Debating Reaganomics Architect Paul Craig Roberts
Former Assistant Treasury Secretary discusses free trade, business regulations and Mid-East policy.
Former Assistant Treasury Secretary to Ronald Reagan talks about how he helped make the U.S. an economic superpower during the Cold War.
Aaron Brabham: Welcome to another episode of Stansberry Radio. I'm Aaron Brabham. Porter, you just got back from a little work vacation in the Bahamas. It's good to have you in.
Porter Stansberry: Just back from some brainstorming that involved lobsters and mahi and sailfish.
Aaron Brabham: What do you call the lobsters in the Bahamas?
Porter Stansberry: Bugs.
Aaron Brabham: Bugs. What are they – there's a certain name for it, right?
Porter Stansberry: Well, when you catch them out of season, they're called summer crabs.
Aaron Brabham: That's what it is, summer crabs.
Porter Stansberry: But they're in season now.
Aaron Brabham: Okay. So you guys got some, ate them I'm sure.
Porter Stansberry: Oh yeah. We had a great trip. We had a big sailfish on. We caught a dozen mahi and we filled up the pail with lobsters.
Aaron Brabham: Took out the Two Suns, I take it.
Porter Stansberry: We were on the Two Suns, yeah.
Aaron Brabham: Fantastic.
Porter Stansberry: It was a good weekend.
Aaron Brabham: All right, Porter, we have an interesting guest on today. It's Dr. Paul Craig Roberts. He is a columnist for Creator's Syndicate. He was the assistant secretary of the treasury during the Reagan administration, where he earned fame as the cofounder of Reaganomics.
Porter Stansberry: Yeah, this is a very respected guy in DC. He's been around for a long time. And I'm hoping, now that he's not really in the government anymore, he'll give us the straight poop –
Aaron Brabham: I have a feeling he will.
Porter Stansberry: – on how things really work.
Aaron Brabham: He goes on Alex Jones' show a lot, Lou Rockwell. So a lot of people that we kinda deal with. And I think he'll give some truths.
Porter Stansberry: One of the things I've tried to do with my career, is I've tried to teach people the inside of finance. If you're on a trading desk on Wall Street, you know all kinda of ways and all kinds of strategies to make money that the average guy never even hears about. And we try to publish those things.
Likewise, when it comes to our political reporting, what I really hope to do is to show people how the system actually works. Because how the system actually works, and how it's portrayed in the media and how most people believe America works, are two totally different things. So I'm hoping that this guest can really give us a window into the way that DC actually works.
Aaron Brabham: Yeah, I think he will. He's very critical of the media. Of course he's been – he was an editor for the Wall Street Journal and a columnist for Business Week. He's very well known for that. All right, Porter, we've been receiving a ton of feedback from listeners. Shockingly, we have a new demographic that I never thought to attract.
Porter Stansberry: Well, hold on. What does Arbitron say we're up to now, like 37 maybe.
Aaron Brabham: We're in that range. It might be a little generous, but we're getting there.
Porter Stansberry: Wow.
Aaron Brabham: Yeah. We're getting almost to the half-century mark.
Porter Stansberry: So instead of a lark, this is actually becoming a hobby.
Aaron Brabham: Yeah. Now, we're kind of like getting stuck doing this thing, right. At first it was for our entertainment. Now, people are actually kind of like, "All right, I took your advice and made an actionable item and I made some money." Good for you. Anyways, the demographic that we were not really going after but seems to be creeping in – maybe it's an iTunes thing.
Porter Stansberry: Gotta be iTunes.
Aaron Brabham: It's the 20 to 25 year olds.
Porter Stansberry: Yeah.
Aaron Brabham: I love it, personally, because I feel like this could be the next generation of very conscious, decision making voters, good investors. These people could have some good sense about them if they keep listening to Stansberry Radio.
Porter Stansberry: Oh boy. I just – I'm afraid our radio show business card got passed around at like the Iron Ran Club at Yale or something and that's where all these people come from. Some whacko, extremely intellectual – the chess group, per see, you know, and if we ever met these poor people we would just be horrified.
Aaron Brabham: Oh, come on now. I'm sure they're very normal, decent people. [Laughter]. I would like to hang out with them. I'm just saying. Maybe it's just me trying to remain young and cool.
Porter Stansberry: Oh, come on. What were you doing when you were 22 years old? You were not listening to financial podcasts.
Aaron Brabham: I was not listening to financial podcasts. I was having this – but then again, back then – we are a little bit older. We're still younger, but podcasts really didn't – they weren't around.
Porter Stansberry: Okay, fine. But you were listening to Howard Stern.
Aaron Brabham: Well.
Porter Stansberry: You were not listening to CNBC.
Aaron Brabham: I will say that – so that was right around my time of the accident, and I got a little bit of settlement money. I became real big into finance, but mine was watching CNBC 'cause that was like that really the only avenue.
Porter Stansberry: How long did that settlement money last?
Aaron Brabham: Well, it lasted until I got married, and then she managed to drain a massive amount of it. And then I gave the rest to her in divorce.
Porter Stansberry: Yeah. Well, that's what happens is you're kinda like an NFL player.
Aaron Brabham: Yeah, but at least your cheating. But she deserved it. All right, that's a side note.
Porter Stansberry: Wait, I got one more thing about this thing about young kids listening to the show. I actually, of course, think it's great. And the people that I correspond with actually seem to be extremely smart, very normal people, not like believing they have microchips in their head or anything like that, which we sometimes get from our older listeners.
But, sincerely, with the young folks, the single, most important thing that you can learn, at your age, has nothing to do with investing, per se, at all. It's just simply this. Live beneath your means. Do not borrow money. It's that simple. If you just go to work every day, try your best, build a career and save money. Save 20 percent, 25 percent of your income and don't get into debt, then by the time you are 35 years old, you will be well ahead of the game.
By the time you're 40, you can be easily, easily a millionaire, easily. And you don't have to do anything with your investing beyond corporate bonds, municipal bonds, local real estate deals. There is no reason for you to become a stock trader or a dividend – or an options seller or anything like that. You don't have to do that, and I wouldn't recommend you do it until you can do it full time.
Now, let's say you're 55 years old and you're retiring, and you've got 40 hours a week to spend on your investments. Great, and you can do the options stuff. Fantastic. You can start getting into the junk bonds. You can learn, maybe, to trade the junior mining stocks, which is hard to do but can be very lucrative, okay. But the point I'm saying is don't waste your time and energy with all that stuff right now.
You can read about it, you can learn about it. That's great. But just focus on increasing your income by either building a career and/or having a part-time business of your own and living beneath your means. And, by the way, some easy things to avoid. Don't ever borrow money to go to college. That's – college is a waste of time to start with. Why would you borrow money to waste time? It makes no sense.
Secondly – and this is the trap that a lot of people fall into, Aaron – they want a huge house. They're 28 years old, they're 30 years old, they get married. They have a kid, and they believe, therefore, they’ve gotta have the house, the house, and they go crazy into debt to buy it.
Aaron Brabham: The McMansion.
Porter Stansberry: Don't do it. Don't do it. You do not need to do that. I swear you don't have to do that. If you just focus, instead, on living within your means, you can buy a small condo. You can live there for five years until you can afford to buy a small house. And, by the way, I said buy. I didn't say mortgage.
Aaron Brabham: Right.
Porter Stansberry: I said buy. If you become dedicated to never getting into debt, your entire financial life will be brilliantly successful. If you can't avoid the temptation to get into debt, then there's a 50/50 chance that you'll never make it. So the best thing you can do to increase your odds at financial success. Simple. Live within your means, avoid debt. Guess how many people listening will follow that advice?
Aaron Brabham: Now, I hope at least one does 'cause guess who didn't do that? This guy. Two thumbs pointing up at myself. I always was in that sales career path. And sales dangles the carrot 'cause you can make some good money. The problem is there was a lot of competition and businesses go – they go outta business and then you're kinda stuff. Man, it is nice to get those big checks and to want to keep up with the Joneses.
You know you always got somebody, one of your friends that's a little bit better than you that you're kinda chasing after. I am no a minimalist. You know this Porter. Now, I save like crazy. I live way below my means. I have zero debt and I've never felt better. I sleep better now than I've ever slept in my entire life.
Porter Stansberry: Yeah, and you with a lot of training in finance, working for a research company, how much time to do you spend trading stocks and bonds and options?
Aaron Brabham: Very little.
Porter Stansberry: Almost none, right?
Aaron Brabham: Very little. Trading is a loser's game for the most part.
Porter Stansberry: Absolutely. So the thing I want to tell people is unless you can do it on a full-time basis, you're gonna be better off to focus putting your money – yeah, sure, some of your money should go into high-quality, blue chip, dividend-growing stocks. Absolutely. That's part of your savings program, of course. You can do it via your 401(k); you can do it with an IRA. I'm not saying avoid stocks altogether. But I'm saying most of your money should be in corporate bonds, municipal bonds. It should be in gold and silver.
It should be – and people forget about what a great deal local real estate can be. As you know, Aaron, that's pretty much the only investments I've been making for the last three years because real estate became cheaper than I'd ever seen it in my life. So I've been putting lots of money into real estate. There is a place for debt. Okay, there is a place for debt.
Let's say you're gonna buy a rental property and you can get it so that it's cash-flow positive. Great, use that for that, okay. But where you live, your personal house, that's consumption. That's not an investment. You're consuming that house. If you live there for 20 years, the house will depreciate and you will have to completely renovate it in order to sell it.
You will not – you are going to make money only in nominal terms, meaning you're gonna make money because inflation pushes the price of real estate up. You're not gonna actually make money on where you live. You will consume that house. So you can think about it this way.
Imagine if you bought a house and then you had to pay your own account to rent it. That's really what's happening. You don't see it because you don't have to pay the rent 'cause you're the owner already. But there is a cost of living in a house, and the bigger the house you live in the bigger the depreciation cost will be. Anyway, we could go on all day like this.
But the point is real simple. Figure out how to avoid being in debt. And there is a way to do it. If you just say, "I'm not going to borrow money," then everything else in your life you'll get a lot more simple. Because guess what? You're not gonna be shopping for a new car. You could buy a decent car for $2,000.00. Why would you borrow $20,000.00 to buy a new one.
Aaron Brabham: Cars last forever these days.
Porter Stansberry: It makes no sense. If you really want to be rich, if that's important to you, then the first step is don't ever borrow a penny. Because as soon as you understand interest, you will only be a lender; you will never be a borrower. Out of all the things that I did right, financially, that was the most important one.
The second one was I was dedicated to always working for myself. And if you can put those two things together, you can be rich by the time you're 30. But I'll tell you this. There is more to life than being rich. And, Aaron, you know me; you know my story. I gave up on lots of other things in my life.
Aaron Brabham: For many years.
Porter Stansberry: For many, many years.
Aaron Brabham: A decade.
Porter Stansberry: But this is what I wanted. I wanted to be rich, and I sacrificed everything else to get it. There are people out there, who are 20 years old who are listening, who say, "Yeah, that's what I want to do too."
Aaron Brabham: But they're not willing to make their sacrifices or have the dedication to it.
Porter Stansberry: But guess how many credit cards they have in their wallet.
Aaron Brabham: As many as offers that they get.
Porter Stansberry: So don't tell me that you want to be rich and then tell me that you borrow money all the time. Because you're just fooling yourself. Stop it.
Aaron Brabham: I like it. All right, that answers Zach. I hope that that answers your question 'cause before I could even read your e mail, Porter pretty much tackled it. And for the young listeners, that's definitely good advice.
Porter Stansberry: And, in the meantime, please go have fun. And don't do the whole thing where you're monogamous while you're in college. That's a complete waste.
Aaron Brabham: Look, if you really want to learn how to have a good partner, become a sommelier of dating. You have to taste a lot of different wines in order to know what you really like. Go out there and date; date a bunch of different types of girls.
Porter Stansberry: Date, date.
Aaron Brabham: Agree 100 percent.
Porter Stansberry: Date. And, by the way, you can't learn to be a good husband until you've learned to be a good dater. Because a big part of the game in keeping your marriage interesting is knowing how to manipulate your wife. Now, listen. I'm serious. I don't mean manipulate her in a bad way.
Aaron Brabham: It's gaming.
Porter Stansberry: It's gaming. And, even after you're married, your wife still wants mystery. She still wants to feel like –
Aaron Brabham: She does.
Porter Stansberry: – she can't quite control you. You've gonna still be a challenge to her. You just have to.
Aaron Brabham: Teasing and challenging are –
Porter Stansberry: Teasing and challenging.
Aaron Brabham: – things you do till you die.
Porter Stansberry: And if you do good to date and you learn these things about women and what women will tell you that they want is –
Aaron Brabham: Not actually what they want.
Porter Stansberry: – not actually what they wanted at all.
Aaron Brabham: Look no further than every hot chick that's dated a bad boy, and they say, "I just want a nice guy." Guess what? Nice guys never get to date them, ever.
Porter Stansberry: No. And nice guys don't stay married.
Aaron Brabham: Never. They're safe. But that's it. And also, one more piece of advice. When you get married, make sure you marry the hottest sister. How'd that work out for you, Porter?
Porter Stansberry: Ach, well there was a –
Aaron Brabham: All right, so you did fine.
Porter Stansberry: But I did marry the bad twin.
Aaron Brabham: You like a challenge. It's in your nature.
Porter Stansberry: There's always the good twin –
Aaron Brabham: Sure.
Porter Stansberry: – and the bad twin. So my wife's identical twin sister was, like, the student body president, Mrs. Goody Two Shoes. Let's just say that my wife wasn’t.
Aaron Brabham: You like a challenge. What can I say? All right, Porter, let's go to our guest right now.
Porter Stansberry: That was a fun segment. We should do more life coaching.
Aaron Brabham: I actually think it's a very big – it's a big part of what we do.
Porter Stansberry: Yeah, I think listeners out there, part of the reason why they listen is 'cause they want our lifestyle.
Aaron Brabham: There was one person that wrote in. I think this would be great, and I know you talked about getting into books and documentaries.
Porter Stansberry: Documentaries, yeah.
Aaron Brabham: I think what would be great is a book for your two sons –
Porter Stansberry: Ah, good.
Aaron Brabham: –if you wrote that. Because it's just life advice. It's general philosophy, and I think that would be a great thing for you to write because you have a very unique perspective, and you're very decisive on what you believe.
Porter Stansberry: Yeah. So I could say, clearly, what it was, and it would be different advice than most people.
Aaron Brabham: Yeah. It'd be way different. All right, I know –
Porter Stansberry: Telling people to avoid debt, no matter what.
Aaron Brabham: Man, I can't agree with you more. It's crazy – I can't believe how dumb I was for so long, but that's a different story.
Porter Stansberry: And doesn't it feel nice.
Aaron Brabham: I sleep like a baby. It's crazy.
Porter Stansberry: Nobody can hassle you for anything.
Aaron Brabham: No. And once you have reserves, every dollar you add for reserves –
Porter Stansberry: Yeah, you feel better.
Aaron Brabham: – the fear factor goes down. Safety. All right, so on the hotline, we have our guest, Dr. Paul Craig Roberts. Dr. Roberts is a columnist for Creator's Syndicate. He was also the assistant secretary of the treasury during the Reagan administration, where he earned fame as a cofounder of Reaganomics. Dr. Roberts, welcome to Stansberry Radio.
Paul Craig Roberts: Thank you.
Porter Stansberry: Dr. Roberts, Porter Stansberry here. A question I got for you about your time with the Reagan administration. The Reagan economic team was famously supply-side oriented, brilliant economists, yourself included. What happened to the program you guys came into office with? You're all sort of hard-money, supply-side guys. But the spending and the debts soared under Reagan's term. How did that go wrong?
Paul Craig Roberts: Well, actually, it didn't because spending didn't soar. And the reason the deficit went up because the rate of inflation fell below the forecast. At the time, the supply-siders were kind of unique. We said that if we change the policy mix and tightened up money and reduced the marginal tax rates that it would cause supply to increase relative to demand, and so inflation would fall.
In other words, we could get rid of inflation without having to pay for it with a higher rate of unemployment. At the time, we were addressing stagflation. Well, the economic establishment had the Phillips Curve, and that said that you could not get economic growth unless you accepted a higher rate of inflation.
So that limited the ability of the administration to forecast what the actual inflation rate would be because none of the forecasting firms would stand for it, and they would have pilloried the administration and scared the Republicans in the Senate and messed up the effort to correct the policy situation.
Sort of a compromise was worked out between the office of management and budget and the forecasting community, and it showed inflation coming down, but actual inflation came down much more than the forecast. Well, when inflation falls, so does the tax base. The tax base is nominal. It those days, there was no indexation of income tax inflation.
So when the GDP – the nominal GDP, not the real – collapsed below forecast, you had these budget deficits result. Now, the economists at the time said, "Oh, it'll be inflation, it'll be inflation," but they didn't know what they were talking about because the deficits were the result of a collapse of inflation; therefore, it couldn't cause inflation.
And, of course, we had growth for roughly 20 years without any rise in the rate of inflation, without having to pay for it with rising rates of inflation. So what the Reagan supply-side team did was to get rid of stagflation, and it succeeded.
Porter Stansberry: Right. But even in terms of percentages of GDP, didn't the federal deficits increase dramatically under Reagan?
Paul Craig Roberts: Well, it increased temporarily, but for that reason. Because inflation collapsed. See it increased relative to forecast, but this was due to the collapse of inflation. The deficit under Reagan was never any problem. The fed didn't have to monetize it like it's doing now.
Porter Stansberry: Right. Now, we're gonna get to that.
Paul Craig Roberts: Yeah. It didn't cause high interest rates. Interest rates collapsed, inflation collapsed. It was simply a forecasting thing and posed the Phillips Curve thinking that characterized the change in demand management economists at the time. And there was a limit to how much they would accept from upstarts like the supply-siders, and they just weren't gonna let us get too far out of their view of the world.
And so that's all that happened. The deficits had no effect on anything. And, as I said, the evidence is clear. Inflation collapsed, interest rates collapsed. Anybody who bought treasure bonds in those days –
Porter Stansberry: They did very well.
Paul Craig Roberts: – at 15 percent for long-term, 30-year bonds has gotten rich.
Porter Stansberry: Yeah, they sure did. What about the gold standard plank? There's been some talk about bringing that back to the party. Was there ever any serious consideration of the Reagan administration of finding a way to tie the dollar to gold again?
Paul Craig Roberts: Well, no because you can't come out with two dramatically new policies at once. I mean we had enough trouble just with the supply-side impact of fiscal policies. If we'd said, "We're also gonna have a gold standard," we would’ve just been ridiculed and pilloried. You can just go overturn everything and have any credibility. So there wasn’t.
But most of us understood that the gold standard really wouldn’t do anything anyhow if the Central Bank didn't want to behave. Because, Milton Friedman has shown years ago that the gold standard never worked because the Central Bank always offset its workings.
For example, if the gold flowed into the country, you know under the gold standard that would make the money supply expand and inflation would cause – it would come about and so on, well, the fed would just offset the inflows of gold by selling bonds. And if gold flowed out, they would offset that by buying bonds.
So the fed would manipulate. The monetary was open-market operations to offset the workings of the gold standard. So if you have a Central Bank you can't just assume it's gonna let the gold standard work, and they don't. So we didn't think that that would be worth the effort and the skepticism and the fight.
Porter Stansberry: Well, you've done extensive amounts of thinking and writing about the U.S.'s relationship with Israel. And I wanted to ask you, do you think we have any strategic reason to back Israel at all.
Paul Craig Roberts: No. During the Cold War, there was one because of the Russian influence in the Middle East with Iraq, Egypt even. And so it started out that we – that was sort of our toehold there. But, today, no, there's no – I mean who is thy enemy? There's nobody challenging us or trying to make war on us or opposing ideology.
Porter Stansberry: Well, if you believe Dinesh D'Souza, we're at risk of seeing the creation of a United States of Islam, and only our support of Israel is –
Paul Craig Roberts: Oh, I think that guy's an idiot. He's just a weird [Porter Stansberry laughing] propaganda. Those people lie through their teeth. It's just a way –
Porter Stansberry: Really. You don't stay awake at night. You're not staying awake at night worrying about the United States of Islam.
Paul Craig Roberts: Oh, my God. Look, they can't get along with each other. This is why we dominate them so easily.
Porter Stansberry: They’ve been fighting for –
Paul Craig Roberts: – Egypt.
Porter Stansberry: They’ve been killing each other since 600 AD.
Paul Craig Roberts: That's right. Look –
Porter Stansberry: Now, how many battles can you name, Dr. Roberts, between the various Arab groups?
Paul Craig Roberts: Oh. Well, they're endless.
Porter Stansberry: Exactly. They're endless. That's what Dinesh – we spoke with Dinesh a couple of weeks ago. He was very upset that we weren't familiar with all of the Arab battles.
Paul Craig Roberts: Well, look –
Porter Stansberry: His position is absurd. And I agree with you completely that there is a strategic interest in Israel. So I know this is an obvious question, but some of our listeners, I like to try to show them how Washington really works when you talk to someone like yourself. Why? Why is the Israeli lobby so strong in the United States? What are the political nuts and bolts involved?
Paul Craig Roberts: Well, you know we give them billions of dollars every year, and it comes back and purchases our elections. I mean we pay the Israelis to buy our elections. We provide them with the money that they then buy the elections. So if you go against Israel, you're gonna get beat. Anybody, no matter how strongly supported – you take Cynthia McKinney in Georgia. She was actually a real leader, a black woman that represented blacks, essentially.
The Israel lobby was able to get her out of office. Now, there weren't any Jews in her district. [Laughter]. So you can't – it's like Admiral Tom Moorer, the chairman of the Joint Chiefs of Staff, said, when he was trying to get hearings on the Israeli attack on the USS Liberty. He said, "No American president can stand up to Israel." And they may also have the high ground because of the Holocaust.
You may have read Finkelstein's book about The Holocaust industry. And they’ve used this to make it immoral to oppose anything Israel wants. If you oppose Israel or the Israel lobby in any way, it means you're an anti-Semite, you're trying to destroy the Jews. And so no congressman or senator or president wants to take on that type of a fight, and so they just give in. It's easier than having somebody denouncing you 24 hours a day for the rest of your life.
Porter Stansberry: Now, what about the – I want to get some of the views that you published about trade. I think we might have a conflict here. But I want to understand exactly what your position is. How do you feel about more open trade between America and other countries?
Paul Craig Roberts: Well, it depends on whether it's trade. Now, jobs offshoring is not trade.
Porter Stansberry: Oh, okay. So let's talk about that for a minute. I own a small publishing company in Baltimore, Maryland. I started it myself with my own capital of – geez now, 14 years ago. As an American citizen with the Constitution protecting my civil liberties, why should I not be allowed to employ whomever I want wherever in the world?
Paul Craig Roberts: Well, look. Whether you do it or not, what I'm pointing out is consequences. And the consequences of American corporations moving the production of goods and services that they sell to Americans, offshore is that the domestic labor force is removed from the incomes associated with production of the goods and services that they consume. And, therefore, the domestic consumer market dries up.
The incomes of the people cease to grow. In fact, they regress because the replacement jobs are low productivity, domestic service jobs, waitresses, bartenders, hospital orderlies. So you, first of all, destroy the ladders up upper mobility, you destroy the domestic consumer market. Greenspan tried to fill in for the missing growth and consumer income with growth and consumer debt.
That's how we got the financial crisis. Another consequence of the offshoring is that it – when you move consumer income off, you're moving the domestic GDP off. So what was American GDP becomes Indian or Chinese or some other countries. And with it, goes the tax base for the states, the localities, the federal government.
Porter Stansberry: That's the good news.
Paul Craig Roberts: And with it goes – well, it's not good news if you've obligations. You've got Medicare, you got Social Security.
Porter Stansberry: But I mean that you're crafting a class of economic fallacy because you're talking about what's seen, but what is not seen – you're ignoring what is not seen. So you're saying that we're losing these things, and I would agree that those things are lost. But you're ignoring that we gain all these things by having lower cost products and services available to American citizens.
Paul Craig Roberts: No, but you don't gain. The law –
Porter Stansberry: But you absolutely do. You can't – I mean it's a –
Paul Craig Roberts: No, look.
Porter Stansberry: It has to be balanced.
Paul Craig Roberts: If you gain, how come the – all the measures of consumer real income – have them back where they were in 1967.
Porter Stansberry: Well, mostly because of inflation and taxes, actually.
Paul Craig Roberts: [Laughter]. No.
Porter Stansberry: Absolutely.
Paul Craig Roberts: Now, it's easy to adjust to those things.
Porter Stansberry: Well, that – then okay, so we're not gonna agree on the economics and that's fine. We can have an argument about that.
Paul Craig Roberts: Well, it's not really a question –
Porter Stansberry: You can have your data and I can have my data.
Paul Craig Roberts: – of agreement. It's a question of what the facts are.
Porter Stansberry: But so –
Paul Craig Roberts: I'm not arguing opinion.
Porter Stansberry: Oh, no. But let's –
Paul Craig Roberts: I'm just telling you what the facts are.
Porter Stansberry: Well, then, if that's the case, then why do we have any trade at all? If you're right, then what we should do –
Paul Craig Roberts: That's not trade.
Porter Stansberry: – is close the borders and supply everything internally.
Paul Craig Roberts: Now, wait a minute. Now, look.
Porter Stansberry: What? You can't have it both ways.
Paul Craig Roberts: If you want to know, I'll be glad to tell you [crosstalk].
Porter Stansberry: Either trade is good or trade is bad, right.
Paul Craig Roberts: Free trade is based on the principle of comparative advantage.
Porter Stansberry: Exactly. And you know that works. Everything –
Paul Craig Roberts: Comparative advantage is –
Porter Stansberry: – in history and economics tells us that works.
Paul Craig Roberts: – the capital stays at home and finds its best use, and so that it produces the products in which that country has a comparative advantage. And it then trades those products with other countries doing the same thing. But jobs offshoring is not any kinda trade. It is the –
Porter Stansberry: That does not make –
Paul Craig Roberts: – of absolute advantage –
Porter Stansberry: – any sense. Well, that does not make any sense.
Paul Craig Roberts: – what Otto said was the antithesis of free trade.
Porter Stansberry: That is – I can't believe you believe that. You're a very smart guy. Well, how can you say that that is not the same thing as trade because my capital goes overseas? It's still trade. It's still the Indian guy doing my financial research.
Paul Craig Roberts: Well, what are you trading?
Porter Stansberry: I'm trading worthless paper dollars for labor and service and material. That's gotta be a benefit to our country.
Paul Craig Roberts: No, that's not free trade. Ricardo makes it clear and the economics profession has known that ever since whenever he wrote in 1820 or – that's the pursuit of absolute advantage. It's the antithesis of free trade. Nothing is traded. It's the pursuit of lowest factor cost.
Porter Stansberry: But why is that –
Paul Craig Roberts: And let's assume it is. So where are the benefits? I mean how come everything here is going to hell if this is such a great fine –
Porter Stansberry: Everything isn't going to hell. Everything's not going to hell in America at all.
Paul Craig Roberts: [Laughter]. It most certainly is, every measure.
Porter Stansberry: Okay. Well, then let me ask you –
Paul Craig Roberts: Wherever you look. If you look at job growth, you look at income, you look at the distribution of income, income in equality.
Porter Stansberry: What are you talking about?
Paul Craig Roberts: Everything is collapsing. It's the worst. I mean when I was doing economics as a graduate student, nobody could have imagined the terrible situation the country's in now.
You could not have imagined what would have happened.
Porter Stansberry: Look at real measures of consumption in the United States. They're all up.
Paul Craig Roberts: What?
Porter Stansberry: Look at real measures of consumption in the United States. Look at how much electricity we use per capita. Look at things like college enrollment. Look at things like new car sales.
Paul Craig Roberts: This is not a measure of anything other than –
Porter Stansberry: Well, they're fine. Look at –
Paul Craig Roberts: – debts, huge student loan debts who – and they come home and have to move back in to the parents because there are no jobs.
Porter Stansberry: I hate student loan debts. I spend all day telling people not to go into debt. I agree with you. But I'm saying that the economy in the United States is doing very, very well.
Paul Craig Roberts: I don't know where you got that. You're pulling my leg.
Porter Stansberry: What's unemployment –
Paul Craig Roberts: You trying to get me worked up?
Porter Stansberry: No. What's the unemployment rate in our country for college-educated people?
Paul Craig Roberts: Well, the last two crops, the unemployment rate is about 55 percent.
Porter Stansberry: The unemployment rate for college-educated people in the United States today is just a little bit about 4 percent.
Paul Craig Roberts: [Laughter]. Look, the reports are endless. The last two graduating classes are back home living in their childhood rooms in their mothers and fathers' house. There are not any jobs.
Porter Stansberry: Fine. So what? There's higher unemployment of people under the age of 25. That's not new, different or a crisis. I'm talking about what the total unemployment rate for every American who's college educated in the United States. It's 4 percent.
Paul Craig Roberts: Do you know what the real unemployment rate is?
Porter Stansberry: I know that the dependency rate is off the charts. We've got two Americas. We've got one America that's educated and is doing quite well. We have another part of our country that's dependent upon the government and they're totally being destroyed.
Paul Craig Roberts: Look. That argument is about 30, 40 years out of date.
Porter Stansberry: But free trade has nothing to do with it. But let's to a –
Paul Craig Roberts: Oh, yes, it does.
Porter Stansberry: Let's get passed this. Let's get to the moral argument. How can you tell –
Paul Craig Roberts: The which?
Porter Stansberry: How can you tell a guy like me, that built all the capital myself, that has my own business, has a hundred employees – how can you tell me I'm not allowed to hire somebody overseas? Where in the Constitution is it that you have that authority?
Paul Craig Roberts: You could probably, also, get away with all kinds of things.
Porter Stansberry: But why –
Paul Craig Roberts: If you hire someone overseas to produce the jobs you're gonna sell to Americans, you are worsening the trade deficit.
Porter Stansberry: No, I'm not. I'm not doing anything at all to trade.
Paul Craig Roberts: Yes, you are because when the goods come back in –
Porter Stansberry: Trade doesn't have nothing to do with it.
Paul Craig Roberts: – they are imports.
Porter Stansberry: Trade doesn't have nothing to do with it. I'm sending capital to India, and I'm getting a service done that I'm able to sell around the world to people of all different countries. But I'm doing – if my offshoring –
Paul Craig Roberts: If you're gonna sell it abroad, that's different.
Porter Stansberry: But if my offshoring – but by offshoring – let's say customer service.
Paul Craig Roberts: You seem to be very confused about what job offshoring – if you want to go – if [crosstalk] –
Porter Stansberry: I'm not confused about that at all.
Paul Craig Roberts: – direct foreign investment.
Porter Stansberry: In fact, Dr. Roberts, I'm pretty sure I have more experience with hiring people overseas than you do.
Paul Craig Roberts: No, no. You most certainly do not. I was the absolute director of one of the large multinational, transnational firms. I know how it all works. The –
Porter Stansberry: So how could that be bad for America? We're getting – we, an American company, is having that service done at a much lower price.
Paul Craig Roberts: Look. You're just trying to argue and not listen. There's a big difference between the traditional foreign investment and jobs offshoring. If you want to go invest in some other country and sell there or sell from that country somewhere else, that's just traditional foreign investment.
Jobs offshoring is when you pick up and move production of goods and services, that you sell domestically, to another location, and then you continue to sell those back, domestically. That then raises the trade deficit by the amount of the goods that you move offshore and bring back in.
Porter Stansberry: Okay, what if those goods –
Paul Craig Roberts: It also transfers the –
Porter Stansberry: And what if those goods are –
Paul Craig Roberts: – consumer income from the United States to another country. It transfers the gross domestic product. It transfers the tax base –
Porter Stansberry: But it also delivers a car cheaper to the American consumer. And all those costs are offset by the difference of –
Paul Craig Roberts: No, it doesn't because their incomes drop by more than the price. They're not employed. Look, you –
Porter Stansberry: That’s not the case.
Paul Craig Roberts: What?
Porter Stansberry: That is not true. If that were true – if what you're saying was true, then Wal-Mart would be destroying America.
Paul Craig Roberts: Well, a lot of people think they are.
Porter Stansberry: Well, a lot of people are wrong. Wal-Mart is a fantastic business. It supports all kinds of people, mostly retirees who are living on a great dividend.
Paul Craig Roberts: This is nonsense.
Porter Stansberry: And it's the largest private [crosstalk] in the United States.
Paul Craig Roberts: Let me ask you something. Are you – I thought you were interviewing me about something, but you're really trying to argue about we should give away all the jobs and we'll be better off.
Porter Stansberry: [Laughter]. No, I'm not. I'm trying to understand the economic rationale for your view. And I'm also trying to understand the moral foundation for it. And I don't think that you can tell someone, who has run their business with private capital, that they should not be allowed to invest overseas or do –
Paul Craig Roberts: I haven't told them what they're allowed to do.
Porter Stansberry: But you're –
Paul Craig Roberts: I'm just telling you what the implications are.
Porter Stansberry: Right, but your policy recommendations –
Paul Craig Roberts: A lot of people do things that –
Porter Stansberry: You're policy recommendations aren't to do that.
Paul Craig Roberts: – hurt others. They may hurt a million people and they may gain $10.00 and be proud of it.
Porter Stansberry: But I'm also trying – and I'm also trying to understand –
Paul Craig Roberts: Other people don't do that.
Porter Stansberry: – why you believe in –
Paul Craig Roberts: I don't know what they're gonna do.
Porter Stansberry: – because if you believe that, if you believe these things that you're saying, then the answers –
Paul Craig Roberts: I wouldn't say it if I didn't believe it.
Porter Stansberry: Right. So I'm trying to understand why you believe it. Because if you believe it, then you must believe that enormous barriers to trade and commerce would be good for America. But we have seen, historically, that when countries try those policies they all fail.
Paul Craig Roberts: No, actually, you're completely wrong. The entire economic development of the United States was the result of economic protection. We've never – we were never a free-trade country. We always had protection. The entire industrialization of the United States relied on it.
Porter Stansberry: No, it didn't.
Paul Craig Roberts: All the economic histories that have been written show that.
Porter Stansberry: That's ridiculous.
Paul Craig Roberts: This whole thing about free trade is brand new. It's something that came a long way even in my life.
Porter Stansberry: No. It came along because of the experiences.
Paul Craig Roberts: No, it did not.
Porter Stansberry: So, for example, you think that Smoot-Hawley's was just great for America.
Paul Craig Roberts: No, it didn't come on – it was no experience.
Porter Stansberry: What about the Smoot–Hawley Tariff? That worked out very well, didn't it?
Paul Craig Roberts: The which?
Porter Stansberry: It saved us in the 1930s.
Paul Craig Roberts: The which tariff?
Porter Stansberry: The Smoot-Hawley Tariff.
Paul Craig Roberts: Smoot-Hawley?
Porter Stansberry: Yes.
Paul Craig Roberts: It had no affect on anything.
Porter Stansberry: Oh my God. It led to an entire banking crisis in Europe because the flow of dollars stopped.
Paul Craig Roberts: No, it did not. Look, it was a very small increase in tariffs. It had nothing – the Great Depression was due to the Federal Reserve collapsing –
Porter Stansberry: It was a giant increase in tariffs.
Paul Craig Roberts: – the money supply by one third.
Porter Stansberry: I don't know the number off the top of my head, but it was a huge increase in tariffs.
Paul Craig Roberts: No, it wasn’t. It was a very small increase.
Porter Stansberry: All right.
Paul Craig Roberts: It had – tariffs have – United States' industrial growth was based on tariffs. Yeah, that's true.
Porter Stansberry: I'm just shocked that you believe that.
Paul Craig Roberts: It's just a fact. It's not my opinion on it.
Porter Stansberry: It's not a fact.
Paul Craig Roberts: Doesn't even mean I'm in favor of it. It's a fact.
Porter Stansberry: Oh, my Lord. All right so –
Paul Craig Roberts: With trade, again you're confusing what trade is with jobs offshoring. Again, the free-trade theory as set out by Ricardo and understood by economists through our years is –
Porter Stansberry: So let's go ahead and say that you're completely right and that we need more tariffs and more barriers to trade and offshoring and all these things.
Paul Craig Roberts: I haven't said anything about –
Porter Stansberry: But that's the conclusion that you would reach by what you've said. You've said that America was built with tariffs. That's just a fact. That's what you said, isn't it?
Paul Craig Roberts: Yeah. It was built with them, right.
Porter Stansberry: So if it was built with them, then we need more of them 'cause we want to build America more.
Paul Craig Roberts: Well, I don't know what good they would do you now. The manufacturing's gone.
Porter Stansberry: Well, if you had tariffs, then you'd have the main –
Paul Craig Roberts: You can't get tariffs now because it's not in the interest of corporations any longer. They're producing offshore and bringing stuff in.
Porter Stansberry: Right. Well, if you charge them a tariff –
Paul Craig Roberts: – any effort to raise tariffs.
Porter Stansberry: If you charge them a tariff, Dr. Roberts, wouldn't they have –
Paul Craig Roberts: The tariffs served when the corporations were trying to block traditional foreign competition. They weren't trying to block –
Porter Stansberry: Dr. Roberts.
Paul Craig Roberts: – companies from coming in here, offshoring the production for their own markets.
Porter Stansberry: Dr. Roberts.
Paul Craig Roberts: The tariffs were part of the –
Porter Stansberry: Dr. Roberts.
Paul Craig Roberts: – infant industry protection. It got started and we have –
Porter Stansberry: Dr. Roberts.
Paul Craig Roberts: – them for the longest time.
Porter Stansberry: Paging Dr. Roberts.
Paul Craig Roberts: Yeah.
Porter Stansberry: I understand all the things that you're saying. You've said them a couple times in the show. I'm just trying to understand what the implications of them are. If we had higher tariffs, then corporations would have to move the production back to the U.S., wouldn't they?
Paul Craig Roberts: You can't have higher tariffs now because the corporations benefit. Because they're offshore, they’ve blocked any effort to have tariffs.
Porter Stansberry: So if you had tariffs, then get access to the U.S. market, you'd have to manufacture here, wouldn't you?
Paul Craig Roberts: Look. It's got nothing to do with the tariffs. If you move your stuff offshore, you've lost it.
Porter Stansberry: Wait a minute. Wait a minute. Didn't you just say, though, that America's built with tariffs and with trade protectionism?
Paul Craig Roberts: That's true.
Porter Stansberry: Okay. So if you wanted to keep building America then, and you believe those things you just said, then wouldn't you want –
Paul Craig Roberts: Oh, no. If you want to bring the jobs back home –
Porter Stansberry: Right.
Paul Craig Roberts: – you wouldn't use tariffs.
Porter Stansberry: Oh.
Paul Craig Roberts: If you wanted to bring the jobs back home, you would tax corporations according to the geographical location at which they added value to their product. If they add value to their product, domestically, you would have a low tax rate. If they added product to their – if they added value to their product internationally or in China or somewhere, you'd have a higher tax rate. And you would use the tax rate to offset the difference in the labor costs.
Porter Stansberry: That's a very, very –
Paul Craig Roberts: And that's what would bring them back. You wouldn't try to do it with tariffs.
Porter Stansberry: That's a brilliant idea. That's a brilliant idea. That would be exerting government control to the utmost possible, kinda like – remember when the –
Paul Craig Roberts: I don't know what you're worried about government control –
Porter Stansberry: Why should I worry about that?
Paul Craig Roberts: – when they can throw you in jail without due process, hold you indefinitely without presenting evidence, assassinate you on the suspicion of only –
Porter Stansberry: Absolutely. That's why I'm terrified of the government.
Paul Craig Roberts: – for your government control. You got the worst kinda government control that the world's ever seen.
Porter Stansberry: Right. So why would I want more of it?
Paul Craig Roberts: What do you mean more of it?
Porter Stansberry: Why would I want to tax corporations like you suggested?
Paul Craig Roberts: Well, if you wanted to have a vibrant economy with an employed population, that's what you would do. And if you didn't, and you want to continue –
Porter Stansberry: It's astounding to me.
Paul Craig Roberts: – to drive people down and produce more social unrest –
Porter Stansberry: Right. Hold on, Dr. Roberts. Just hold on a second.
Paul Craig Roberts: – then you would continue with job offshoring because that's what the result will be.
Porter Stansberry: Wait a second. Let me ask you a simple question. You clearly fear the power of the state when it come to civil liberty issues like you mentioned. But you love the power of the state when it comes to influencing commerce. And I don't understand that. I don't understand that statement –
Paul Craig Roberts: I don't know why you come to that conclusion.
Porter Stansberry: [Laughter]. Well, you were just suggesting that to have a vibrant economy that we give the government an entire new taxing authority –
Paul Craig Roberts: Look. I tell you what –
Porter Stansberry: – and you could pace companies.
Paul Craig Roberts: – you explain to me how you have a vibrant economy when you move it offshore.
Porter Stansberry: I think it's –
Paul Craig Roberts: And when you can do that, call me back and we'll talk about it.
Porter Stansberry: Well, I think the entire history –
Paul Craig Roberts: I thought this was gonna be a 15-minute interview and –
Porter Stansberry: The entire history of free trade revolves around comparative advantage.
Paul Craig Roberts: No, this –
Porter Stansberry: Why would you begin to doubt that?
Paul Craig Roberts: This is some kind of a myth.
Porter Stansberry: Comparative advantage.
Paul Craig Roberts: It's not comparative advantage when you move your capital offshore and pursue the lowest factor costs.
Porter Stansberry: Sure it is. If you – it's comparative advantage –
Paul Craig Roberts: If you think it is, go read Ricardo. He'll explain it to very carefully and very clearly.
Porter Stansberry: It's comparative.
Paul Craig Roberts: Or go read Herman Daly or anybody. Read Gomery and Bowble, whatever you can find. What you think is simply not the case. It's not the case that free trade means moving your capital offshore and producing the goods that you sell at home abroad. That is not what free trade means. It's never meant that. So I'd like to issue a challenge. You go figure out how a country improves itself by moving its jobs offshore, and then we'll talk about this some more.
Porter Stansberry: Okay, very good.
Paul Craig Roberts: Okay.
Porter Stansberry: Thanks, Dr. Roberts.
Paul Craig Roberts: All right, okay. Well, good morning.
Aaron Brabham: All right, interesting. You can't have it both ways, can you?
Porter Stansberry: Oh. I'm sorta shocked. I'm sorta speechless. Well, at least he's not in government anymore.
Aaron Brabham: He definitely speaks like a academic.
Porter Stansberry: It's shocking to me. It's just it's amazing to me that the guy can see all of the downside of a global economy and none of the upsides. And I think you either believe in freedom and liberty or you don't. And if you believe in freedom and liberty, then that means you gotta have the right to employ who you want, where you want and how you want.
And it doesn't – and not only that, but when you look at all the countries that have done that, that have totally opened borders, you're looking at Hong Kong and Singapore, and you're looking at the greatest creation of wealth in history. Hong Kong went from being a barren rock to being the wealthiest place in the world in about 50 years.
And they did it by having no protectionism, no trade barriers whatsoever and having very little government. And, believe me, if you're a Hong Kong entrepreneur, you're employing people all over the world. And the money and the profits from all that employment go back to Hong Kong.
Aaron Brabham: Yeah, let me ask you this, and this is a serious question. If we had never gotten into free trade, okay, what do you say – how big do you think the unions would be and how much cost of goods would there be in the United States? I think it would be astronomical.
Porter Stansberry: Of course it would be.
Aaron Brabham: They would keep piling regulations –
Porter Stansberry: It's devastating to our economy.
Aaron Brabham: – and these tax laws.
Porter Stansberry: This is a – if you guys want to learn about this, you don't read Ricardo, whose been completely discredited. You read Bastiat and you read the Candlemakers' Union story in his book, Economic Sophisms. And it's about the Candlemakers' Union in France and they had a tariff on all of the candles and all imported manufactured items because they wanted to protect themselves.
Well, what happened to the price of candles in France? It skyrocketed. And what happened to the lighting? It disappeared. So all that happened was that the wealth of the nation was tremendously decreased. The candlemakers didn't get any richer 'cause as the price of candles went up people stopped buying them, period. So it's just a myth.
The whole idea he was talking about protection, it was a myth. And every time I tried to get him back in a corner, he, of course, said, "No, that's not what I'm saying. I'm not talking about that. I'm talking about offshoring." All offshoring is, it's a labor competition. It's the same as any other kinda competition, and comparative advantage absolutely applies.
When we could make a car for less in Mexico then we make it for in Detroit, the people in Detroit lose their jobs. That's true. But millions of people around the United States get a higher-quality car for a lower cost. The wealth in our country's increased. And, by the way, just 'cause you hire people in Mexico to build your cars, yeah, the profits of that – the cost of that labor, okay, accrues in Mexico – but the profits of that labor accrues in the United States to the owners.
That's what he's forgetting. The trade deficit is irrelevant. What matters is the current account deficit, and that means how much money is going overseas from America and how much money is coming back. And if you were to make – you make America a better place to do business, if you make America a better place for capital, then the current account deficit will solve itself.
And, by the way, the biggest pressure on the current account deficit has nothing to do with the civil society or the private markets. The pressure on the current account deficit is all related to federal and state borrowing, all of it. Moral to the story for our listeners is beware of people who advocate state power on one hand and who despise it on the other because they're not being intellectually honest or they have a really flawed understanding of something.
And, in this case, I'm telling you, this guy – I don't know why he believes the things he believes. But they don't add up. You can't tell me that America was built on tariffs. You can't tell me the Smoot-Hawley Tariff wasn’t one of the worst things that ever happened in America. But that's what he believes.
Aaron Brabham: All right. Send us your feedback.
Porter Stansberry: Of course, he also believes that there was no debt burden created by the Reagan administration.
Aaron Brabham: Yeah. I've seen that balance sheet. Send us your feedback – http://email@example.com – on the interview. We appreciate it. All right, Porter, it's time for our segments. All right, Porter, so scumbags – I know you hate hearing the scumbags, but I gotta fill out my bracket. So I'm gonna nominate two today.
Porter Stansberry: I don't hate hearing scumbags.
Aaron Brabham: Okay.
Porter Stansberry: I just – I need – my threshold for real scumbaggery grows because there is so much scumbaggery out there that most of it's just banal, you know.
Aaron Brabham: All right. I got two that are pretty good. We had a loyal listener, BK, nominated former governor of New Mexico, Bill Richardson.
Porter Stansberry: I think he's already been nominated.
Aaron Brabham: I thought maybe he was, but I didn't see it on the list.
Porter Stansberry: Somebody's not maintaining the brackets.
Aaron Brabham: Yeah. Come on Nuress. Let's get on it. All right. The other one I know you'll agree with. But I swear I nominated her too, but maybe not.
Porter Stansberry: This is the one who made the YouTube video where she can't even speak English.
Aaron Brabham: Sheila Jackson Lee.
Porter Stansberry: I think so.
Aaron Brabham: Oh no, there's this – the one in Florida is the one that can't – this is from Houston. This is from my 'hood.
Porter Stansberry: This is your hood, yeah.
Aaron Brabham: This was – well, I don't live in this ward.
Porter Stansberry: Of course not.
Aaron Brabham: You don't want to live in Sheila Jackson Lee's ward.
Porter Stansberry: How can I say this in a nice way? I can't.
Aaron Brabham: You can't. C.L. Bryant already said it for us a couple of –
Porter Stansberry: But it's clear that you would not live in this neighborhood.
Aaron Brabham: Houston –
Porter Stansberry: You would not belong.
Aaron Brabham: This – no. And this part of Houston easily rivals the worst part of Baltimore.
Porter Stansberry: Yeah, that's fair.
Aaron Brabham: It's that bad. And the worst part of Chicago and the worst part of –
Porter Stansberry: The worst part of Philly. And so, if you – by the way, simple. I don't even know what you're gonna say, okay. I don't know. But I can tell you this. If you live in a community where civil society has been destroyed, where nine out of ten children are born out of wedlock, where unemployment is rampant – 30, 40, 50 percent.
Where nobody graduates from high school because it's nothing more than jail school, and where the population from that district makes up large amounts of the population of the entire state's penal system, then there's a very good chance that your congressman is black, that he's a liberal – he or she's a liberal Democrat, and that he or she has won every election for the last 20-plus years by more than 80 percent margins, which makes no sense.
How can the worst areas of our entire country be represented by the same political class of people and win elections by margins that are Putinesque.
Aaron Brabham: Yeah, you didn't see this. So she's in charge of District 18 where Democrats have won every election since the district was created through a rezoning in 1972. In 1994, Sheila Jackson Lee won the seat by promising –
Porter Stansberry: What?
Aaron Brabham: – to deliver more federal benefits to her constituents. Yes, you nailed it. And crime's rampant, the school system's a disaster.
Porter Stansberry: And I can tell you – and I don't know the details behind Sheila Jackson Lee. I did do some research on her district and know a little bit about the problems there. But I also would wager that she has a long history of ethics violations, of check kiting, remember the old check writing scandal.
Aaron Brabham: Yup. You go back and back between two banks and –
Porter Stansberry: Yeah. Well, it was Congress' own back, so they were all floating checks on the federal taxpayer.
Aaron Brabham: Great.
Porter Stansberry: Anyway, yeah. I guarantee you that there's all kinds of problems. The kind of things that would normally get you canned if you were a congressman anywhere else, but is cheered by this district.
Aaron Brabham: Yes, you'd be right on those. And she also alleged racism on the part of her fellow members of Congress who were voting against raising the debt ceiling. I don't know how that became a racist issue. It's a fiscal issue. But okay, you're right.
Porter Stansberry: But anyone that opposes her is a racist.
Aaron Brabham: Yes.
Porter Stansberry: So, therefore, you and I are racists, clearly.
Aaron Brabham: We've been looking for – clearly not, but okay. Let me clarify that because, obviously, I had to. Actually I didn't.
Porter Stansberry: No. It's so obviously sarcasm. It's just –
Aaron Brabham: It's ridiculous. I know. You know we're looking for what kind of award we can send.
Porter Stansberry: No, listen. I have something serious to say about this, just for a second. There's no way you can do this. But wouldn't you love it if you could just tell the people in that ward, "If you elect this scumbag again, okay, we're cutting you out. We're stopping all the benefits. You gotta do a job for your own community first. You can't continue to elect people like this."
Aaron Brabham: Yes. But it won't happen.
Porter Stansberry: Take one step in the right direction to help yourself.
Aaron Brabham: I mean but there are now websites devoted to exposing scumbags and, yet, they still get voted in. I don't know how you educate these people. I guess it's they'd rather be with the devil they know then the devil they don't.
Porter Stansberry: It's just dependency. She is the one that keeps voting them more EBT cards and more Food Stamps and more whatever, grants – and it's all crooked.
Aaron Brabham: Swipe yo' EBT. It's free.
Porter Stansberry: Swipe yo’ EBT.
Aaron Brabham: All you gotta do is one thing. All right. So one of our listeners, Steve – Steve put together a great list of things that we can name the award for the biggest scumbag. 'Cause remember, we want them to show it in the office. We want them to be proud of it. We want a picture so we can post it and tool them out. So some of the suggestions: the Woodrow Wilson Lifetime Achievement Award.
Porter Stansberry: Oh, that's my top. Most people don't understand what a terrible president Woodrow Wilson is. So they wouldn't know either. They would think that was great. We could call it the Woodrow Wilson Award for Championing Progressive Government Action in the Modern Era.
Aaron Brabham: I love that, love that. FDR Lifetime Achievement Award, Teddy Roosevelt Lifetime Achievement Award, John Maynard Keynes Award, Alexander Hamilton Lifetime Achievement Award, Dick Cheney or the LBJ.
Porter Stansberry: Yeah, all those folks are fine for lots of different reasons.
Aaron Brabham: But Woodrow Wilson is –
Porter Stansberry: But Woodrow is the absolute peach. I mean he was the first president that convinced Americans that it was our job to be the global policemen. There was a horrible war in Europe, a horrible war. World War I, in many ways, was the most violent, decrepit war ever. Now, more Americans died in the Civil War, but that was only because we had forces on both sides.
And then more Americans probably died in World War II, too because it was a much bigger conflict, the Japanese theater. There's no doubt that – and I don't know the facts. I'm not in front of Wikipedia right now, but I guarantee you more Americans died in Europe in World War I than they did in World War II 'cause the trench warfare and the machine guns –
Aaron Brabham: Man, those were –
Porter Stansberry: – invented.
Aaron Brabham: – nasty fighting days. Getting bayoneted and all the diseases and sort of –
Porter Stansberry: But he convinced Americans that we had to go make the world safe for democracy, which was laughable because there weren't even democracies in Europe. It was, literally, a fight between cousins. No kidding. The cousins that were fighting – all the – the king of Russia, the Tsar of Russian, the whatever he was – the emperor of Germany and the King of England, they were all cousins, they were all related. It was a war about absolutely nothing.
Aaron Brabham: And wasn’t it Woodrow Wilson also the president that signed the Federal Reserve?
Porter Stansberry: That was 1913. He put through the income tax, he put through the direct election of senators and he put through the Federal Reserve, all of which destroyed, what at the time was a constitutionally limited republic, and created what we have now, which people finally called democracy. But it's really nothing more than mob rule.
Aaron Brabham: That's our reward. I mean that's our award.
Porter Stansberry: Yeah. It's absolutely the best thing. And they, of course – the people we will award it to will be pleased. They'll think they’ve done something really great.
Aaron Brabham: Absolutely. And we also had another listener write in and say, "You can scribe it in Latin too. That way you can say some hateful stuff on there 'cause they'll never look it up."
Porter Stansberry: 'Cause you know these people probably – most of these people went through jail school. They don't know Latin.
Aaron Brabham: For sure. It's gonna be great. They're gonna think it's the greatest thing in the world.
[Advertisement from 55:47 to 56:47]
Aaron Brabham: All right, Porter. Next, you just can't make this stuff up. Federal government officials blame unfair competition, China, for the collapse of solar panel manufacturer, Solyndra. But that didn't stop the federal government from breaking stimulus program rules to use Chinese solar panels atop a federal building. The building houses the offices of a senator, congressmen and several agencies. That's great. Tax dollars, we're still gonna go buy Chinese solar panels and put them out there. It's ridiculous.
Porter Stansberry: I can't even say anything because the thing that I would just tell people is solar panels don't work. And what I mean they don't work, they're fine to use for distributed power needs where you have a battery that's functional. So you want to put a solar panel on top of a red light and a battery to work with it, that's fine. It's a very expensive way to power things, very expensive.
It does not work in terms of providing power to the grid or to an office building or anything like that because you cannot possibly afford enough batteries to make it work. It just does not work. The other thing – and people don't understand this – PV solar cells, which are the kind that are made by First Solar, or the kind that are made by all these Chinese manufacturers, they are very sensitive to heat. If they get above room temperature, which is 78 degrees – if they get above room temperature, their electrical efficiency plummets.
Aaron Brabham: Oh, that's great. So it's relying on the sun and but you gotta have a cool place.
Porter Stansberry: So if you put them on the roof of the building, and the roof of the building's temperature is 100 degrees or above –
Aaron Brabham: Which it most likely will be.
Porter Stansberry: They literally don't work at all.
Aaron Brabham: Great. Sounds efficient.
Porter Stansberry: It's just totally stupid.
Aaron Brabham: All right, Porter. Winning the war on the middle class. This is something – I was shocked. One of our – I think one of our listeners.
Porter Stansberry: Yeah. I saw this before the show and I was – I'm devastated by this. This is a real problem.
Aaron Brabham: You know which one I'm talking about.
Porter Stansberry: Yeah.
Aaron Brabham: Across the United States, more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers and are keeping the money with the state's approval.
Porter Stansberry: I just – this is –
Aaron Brabham: I'm shocked.
Porter Stansberry: This is fascism. This is the collusion between big government and big business at the expense of the middle class. This is just heartbreaking. It really is. It really, honestly, breaks my heart.
Aaron Brabham: Yeah. So basically big corporations are incentivized to move their business to a different state.
Porter Stansberry: Marriott came to Maryland. Marriott put their headquarters in Baltimore.
Aaron Brabham: Perfect example.
Porter Stansberry: And they cut a deal like this, I'm sure.
Aaron Brabham: Yeah. Companies like Goodman Sachs, GE, Chrysler, Ford, GM, Sears, even foreign firms like Nissan, Electrolux, International Banks, over $5.5 billion has been kept by employers. That's what they found out so far. I would be irate if my state taxes that I thought were going to the state were just being pocketed by my employer. That's the ultimate betrayal.
Porter Stansberry: Well, the only way that I would root for it is if I could convince my employer to split it with me. [Laughter].
Aaron Brabham: Well, that's true 'cause you're still getting a break, right?
Porter Stansberry: Well, if you give the money to the state, they're gonna completely waste it.
Aaron Brabham: That's true.
Porter Stansberry: Right, okay. But if you give the money to the company, at least they could pay you back in a dividend or a bonus or something. But this is horrendous. And this – what's so funny is this is what goes on all the time behind the scenes in ways that are not as easy to track. So governments cut deals with businesses. So the government taxes people more, they give the excess surplus revenue to companies in various forms, subsidies. Or, for example, how many local municipalities have bought the Tom – car.
Aaron Brabham: The Volt.
Porter Stansberry: The Volt.
Aaron Brabham: Pretty much every one of them.
Porter Stansberry: So who actually pays?
Aaron Brabham: The taxpayer.
Porter Stansberry: How about all the subsidies that go through all these solar power plants that don't work?
Aaron Brabham: The taxpayer.
Porter Stansberry: They all go back to the taxpayer.
Aaron Brabham: They love experimenting with it. It's for other people's money.
Porter Stansberry: It's awful. And this at least is a case where we pinpoint it, black and white, exactly what is going on.
Aaron Brabham: Super scumbag.
Porter Stansberry: Where did that story come from?
Aaron Brabham: I gotta find – I don't remember the source, but it appeared to be a legitimate source that I got it from. I can't remember the website. I'll have to go back and find it. But this, to me, was one of the most shocking things I've seen and heard about in the past couple of years of –
Porter Stansberry: The only – I'm just skeptical. I know it goes on. I know it does go on, but I'm skeptical that they let it go on in such a direct way. Normally, what they do is they calculate how many employees are coming or how much income tax can be generated, and then they give the company back a subsidy that's roughly matching. But I didn't know they were letting the companies collect the taxes and keep them. That would be shocking.
Aaron Brabham: I totally agree. I'll find that article 'cause we're gonna dig a little deeper on this one. All right, a Congressional Oversight Committee on Thursday accused New York of overbilling Medicaid by billions of dollars by inflating reimbursement payments to its state run institutions for the mentally disabled. New York has allegedly overcharged taxpayers by $15 billion since 1990. It's great when you have states participating in Medicare/Medicaid fraud. Another hard-earned dollar going to complete waste.
Porter Stansberry: I would love to know. It would be fun if we had the budget to do a documentary on Medicare fraud in South Florida.
Aaron Brabham: Ooh, ooh.
Porter Stansberry: Because it's literally a way of life there.
Aaron Brabham: Absolutely.
Porter Stansberry: I mean the entire community in Hialeah, it's completely based in Medicare fraud. People have no idea how much money is being stolen in South Florida.
Aaron Brabham: Yeah. It's just South Florida.
Porter Stansberry: Yeah.
Aaron Brabham: I know. It's crazy. All right, stupid business models. One thing I was actually a little bit proud of. The Congressional Budget office came out and shredded the electric car industry and the government's role in its backing of them.
Porter Stansberry: Oh, this is horrendous stuff.
Aaron Brabham: Yeah, basically I guess – so the government's role reflects the cars started in 2009 with the emergency spending program, ARRA, American Recovery and Reinvestment Act. It provided $2 billion in funding to the Department of Energy for grants under the program to provide any type of producer, anything –
Porter Stansberry: Grants.
Aaron Brabham: Yeah.
Porter Stansberry: So they're gonna funnel $2 billion to privately owned interests, who, by the way, just happen to be extremely well connected, politically, and gigantic donors to certain political campaigns.
Aaron Brabham: The big lobbyists that contribute to the campaigns.
Porter Stansberry: Hmm, who could that possibly be? Who – which president would benefit from that? Hmm.
Aaron Brabham: Hmm. The guy that's gonna get re elected. So Washington also agreed to pay – to provide, sorry, $25 billion in cheap loans to the companies who make electric cars. So far –
Porter Stansberry: So give them $2 billion or loan them $25 billion.
Aaron Brabham: So far, $8.4 billion has been committed. The rest of the money will be doled out before 2019. But the Congressional Budget office is basically like –
Porter Stansberry: Stop.
Aaron Brabham: Yeah, just stop it. These electric cars are junk. You're never gonna get a return on investment, ever. It's ridiculous.
Porter Stansberry: And I think it's funny that you can actually short – I mean you could buy or sell, but you can trade Tesla. And the numbers of the company are horrendous.
Aaron Brabham: Yeah, Dan wrote about that. Was it Dan that wrote about that?
Porter Stansberry: Yeah. It's laughable.
Aaron Brabham: Yeah, they are in bad trouble, but yet there's $400 million from the government. It's $400 million, I think, something like that that this – it's a lot.
Porter Stansberry: It's a lot. They’ve taken a lot of government money. I don't know the details off the top of my head.
Aaron Brabham: One more stupid business model. The wind sector are struggling. You've written about this before. The wind doesn't always blow.
Porter Stansberry: Big surprise.
Aaron Brabham: Wind energy companies have announced more than 1700 layoffs over the past few months. They’ve been hurt by weak demand for electricity, stiff competition from cheap natural gas –
Porter Stansberry: Cheap natural gas –
Aaron Brabham: – something you know about – and cheaper options from Asian competitors. On December 31st, the federal tax credit that makes wind power more competitiove with other sources of electricity.
Porter Stansberry: Why do we have the government paying to make any form of electricity cheaper than another? I don't understand it. I wouldn't do that. I would like to power my house the cheapest way possible please. If that's natural gas, that's fine with me because, by the way, we have tons of it and it employs hundreds of thousands of people in America.
Aaron Brabham: I am enjoying the commercials that are out now 'cause they're really pushing this agenda pretty hard, the natural gas industry. And I'm actually pretty happy about it 'cause they're trying to educate people. People won't listen. They have no clue. People don't even know that electric grids are powered by natural gas. I think they think that they're just – they just show up.
Porter Stansberry: Well, the thing that I would like to point out to everybody is what do you think would happen to the power grid if overnight we all plugged in our cars.
Aaron Brabham: It'd be like that stupid TV show that's out right now, Revolution. It would just melt down the entire grid.
Porter Stansberry: It wouldn't work. Not only that, but to make it work you'd have to build hundreds of new coal-fired power plants. So that's not good for the environment.
Aaron Brabham: It's not good for the –
Porter Stansberry: Just stop it. These people live in fantasy land. It drives me nuts.
Aaron Brabham: All right, voice mail time. Tim, I think we have three. Fire them up.
Voice mail 1: Hi, Porter and Aaron. This is Pablo again, this time calling from Buena Padres, Argentina. I'm a little disappointed in you, Porter, when Dinesh asked you to name a single –
Porter Stansberry: Oh, come on.
Voice mail 1: – in Iraq.
Porter Stansberry: Jesus Christ.
Voice mail 1: You kinda put yourself up to fail there, and you had to regroup –
Porter Stansberry: Oh stop.
Voice mail 1: – drop out and –
Porter Stansberry: Oh, come on.
Voice mail 1: – from a debating point of view, you lost. Please do try to get Ron Paul on the show.
Porter Stansberry: Don't be ridiculous.
Voice mail 1: – a great guest, although Porter would just have to sit there and agree, and I don't see that being much of his style.
Aaron Brabham: You would have some good questions for Ron Paul.
Porter Stansberry: Oh, my God. No, the point I was making was the names of the battles are completely irrelevant. If you want to know names of battles, then read Laurence of Arabia's book. I have. There's thousands of them. Like I said, they’ve been fighting since 600 AD.
Aaron Brabham: All right, next voice mail.
Voice mail 2: Porter, I need to help you become a little less of an ignoramus. You need to go to the website, http://www.actforamerican.org, and learn about the Islamic agenda.
Porter Stansberry: Oh boy.
Voice mail 2: Other than that, you make pretty good sense.
Aaron Brabham: Next.
Porter Stansberry: The Islamic agenda. The Islamic agenda. There is no such thing as the Islamic agenda. God.
Aaron Brabham: Next, Tim.
Porter Stansberry: People will believe anything.
Voice mail 3: I think the idea of doing a Porter laughing ringtone is a great idea, and I would definitely download that. And, secondly, you gave some ideas of how to identify a company you would identify for shorting. This week, you talked about companies that have the management only serving the interests of the management and not the interests of the shareholders. I was wondering if you could offer some ways that a novice investor could identify a company –
Porter Stansberry: Oh, easy.
Voice mail 3: – that has the management that is only serving the management itself.
Porter Stansberry: Easy. Easy, easy, easy.
Aaron Brabham: Let me guess. If they pay out a dividend first.
Porter Stansberry: No, the easy way to look at this is – two ways that I do it. First of all, go to the cash flow statements of the company you're looking at and see whether or not the company invests more money every year in its own business or if it invests more money in returning capital to shareholders. And you can do that by looking at the capital investment line and the investment line.
So let's say a company makes $500 million in cash. How much do they spend on the business? How much do they reinvest in their own company of that amount of money, okay. If it's $400 million and then they only give $100 million back to shareholders, I'm gonna tell you that that's not really a very fair deal.
So what I'm looking for is to see companies that consistently return more capital to shareholders, in the form of buy back and dividends, than they spend on the business. The other way is simple. Just look at compensation, okay. So if I told you that Lehman Brothers was spending 40 cents on every dollar of revenue it made in compensation, would that sound reasonable to you?
Aaron Brabham: It sounds like they're really in it for themselves.
Porter Stansberry: Exactly. So you've gotta look at – you have to look at how – what the company does with its cash flow in terms of does it spend it on building an empire for itself or does it return capital to shareholders. And then you gotta look at gross compensation. And you can see gross compensation by going to the income statement, which is one of the three financial statements.
So you look at the cash flow statement and you look at the income statement. And on the income statement, you want to look at the SG&A line, and the SG&A will tell you, as a percentage of sales, how much you're spending on compensation. So you look at the – if you look at the gross sales and you look at the SG&A and you compare companies. And you see who spends a lot of compensation relative to sales and who doesn't.
And the last thing is – those two ways are both objective. They're numerical. They're simple measures of where capital is being spent. The third way is subjective. And what I look for is I look to see CEOs who care more about their products or their employees than they do about their owners. So – and this is – obviously, this is a counter example. But I look to a guy like Steve Jobs as a classic example of the kinda guy that you want to avoid.
Now, I know Steve Jobs built an incredible business and it's been incredibly successful. I know that. But most of the time, when you have a CEO who does with money that Steve Jobs did, it's a disaster. So you got a guy who – Steve Jobs literally said, "that paying dividends was like bribing the shareholders."
Aaron Brabham: That's crazy.
Porter Stansberry: It's crazy. And he never paid a dividend. Apple did, but only when he wasn’t there. So you want to – I, personally, would not invest with a guy like that. And I understand Steve Jobs was very successful and that's fine. But that is a shocking counter example to what normally happens. What normally happens, when you got a guy like Elon Musk, I think is his name, who's doing the electric car business, the –
Aaron Brabham: Tesla.
Porter Stansberry: Tesla. You know he's gonna spend every last penny developing those cars.
Aaron Brabham: All on R&Ds. Zero back to shareholders.
Porter Stansberry: And he's never gonna build or sell them at a profit and the investors are gonna get wiped out. And that's a – by the way, if you want to put that down as a prediction, go ahead. I guarantee that will happen. And it will happen because Elon is a bit of a megalomaniac, and he cares way more about building his own reputation than he does about shareholders.
Aaron Brabham: And just look at the car. It's a bit ridiculous. It's like the Apple of cars.
Porter Stansberry: Yeah, except for – there is no market for a –
Aaron Brabham: Yeah, except for there's no market for it.
Porter Stansberry: – for the car.
Aaron Brabham: It's bad. Yeah, and actually I read that they're doing a secondary offering. So dilute the shares. It's the opposite of good will. It's diluted. All right, Porter, we get a lot of people that write in, and they ask where can they see you. They want to see you speak. You do very few speaking engagements a year.
Porter Stansberry: It's fair to say I do none.
Aaron Brabham: Pretty much none. But you do have one coming up.
Porter Stansberry: I don't really – truth be told, I do not want to be famous. I don't really want – I don't want that. I like doing the radio show, but I don't want to do television, I don't want my picture everywhere. I like to be anonymous, especially 'cause of when I travel or when I'm with my family, I don't want people to know who I am. Would you?
Aaron Brabham: No, not at all. Not interested in that.
Porter Stansberry: And once you give up your privacy, you can't ever get it back. So I don't do very many public appearances. The only time I do it is with our own audience. I go to our Alliance Conference every year, which is our highest level of membership in our business.
Aaron Brabham: Which really are like partners. They're partners of the business.
Porter Stansberry: They're partners of ours. I see them that way. And there's usually 500 to 1000 people at that event. And then the other thing I will do is for certain very old friends and supporters of me, I will do an appearance for them every now and then. So I'll go to Doug Casey's show every now and then. I'll speak at a Joel Nagel Conference every now and then. And I'm speaking at one for Asset Strategies International, which, by the way, I buy all my bullion from the check-ins at Asset Strategies International, ASI. They're down in Rockville, and I'm going to their 25th Anniversary.
Aaron Brabham: It's their 30th Anniversary.
Porter Stansberry: Their 30th Anniversary.
Aaron Brabham: And it's held at a Hilton Hotel and Conference in Rockville on October 27th.
Porter Stansberry: Yeah, I'll be there.
Aaron Brabham: So if you're dying to go see – I know they still have some spots available – go to http://www.assetstrategies.com or call 877 339 7729. All right, just got a couple of e mails and then we'll get outta here. Let's see here. Clay said, "The relationship between the U.S. and Saudi Arabia is based on oil for U.S. dollars. Since you believe that the U.S. dollar will lose its reserve currency status, why wouldn't the relationship change?"
Porter Stansberry: Well, let's look at history. People ask questions. "What's gonna happen in the future?" Look at what happened in the past. In the 1960s, when the dollar first began to really, seriously, lose value quickly because of the twin deficits caused by Lyndon Johnson's social programs and the war in Vietnam, the Saudis said, "Hey, we're not gonna accept your dollars anymore because they're just paper and you're just printing them. And so we're gonna break all the contracts that we have in place with U.S. oil companies."
And Americans said, "Oh, don't do that. We will secretly pay you more." So the companies were still paying them a certain share of royalty. I forget exactly what the numbers were. But it wasn’t very much. It was let's say 10 percent of production, something like that. But then the government was spending another 10 percent on their behalf to keep the Saudis happy.
And then, when the printing got even worse, in the early '70s, the Saudis said, "We don't want any more money. We're just gonna take the fields back." And that's what they did. They seized all the oil fields from the American companies. And a lot of people think that the Saudis were in the wrong to do that. But the truth is, the Saudis – we're the ones who broke the contract.
Aaron Brabham: Shocking.
Porter Stansberry: Yeah. We did not live up to our end of the bargain, which was to pay them a fair economic return for the assets that they were letting us exploit. And it wasn’t fair because we deliberately devalued the currency we were paying them in. So they took the oil fields and then they – obviously, they set new terms for the oil, and the new terms were vastly higher prices. But if you look at the inflation-adjusted price of oil, it never really changed.
There are spikes in the price at various times, in '79 and in '91 and then recently. But if you look at the long-term price – long-term real inflation-adjusted price of oil, it hasn’t really changed very much at all over the last hundred years. If anything, it's declined on average. So the point I'm making is that the Saudis have had a long history of dealing with the instability of the dollar, and what they will do in response is simply raise the price of oil enormously.
Now, that's a huge risk to my call for lower oil prices. But what I see happening is that the entire center of the oil world is gonna change from Saudi Arabia to the United States. And as we import much less oil, then the value of the dollar will become less important in the global oil trade.
In fact, I wouldn't be surprised at all to see Saudi Arabia start dealing oil in something outside the U.S. dollar, completely outside the U.S. dollar. It could be in Euros; it could be in a basket of currencies; it could be in gold. So I'm not as concerned of oil as I am about the price of other hard commodities, particularly gold and silver, which I think will do better than oil in the coming inflation.
Aaron Brabham: Let me give a little shout out to Patrick, Seth and Aaron. They were all young listeners that had kinda questions –
Porter Stansberry: Stay out of debt.
Aaron Brabham: – revolving around what your advice was. So thank you for writing us. We really do appreciate that.
Porter Stansberry: Stay out of debt.
Aaron Brabham: Yes, that's the number one thing. Live below your means.
Porter Stansberry: Stay out of debt. And if you can, develop a business of your own, even if you have to start it on the side.
Aaron Brabham: Yeah. 'Cause that's the ultimate investment is investing in yourself.
Porter Stansberry: Absolutely.
Aaron Brabham: And it'll teach you discipline; it'll teach you hard work; it'll teach you about failure. It'll teach you about all those things.
Porter Stansberry: Yeah. I'd also tell you, spend some time still on real estate. Real estate's still relatively cheap and it's a business that you can. It's a business that allows you access to capital at a young age, and it's the kinda business you can put sweat equity into. You don't have to have a boss.
Aaron Brabham: Absolutely.
Porter Stansberry: So you can buy a beat-up old house. You can get money from a bank to buy it if you have a reasonable income. And you can live there and fix it up and flip it in a year, and you can do all the work on the weekends. And you can make returns on equity in excess of 20 or 30 percent. And you can control it; it's all up to you. So those are – that's a very, very simple way to get started.
Aaron Brabham: And there's never been more renters than now. So if you have a little bit of capital and something you're looking for cash flow or positive like you talked about, that'd be a good route. All right, Kim said, "We are longstanding listeners and paid-up flex subscribers. We love the show so much that we named our new puppy after Porter."
Porter Stansberry: Porter the dog.
Aaron Brabham: "We thought about naming him Aaron, but it just didn't seem to fit. Thank you for allowing that to not fit."
Porter Stansberry: That's a new all-time low for me.
Aaron Brabham: "He's a mix of Australian Shepherd, German Shepherd and Border Collie. We hope you take it as a compliment. And, by the way, we posted it on the blog." It's a pretty cute puppy.
Porter Stansberry: Nice.
Aaron Brabham: I'm not gonna lie.
Porter Stansberry: Porter the dog.
Aaron Brabham: And a couple of tweets and we're out. @UrbanTriathlete tweeted, "I really like the reasons for shorting stocks. It was fascinating to me that you prefer short selling to buying puts. I just shorted my first ETF." Congratulations. Remember, when you're buying puts, you have that whole time to take back your thing. It's a terrible thing.
Buying calls and buying puts are a loser's game to something like 90 percent. TalktoNNL said, "Obama alienated friends, Britain and Israel, and is supporting the Muslim Brotherhood. He wants to destroy the USA, and he has showed the desire to give U.S. wealth to others." A lot of presidents give U.S. wealth to others.
Porter Stansberry: Yeah. I just –
Aaron Brabham: I know.
Porter Stansberry: I don't believe that Obama is trying to destroy America, and I think that kind of talk is just paranoid nonsense. I do think that Obama has done many terrible things. But I don't think there's any difference at all between Obama and Romney. If Romney had been in office the last four years, every single thing would have been exactly the same, exactly the same. So people who keep saying, "Oh, Obama's terrible. Obama's terrible." "Okay, well, who you gonna vote for?" "I'm voting for Romney."
Aaron Brabham: Obomney.
Porter Stansberry: Yeah. What's the difference?
Aaron Brabham: Not much.
Porter Stansberry: Nothing, nothing. And as far as Obama – I don't know, pissing off the Israelis or whatever. That's because the Israeli government in charge right now is extremely right wing. So, no, Obama doesn't like them. That doesn't mean anything in America's policy towards Israel has changed. Stop.
Aaron Brabham: All right. The guest on our next show will be investment publisher and financial analyst, Martin Weiss, of Weiss Publishing and Money Markets. He's a friend of ours.
Porter Stansberry: Absolutely.
Aaron Brabham: You invited him out for the conference last year. A very charming guy.
Porter Stansberry: Yeah. Long-time friend.
Aaron Brabham: We appreciate you listening to Stansberry Radio. Special thanks to Paul Craig Roberts for joining us on the show. Visit it at http://www.stansberyradio.com where you can subscribe to our mailing list. Find us on Facebook. We also have our own media channel on YouTube. It's Stansberry Media. And also, don't forget, man, we love to play those voice mails. So call us. 1 855 727 2346. That's 1 855 SARadio. If you enjoyed it, please pass it along to a few people. We'd like to get up to 50 at some point.
Porter Stansberry: Fifty Arbitron listeners –
Aaron Brabham: That would be a big goal of ours.
Porter Stansberry: – by the end of the year.
Aaron Brabham: That would be the big goal.
Porter Stansberry: Hey, sincerely, thanks everybody for joining us. We love doing the podcast and we appreciate your support.
[End of Audio]
This Episode's Guest
Paul Craig Roberts
Hon. Paul Craig Roberts is the John M. Olin Fellow at the Institute for Political Economy, Senior Research Fellow at the Hoover Institution, Stanford University, and Research Fellow at the Independent Institute. A former editor and columnist for The Wall Street Journal and columnist for Business Week and the Scripps Howard News Service, he is a nationally syndicated columnist for Creators Syndicate in Los Angeles and a columnist for Investor's Business Daily. In 1992 he received the Warren Brookes Award for Excellence in Journalism. In 1993 the Forbes Media Guide ranked him as one of the top seven journalists.
He was Distinguished Fellow at the Cato Institute from 1993 to 1996. From 1982 through 1993, he held the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies. During 1981-82 he served as Assistant Secretary of the Treasury for Economic Policy. President Reagan and Treasury Secretary Regan credited him with a major role in the Economic Recovery Tax Act of 1981, and he was awarded the Treasury Department's Meritorious Service Award for "his outstanding contributions to the formulation of United States economic policy." From 1975 to 1978, Dr. Roberts served on the congressional staff where he drafted the Kemp-Roth bill and played a leading role in developing bipartisan support for a supply-side economic policy.
In 1987 the French government recognized him as "the artisan of a renewal in economic science and policy after half a century of state interventionism" and inducted him into the Legion of Honor.
Dr. Roberts' latest books are The Tyranny of Good Intentions, co-authored with IPE Fellow Lawrence Stratton, and published by Prima Publishing in May 2000, and Chile: Two Visions—The Allende-Pinochet Era, co-authored with IPE Fellow Karen Araujo, and published in Spanish by Universidad Nacional Andres Bello in Santiago, Chile, in November 2000. The Capitalist Revolution in Latin America, co-authored with IPE Fellow Karen LaFollette Araujo, was published by Oxford University Press in 1997. A Spanish language edition was published by Oxford in 1999. The New Colorline: How Quotas and Privilege Destroy Democracy, co-authored with Lawrence Stratton, was published by Regnery in 1995. A paperback edition was published in 1997. Meltdown: Inside the Soviet Economy, co-authored with Karen LaFollette, was published by the Cato Institute in 1990. Harvard University Press published his book, The Supply-Side Revolution, in 1984. Widely reviewed and favorably received, the book was praised by Forbes as "a timely masterpiece that will have real impact on economic thinking in the years ahead." Dr. Roberts is the author of Alienation and the Soviet Economy, published in 1971 and republished in 1990. He is the author of Marx's Theory of Exchange, Alienation and Crisis, published in 1973 and republished in 1983. A Spanish language edition was published in 1974.
Dr. Roberts has held numerous academic appointments. He has contributed chapters to numerous books and has published many articles in journals of scholarship, including the Journal of Political Economy, Oxford Economic Papers, Journal of Law and Economics, Studies in Banking and Finance, Journal of Monetary Economics, Public Finance Quarterly, Public Choice, Classica et Mediaevalia, Ethics, Slavic Review, Soviet Studies, Rivista de Political Economica, and Zeitschrift fur Wirtschafspolitik. He has entries in the McGraw-Hill Encyclopedia of Economics and the New Palgrave Dictionary of Money and Finance. He has contributed to Commentary, The Public Interest, The National Interest, Harper's, the New York Times, The Washington Post, The Los Angeles Times, Fortune, London Times, The Financial Times, TLS, The Spectator, Il Sole 24 Ore, Le Figaro, Liberation, and the Nihon Keizai Shimbun. He has testified before committees of Congress on 30 occasions.
Dr. Roberts was educated at the Georgia Institute of Technology (B.S.), the University of Virginia (Ph.D.), the University of California at Berkeley and Oxford University where he was a member of Merton College.
He is listed in Who's Who in America, Who's Who in the World, The Dictionary of International Biography, Outstanding People of the Twentieth Century, and 1000 Leaders of World Influence.
- with Rick Rule
- with John Doody
- with Porter Stansberry
- with Porter Stansberry
- with Doug Casey
- with Rick Rule
- with Alex Jones
- with James Altucher
- with Richard Epstein
- with Porter Stansberry