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Monday, February 13, 2017

Fed Insider: The Debt Is Unsustainable:Danielle DiMartino Booth

Fed Insider: We Have Been Put On Notice, The Debt Is Unsustainable:Danielle DiMartino Booth

Transcript : today's guest is danielle 0:26 DeMartino booth 0:28 Danielle spent nine years as a senior 0:30 financial analyst with the federal 0:31 reserve of dallas and served as an 0:33 advisor on monetary policy to dallas 0:35 Federal Reserve President Richard W 0:37 Fisher until his retirement 0:40 danielle has a new book out called set 0:41 up it will be released on febuary 14 and 0:44 I am very happy and honored to have 0:46 Danielle on the x20 report spotlight 0:48 danielle welcome to the spotlight 0:49 I'm so happy here today thank you for 0:51 being on here and you are upset insider 0:55 you work for the Fed did you quit the 0:57 fed well I wouldn't say I quit the fact 1:00 that that's kind of a strong word i 1:01 followed in whatever this one of the 1:03 most hawkish hawks in central banking 1:05 history and I call him out 1:08 it's not involved in Richard Fisher I 1:10 followed him out yes so you wrote this 1:12 book set up i like the title set up 1:14 that's the plan words can you just give 1:16 us a brief summary of why you decided to 1:19 write this book out called days at the 1:21 words that i use our are duty-bound oh I 1:25 i spent a long time inside the Fed as an 1:28 outsider as an outsider looking in and i 1:32 joined the Fed it going into the 1:34 financial crisis and i was there in the 1:36 years that followed it and what I 1:39 witnessed and experienced were so 1:42 alarming to me that I felt that I was 1:46 duty-bound to share my experience and 1:49 connect the dots for the average 1:51 American who might not appreciate the 1:54 intricacies of the institution but more 1:56 importantly how directly the Fed affects 1:59 their everyday investment decisions it 2:04 as well as spending decisions 2:06 ok i just wanted to get into the Fed and 2:09 I just wanted to clear up some things 2:10 that people might not know many people 2:12 do know this but is the Fed part of the 2:15 government but that is a hybrid if you 2:18 will the Federal Reserve district banks 2:21 are private institutions that remit the 2:26 remaining profits that they generate if 2:28 there are any after they cover their 2:30 operating expenses 2:31 to the Federal Reserve in Washington and 2:34 the Federal Reserve in Washington then 2:35 transmits any profits after it covers 2:38 its operating expenses to the treasure 2:40 in the form of remittances so the best 2:42 way I can describe the fed to the 2:44 average American as is that the 12 2:47 district that the 12 districts email 2:50 addresses and in dot o RG and those in 2:54 washington DC like Janet Yellen her 2:58 email address and in dot govt so it's 3:01 it's a private public institution it's 3:04 both 3:05 okay and who are the people running the 3:07 fit i mean who are they what are they 3:08 part of well they're mainly part of 3:11 academia who are they what are they part 3:13 of a rin it didn't used to be that way i 3:16 don't mean to be flip but but the people 3:19 running the Fed are mainly PhD in 3:22 economics whose decision-making revolves 3:25 around theoretical models these 3:28 theoretical models is just things where 3:30 they're sitting you know in a setting 3:32 where they're just you know thinking 3:34 about how they should approach the 3:35 economy i mean are they out on the 3:37 street are they looking at what's 3:39 happening with the people are they 3:41 really do they have their ear to the 3:43 ground of knowing what's really going on 3:45 no I think that's I think that you're 3:47 driving at the core of really what's 3:49 gone along with the Fed is that there's 3:52 not enough practicality and pragmatism 3:55 it within the institution if something 3:58 is going on in the real world doesn't 4:00 happen to fit into one of their 4:02 econometrics models then it simply 4:04 dismissed and that goes a long way 4:07 towards explaining why the fed missed 4:09 the financial crisis when a lot of 4:11 people who did have their ear to the 4:13 ground myself being one of them thought 4:15 coming is the Fed than working in the 4:18 best interest of the American people 4:20 well no that's kind of a rhetorical 4:21 question and i would have to say no that 4:24 the Fed has not been acting in the best 4:26 interests of the American people 4:27 otherwise you wouldn't have had now the 4:30 second largest generation in the country 4:32 the baby boomers course the Millennials 4:33 are a larger generation population life 4:36 but you really wouldn't have a have 4:38 abandoned the retiree class in this 4:40 country with the specter of zero 4:42 interest rates 4:44 add that truly had their best interests 4:46 in mind so with all this currency 4:48 printing or creation with QE the Fed 4:53 buying up the toxic real estate from the 4:55 banks is the Fed actually working for 4:57 wall street then 4:59 well i don't think anybody fed would 5:00 answer in the affirmative to that 5:03 question but that has been one of the 5:06 they would tell you unintended 5:08 consequences is that fed policy has 5:11 unfairly benefited Wall Street and that 5:15 it has unfairly detrimental the average 5:18 American IE main street but I don't 5:21 think that's what they think that they 5:23 were doing but again to go back going 5:27 back to early observation is their ear 5:29 to the ground 5:30 no I don't think it is I think that they 5:32 believe that the so-called wealth effect 5:33 actually exist on planet earth where it 5:36 really doesn't the wealth is not trickle 5:38 down to every working American so since 5:41 2008 since the the crisis that we had 5:44 the great recession up into this point 5:46 which is almost nine years later as the 5:49 economy actually improved after 5:51 everything the Fed has done i think it's 5:53 it's fair to say that jobs have been 5:55 created and that home prices are 5:58 certainly risen and that asset prices 6:02 like stocks and bonds have have also 6:04 risen in value has the economy itself 6:08 improved you know if you look at 6:11 economic growth from the time that we 6:14 emerged from recession in 2009 until the 6:17 just reported year and final 2016 gross 6:21 domestic product has averaged 6:23 one-point-eight percent so i would have 6:25 to say no the economy really has not 6:29 improved or not technically in recession 6:31 the way it's defined but improved i 6:34 think is something at the stretch given 6:36 this is the most anemic economic growth 6:39 we've seen in the post-world War two ERA 6:40 you talk about jobs and there's a lot of 6:43 individuals that look at the job numbers 6:45 and they're saying that these job 6:46 numbers aren't really reflecting the 6:49 actual people at work because they're 6:52 saying a lot of it once a lot of jobs 6:54 one from 6:55 full-time to part-time a lot of people 6:57 are out of the labor force but they 6:58 still want a job and when Trump was 7:00 actually campaigning a lot of people 7:02 looked at this and said you know you 7:04 know he's right there's a lot of people 7:06 out of work and and people aren't 7:09 working right now defend actually see 7:12 this as a problem where they feel that 7:15 the labor market is strong 7:16 unfortunately I think they believe that 7:19 the unemployment rate that is reported 7:23 every month in the headlines is 7:25 indicative of success on their part up 7:28 but by the same token i think that they 7:33 recognize that the labor force 7:34 participation rate or the flip side of 7:37 it is the employment to population ratio 7:39 is certainly not what would indicate a 7:42 robust and strong jobs market which is 7:46 why they continue to keep interest rates 7:48 as low as they are hoping that this tool 7:52 will help create more jobs but this far 7:56 into again a very anemic recovery you 8:00 would have to start to observe that 8:02 they're using the wrong tool that it is 8:04 not it is not and should not be the onus 8:08 and federal reserve to induce strong job 8:12 recovery that that produce strong wages 8:14 and incomes now the Fed has been talking 8:16 about interest rates raising interest 8:19 rates they said last year they were 8:20 going to raise interest rates you know 8:22 maybe three times during the year they 8:23 only have one so now in 2017 they have 8:26 said they're going to raise interest 8:27 rates once again from working with the 8:30 Fed and seeing what's out there 8:31 do you believe that they will be raising 8:34 interest rates three times this year 8:36 well they're going to have to get 8:37 started when the market does not expect 8:39 for them to get started 8:40 they were a bit more dovish than the 8:43 than was anticipated coming right out of 8:46 the gate with their first statement on 8:48 temporary the first and so the market at 8:50 that point reduced its expectations for 8:53 lighting interest rates at the upcoming 8:55 march meeting so so the Federal Reserve 8:58 only tends to raise interest rates if 9:01 there's a press conference that follows 9:02 the decision that leaves them with for 9:05 opportunities in 2017 9:08 they'll really have to change the 9:11 persistent the perception of a of an 9:14 interest rate increase in march in order 9:16 to even begin fulfilling that commitment 9:18 of three times if they don't raise 9:20 interest rates in March that means that 9:22 they'll have to raise that's at the 9:24 other three meetings where there's a 9:26 press conference that follows which kind 9:28 of backed him into a corner in the same 9:30 spirit that they were backed into a 9:31 corner in 2016 and had to renege on 9:34 their caucus that the Fed is continually 9:37 out there and there I mean I see the 9:40 minutes and they say that the economy is 9:42 doing well you work for the Fed and you 9:45 saw what was coming up in the 2008 9:47 crisis when you look today 9:51 do you see that we're headed towards 9:53 another crisis i try and keep a positive 9:56 lookout out their outlook i would say 10:01 that American banks are not as capital 10:05 constrained or as weak as they were 10:07 going into 2008 because there has been 10:10 some repair that's gone on those balance 10:13 sheets but by the same token we don't 10:17 know how interconnected we are on a 10:19 global basis in the aftermath of all of 10:22 this quantitative easing other global 10:25 banks blowing out their balance sheets 10:27 in the same way that we have here at the 10:29 Federal Reserve United States and asset 10:33 valuations are more stretched then they 10:35 were maybe not in residential real 10:37 estate that's certainly the case in 10:39 commercial real estate and in the bond 10:42 market and got the stock market is 10:45 almost at its peak overvaluation levels 10:48 as well so will the financial crisis 10:51 that's become look the same as that 10:53 which arrived in a way to no.9 probably 10:56 not but that doesn't mean that there 10:59 won't be a substantial amount of wealth 11:01 lost going forward when these different 11:04 and multiple bubbles do eventually 11:06 implode under their own weight 11:09 i mean you're talking about bubbles and 11:11 many times the Fed is out there and they 11:13 say they don't see any bubbles 11:14 whatsoever 11:15 is that you actually see bubbles and in 11:17 the market in real estate and maybe Otto 11:20 and student loans did you actually see 11:22 bubbles 11:23 I mean bubbles is a word that is just 11:25 overused but if you look at for example 11:30 consumer credit United States because 11:33 you just said auto loans and student 11:34 loans right now it's almost twenty 11:37 percent of economic output consumer 11:40 credit outside of mortgages that's two 11:42 percentage points above where it was at 11:45 its former peak in 2008 so households 11:49 are definitely more stretched than they 11:52 have been again maybe not in mortgages 11:55 but when you add up some of the default 11:58 rates that we're seeing in FHA mortgages 12:01 which is really the only way for uh for 12:04 but for households with stretch budgets 12:06 to make low down payment down payment on 12:10 mortgages and get into a home if you 12:12 look at the default rate there about 12:15 four percent if you look at the default 12:16 rate on student loans about eleven 12:18 percent if you look at the default rate 12:20 on subprime auto loans about that love 12:25 that the losses are running about 8% 12:26 sorry i don't know that that default 12:28 figure 2 top of my head but you are 12:30 seeing stresses emanate from the 12:33 household sector which tells you that 12:36 the size of the debt has grown to be um 12:41 is going to be much too large bubbles 12:43 usually talk about bubbles and asset 12:45 classes and is a bond market in a bubble 12:48 I would have to say that that's the case 12:50 because it's a three trillion dollars in 12:52 global losses suffered just in the few 12:54 weeks that followed the election because 12:56 the bond market took a step back and you 12:58 talked about debt 13:00 I mean right now the United States in 20 13:03 trillion dollars worth of dead two 13:05 hundred trillion of that global global 13:08 market I mean we have a lot of debt and 13:11 what I've seen in the passes that the 13:13 tax revenue coming into the government 13:15 has continually dropped declining right 13:17 now if you look at the state level if 13:18 you look at the federal level the tax 13:21 revenues coming in are dropping 13:23 can we sustain this debt right now 13:27 well we can sustain the data is long 13:29 the rest of the world allows us to is 13:32 the long story short would have US 13:34 dollar remains well the US dollar 13:36 remains the reserve currency and that 13:39 means that foreign countries will still 13:42 have to continue to pony up at our 13:43 auctions and support our debt so 13:46 mathematically speaking unless you're 13:47 talking about Armageddon we can continue 13:49 to support this get that being said 13:52 you're right the budget does not work 13:54 and at towards the end of last year we 13:57 were put on notice of the country 13:59 because our deficit started to rise as 14:00 well so if interest rates rise at any 14:05 kind of an appreciable rate the debt 14:07 service of the country will quickly 14:09 engulfed the budget and we will have 14:11 serious problems and I'm worried about 14:14 the ability to service the US debt I 14:16 worry about the ability of corporations 14:18 to service their record debt levels if 14:21 you look at non-financial corporations 14:22 and again I go back to households as 14:24 well who have tacked on enormous amount 14:26 of get over the past few years and they 14:29 could seriously not afford interest 14:30 rates to rise against that backdrop if 14:32 we cannot service the dead at that point 14:35 ever comes 14:36 what do you see happening in the economy 14:37 then what these are these are questions 14:39 that are very difficult to answer right 14:41 the last time something like this 14:42 happened china was a global super parent 14:44 you're talking about 1913-14 in the 14:47 years that led up to the great 14:48 depression that's what happens when 14:50 countries can't service debt you end up 14:53 with currency wars and trade words that 14:56 follow followed by Wars and that's what 15:00 happens that's why that there there's a 15:02 tremendous amount of anger which is one 15:04 of the reasons I wrote the book because 15:06 the average American can't figure out 15:08 why they can't get ahead 15:11 well they can't get ahead because the 15:14 culture inside the federal reserve has 15:16 been one that has promoted debt creation 15:19 at this at the expense of long lasting 15:24 prosperity and that's not something that 15:27 can continue indefinitely without 15:29 serious consequences but I would never 15:31 bring up the whole idea of war as in 15:35 warfare related to an economy if it 15:39 wasn't that serious but i think that it 15:41 can become that 15:42 areas over time especially if other 15:46 global economies have to engage 15:48 themselves to try and keep their 15:50 economies afloat which end up trading 15:53 tension across global lines former 15:55 senator ron paul and I'll Senator Rand 15:58 Paul and other senators they're pushing 16:00 a bill to audit the Fed and it seems 16:03 like the Fed continually fights that 16:04 they don't want to be audited what are 16:06 they so afraid of what are they worried 16:08 about if they are audited 16:10 well i don't think that the Fed wants 16:13 anybody to question the way that they 16:15 make monetary policy 16:17 they're very protective of that which is 16:20 understandable we need an independent 16:21 central bank i disagree with the 16:25 Senators on the idea that we should end 16:28 the fed I wouldn't want the banking 16:30 system to run off into the sunset 16:31 completely unregulated arm but i do 16:35 think that there needs to be more of a 16:37 check and balance on what has 16:39 effectively become the fourth branch of 16:40 the u.s. government the federal reserve 16:43 and i think that the onus is upon 16:45 Congress and the administration to put 16:49 dissenting voices on to the federal 16:51 reserve board so that we don't 16:53 necessarily have to come in and say this 16:55 is absolutely how you have to conduct 16:57 yourself and you you have to be a you 16:59 have to go by this or that rule in 17:01 making monetary policy and be 17:03 disciplined inside of a box but i do 17:06 think that if you had more people among 17:09 federal reserve officials who were able 17:11 to dissent and were able to disturb that 17:14 culture of groupthink that we wouldn't 17:17 be in the situation that we were in 17:18 today with people demanding an audit of 17:20 the Dead you have to go down to the stud 17:23 and invite descent on to the federal 17:26 reserve board i think the opposite way I 17:28 think that it's the people of the 17:31 country that should be involved and 17:34 looking at what the Fed is doing i no 17:36 its private but i believe that the fed 17:39 as a private corporation gets away with 17:42 a lot of things and the people of the 17:44 country because before the said there 17:46 was no said it was the government 17:48 creating currency and now we have this 17:51 debt base model which looks like it 17:54 can't go any further 17:56 and at the at this time I don't see the 17:58 purpose in the Fed I don't see what 18:01 benefit it gives to the people because 18:03 they're actually loaning currency out to 18:06 the public with interest and the people 18:08 then they have to pay for this in the 18:10 long run with taxes and actually if you 18:12 look at the debt load in the country 18:15 there's really no way to pay this back 18:17 at all 18:18 no there's not and your white that the 18:20 Fed has stopped working for the people 18:24 of the country but that doesn't mean 18:26 that the institution needs to go away 18:28 the word that i use means it is up and I 18:32 don't think we need a thousand PhD 18:34 economist at the Federal Reserve all 18:36 coming up with the same conclusion 18:38 looking at the same data i think that 18:40 the budget in terms of the research that 18:42 needs to be slashed and that the budget 18:45 in terms of providing the bank's needs 18:47 to be greatly increased so that we can 18:50 stay one step ahead of those on Wall 18:52 Street who are creating the Securities 18:55 and assets that makes there specifically 18:58 to get around the regulators and stay 19:00 one step in front of the Fed I think we 19:03 need to have the smartest people at the 19:06 table and have people who have been on 19:08 the receiving end of that policy to make 19:11 sure that set policy is designed for the 19:13 people at the Federal Reserve you have 19:16 to start at the very foundations and put 19:19 make sure that if the Federal Reserve 19:22 cooks up a concoction that they actually 19:24 have to taste their cooking and eat it 19:27 themselves before passing it out on the 19:30 menu 19:30 everybody else you know because when I 19:32 look around the world i mean this is 19:34 what i say this is and many people who 19:36 listen to what I report and and what I 19:40 talk about is the Fed around the world 19:43 not just here in united states that the 19:44 ECB the IMF the central bank systems we 19:48 look around Europe 19:49 I mean that they have huge amount of a 19:52 high very high unemployment most of the 19:54 countries are in debt there at negative 19:57 interest rates and they're continually 20:00 purchasing a corporate bonds therefore 20:02 you know they're monetizing the debt the 20:04 same thing in the United States to 20:05 monetizing the debt 20:07 they're buying Treasuries 20:09 and right now over this period of time 20:12 it seems like the system is completely 20:14 broken down and right now the people at 20:18 at the bottom they are completely 20:20 suffering through all of this and it 20:23 doesn't seem like it's getting better as 20:25 they continue on with their policies 20:27 well I would push back a bit i would say 20:31 that the people at the very bottom are 20:34 doing okay we've had one of the quietest 20:37 expansions of the social safety net 20:39 since FDR was an office i would say that 20:42 people right above them are suffering 20:44 the most the people who get up every day 20:46 and go to work and pay their taxes and 20:50 stretch themselves to pay property taxes 20:52 to cover underfunded pensions that have 20:55 been corrupted and cannot put food on 20:59 the table and are forced to take out a 21:01 subprime auto loan in order to get back 21:04 and forth to work to stretch that 21:06 payment amount i would say it's the it's 21:08 the run right about there being hollowed 21:11 out and being a disservice to the most 21:15 by Federal Reserve policy it's those who 21:17 want to continue to give that has been 21:20 destroyed the greatest degree and who 21:23 are arguably really angry and deservedly 21:28 cell 21:28 yes i do agree with you on that it is 21:30 the middle classes kind of disappearing 21:33 but I mean if the bottom rung if we took 21:35 away all those short social programs 21:37 food and food stamps number of people on 21:40 food stamps ever have gone up 21:41 dramatically if the government couldn't 21:43 pay for that anymore it would be pretty 21:45 much almost everyone except for the very 21:46 wealthy that would be suffering right 21:48 now I since Trump has become president 21:52 do you think he's going to approach the 21:55 said and end the fed why don't you get 21:57 ended I mean he's he's got a lot of 21:59 things he wants to spend money on last I 22:02 checked and for that you need somebody 22:05 controlling the leavers of interest 22:06 rates so when people ask me about Trump 22:10 my stock answer is I hope she introduces 22:16 the essential changes that are needed 22:18 inside the institution he had an 22:20 immediate opportunity an enormous 22:23 opportunity because there are two 22:24 vacancies on the federal reserve board 22:25 so he's got it in him he's got the power 22:29 right now to put to defending voices on 22:32 the federal reserve board i'll dig into 22:34 the weeds for just to be a bit with you 22:36 last September Janet Yellen was staring 22:39 down the barrel of a double descent on 22:41 the Federal Reserve Board Tarullo and 22:43 Brainard were very vocally threatening 22:46 the descent something that only happens 22:47 on the Federal Reserve or twice in the 22:49 last 21 years 22:51 so rather than withstand that she took a 22:53 triple percent from three district bank 22:55 presidents who were stepping down from 22:57 their voting rotation in December Yellin 23:01 does not want people on her inner in the 23:04 winter inner sanctum to say no and Trump 23:07 has an immediate opportunity to put 23:09 people on the federal reserve board who 23:10 will push back and we'll say no 23:12 immediately and then you will see other 23:16 people follow Janet yellen's term is 23:19 over in less than a year i think Daniel 23:23 Tarullo would follow if a check and 23:25 balance was placed in where he is i 23:28 think brainerd would leave as well and 23:30 Stanley Fisher's term is due up the vice 23:32 chair of the Federal Reserve Board in 23:34 June you're talking about six of the 23:36 seven feet on the federal reserve board 23:38 that are there for the picking for 23:40 president Trump to fill and completely 23:44 revolutionized and change the face of 23:46 that organization so I mean I said in 23:49 the Fed what happens if he decides to 23:51 get rid of the private part that part 23:56 but the privacy of the Fed to open up 23:59 and the government actually take control 24:00 of the Fed you think he'll make that 24:03 move 24:03 well I hope is a wise enough sold 24:06 understand the last thing we need is a 24:08 bunch of politicians running the Fed the 24:10 Fed become overly political as it is I 24:12 wouldn't want Congress writing it not on 24:15 behalf of my children because obviously 24:18 there's other ways of Independence and 24:20 reason bringing in complete outsiders so 24:23 i would hope that he would not invite 24:24 the Fox into the henhouse of the Fed I 24:27 mean I different that because the 24:28 Constitution when it was created in 24:31 look at you know coining money there 24:33 there was no fed I mean Andrew Jackson 24:35 ran on the platform of removing the 24:37 deciding with the second bank of america 24:39 with essential type of bank at that time 24:42 and I think we've come to this point in 24:45 time in our country where many things 24:49 need to change and personally I think 24:50 one of them is this the central bank 24:53 which is the Fed where it needs to have 24:55 a complete overhaul or actually just 24:57 completely remove it because I really 25:00 still do not see a benefit of a private 25:03 corporation creating currency out of 25:06 thin air and attaching interest on it 25:08 and loaning it to the government where 25:10 then filters down to the people and put 25:12 people into further and further debt 25:15 well I think we're agreeing to disagree 25:16 here because you're talking about the 25:18 way the Fed operates today as being 25:21 broken and in that sense i would say 25:23 absolutely it needs to be fixed it needs 25:26 to be re-engineered it needs to be 25:28 recreated you need to go down to the 25:29 studs so in that we agree it's whatever 25:33 central bank i think china was still a 25:35 huge party because they know that our 25:37 financial system is global and if we had 25:40 a narky inside of our banking system 25:42 then they would be that one step closer 25:44 to having their current CD the reserve 25:47 currency and overtaking our economy and 25:50 becoming the largest economy in the 25:51 world we have to understand that we are 25:53 interconnected in our global financial 25:55 system and the magic that is not a bell 25:57 you can ring which means you have to be 25:59 in it to win it 26:01 and again I say it one more time take 26:03 the Federal Reserve down to the studs we 26:06 are not a country anymore that we were 26:09 in 1913 you don't need to have all of 26:12 the decision-making centralized in New 26:15 York and in Washington you need to 26:17 decentralize it and put the powers 26:19 inside of the district where we have 26:21 economic growth and make sure that every 26:23 federal reserve district president is as 26:26 a permanent vote going forward against 26:29 you distill that power base that has 26:31 become so politicized in washington DC 26:33 you mention the the the dollar being the 26:37 reserve currency there are many out 26:39 there calling for a different reserve 26:41 currency 26:42 see where they're saying maybe the SDR 26:44 we see problems in the Middle East where 26:47 we had the petrodollar where these 26:49 countries are using the dollar to pay 26:50 for oil purchases and that seems to be 26:54 eroding away right now and we see right 26:58 now that there are many out there saying 26:59 that you have the dollar it's not going 27:01 to be the reserve currency anymore that 27:04 there is there are replacements that are 27:07 ready to take over 27:08 did you see that at all well given the 27:10 debt load of the country i think if 27:12 there was a viable alternative we would 27:13 already be there but the infrastructure 27:17 to have some kind of a of a hybrid or a 27:21 basket of currencies replace it with a 27:23 bit cone coin for example replace it 27:25 we simply don't have a payment system in 27:27 place globally that would withstand that 27:29 if we did I think we would be much more 27:32 vulnerable if we go out 10 years from 27:35 now and don't and that's the changes 27:37 that are required i think china steps 27:40 into that breach and replaces a dollar 27:42 and then we're in men were truly in the 27:44 soup 27:45 what are we going to do with are going 27:46 to tell our grandchildren then yeah I 27:48 mean that everything would completely 27:49 change and our way of life will 27:51 completely change at that point and 27:53 everything I mean you even mentioned 27:55 China because China and Russia they have 27:57 almost kind of duplicated everything 28:00 here in the United States they created a 28:01 payment system they created very similar 28:04 market the gold exchange the shanghai 28:07 gold exchange and it looks like they're 28:09 kind of duplicating what we have here 28:12 maybe to set up a them or you know China 28:16 or Russia or whatever to be the reserve 28:19 currency of the world and you know if 28:21 you don't know if you see that or you 28:22 heard about well i think that the 28:24 groundwork is sunlight but again china 28:25 tower four percent of the global payment 28:28 system on a practical level it doesn't 28:30 work but over time again these are not 28:35 changes that i'm talking about meeting 28:37 to be made over the next eight years i 28:40 think these are immediate changes to 28:42 have to be effective immediately because 28:46 as you mentioned they'd at least 28:48 followed us in principle if not in 28:51 practice 28:52 and laid the groundwork for them to one 28:56 day take over and the longer we wait the 29:01 more more vulnerable we become to that 29:04 becoming individuality neither of them 29:06 have strong enough banking systems 29:08 resources or economies to take over the 29:13 United States at this point it's just 29:14 not a it is not a reality that that can 29:17 come to pass anytime soon china banking 29:19 system is largely known to be insolvent 29:21 and the corruption in Russia is that 29:23 prevents them from being a true viable 29:25 alternative but again you never know 29:27 what tomorrow holds 29:29 if the anger that is at the core of the 29:33 global inequality divided continues to 29:36 simmer and is left unchecked and I go 29:40 back to what I said earlier you begin to 29:42 lay the foundations for World War 29:46 because that's what happens when 29:48 economic strife is allowed to continue 29:51 to fester under the surface and the 29:55 anger continues to build not just among 29:57 Americans who were called the deplorable 29:59 but among the world quote-unquote 30:02 deplorable who work hard everyday I i 30:07 hate to look into the future and see 30:08 that as a possibility but to your point 30:11 all four of my children have been taking 30:12 a drink since they were four years old 30:14 the best defense is a good often Daniel 30:17 I really appreciate you coming on the 30:18 x20 report spotlight once again how can 30:21 people find your book and how can they 30:23 purchase it 30:24 uh well first of all follow me on 30:25 twitter if you will at DeMartino boots i 30:27 talked about the same subjects you and I 30:29 discussed everyday 24-7 and sign up for 30:33 my newsletter at and go on 30:37 Amazon go on 30:38 going into books step 30:41 into your bookstore might like my books 30:43 out in on valentine's day go by the book 30:46 read it give it to your mother give it 30:49 to your children give it a big it pass 30:51 it out widely so that people can 30:54 understand that it's possible to forge a 30:57 pathway forward for the Federal Reserve 30:59 and for our economies future Daniel 31:02 thank you very much for being in the 31:03 spotlight once again i really do 31:04 appreciate it thanks 31:05 very much thank you so much for your 31:07 time

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