From the Easy Chair

The National Debt

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 116-214

Genre: Speech

Track:

Dictation Name: RR161CH158

Year: 1980s and 1990s

Dr. R. J. Rushdoony, RR161CH158, The National Debt, from the Easy Chair, excellent colloquies on various subjects.

[ Rushdoony ] This is R. J. Rushdoony, Easy Chair number 268, June 9, 1992.

This evening Otto Scott, Douglas Murray and I will discuss now the national debt, a very big subject. As a matter of fact, it is beyond one’s imagination to grasp.

Economist Murray Rothbart says the national debt on budget and off budget is 20 trillion dollars. So this means we are bankrupt.

Douglas, would you like to make a general introduction to the subject?

[ Murray ] Well, it is right that nobody understands it. Otherwise people would do something about it. The national debt is never explained in practical terms that the average person really understands as to how it affects their day to day lives. And that seems to be the crux of the problem. That is why the politicians get away with this ever expanding national debt, because people don’t truly understand what the ... what is going to happen to them down the line. It is four trillion dollars now of the on... on the books part of it.

[ Rushdoony ] Yes.

[ Scott ] The current deficit or the rate of increase is about 350 to 400 billion. By the end of this fiscal year it will be 500 billion and the on budget portion of the debt at the current rate of expansion will be 20 trillion. So obviously something has to break. It can’t go on forever, because other countries are not going to accept our currency because it is going to... they... it is going to be worthless.

So perhaps since no one understands it... how it affects the lives of day ... day to day ordinary people, we should try to approach it initially from that point of view. There have been attempts by economists to explain it, but that puts people to sleep. There has been attempts by pundits to explain the national debt, by example, such as if you piled one dollar bills on top of each other that it would form a ... a line from here to Mars, but that still for the average person that ... that doesn’t do anything for them. That doesn’t strike them where they live. They don't see what is going to happen, where am I going to be a year from now or five years from now if the debt keeps expanding. So let’s tackle it.

[ Scott ] Well, simply put if you buy a treasury bond you have lent money to the government and the bond is supposed to pay interest to you for a certain number of specified years. If the government puts out the whole series of bonds these bonds are purchased either by banks or investment groups or by individuals and the government then has to pay in interest on all this paper to whoever purchased the bonds. If you add all the bonds together, the treasury bonds of one form or another and there is all kinds of them that cover mortgages and they cover all... all areas of activity, all of which is used by the government to borrow money both from other governments, from banks, from Wall Street and from individuals, if the amount of that paper keeps increasing, the government bonds keep increasing then what is called the interest on those bonds is the 450 billion dollars that you just mentioned. We have 450 billion dollars a year going out in interest to all the groups that purchased paper, financial instruments from the government of the United States. That is the national debt.

Now when you ... when you issue a bond you issue it for a... for a specified number of years at a specified rate of interest. And the rate of interest at this point on government paper is lower than it has been for a number of years, but people are still holding bond when the interest was almost 20 percent which they purchased under the Carter administration, which have not yet exhausted their life. So anywhere from 20 percent to four and a half percent today is the amount of interest which is pouring ... has to pour out of the treasury. But in order to pay this interest the government has to put out more paper each time. It is borrowing money, in other words and not in order to pay the principle at the end of the road, but the interest year by year. At the end of the road you cash the whole bond in and you get the face value of the bond. The interest that you accumulated on the way is your profit. So every year there is a certain number of bonds that are cashed in or turned over as the phrase is and the government puts out new bonds in order to pay the old bonds and in order to pay the interest.

So you can see that the national debt feeds upon itself. This is where Murray Rothbart gets his 20 trillion. He is adding up with the bonds are worth when they are redeemed as well as what they are worth on route to redemption.

Now these are sums. This is a method which governments have used for several hundred years and one of the... one of the greatest examples, of course, there is a lot more recent examples, but the great example for most people was the government of France in the 18th century. The government of France borrowed money in order to go to war against Great Britain on several occasions. It borrowed more money from the banks of Antwerp and Rotterdam and Amsterdam and London and so forth in order to help the American colonies and it finally reached the point where it had put out so many bonds that the banks refused to buy any more. And that was when the government went bankrupt and that is when they had to call the estates general together, because the only way a government can get money when it is bankrupt is to increase the taxes.

Now we are at the point now where this has to be done. Now in the interim some very clever people in Washington have figured out a way around this. They are shifting the load, the tax load from the government to private business. Private business is to pay for the health program. Private business is to pay for the pensions. Private industry is to pay for all the expenses of government and then the government will say, we have... we are going to reduce your taxes.

[ Murray ] And they want them...

[ Rushdoony ] Yes...

[multiple voices]

[ Scott ] Yes.

[ Murray ] ... environmental programs.

[ Scott ] Right.

[ Rushdoony ] I talked a few days ago to a very fine man who has been a very faithful and generous supporter of Chalcedon over the years and he has held executive positions. Eighteen months ago he lost his job because the economy had destroyed his ... the group he was working for.

Well, because the healthcare and pension load is shifted on to industry, he found that the only way any group could take him was to pay the difference that would have made up for his not being, say, 25 years old.

So he said, “Who is going to make up the differences in industry and catch me up?” So he said, “I find that as a white male of 50, I am unemployable. It is too high a price for industry to pay to take me on.”

[ Scott ] The government has mandated these payments.

[ Rushdoony ] Yes. And he said they could be compelled to take me on if I were black or a female.

[ Scott ] Yes.

[ Rushdoony ] But he said a white Christian male... he said at the unemployment office there was a very helpful woman who told him very frankly she said, “The thing for you to do is to run out on your wife and then I can get a job for her.”

[ Murray ] The... {?} contractor...

[ Scott ] That is a great solution.

[ Rushdoony ] Yes.

[ Murray ] This... this... this health care thing really is a vicious anti family piece of legislation and illustrate this. A local contractor told me that he cannot afford to hire a married male under 34 or over 34 years old. He has to get virtually kids right out of school and ... and use them in his business for five to eight years and then he has to cut them adrift otherwise he can’t keep them employed. He cannot afford the health care insurance.

[ Scott ] Well... well, let’s go back to the government debentures, the government obligations. Fannie Mae and Freddie Mae, to government agencies have accepted the mortgages of many millions of people at varying rates of interest. Now they forced a lot of this onto the banks, the guarantees... they guarantee the banks so the banks have picked up the mortgage. If the mortgages fall below a certain level, the level of return, let us say, and they go into a state of debit, the people will not pay the mortgage, because it isn’t worth what they are living in. The Fannie Mae and Freddie Mae will go belly up just like the savings and loan guarantees because there isn’t that much money in the country no matter much money we have.

One of the things that has been saving the government from the crunch is the fact that the overseas dollars are not being returned to this economy. They are being locked up or they are being used as currency by other countries. And this is the Euro dollars, dollars they use in Argentina. Dollars are being used in Russia. You wonder where they got all the dollars in Russia, where they got them.

But in any event what we have floated here is a sort of a ponzi scheme. We have borrowed from the world over and over and up and up. And the whole world now is our creditor. And if we fall they all fall with us.

[ Rushdoony ] Yes.

[ Murray ] Well, if an individual uses this system that the government uses they go to prison.

[ Scott ] Oh, yes.

[ Rushdoony ] Yes.

[ Murray ] What we need is a special prosecutor to go after the government.

[ Rushdoony ] Well....

[ Murray ] Over this ponzi scheme.

[ Rushdoony ] Whenever you have a debt, someone pays.

[ Scott ] Oh, yes.

[ Rushdoony ] Someone always pays. If the debtor doesn’t pay then the lender does and sometimes when the government is involved it is an innocent third party who pays. To illustrate—and I can think of several cases of this immediately—of people who called and talked to me and others as well. Let’s assume there is someone in New York. His wife is in process of getting a divorce and she comes to California. She gets a job here. He has been a ... a man who has made money but has not paid his taxes properly so the IRS cannot get it out of him. He has got it all concealed or hidden. They can come and seize her meager earnings. Or they can take what belongs to her family and which she has inherited that she might have inherited while they were still married. This is the brutality of the situation.

Now more than one country in this century has defaulted, has refused to pay its debts and has simply said we don’t owe anyone anything, but what happens is that someone loses.

[ Murray ] Yeah, but you notice the... the common denominator element is that it is anti family, anti...

[ Rushdoony ] Yes.

[ Murray ] ...traditional values or Christian values.

[ Rushdoony ] Well, what they will do, you see, they seize everybody’s bank accounts. This has been done repeatedly, their insurance money, their pension funds, everything.

[ Scott ] Well, look what Gorbachev did. He pulled in all the 50 pound... all the 50 rubles.

[ Rushdoony ] Yes.

[ Scott ] He declared them worthless overnight. So all the savings of all those people were overnight declared of no value.

[ Rushdoony ] Stalin did that once earlier.

[ Scott ] No, of course, defaulting... Philip II defaulted three times in the... in the course of his reign. Defaulting is the oldest thing that a government does. The other oldest thing that they do is to debase the currency or inflate, whatever you call it. What is really at stake here when you have a government that cannot meet its obligations without raiding the private sector is that the government is eating up the seed capital of the nation and forcing worthless paper onto the banks. This is why the banks are in trouble.

Our banks were not so stupid as to lend all this money overseas with the expectation that it would be paid. They knew that it wouldn’t. They were pressed by Washington, DC into making those loans because the governments said, “We guarantee them and we insist that you make them.”

[ Murray ] So they nationalized the banks.

[ Scott ] Yes, in effect, they have nationalized the banks. They have also nationalized the auditors and they are in the process of trying to nationalize the attorneys.

[ Rushdoony ] Back in the 1930s for every teaching job that opened in Los Angeles, there were as many as 5000 applicants from all over the West. The pay was regarded as sensational, 150 dollars a month.

[ Scott ] Oh, that was a great, nice job.

[ Rushdoony ] Yes. And it was towards the end of the 30s, I think when the 30s ended my father at no small sacrifice provided me with a gift of 100 dollar bond. Now that when 150 was good pay was big money. It was early in the 50s I began to realize that 100 dollar bond was not worth as much anymore. So I cashed it in immediately.

Now if someone had collected quite a few 100 dollar bonds and put them away, as some people did, consider what in time they would have found. They had thrown their money down the drain. They had been robbed.

[ Murray ] Well, the used to promote bonds as a means of funding college education. And it was dishonest all the way down the line, because by the time your kids grew up the money wouldn’t cover the education.

[ Rushdoony ] That is right.

[ Scott ] Well, this is what is happening to all the people who have treasury bonds. My mother went through that. She bought 80,000 dollars worth of war bonds in 1942 at three and a half... three and a half percent. When she died in 1982 we cashed them in. We didn’t know she had them. And do you know, she never even cashed them in.

[ Murray ] And yet today you can ... there are dozens of these investment newsletters and the... the quotes more conservative ones, the ones who feel that they are safe investments say that treasury paper is the place to be...

[ Scott ] Oh, yes.

[ Murray ] ... because of the full faith and credit of the...

[ Scott ] Final security...

[ Murray ] ... of the U S government.

[ Scott ] Final security. But the pension funds that have gone into it... now, of course, there is a great deal of outcry about what corporations are doing with the pension funds. It is… the corporation’s duty is to earn money with a pension fund. You understand that if the pension fund is left untouched it is not in cash. It is always in the form of stocks or bonds. And they have to earn money with the pension funds in order to keep up the payments of the pension, because if they don’t, they won’t be able to continue those payments.

Well, when you have continuing inflation, which we have and when you have a stock market which is out of control and totally irrational, what are you going to do with your pension funds? A lot of companies went into what we call junk bonds, because the junk bonds had a higher yield. Now it is true that they were more speculative because if they... they had to give you more interest than something that was a blue chip bond. But if you wanted to bring in enough money to keep your pension funds going, you had to go into these more speculative bonds. When the government moved in against the junk bond field, what they called the junk bond, they forced the banks to sell them overnight. That is what caused the S and L collapse. And that is what caused the banks to get into trouble.

So we have the government manipulating on all sides of the fence.

[ Murray ] Well, you know, the... the junk bond thing was predicated on an expanding economy.

[ Scott ] Yes.

[ Murray ] Which they could convince people of during the 80s.

[ Scott ] Yes. That is right because the economy was expanding. So what comes... what comes next in this discussion? The crash. This ... we have here a situation very similar to the French civilization... French situation in the close of the 18th century. We have a rich country. We have what amounts to a rich populous and we have an increasingly impoverished government which is drawing its riches from the people in various and various forms. It is closing down the investment market in one hand with its free trade policies and also with its EPA policies and so forth and at the same time it is dragging in all the money it can by putting out more and more bond issues. We would call them junk bonds if we were telling the truth.

So in the case of France it led to revolution. Here what do you suppose happened? We have no idea. But we know that we can’t continue.

[ Rushdoony ] Yes. And the most horrifying fact is neither Bush nor Clinton nor Perot...

[ Scott ] Is discussing it.

[ Rushdoony ] Yes or seems to be even remotely aware of it.

[ Scott ] They are not talking about it. They are not telling the people the situation. And I don’t... I am not even sure they understand the situation.

[ Rushdoony ] No, I don’t think they do. They act as though all that is necessary is for Congress to pass some kind of legislation and it will solve the problem.

[ Murray ] Well, I often think that they really know what is coming, but they are... they are hoping it won’t happen on their watch.

And the Congress, you know, it is kind of interesting to me that Congress has become more corrupt as far as grabbing what they can for themselves. And that, to me, indicates that the game is about up because they see it coming and they are going to get what they can get while they can get it.

[ Scott ] Well, it is... it is like saying just give me a higher seat in the lifeboat.

[ Murray ] Well, you know, the choices are kind of limited. You can have an inflationary depression where the government prints an unending stream of money to the point where nobody will accept it or you can have a deflationary depression which, I think Howard Rupp described once as choice between a car going over a cliff with the foot on the accelerator or the foot on the brake, but you are going over the cliff one way or there other.

[ Scott ] Well, supposed they were to revalue gold. I am positive that they are sitting on the price of gold.

[ Rushdoony ] Yes.

[ Scott ] The central banks are buying gold and swapping gold all the time. But none of those large transactions ever seem to affect the price of gold in the marketplace. They are not even counted as existing. So we have an artificial price of gold. But suppose that the government gold now is down to 338, down to. I remember when 35 dollars for 25 or 30 years...

[ Murray ] They call it the London fix, by the way.

[ Scott ] It is a London fix. They... they fix it every morning before breakfast, because it will turn the... you know, they throw their food up if they wait after breakfast. At any rate, if they were to say, “Ok, American gold is now worth x dollars,” the gold that we presumably have in the government, suddenly there would be... and if they fixed it to the dollar there would be some sort of yardstick where you could begin to make economic sense.

As it is, you have to read the paper every day to find out what the dollar is worth. Now this is l like changing the inch or the yard or the mile, the dimensions of these big... and running an engineering company. I mean, you can’t do it. If... if you are... if you are prime unit of measurement fluctuates then you cannot have a stable economic structure.

[ Murray ] Well there is a ... there is a big contradiction floating out there. A lot of the politicians and some running for president seem to feel that the way to pay off the national debt is to earn your way out of it by expanding the economy. But if, as forecast in ... by... within the next five years the government will consume 90 percent or more of the total credit available. Now when that happens you can’t expand an economy because nobody can borrow any money to start a business.

[ Rushdoony ] Yes.

[ Murray ] ...when you are in competition with they government to get at it.

[ Scott ] Almost every day I get checks and notices from credit card companies offering me more credit. I am worth more on paper now than I have ever been worth in my life. If I were to draw upon it I don’t know how I would ever pay it back.

[ Murray ] Well, they are counting on peoples still having the mindset that we are living in an inflationary economy.

[ Scott ] No.

[ Murray ] But it is obviously beginning to deflate.

[ Rushdoony ] I think the economy is deflating, but not the currency.

[ Murray ] That’s true. Yeah.

[ Rushdoony ] The money is inflating.

[multiple voices]

[ Murray ] Yeah, the ... the money or the availability of money maintains the perception that the lenders want to maintain.

[ Scott ] So we have profits... rising profits and ... and falling productivity. Now in the end what are we going to do for making our goods to keep ourselves alive? I must bought a chair, an office chair. My old one finally wore out. It was made in China.

And practically all my clothes come from some other part of the world.

[ Murray ] It is hard to find anything that is made here anymore.

[ Rushdoony ] I ...

[ Scott ] Yes.

[ Rushdoony ] ...was moved to remember something today. During the Carter years when we had dramatic inflation I was talking to an accountant who said that he was donating his services freely making out the returns of a number of people who had retired when Gerald Ford was president and thought they had a good pension. But with the march of inflation so dramatically under Carter, they couldn’t make ends meet. And they were having to skimp.

Well, everything doubled in the 80s. So consider what that did. And in the 90s it is going to be even worse.

[ Scott ] Well, these... these people a couple of decades ago could sell their house.

[ Rushdoony ] Yes.

[ Scott ] Because in most cases they owned their house by the time they retired. They could sell their house at a fairly decent profit and move into something smaller, but what happens if you can’t sell the house.

[ Murray ] Or the value drops.

[ Scott ] Well, the value drops. You own the house, but your taxes keep going up.

[ Rushdoony ] Yes.

[ Scott ] Your county taxes keep going up and we have also seen that case which I will never forget, Rush, about that county in Colorado that went bankrupt and suddenly they hit the house owners with 20 and 30,000 dollar ...

[ Rushdoony ] Yes.

[ Scott ] ...bills in order to pay the bills of the county.

[ Rushdoony ] And never gave us the follow up on that story.

[ Scott ] And we never found out what happened after that.

[ Rushdoony ] No.

[ Scott ] But, you know, the county is capable of doing that. It has the legal authority to do it.

[ Rushdoony ] Yes.

[multiple voices]

[ Rushdoony ] And people who vote for bond issues in their county don’t realize that that can happen to them.

[ Scott ] If the bond issue collapses.

[ Rushdoony ] Yes. Well, we will continue with this. Otto, you were going to say something about repudiation of debt.

[ Scott ] Yes. Dorothy reports that Murray Rothbart says that is the only way we an extricate ourselves from this debacle. I recall that various countries have done this. And, of course, it destroys their international credit for generations to come. Latin American countries have gone through repudiation when there is a change of government. The Soviet Union, of course, repudiated all the czarist debts, I mean, as a result of revolution or internal overthrow or whatever. So you are then barred from the international markets for an indefinite period of time. But don't forget in this instance much of our internal debt is owed to the people. So the repudiation of our... of our debt would wipe out all kinds of pensioners and all kinds of American investors.

[ Rushdoony ] Rothbart is aware of that and he says we are going to repudiate and he feels that what we should work for is to get the federal government to sell off its assets so that it will pay off the national debt by selling off the national forests, the national parks.

[ Scott ] To private interests.

[ Rushdoony ] To private interests. And he feels that since the federal government has accumulated such vast properties in all 50 states selling these off will more than take care of the national debt.

[ Scott ] Well, in that case he parallels what Peter Ball, a retired investment banker I know in San Diego had told me 20 years ago, that we had... the government has enough assets to match its debt, if it would turn ... turn them loose. But, of course, here you would have every one of these agencies which make a living monitoring the use of these assets out of business. What we are really talking about when it comes right down to the crunch would be a reorganization of our government.

Now in the previous tape we talked about a new constitution because that is what Mr. Perot wants. But I don’t think a new constitution is necessary. I think the old constitution should be restored.

[ Rushdoony ] Yes.

[ Scott ] Which prevented the government from owning all these assets.

[ Murray ] Originally they were only allowed, what, 10 square miles?

[ Scott ] They were only allowed post offices and forts.

[ Rushdoony ] Yes and ...

[ Murray ] And an area 10 miles square for the...

[ Rushdoony ] ...military bases.

[ Murray ] ...for government buildings.

[ Rushdoony ] Yes. The Constitution forbade the ownership by the federal government in the states of anything more that that.

[ Scott ] I have never forgotten your talk about the king’s property, the deer parks.

[ Rushdoony ] Yes.

[ Scott ] Which was put in by the Norman, William the Conqueror.

[ Rushdoony ] Yes.

[ Scott ] Who took over all the free lands of England and called them crown properties.

[ Rushdoony ] The...

[ Scott ] This... this government has done the same thing.

[ Rushdoony ] Yes.

[ Murray ] Well, you know spotted owl parks and snail darter parks and...

[ Scott ] They have used the sovereign authority the way an absolute king used to do it.

[ Murray ] By decree.

[ Scott ] By decree. They gave themselves the authority and a cowardly court which is under the thumb of Congress has permitted them to do it.

[ Rushdoony ] One of the things that I think we need to be mindful of is this. There has never been an advance in the history of civilization that has not been preceded by a greater productivity in farming. And whenever productivity in farming has for any reason been throttled, civilization nose dives, because we are tied to the land. We are tied to food. And what we are seeing all of the world is a steady throttling of productivity in agriculture.

The Soviet Union is a classic example of what happens when that takes place and they destroyed their own future when they did it. The Ukraine was once the bread basket of Europe under the czars and it became like all of Russia, a poor area. Stalin forcibly starved six to 13 million peasants to break the backbone of the resistance of the farmers.

[ Scott ] There is some argument today that he didn’t intend to starve them all. He really just intended to reform the agricultural situation. And in the process he starved them. Now I... I don’t know whether that is considered an excuse or not.

[ Murray ] It sounds like revisionism to me.

[ Scott ] It is revisionism, because you know the Marxists have not yet given up at all. They have not surrendered.

[ Rushdoony ] No. I have somewhere in my library Stalin’s speech when the enforced collectivization and the famine took place in the 30s. And he fully recognized what had happened, but he blamed it on two eager underlings, as though any underling would have dared do anything like that without direct orders from him.

[ Scott ] Well, you are, I think hitting on a very central nerve when you talk about curtailing production as a result of governmental regulations whether it is... of course, all... all wealth comes from the land. Everything. All our commodities and everything that we manufacture comes ultimately from the land.

But what worked in certain periods of national growth doesn’t always work if continued beyond the point of diminishing returns. A free trade never worked and the South is a pretty good example of the argument that it {?} but it any event every great power that has gone into finance at the expense of production has destroyed itself.

[ Rushdoony ] Yes. Well, this is exactly what we have done as far as industry is concerned and what we are in process of doing insofar as farming is concerned. Because we had a measure on the ballot that in the last election would have wiped out farming here, because it would have barred anything that they felt was not natural. It would have barred certain kinds of chemicals and pesticides.

[ Scott ] Oh, I see. They... they... they are unnatural.

[ Rushdoony ] Yes. And it would have killed the most productive area it the world, California farming.

[ Scott ] Well, you know, of course, that the L A riots hit the largest industrial concentration...

[ Rushdoony ] Yes.

[ Scott ] ...in the country that remains...

[ Murray ] {?}

[ Scott ] Yes. It was our last large industrial concentration. It was a mass of small industries.

[ Rushdoony ] Yes.

[ Scott ] And those riots were a heavy blow to the economy of the United States. Not one newspaper mentioned that aspect.

[ Rushdoony ] Well...

[ Scott ] And the gods will destroy their first {?}.

[ Rushdoony ] Yes, yes. We have seen every great movement forward marked first by productivity in agriculture and then a productivity in industry. Man is food based.

[ Scott ] Well, ... well, everything is...

[ Rushdoony ] ...in his daily life.

[ Scott ] Everything is based on work. Without work what have you got?

[ Rushdoony ] Yes.

[ Scott ] And it is interesting to see the decline from generation to generation, from the men who built factories and turned out goods and operated farms to the sons who went into the professions.

[ Rushdoony ] Yes.

[ Scott ] Now professions don't keep us alive. The law doesn’t keep us alive. And these caring professions, as they call them, the social therapists, are saddling us with expenses that bankrupt us if we get sick. And everyone gets sick.

[ Murray ] In other words, we made a mistake generationally when we sent our kids to college.

[ Scott ] Well, I am sorry to say we did. We ... we had a great American.... we substituted schooling for aristocracy. And the aristocrats were never notable for their schooling.

[ Rushdoony ] Craig Flanagan has a friend in Los Angeles, now retired, who lived in Beverly Hills. He was a Scot, a hard headed thrifty man. And he said to his friends, “If your boys are ready to work and to work hard, I can ensure that they get rich. But they are going to have to forget about college and come with me. I will teach them how.”

No takers.

[ Scott ] No takers.

[ Rushdoony ] No takers. Well, he has demonstrated again and again that he can do it. It just takes a little entrepreneurial spirit.

[ Scott ] Well, we have now a problem because we have moved into the mandarin era.

[ Rushdoony ] Yes.

[ Scott ] The mandarins were give official positions because of their learning. And you can’t really get very far in government without the entry of the degree and so forth. John Major seems to have survived in England without one, but there actually is more upward mobility in Britain than there is in the United States today. We were once famous for allowing the common man to rise to his natural level. That is no longer true.

[ Murray ] That is the reason people used to come here. Now they come to here to collect welfare.

[ Scott ] Well, they come to share in the riches of the country. But they will flee in equal numbers if we get into trouble. Economic settlers are not the best.

[ Murray ] Now but as the L A riots showed they will destroy the place before they leave town.

[ Scott ] I was told by a man in Pittsburgh who has a son in L A that his son saw the riots and he said the media misled us because it only showed the street people. He said actually people of all levels joined in the looting. He said men in three piece suits, whole families drove up in big automobiles to take part I the stealing.

[ Murray ] Feeding frenzy. Well, that... the attorney generals reported that a third of the people arrested were illegal aliens.

[ Scott ] Well, that is adding to our internal debt, isn’t it?

[ Rushdoony ] Yes.

[ Scott ] Because we have to support many of these people.

[ Rushdoony ] And...

[ Scott ] And they don’t pay taxes.

[ Rushdoony ] We are to give them all... every kind of health insurance. We are to care for them. We cannot send them back. Our immigration service is hamstrung at every turn.

[ Murray ] Listen. It is an augmentation of foreign aid.

[ Rushdoony ] Yes.

[ Scott ] Mr. Perot wants to stop social security payments beyond a certain income level. And I said, “Does he plan to give back the money?”

[ Rushdoony ] Yes.

[ Scott ] And apparently that hasn’t occurred to him that this was a contract.

[ Rushdoony ] Yes.

[ Scott ] With the people who paid social security. I paid it from the time it was enacted.

[ Rushdoony ] Well, you are going to kiss goodbye most of it.

[ Scott ] I am sure.

[ Murray ] {?} Well Burkett talked about there is a 600 billion pool of money in the private retirement accounts and he thinks that the government is going to sweep that into social security when they get their back to the wall.

[ Rushdoony ] Yes. Of course they will.

[ Murray ] Well, it is...

[ Rushdoony ] When they get their back to the wall they are going to take everything you and I have if they can do it.

Well, I think we ought to look at the brighter side of it now for a while.

[ Murray ] There is one?

[ Rushdoony ] Well, I think the federal government is a dead duck. They are bankrupt so they are not going to clutter the landscape too long and the same goes for all the European countries, the far eastern countries and more. Japan is about the only solvent one. They don’t have a national debt.

[ Scott ] Well, they allowed the people savings.

[ Rushdoony ] Yes.

[ Scott ] Now our savings are every low because what we would ordinarily have saved has been taken away from us in taxes. And what is left is just about enough to keep us going.

[ Murray ] Now the Japanese didn’t intentionally keep their tax rate very low.

[ Scott ] They kept their tax rate low and they also exempted savings.

[ Murray ] Yeah.

[ Rushdoony ] We have exempted housing. What you put into a house.

[ Murray ] That is right.

[ Scott ] That is right.

[ Rushdoony ] So if you equate the two, the average American has saved as much ...

[ Scott ] In his house...

[ Rushdoony ] In his house as the Japanese have in the bank. The only difference is we are taxing the house.

[ Scott ] Yes.

[ Rushdoony ] And we are taxing it at a greater and greater rate across the country so we are striking at people’s savings there.

[ Murray ] It is becoming... it is getting to the point where it will be cheaper to rent than it will be to own a house. The... the... the deflation that is going on now which is we are seeing in the northeastern part of the country there are people back there who are abandoning homes that they put a lot of money into because the amount they own on the mortgage is more than the current market value of the house.

[ Scott ] Well, don’t forget Perot came out of nowhere and despite the fact that he has made some very wild statements about what he thinks he would do, he has rendered already a very valuable service in that he has rendered both the Republican Democratic parties hollow. And he has proven that they are hollow. He has also proven that Pat Buchanan also probed the conservative movement was hollow just by emerging.

Now once you break Humpty Dumpty, once the mystique is gone of the rulers, the governing elite and it is in the process of destroying its own mystique, then the game changes and all kinds of new individuals begin to appear, Perot being simple one of the first. Others will appear. I think that Perot has done Howie Philips a great unintended favor, because Howie is trying to put together a small intellectual party based upon Christian principles. And I think that no matter how this election goes, he says he is going to continue this for the rest of his life. He is going to have an alternative, an alternative, an intelligent alternative to the dementia that we may see.

So therefore I really am not ... I am more hopeful now than I was, let us say, six months ago, because once the gates of change swing open there is a fighting chance.

[ Rushdoony ] Yes. Well, I agree with you. I think what has happened this year shows that the Republicans and Democrats are bankrupt and people are increasingly ashamed of what they represent. I think that we are going to see that disillusionment increase.

I think, however, before the people expect too much from any leader that emerges they have got to demand more of themselves. The bankruptcy begins with the people. They have drifted from Christian faith. They have settled for a kind of minimal Christianity which is no Christianity at all. They are morally bankrupt. The overwhelming majority of church members as I have pointed out in the tape about a year ago, these are those who profess to be Bible believing. Don’t believe more than four of the 10 Commandments. So they are really bankrupt, morally bankrupt.

Now this has to change. I do believe a change is developing on the grass roots level. So I am encouraged. I think it is going not be grim for the rest of this decade, but thinks signs of a new country will emerge.

[ Scott ] Well, I heard from a fellow a couple of days ago who lives in Virginia who has been attending some religious gatherings of a fundamentalist nature and he said that when he began to attend them they were something like 40 or 50. He said now they are in the hundreds. And he said nobody seems to know it, but there is an awakening.

[ Rushdoony ] Yes. Well, the media would never acknowledge it.

[ Scott ] No. Of course not.

[ Rushdoony ] But it is very real. It is very real.

[ Murray ] Well, how do people survive in the meantime during this period? What do they... what practical measures can they take to try to minimize the pain?

[ Rushdoony ] I think they need to get out of debt. They need to have some gold and silver. They need to think in terms of a crisis that is developing. And they need, above all else, to deepen their spiritual roots.

[ Scott ] I the last Depression, the last great Depression of the 30s there were an awful lot of governmental activities were just quite simply ignored. There were an awful lot of people who helped each other . Almost everyone I knew that had a job had somebody living in a sleeping on the sofa at night...

[ Rushdoony ] Yes.

[ Scott ] ... who needed a job. There were ... in prohibition, you know, when the Depression started, I can’t tell you how many home brews were sold in private homes, how many house wives were making beer on the side. And there were all kinds of expedience going on.

[ Murray ] Nobody took baths.

[ Scott ] People took baths.

[ Murray ] Baths... bath tubs were full of this brew.

[ Scott ] Oh, no. They didn’t use it in bath tubs. They had regular barrels and so forth. In fact, there were stores that sold hops, remember?

[ Rushdoony ] Yes.

[ Scott ] And they sold stills.

[ Rushdoony ] Well, it is interesting, too, that crime dropped for the Depression. And people went back to church. Families doubled up, as Otto said. Every sofa had somebody sleeping on it.

[ Scott ] Even the movies got religious.

[ Rushdoony ] Yes, they did. Very definitely. It was a back to basics time.

[ Scott ] There are worse things than losing your money.

[ Rushdoony ] It was surprising, too, how many people had their power turned off and I only knew one person who was broken up and cried over it and she had been very wealthy. And she was a widow. Her oldest son had laid waste to everything. And she cried. But others took it in their stride.

[ Scott ] Well, what else can you do? I mean it is like war time.

[ Rushdoony ] Yes.

[ Scott ] You know, the suicide rate drops...

[ Rushdoony ] Yes.

[ Scott ] And there is a common cause and all the sudden the disparities in circumstances cease to have the exaggerated influence and status that they have in good times. All of a sudden nobody says if you are so smart why aren’t you rich, because nobody is rich any more. People...

[ Rushdoony ] There was another aspect to the Depression. People enjoyed laughing. That was a time when the great radio comics developed, Jack Benny, Fred Allen and a great many others.

[ Scott ] It was amazing. They had these comedy movies.

[ Rushdoony ] Yes.

[ Scott ] ...about wealthy people and you would have thought that the audience would throw stones at the screen. They didn’t.

[ Rushdoony ] No.

[ Scott ] They thought it was just marvelous.

[ Murray ] I think George Burns plans to go through this whole next cycle.

[ Scott ] He... he very well may.

[ Rushdoony ] Yes.

[ Scott ] I am ... I am surprised that he hasn’t issued his secret of longevity.

[ Rushdoony ] Well, he says he is waiting to get to 100 because after 100 the death rate is very low. But George Burns and Gracie Allen were one among many, many comedians of that era that it was quite a time. In fact, the most popular newspaper commentator was Will Rogers, a comedian.

[ Scott ] That is true. He was more of a wit than a comedian.

[ Rushdoony ] Yes.

[ Scott ] But what we are saying is that life goes on and that the importance that is attached to material circumstances has been greatly exaggerated. The government will suffer more than the people unless they pull their socks off.

[ Rushdoony ] Yes.

[ Scott ] Because we have seen the disillusion of the political structure of the Soviet Union, the world’s largest empire just in the last couple of years. And why these people think they are going to survive a debacle I don’t know.

[ Rushdoony ] Well our time is nearly up. I would like to add one more think. I mentioned Will Rogers and it brought to mind something he said about the media. They still quote him to the effect that I all I know is what I read in the papers, but they don’t quote what he said in another time. All I know is what I don’t read in the papers, which is closer to the truth.

[ Scott ] Well, it was a great put down of people who got everything they knew from the papers.

[ Rushdoony ] Yes.

[ Scott ] I mean it is like Lincoln’s comment about the common man. He said, “God must have loved him. He made so many of them.” And I never thought of that as a complement for the common man.

[ Rushdoony ] Well, I think our time is over. Thank you all for listening and God bless you.

[ Voice ] Authorized by the Chalcedon Foundation. Archived by the Mount Olive Tape Library. Digitized by ChristRules.com.