From the Easy Chair

Money and Debt

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 10-214

Genre: Speech

Track:

Dictation Name: RR161AD56

Year: 1980s and 1990s

Dr. R. J. Rushdoony, RR161AD56, Money and Debt from the Easy Chair, excellent colloquies on various subjects.

[Rushdoony] This is R. J. Rushdoony, Easy Chair number 160, December 9, 1987.

Now Otto Scott and I are going to discuss money and debt, two very important subjects and two we had better be concerned about these days given the outlook for this country.

In the Bible money means hard money. When the Bible talks about just weights and just measures shall ye have, the just weight has reference to weights of silver and old. In other words, this is seen in Scripture as true money. It was not a coin. It was a weight. So it was a piece of gold or silver that bore a precise weight.

Then with regard to debt the Bible does not allow for long term debt. As a general principle owe no man anything save to love one another, as Paul tells us in Romans 13. In cases of need, debt may be contracted for six years and no more. Now this premise, limited term on debts, was once the routine practice in this country. As a matter of fact, up until World War II in most of the country mortgages were for five years, short term debt. A man was expected to pay for his house or his property in that time and pay one fourth down. All this changed with World War II and since then we have embarked on an insane course of inflation and debt, which will destroy us and the whole world with us.

Well, with those introductory remarks, Otto, do you want to follow with any general statement?

[Scott] Well, yes. I think, first of all, the crash of October the 19th proved for the first time that we really do not have a New York Stock Exchange and a London exchange, a Tokyo exchange and so forth. We have one big stock exchange of which London, Tokyo, New York, et cetera, are merely branches. And it moves up and down together, because we are tied together financially in a way that we have never been tied before.

When there was a German inflation of 1921-22, those people inside Germany who had international connections and could get hard currency—don’t forget, the dollar, the franc, the French franc and the English pound were all pegged to the gold standard in 1922. So you could ... if you could get hold of any of those currencies you could buy all kinds of real values in Germany. You could buy houses, automobiles, factories, whatever. There was a transfer of wealth and this is one of the reasons anti Semitism took such a leap is that the members of the Diaspora could get in touch with others in other countries and get hold of hard currency. Naturally they took advantage of the situation and bought what they could. And the German middle class was wiped out and this led to tremendous bitterness. The Jews were blamed for what was governmental crime, because it was the German government that did this, that created that situation.

What today we have no alternative currency to go to. The newspapers, the Wall Street Journal, let’s say, keep telling us that we do. We... they kept saying... I saw an article two days ago in the Journal on gold in which it said those who invested in gold in the last two years, let us say, would have made more money if they had bought Swiss francs or Japanese yen all of which have increased in terms of... against the dollar, more than gold. But what they are not saying is that two years from now all those currencies may be worthless.

[Rushdoony] Yes. R. E. McMaster recently pointed out that since October 19th, the sale of gold coins has increased 600 to 900 percent. So we do have an element in the population that is waking up to the necessity for real money and they are moving into gold coins.

[Scott] Well, that is interesting. If we look back at gold, I think, let’s stake the 19th century in gold. There was no income tax anywhere.

[Rushdoony] Yes.

[Scott] Gold could be used anywhere. You didn’t have to have a Spanish gold dollar or an English gold dollar. You could just take your gold piece and spend it anywhere.

[Rushdoony] Yes.

[Scott] If you found a gold mine you could take... you could refine the gold and take it to the nearest treasury and they would mint it out for you in the coin of that particular realm and give it back to you, because it belonged to you. They didn’t ask you where you got it. It wasn’t any of their business.

So... and then you could spend it anywhere in the world you wanted. You could travel anywhere in the world in those days without a passport. The only country that issued a passport was Russia and I remember when my dad got a passport from the Venezuelan government before World War I, because he was in exile. They gave him a diplomatic passport and they stamped exilado on it, exiled. So he got a passport. It enabled him to travel around the world.

But anyone could travel around the world then. You had to have some kind of a nationality. They didn’t care. You had to... if you were going to stay in the country, of course, they would take another look at you, but if you found a gold mine, what I am saying is that you had a private treasury and you could do what it what you pleased.

All right. Now we have an income tax. And now remember that one of the representatives said, “How do we know how far this will go?” He said, “It could go as high as five percent.” And men rose up out of their seats in the House of Representatives and shouted him down as a damn fool. They... nobody would dream of paying that kind of a tax.

All right.

[Rushdoony] Or that anyone under a millionaire would ever be taxed.

[Scott] Yes. Oh, well, tax the rich is the greatest hook there is.

[Rushdoony] Yes.

[Scott] So we have up until our time, you might say, people had money. Our fathers knew what money was. But we don’t have any money. We have only got pieces of paper.

[Rushdoony] Yes. I can recall that into the 50s the ranchers of Nevada, because I was the in the 40s and to the beginning of the 50s, and the farmers of California whom I knew in the 30s, the older men would refuse paper money. They had long coined pouches with a snap top and they would keep their money, silver dollars and silver coins in those coin purses. It was the only real money as far as they were concerned. So after gold coins disappeared from circulation they depended on silver and would not accept anything else.

[Scott] Well now, of course, the idea of silver as a monetary metal has been stopped. A lot of people aren’t aware that silver is silver. You don’t hear anything more about the silver bugs. Silver right now is selling at something like 72 to one in relation to gold.

[Rushdoony] Yes.

[Scott] That is an un... unheard of...

[Rushdoony] Yes.

[Scott] ...ratio. But this is all interesting. We have moved into the world of paper. We have moved away from the basis of wealth.

E. L. Kennedy who is a senior partner at Lehman Brothers gave me a long talk on it once. He is a director of Kerr McGee and a friend of Ashland Oil and in charge of the oil desk at Lehman Brothers, at least he was. And his argument was that all the wealth of humanity comes from the earth, the food, the wood, the water, the animals and their skins and pelts and meat and so forth and the minerals under the earth.

Now he knew this, but the average person today doesn’t know it. The average American today I could compare in terms of understanding of real wealth and technology and so forth to Ortega y Gasset’s cannibal driving an automobile. He said you could teach him how to drive, but you couldn’t get him to understand the ... the enormously complex system that creates the automobile. And we are living her something like the heirs of Byzantium who could no longer operate the defensive machinery to flood the dykes.

[Rushdoony] Yes.

[Scott] ...because they had forgotten what their forefathers had built. They had forgotten how to manage it.

In terms of money, in terms of wealth, we are reaching this situation.

[Rushdoony] Yes. And we must recognize that not only do we no longer have gold and silver for money, so there is nothing behind the paper money that is solid, but that we do have in back of the paper debt. Every federal reserve note is a sign of a borrowing by the federal government from the banks of your deposits and mine so that it is only debt that is behind our currency.

[Scott] Well, there is a man whose name I am sorry I can’t recall who wrote a book on cycles of money and debt. And he made a very interesting point. He said interest, interest, which, of course, demands more money back than you received and if everyone in the world received his share of the money in circulation and had to pay it back in interest, there wouldn’t be enough money in the world to pay it back, because this is an endless chain.

[Rushdoony] Yes.

[Scott] That once it begins.

[Rushdoony] Yes.

[Scott] And, of course, it eventually comes back to the point of origin, because there is a limit to the demands that can be made, just as there are limits to the amount of money that can be printed.

The Mexican peso now is over 2500 dollars to one American dollar, 2500, that is 2525 is the official figure that I last saw. We know the unofficial figure is higher.

Now five years ago, well, let’s say seven years ago when I was living in San Diego there were a lot of Americans going down to the banks in Tijuana and putting dollars into those banks and they were getting something like 20 and 25 percent interest. And a friend of mine really got very annoyed with me, because I wouldn’t put any money in one of those banks. And I said, “You don’t understand the Mexican government.”

He said, “Well, it is a good government.”

I said, “I am not talking about their personal character or anything else.” I said, “Collectively, they are a bunch of thieves and they are going to steal it as soon as they have enough accumulated,” and, of course they did. In everyone’s... they seized all the money, all the American accounts. I never heard the American government say a word.

[Rushdoony] No. Nor did your friend stop to think that if anybody is offering more interest than others as the Penn Square bank, I believe, in Oklahoma was doing, there is something wrong. They are hungry for your money. They are promising you something because they are desperate for dollars.

[Scott] Of course, of course. And a sovereign state isn’t going to allow itself to be purchased by the people of another state. It will be just simply step in.

Well, and not only did they step in then, but later on Lopez Portillo seized all the banks just before he got out of office. Now his argument for seizing the banks was that Mexicans were shipping their money out of the country and he was going to stop that. Of course, they found other means to do it. But there is a limit to how much you can ship out of the country if you are in business. You can’t ship your full factory out. You can’t ship your store. You can’t ship your automobile. Maybe you could your automobile, but in... In other words, a lot of... most people’s wealth are in tangible things. Then you have to sell them, get the money and then, of course, the tax collector is right there, because the tax collector... the tax collector is the fellow with the axe. He chops the roots of the system down.

[Rushdoony] Yes.

[Scott] Because he is more interested in collecting taxes than he is on how you earn the money to owe the taxes.

[Rushdoony] Yes. Very little has been written on the tax collector. A very important book could be written just about the Turkish tax collector, because the Turkish tax collector contributed to the destruction of every part of the Turkish Empire. They put a tax on windows and windows disappeared. They put a tax on trees and people cut down trees. And it led to deserts in many areas as in North Africa. Everything they could tax, they taxed. And it led to the destruction of one area after another.

Of course, they were not the first to do this, although they were among the most ruthless. The Romans did it earlier.

[Scott] The Romans did it earlier.

[Rushdoony] And the Romans were resorting, as the Turks did, to torture. They tortured people to make them confess where they had hidden their wealth.

[Scott] Well, our tortures are psychological. There is a lot of threat. There is a lot of bluff. There is a lot of fear. And there is a lot of heartless things go on.

[Rushdoony] The statement was made by John Marshal that the power to tax is the power to destroy.

[Scott] And that power is pretty evident here. Even the courts are afraid of the tax.

[Rushdoony] Yes.

[Scott] Because they are afraid they will be audited. And those people who have been most vociferous in criticizing tax collectors have been audited. And it has happened too often to be an accident.

[Rushdoony] But let’s remember that the IRS is the creation and tool of Congress.

[Scott] No question.

[Rushdoony] And Rostenkowski of Chicago, the congressman, has stated that he does not like to see the power of the IRS ever inhibited. He believes it is the best institution that Congress has ever created.

[Scott] Well Rostenkowski was arrested for drunken driving about six months ago. Maybe he said that when he was in his cuffs.

[Rushdoony] No, he said it when he was very, very sober to a member the Chalcedon staff.

[Scott] Did he really?

[Rushdoony] Yes.

[Scott] Well, every agency of the government, not just the IRS, which is simply another agency, but the social service agency, the welfare agencies, the scientific agencies, the research agencies and everything else has only one purpose in life and that is to expand its power and authority.

[Rushdoony] And as they expand their power, they limit ours.

[Scott] Oh, it is a natural corollary. The power has to come from someplace.

Now up until recently most Americans really didn’t care too much about the income tax, because they didn’t have to pay it at the end of the year. One of Reagan’s good ideas, suggested to him, undoubtedly by somebody else when he was governor of California was to stop the withholding practice and force all the people in California to pay the tax by writing out a check at the end of the year. Now, of course, if the whole country had to do that, there would be a tax revolt.

[Rushdoony] Yes.

[Scott] Or else they would have to lock everybody up, because most people just simply don’t have enough money left at the end of the year to pay the tax. This is not a saving populace.

But going back to the money and the debt, now in a time of inflation it is almost impossible for people to stay out of debt. They have to give the ... give the average man the benefit of the doubt. He doesn’t want to go into debt. He wants, naturally, to have what his neighbors have. He wants to live decently. But everything is set up so lure him into the debt. The automobile costs so much that he has to pay for it in time.

[Rushdoony] Yes.

[Scott] Now I understand that they are going to six years, something like that, five, some incredible length of time to pay off the darn car.

The same thing with the house, 30 years. And up until recently he could write off the interest from his income tax so therefore he had two reasons, first the objects that he was going into debt for and, second, the fact that it reduced his taxes, because on the face of it now a man accumulates a debt and has to pay taxes on the debt which doesn't sound very equitable.

[Rushdoony] Well, when you have hard money you encourage thrift, because money is worth saving. It doesn't lose its value.

[Scott] It is as good for your son as it was for you.

[Rushdoony] Exactly. But once you get on paper thrift progressively disappears, because the money is constantly depreciating.

[Scott] So if you don't spend it, you lose it anyway.

[Rushdoony] Exactly. I recall, oh, a few years back. I think it was about 13, 14 years ago waiting for Dorothy to come home one evening from some place she and Grace had gone to in Los Angeles and I was watching an old movie. I believe it was Carey Grant movie from way back in the early 30s, one of his first. And he was a rich man in this.

[Scott] Oh, in the 30s he always played those. Yes.

[Rushdoony] Yes. And a few girls were talking about him and they described him as filthy rich, because he made all of 5000 dollars a year.

[Scott] Is that right?

[Rushdoony] Yes. Well, those were the days when in California teachers were making 150 dollars a month were envied.

[Scott] Well, yes. That was a good salary. Teachers were envied, policemen and firemen were envied. Almost all the civil service was envied. They used to have ads, you remember. The ads said, “Retire on 125 dollars a month.”

[Rushdoony] I can remember them 100 dollars a month.

[Scott] Right.

[Rushdoony] And it showed a picture...

[Scott] {?} beach or whatever.

[Rushdoony] A Mediterranean cruise.

[Scott] Oh...

[Rushdoony] Leaning over the side of the ship.

[Scott] Everything was set.

[Rushdoony] The old man and his wife retired looking at the moonlight.

[Scott] But...

[Rushdoony] A hundred dollars a month.

[Scott] Now there has not been in all the history of recorded time a single government that has embarked upon an inflationary course that this failed to destroy its country.

[Rushdoony] Yes.

[Scott] Without exception. Twenty four hundred years. Mexico right now with 2500, over 2500 official pesos to a dollar is on the edge of catastrophe. And yet there isn’t a thing in the press that I can see.

[Rushdoony] Yes. In terms of everything that has happened in history, every civil government in the world is doomed, because they are digging their graves with their paper money. They are destroying their economies. They have no future.

[Scott] Well, there is a turn of government. What happens is that the government changes.

When Elizabeth I came in, the first thing she did was to straighten out the currency that Henry VIII had left the realm in a mess. Then she was followed by James who dissipated the currency again who was followed by Charles I who was even dumber than James and they had a revolution.

They had a change of government in Germany. The Revolution really got its start, Hitler got his start in the inflation....

[Rushdoony] Yes.

[Scott] ... as well as in Versailles. It was Versailles plus inflation that opened the gates to Hitler.

What we are opening the gates to we don’t know. But we are opening the gates.

[Rushdoony] Yes.

[Scott] Because I can’t think of anyone who trusts the government right now. How could we trust the government that is stealing, that stole from my mother when she put money in war bonds in World War II? How can we trust these kind of people who tell us that inflation is good for us and that there is nothing to worry about?

[Rushdoony] Well, if anyone trusts the federal government they should see a psychiatrist. They are pretty far gone.

[Scott] Well, then we get into the business of the debt. Now, we were talking in England on the question of debt and its effect upon family life. Most divorces break up on the financial question.

[Rushdoony] Yes. More marital problems are due to money than to sex or any other thing.

[Scott] Yes.

[Rushdoony] And the younger generation has been reared with no knowledge of hard money. A tremendous belief in debt, because they have seen their parents pay off good debts with bad money and prosper on it. So they are determined to start ahead of their parents.

[Scott] Well I was at a dinner party in the east of seven or eight months ago and the hostess’ daughter and son-in-law were there bemoaning the fact that they couldn’t buy a home and they were both in their middle 20s. And this woman’s daughter actually broke into tears and said it isn’t fair.

Now she just thought she had a perfect... she had a right to buy a house.

[Rushdoony] Yes. Well, one young couple I tried to help or counsel came from, well, fairly well to do families on both sides. They were helped in the down... well, given the down payment when they got married for a very lovely home, a membership in a country club, two new cars, but before long they had gone into such debt that with both of them working if they paid all their bills any month they would have had only 50 dollars left to eat on. So they were in desperation. They were quarreling and they didn’t see the problem, really. I counseled them to sell the house, pay off all their debts, rent and try to make ends meet. They did. Then in no time at all they felt so expansive that they started running up bills again, because they had money suddenly.

Someone told me recently that they had a couple come who were head over heels in debt. They brought all their financial records and this person went over them—I believe it was Victor Portiere—and found out the situation was appalling and told them this is going to take some drastic steps. And he told them exactly how badly they were in debt, because they didn’t know. Their credit card debts ran into thousands of dollars alone. And said they were going to have to bite the bullet.

Well, their reaction was to break the appointment, because what he had said was so upsetting and to go out to dinner to the most expensive place in the city. They said they had to do it to feel better.

Now that is the kid of mentality we face on all sides now. They live in an unrealistic world and they are following the federal government and all their neighbors in doing so.

[Scott] Well, the government is like the young couple. This government does not believe that it will collapse. It does not believe that anything will ever happen to it. It believes, like Lyndon Johnson that there is no limit to the America economy and no end to the tolerance of the American people. But all good things come to an end. We have a dollar that was equivalent to eight cents in 1913. This inflation has been going on since 1913. That is a long time.

[Rushdoony] Yes.

[Scott] That is two generations. The Byzantine Empire came down in three after 900 years.

[Rushdoony] Yes.

[Scott] Nine hundred years. We have had... we have got 200 years. And I remember a European friend of mine in New Orleans who asked... I said this is the oldest place in New Orleans. He said, “How old is it?” And I told him. And he said, “Our family home is older in Europe.” We are young in this incarnation. But don’t forget the previous government... American government, the Articles of Confederation collapsed...

[Rushdoony] Yes.

[Scott] ... because of bad money.

[Rushdoony] Yes.

[Scott] Now the debt situation is much worse, because most people—I don’t know if I could say most people—but a great many people are not aware of the fact that they could lose what they have.

[Rushdoony] Yes.

[Scott] And the banks, of all the people in the world, I hope there are no bankers listening, because my... I happen to have... I do not trust bankers. Bankers come after you when you are in trouble. They only lend you money when you don’t want it. And the minute you get into trouble they want to call the loan and call the mortgage. And then they don’t know what to do with it. they can’t resell the house, but they will take it away from you.

And I don't know what is going to happen to the American people when they get into a Mexican situation.

[Rushdoony] And we are not too many years away from it.

[Scott] Well, that was five years to that, to the... to the... to the final thaw.

[Rushdoony] I would like to deal a little more with the subject of debt, because the Bible has a great deal to say about it. One of the things that we find when we study the world of the Bible is that there are two empires in biblical antiquity that were specialists in debt, the old Babylonian Empire and Assyria.

Now both of these were aggressive military empires. But they had a policy of first of all destroying the morale of the country through debt. They had a class known as tancaru who were merchants or brokers or merchant bankers, money lenders and always state agents. They would send them into a country that they intended in time to invade. They would send them with all kinds of desirable goods and easy credit terms. The people would be encouraged to go into debt. There is a reference to these people in Nahum 3:16 in the Old Testament.

But these people would go in and in no time at all sell everyone in easy credit, all kinds of desirable goods. And the whole country from one end to another would become debtors to these merchant traders. In no time at all debt would sap their independence. The Bible tells us in Proverbs that the borrower is servant or slave to the lender. Old Babylon and then Assyria knew this very well and so their armies would only march after a people had been destroyed internally, as far as their morale and their morality was concerned, by debt.

[Scott] All right. Now the Soviets are doing it differently way, but the essence is very similar. What the Soviets have done have been to borrow enormous sums of money.

[Rushdoony] Yes.

[Scott] They have borrowed, nobody knows exactly how many billions of dollars have flowed from the United States to the Soviet Empire, because you can’t get the records. Neither the banks nor the treasury department nor the IMF, nor the various UN agencies, the international world bank, all of these things that we have set up will reveal any of these details to any of us. But we do know that it begins at 80 billion and it goes up.

[Rushdoony] Yes.

[Sandlin] And right now Gorbachev is asking for more and he is going to get more. And we... our financial institutions owe ... have given so much money to the Soviet Empire that they are dependent upon the Soviet Empire.

[Rushdoony] Exactly.

[Scott] So the effect is the same. And then, of course, you have the other thing which you have... went over rather quickly. I suppose we would begin here with the spiritual value that if you lose your spiritual independence, then everything else begins to sink.

Your story about the couple that went out to the expensive restaurant is very typical, because eat, drink and be merry, for tomorrow the bill collector is going to come.

[Rushdoony] Yes, yes.

[Scott] And the whole country now is tied in inextricably with not only the Soviet block, but with other western countries. The Japanese have bought our government bonds. The government... the Japanese have invested heavily in our real estate. The English banks have always called the tune for the American bankers, because the English bankers are smarter than the American bankers. I hate to say it, but it is true. They have outsmarted the American bankers time and time again and they do it with such subtle charm that the Americans keep falling for it. But we are tied in. All of us are tied together.

Now how can an economy break loose when it is caught up in this world of paper? Electronic transfers now faster that... well, equal to the speed of light. Multi millions cross international boundaries and the various governments here have lost control of the financial black markets.

So we are not going to just go down alone. We are going to go down with the whole ship.

[Rushdoony] Yes. Well, the solution to this is not going to be political. It is going to be moral. As people across the country say to themselves, under God, I have no right to be in debt, I have no right to mortgage my future. I belong to God, not to the banker. Then as people begin to live this way, debt free, it is going to have its repercussions.

[Scott] Of course.

[Rushdoony] If the Christian community to any appreciable extent, let’s say a small fraction of the Christians got out of debt it would have an effect on the entire country.

[Scott] Of course it would, because then you would have a free group.

[Rushdoony] Yes.

[Scott] Who would then lead the others.

[Rushdoony] Yes.

[Scott] You know the police have this. You can’t cheat an honest man. You can’t pull an honest man into a swindle, which is the way most people get cheated.

[Rushdoony] Well today one of the things that is holding back the Christian community as far as its action is concerned, missionary work overseas, missionary work here, Christian homes for all kinds of needs, Christian welfare, everything is the fact that the average church member is head over heels in debt. As a matter of fact, those who profess to be Bible believing have been shown, according to surveys to be deeper in debt than their non Christian neighbors.

[Scott] Maybe they have more faith in God. They think God is going to pay off the debt for them.

[Rushdoony] That is exactly the point. They believe that because they are Christians the Lord is going to bless them even when they are breaking his law by going head over heels in debt, by living in terms of satisfying their every need. But the Lord is going to some how protect them and deliver them.

[Scott] Well, God is not a buttercup.

[Rushdoony] No.

[Scott] Cannot be relied upon to provide summer weather throughout life. There are storms. The are winters. There are tests. Sometimes it is a very good salutary test to lose money. My father, as you know, was a promoter and... and... and sometimes lost everything. You could never tell by looking at him. He always looked the same.

[Rushdoony] Yes.

[Scott] But when they came, I will never forget when they came and took the Strongberg Carlson radio away because he hadn't paid for it. And when we couldn’t answer the phone because of the bill collectors calling up and he would just come home later. That is all. He would come home at 11 o'clock and he would leave at six. But the rest of us were very well aware of the fact that this was a bad period. And it gave me a horror of debt, absolute horror. I hate it. And I look at these ads for six years to buy an automobile and think I would rather build one myself.

[Rushdoony] Well, the sad fact is the present generation has no such feeling about debt. And we have seen a major change in attitude. Credit once meant that you were believable, you could be credited.

[Scott] That is right.

[Rushdoony] Now it means your ability to borrow money and if you are out of debt, you are in trouble, as Dorothy and I have found a few years ago. Nobody wants to lend you any money....

[Scott] Because you don’t owe any.

[Rushdoony] That is, sell you anything if you have to buy something on time. Or, when we bought the house we were making a large down payment, far more than is normal, but that wasn’t enough. We had no credit record. And I said, “Isn’t it a sign of credit that we are paying more down than was asked for?”

But they are so totally enmeshed in their peculiar mode of thinking.

[Scott] Well, I recall listening to corporate managers wondering whether or not to hire a fellow. They would prefer a fellow with two children who had a mortgage.

[Rushdoony] Yes.

[Scott] And, in fact, if he didn’t have a house they would lend him the down payment so that he would be tied to them. And then they knew that they had somebody that wasn’t going to leave very quickly.

[Rushdoony] Like the Babylonians and Assyria.

[Scott] Very similar, very similar.

[Rushdoony] Yes. Same premise.

[Scott] But let’s look at the thing from an overall, from a higher look. If we have all this sea of paper washing back and forth between Switzerland and what not. I read this article. I started to tell you which said we would have made more money, you and I, if we had bought Swiss francs and so forth. But at the end of it, in the last paragraph it said the central banks in recent weeks had bought so many tons of gold. And I thought, well, now, why are the central banks dealing in gold while they are telling the rest of us that paper is good enough for us?

[Rushdoony] Yes.

[Scott] If gold is no good, why do the central banks use it? Why is it the basis for all international exchanges between governments?

[Rushdoony] Yes. Well, we are seeing a situation where increasingly the whole world looks like a modern tower of Babel.

[Scott] Yes. However, we have this peculiarity. We have here a very large population, 240 million or so, the most highly skilled people, I guess, in the world. We have people in this country who really can do literally anything. This is one of the arguments of the pro SDI people is that if they were turned lose as are the atomic bomb thing was turned lose, as the trip to the moon was turned loose, they could create a strategic defense that would protect the United States. And I am sure that we have the technologists who could do it if they were allowed to do it.

We simply do not have a population that will add things up.

[Rushdoony] No, because we have the same idea that the builders of the tower of Babel had. When you examine that account and the symbolism that was involved in it, the whole idea was that they were going to supplant God’s order with a totally man made order and create a one world based on man’s idea of law and order, a new garden of Eden.

Well, this is what these people are dreaming about. They are going to create a one world paradise without God, without hard money, without any of the basic truths that we as Christians have always felt are essential to any social order. They are busy creating a society that is going to be in every aspect, man made.

[Scott] Well, big chunks are falling apart. Of course, I agree with what you say and I think you have said it very well. I think it is true. They have lost sight of reality and they have lost sight of God.

Let’s look at the situation visa vie Mexico and ourselves. We know that Mexico has an enormous debt and that this debt is owed, in large measure to American institutions. We are watching the Mexican government, the money in Mexico fall apart.

[Rushdoony] Yes.

[Scott] So I don’t know how many novels have been recently sold on the kind of debacle this will open up. Mexico has to default. And any country, any one of the third world countries that defaults will set up a chain of reaction where they will all default. And we are sitting here talking about how wonderful it is that we are taking the protective missiles away form the Europeans. This is the most important subject on earth at this point, to strip Europe of its defenses.

[Rushdoony] Yes. Well, in one country after another, increasingly, people cannot go outside of their borders with their money.

[Scott] No, it is not allowed.

[Rushdoony] Their currency... well...

[Scott] It is not changeable.

[Rushdoony] Yes. The orthopedic surgeon’s conventions has... have a fund so that surgeons in countries like, say, Argentina can attend using this fund, because the Argentine end currency will not buy anything outside of Argentina.

Now, the interesting fact that nobody ever calls attention to is that the Soviet funds are worthless outside of the Soviet Union.

[Scott] Well they have no money.

[Rushdoony] And they could not trade. They could not do a thing outside of their borders without credit or without loans.

[Scott] Yeah. Credit and loans they have. They have gold.

[Rushdoony] Yes.

[Scott] They have gold. And every so often they have to discard some of that gold in order to get American credit, in order to get English credits and so forth. But if we were to economically boycott the Soviet Union, of course, it would collapse.

[Rushdoony] Yes. And certainly they would never had gold to the tune of 80 billion dollars. So the gold they discharge has little relationship to the credit they receive and the loans.

[Scott] All right. We have gold. We have silver. Eric Danish, a veteran of the German inflation told me that they even went into buildings and took out the lead pipes. They took the bronze door knockers off the doors. All metal became valuable. Old people committed suicide, because the inflation wiped out their pensions.

[Rushdoony] Dorothy and I know a man who was there as a boy. His father was an American official and well to do Germans were begging them for a dime, just a silver dime and ready to trade their gold watches, anything for some kind of hard currency.

[Scott] Well can the ... the imagination boggles at the idea of a global financial crisis and yet we came very close to it.

[Rushdoony] Yes. And Ron Paul has called attention to the fact that we are moving into it and he believes that this is not going to be like the Depression which was a deflationary depression. The one we are moving into now will be an inflationary depression with higher inflation, higher interest rates, higher unemployment, more bankruptcies, junk bond defaults, brokerage house and bank failures, possible mutual fund failures, declining standard of living and so on and on.

[Scott] Look at these old, old people that we have.

[Rushdoony] Yes.

[Scott] Look at... look at all the people we have on pensions, all these men playing golf every day. I don’t know how they do it. I don’t know how they can do it.

But we have got all kinds of elderly people. I notice when I go to these various places where I give a lecture or seminars or what not how many of the people who are staying in the hotels are elderly, because the younger people are all working. Now young people are having a hard time today. Both the husband and the wife works and the kid is in some sort of a play care, day care center. They are running back and forth all the time. They have very little free time. And all this barely keep up, barely keep up. This has a lot to do with the abortion rate, because they can’t afford any more children, they feel.

[Rushdoony] Yes.

[Scott] They have no faith, you see. They have... they have no reason to... to say, “Well, this child comes from God and God will provide.”

[Rushdoony] Ron Paul in his special alert of his investment letter says among other things, too, “Accumulate wholly owned, physically held gold and silver and get out of debt.”

[Scott] Well, easier said than done for many. I know people in the big cities who can’t move. They haven’t saved enough money to get out.

[Rushdoony] yes.

[Scott] And to live long enough once they move out to find a new place to work. They don’t know where to go. We have millions that are trapped.

[Rushdoony] Yes.

[Scott] And the government is not talking about it. The social scientists don’t talk about it. I read Dear Abby whenever I pick up a paper. I like those flip comments and so forth. Of course, she is a total Feminist, but I notice that there is very little about money.

[Rushdoony] Yes.

[Scott] And yet I know that the letters that she gets must be heavy with those problems.

[Rushdoony] Yes. But that doesn’t make good reading.

[Scott] No. There it is this... it is disheartening reading.

[Rushdoony] Yes.

[Scott] It is... it is... the New York Times every Christmas season puts out the 100 neediest cases. And they have capsule descriptions of people in the most heart rending situations. That is the 100 neediest.

We can think of how many thousands have culled from.

[Rushdoony] Yes and it is only going to get worse, because the economy is in for serious problems

[Rushdoony] Well, one young man some time back asked me what, he said, advice do you have if this debacle comes about? How do you... what would you advise me to do in preparation for it?

And I said, “Don’t get caught alone. Be a member of a group. Be a member of a church.”

[Rushdoony] Yes.

[Scott] Be a member of good people...

[Rushdoony] Yes.

[Scott] ...an organization of good people so that you can mutually help yourself in times of storm.

[Rushdoony] Yes. Dr. Michael Schlutter, whom we visited at Cambridge, England, has written about family associations and their necessity in all times and especially in a time of crisis. And we did publish his article on that last year, June of 86. I think he is thoroughly right. The interesting thing is that in the last Depression families did pull together. They moved in with one another.

[Scott] Oh, yes.

[Rushdoony] They helped each other to a tremendous extent or else the depression would have been far, far worse than any description of it.

[Scott] Well, actually, contrary to the assumptions of cynics, hard times and crises bring out the best elements and the best features of human beings. There was everyone I knew that had a job during the Depression had somebody sleeping on the living room sofa who needed a... who needed a place. War time this has thus mental break downs. People pull together in times of crisis. If there is a debacle we will see a side of America that you and I remember that a lot of young people haven't seen.

[Rushdoony] Yes, but the first stages will be very difficult, because we have had too many people grow up who never had problems, who feel that God should not permit them to have problems.

[Scott] Well, that is an old argument. God... God should not permit sickness, disease, trouble and bad weather. Yes, that is an old argument. Yes.

[Rushdoony] Somebody raised that argument with Toplady who wrote Rock of Ages Cleft for Me, citing a specific thing and saying, “If you were God, could you do this?” And Toplady answered, “When I am God I will tell you.”

[Scott] Well, don't forget. The people who are complaining about the situation are the people who put this government into office.

[Rushdoony] Yes. Yes.

[Scott] They have a responsibility. You know, they could march to the polls and vote and they could change the government. And they are so lost to reality they don’t even vote.

[Rushdoony] And they vote only for more of the same. Christians are no better than non Christians in their voting.

It has been shown from surveys that Christians do not vote any differently from non Christians.

[Scott] Well, that is too bad. They really should.

[Rushdoony] Well, that is because most of your Christian community is made of up evangelicals who are mostly pietistic and don’t see the relevance of our faith to the world around us.

[Scott] They look at the faith as magic.

[Rushdoony] Yes.

[Scott] So many incantations a day.

[Rushdoony] Yes.

[Scott] It doesn’t work.

[Rushdoony] It is just fire and life insurance for them. It is not the way of life, God’s plan for dominion on earth.

[Scott] Well, don’t forget that this government originally came out of a debacle. And that may be one of the reasons why the founders spent so much time on mechanics, so to speak.

[Rushdoony] Yes.

[Scott] And so little time on the spiritual value. But a debacle would certainly give opportunity for a reformation, for a renewal, for a new method, for real money.

[Rushdoony] Well, I think the present crisis is going to bring a great many things to the fore. I have been going through, as you know, the book of Leviticus and dealing of late with the Jubilee. And the jubilee is of central importance to the crisis we face.

A very interesting book was written last year and published in August of 1987. The author is David Knox Barker, Jubilee on Wall Street: An Optimistic Look at the Coming Financial Crash, published by Prescott Press in Lafayette, Louisiana.

It is an excellent book, because as a financial consultant and president of a corporation, this man brings a biblical perspective onto the crisis and why we have to expect it, why it is necessary in terms of God’s law. And how great a help it will be to our future.

It is, by the way, a good history of money and banking in the process. And a great many interesting things it said. I thought this was amusing about bank examiners in the early days. One account tells of a bank examiner, he writes, as he traveled through the Midwest. The banks knew his travel plans and had the same gold coin follow him around to be whisked in the back door of the banks he visited and quickly deposited in the bank. There was a vast amount of fraud and circulation of bad notes.

[Scott] That is true, but, you know, the old theory was, the old argument was that a Depression burned out the inefficient and the incompetent and the redundant.

[Rushdoony] Yes.

[Scott] Now our government has been bailing out the inefficient and the incompetent and the redundant for an awfully long time at the expense of the productive and the competent and the diligent.

[Rushdoony] Yes. And something nobody has written about, this little incident and a few other things that Barker calls attention to do give you a little hint of the problem. But the weakness of the Constitution was that when it required gold and silver, it did not place any requirement on the banks, any hard money requirement. The banks have always been the inflationary element in the United States. They have created every major depression. And they have loaned recklessly and have created the crises we have had.

[Scott] Well, I just received in the mail this week a check made out for 1000 dollars. Instead of extending my credit line for another thousand dollars they sent me a check for 1000 and said, “Please spend this.” Of course, it will be added to your account.

You know, if... it was in a picture window and saw somebody is sending me a check. Well, fine. I open it up. It is 1000 dollars and I said, “Oh, how nice.” And then I saw that it came from this bank.

A mean trick.

[Rushdoony] Yes. To tease you with 1000 dollars.

[Scott] I suppose... suppose I was in trouble.

[Rushdoony] Yes.

[Scott] And needed the money.

[Rushdoony] Yes.

[Scott] That would be irresistible, especially just before Christmas.

[Rushdoony] Yes. Well, I... I will wonder what they have against me, Otto. I haven’t gotten one.

[Scott] Well, maybe they know better. I don’t know. But that did... it kind of took me aback. Of course, paper transfer is just as effective.

[Rushdoony] Yes.

Well, our time is just about over. Any last comment, Otto?

[Scott] Well, I think people should not allow themselves to get too frightened by the comments that we have been making.

[Rushdoony] Yes.

[Scott] You know that the human race is strong, that people can put up and endure and come out better for it and there has been too much fear spread, too many people have been frightened by too many others. We keep, I think the United States has been subjected to tremendous psychological pressure to frighten everybody, to shake their self confidence, their self respect, their belief in themselves, in their neighbors and in God.

[Rushdoony] Yes.

[Scott] This is part of the campaign to bring us down. So I don’t ... I hope that whatever we say about money and debt doesn't frighten people.

[Rushdoony] Yes. And I will add this final word that the best thing about this crisis is that God is shattering the power of the federal government, the world’s various civil governments and of the banks. So while it is going to be difficult, it points to our deliverance. It points to the end of an evil system and an opportunity for us to reorganize society in terms of God’s Word.

[Scott] Very good.

[Rushdoony] Well, thank you all for listening and God bless you.

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