, we got better. we figured it out. it's all in the history book, and sometimes they remember it, who can actually tell you about it. that, i think, frankly, is the good news. the bad news is that the crash of 2008 has not ended, obama came into the office, stopped the bleeding, but none of the fundmentals changed, massive accumulation of wealth at the top, and ecosystem that is broadened and diversed, a
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jungle, a drod and diverse, strong and resilient, and ecosystem that's mono culture, a weak field of a single genetic species of wheat is vulnerable to locusts and drought. same with the economy. we have an economy where every single sector of the corporations at the most, and this is not healthy. this is not good. this is -- and so, anyhow, we have -- if we do these things, and then roll back the reagan tax cut, used to be, you know, i was in business, and i started this story out telling you when i made more money than my dad did in the early 70s, got my first credit card, and he had a cpa for the business, and he came to me in the best year that we had, which, my recollection
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was 76, and he came to me, and he said, you got to stop taking so much pay. i'm like, why? he said, because you're pushing 45% income tax. that's crazy. he said, you shouldn't give that much money to the government. you should be putting that money back into your business, and take the money out eventually when you sell the business as capital gains, put the money back into your business, hire more people, come up with a new product. that's what we did. ceos at that time were making 30 times what the average workers were because the tax rate made 3 billion a year in today's dollars, back then, over a hundred thousand or something like that. when you made over that, you started hitting 74% income tax, and who wants to pay that? that's crazy. reagan droppedded that down to 28%, and all the sudden all the top money flowed into the market like it did in 1921, and our argument, gambling -- we have to
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roll back the reagan tax cuts and go back to a rational policy so that our ceos make 30 times what our workers are and workers are doing what "time" predicted, having a middle class life, and one person works 40 hours can support a family. again, we know how to do this stuff. the good news -- bad news is that the crash -- still in the crash, and it's at some point will fall over. i chose 2016 because i believe that the obama administration's doing the same thing the bush administration did, and this is not a knock on them so much on either one of them as just practical politics. you don't want a crash to happen when president; right? you don't want to get blamed for it. george bush did everything he could to make it happen the day after the election in november, and he just mistimed it. they are doing everything they can to make sure it does not
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happen until after the election of 20 # 16. i'm skeptical they pull it off, but if they are, after the elections of 2016, you know, cover your head. i talk in the book about, you know, personal -- this is not an invested advice book, but there's things like getting liquid and debt free, and things like that, but, you know, know this is going to have to play out. the good news is that every time we've had a crash in the united states, what's followed is a progressive revolution. in the 1700s, after that crash, we created this country. it was the first serious experiment in small democracy in 3,000 years. after the crash of 1857, we had a civil war, we ended slavery. we had a progressive era, the beginning of one with the reconstruction. it was the beginning of reconstruction. in the crash of 29, we came out of that with all the things that
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you know of from the 40-hour workweek, child labor laws, minimum wage laws to social security, unemployment insurance, the list goes on and on. i believe that coming out of this crash, there is this incredible opportunity, incredible moment in time where if we are politically active, if we show up at the republican and democratic parties, whatever inically nation is, yes, i want to participate, if we're playing the inside gig, if we're the outside game joining organizations that are the pressure groups, that are doing things, whether it's the tea party or progressive democrats of america, if we -- if we become -- if we're ready, there's going to be that moment where there's going to be an incredible political vacuum, and we step into that, people who say, we are going to fix this. this is not rocket science. we've done it before. america could be so much more
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progressive, so much -- and i don't mean that in a political sense. i mean, as in the so much better. we can become the nation that we were. we can become better than the nation we were. we can have an extraordinary future for ourselves and for our children. get ready, tag, you're it. [laughter] [applause] [inaudible conversations] >> the rest of you whose questions i don't answer tonight, i'll be over here, you know, we can hang out, but you're welcome to call into the show. i do it three hours a day, five days a week. less educated people voting against interests using one or two hot button issues, why doesn't the left do the same?
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[laughter] i don't think that, frankly, partisan hat, trying to be relative through this, but i don't think the left even, you know, needs to, like, gin up issues. i think, you know, we've got good issues, like, you know, people don't realize 20-year-olds don't realize social security is actually a million dollars -- for a 20-year-old, more than a million dollar insurance policy. if you're disabled, 20 years old, social security takes care of you for the rest of your life, you know, for example -- people want to privatize that to wall street, really? a third of all wall street payments are actually not retired people. they are widows or disabled people. so just to pick one example in which there's obviously dozens, but i think we need better messaging, and there's a book
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called "cracking the code," about the political message, you know, all the politicians. how can the little people stop the pipeline in north eastern minnesota? by getting political out. these things, you know, people say, oh, you know, i don't like this, this is going on, and i'm going to call a radio show and complain about it or something. it's not enough. we've got to get politically active. whatever the issue may be, you know, whether it's showing up and volunteering to be a precinct committee person or republican party, that's how the tea party took over republicans. they showed up at the local level. people show up, you know, if you don't like the keystonepipe line or anything else, or if you do like something, it's not happened, get politically active, get engauged. there's not any simple answer beyond that.
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there's some unions that give jobs as a result of keystone, and, you know, democracy -- this is really an extraordinary thing. it seems kind of dissonance that people would support the pipeline, but unions are democracy. workplaces are not democracies but kingdoms. you have the king, the lord, the ceo and executives, and the serfs. they do whatever they are told. they do whatever the members say, and if the majority of the members support the pipeline, the union supports the pineline, you know, because they think they get jobs, and some will as well. i think we have to honor and respect that. democracy does not always produce the outcomes we like. majority of people don't vote the way we think is best, but it's a democracy.
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we have to work and support unions even when we disagree with them op one particular issue. over a third of americans worked for the unions, had a good job like my dad did when reagan was in office, and now in the private work force, it's 7%. it's a disaster for america. this is something that needs to be changed. we shouldn't let this inter19 warfare, firing squad, oh, not this particular issue divide us. we have to support the unions period. [applause] and i think, frankly, i think i don't think, if the republicans tried some of the tricks, some of the tricks played with president obama, she would be given up a lot.
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a lot of things i disagree with policy-wise, and i think hillary clinton did a lot more than i agree with, and, you know, i would like to see e liz beth warren running. [applause] the reality is that she's reluctantly ran for senator of massachusetts. i doubt she'll run for president. bernie sanders on my program on friday said that he would consider running for president to push the field to the left, and not just that, but see sanders -- [applause] so my answer is yes to all of them. already if obama fast tracks tpp, where should allegiance lie? again, you don't shoot -- you got to stop the firing squad
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mentality. i think obama's rong on fast tracking tpp, but that doesn't mean i don't support him. god forbid we have john mccain as president when syria was happening or mitt romney as our president, you know, can you -- so, you know, again, the simple answer to that is if you don't want something to happen, get engage the, politically involved inside or outside the party, but get involved, show up, and why do we have a mt. everest climb to overturn citizens united? because what they did is it said -- it was the ultimate fulfillment. ..

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