From the Easy Chair

The Economy & What to do about It

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 180-214

Genre: Speech

Track:

Dictation Name: RR161G14

Year: 1980s and 1990s

Dr. R. J. Rushdoony, RR161G14, The Economy & What to do about It, from the Easy Chair, excellent colloquies on various subjects.

[ Rushdoony ] This is R. J. Rushdoony, Easy Chair number 59, October 18, 1983.

Well, I got that out without any errors. We ... are all of us a bit on the weary side because we have been having a ball here with several guests talking into the far hours of the night and all day long and settling all the worlds problems, maybe.

We have happy to have with us this morning John Stafford whom we had a while back for two sessions and also Clint Miller who handles all our Christian Reconstruction work in the Pacific Northwest.

[ Miller ] Along with my wife Elizabeth.

[ Rushdoony ] And Elizabeth, of course, But we are going to ask some questions about economics of John Stafford. John recently resigned as the chief administrative judge of the department of interior courts. His background is in economics and since we are at a critical point economically I think it is important to deal with some of the indicators here.

John, let’s begin with the price of gold which, at this moment, is a little below 400. Let me add, by the way that when this gets out about six weeks from now things may have happened, but we have you here now so we want to ask you the question about the situation with regard to gold.

[ Stafford ] Well, Rush, one of the nice things about biblical understandings and foundations, as you often point out, as found, for instance, in the 127th Psalm, “Unless the Lord buildeth the house, they labor in vain who build it.” And most of the people out there are laboring in vain because they don't trust God. Those of us who do, I think, have a tremendous advantage over everyone else, because we are not surprised by the, quote, unexpected, unquote. And so, again, I think the things that we talk about today will have applicability six weeks from now when the tape comes out. That is one of the nice things...

[ Rushdoony ] Yes.

[ Stafford ] ... about being based the way we are soundly based. And, as Jesus said, if you, of course, build your house on a foundation of stone, not on stand. So when you have that, really, contrary to what you read I the daily press and the financial press so often you ... we don’t have the problem of that the economists often have where they are quoted as economists surprised by latest unexpected development in GNP growth or interest rates or anything and everything else. I think that economics is not a mystery. It is a product of basic human nature, flawed as it may, and... but still we are children of God. And so that if you correctly understand biblical principles you can foresee... I hate to use that word. I want to be careful using that word, but foresee future events in terms of the logical consequences of what is going on today. So if you make an accurate assessment of the factual situation, a realistic assessment you can make reasonable projections from that based on sound biblical principles.

[ Rushdoony ] Well, right now we are more than ever pouring money down every statist rat hole all over the world.

[ Stafford ] Precisely.

[ Rushdoony ] Instead of having learned from all of that debt, we are trying to throw more money away. We are told that inflation is being beaten but when we go to the grocery store we get a different story.

[ Stafford ] Right.

[ Rushdoony ] Now given these indications of what is happening to our money at the stores and our money in Congress, gold should be going up.

[ Stafford ] Well, it should be except for a number of factors. But before, again, getting directly to gold, because, I think, really the principles are more important than trying to make short term guesses about what the price is going to do. I think we are talking about at least two themes related to what you have just suggested. One is embarrassment and one is reality. The reality, as far as the inflation rate, at least according to the {?} group of polls and... and market research data that they do out of... I think it is Media, Pennsylvania, show that the real inflation rate is about 11.6 percent for this year visa what the government tells us which is that the CPI is around four and a half or five percent. And I see that the establishment economists such as Otto Eckstein of Data Resources—I call him crazy Wally Heller, the well known economist who has been associated with the Neo Keynesian way of looking at things for many years—have both in recent weeks told us that inflation rates were going to be very low, four or five percent and Otto Eckstein, for instance, was quoted as saying recently that inflation was dead in our lifetime.

Well, this is the most utter nonsense that I have ever heard, but it is... it is not only a lack of understanding on their part. It also relates, I think, to a ... a deliberate policy on the part of the government and those people such as those two economists who are part and parcel of if not the government directly, at least the government indirectly. Their interests coincide with those of the government.

So the American people, again, are being ill-lead and mislead into believing something which is other than the truth. And the truth is that inflation is not dead and that, in anything the, what I call the currency depreciation process and policy has been continued and if... and, as a matte of fact, and, as a matter of fact, is accelerating. And this can be seen clearly, for instance, from the data supplied by the federal reserve bank of Saint Louis which, at least in the past, even though it was monetarist, I refer to as the only honest federal reserve branch bank. Unfortunately, even there I am greatly concerned because Lawrence K. Roos, R O O S, the former president of that bank has retired and I wouldn’t be surprised now to see an exodus of the kinds of people who ant to put out honest data and over a period of time I would expect that that would be another source of good information that we would be losing.

So, but even looking at those statistics you will find—and it was a little bit of a flap for a week in the paper about it—that the federal reserve M1 targets, for instance, were being grossly exceeded because contrary to everything that Paul Volker had been saying in recent months the federal reserve has been pumping up the money supply at the highest historical rates ever since the history of the federal reserve. In other words, since around 1913.

To cover that up and to try to mislead people into buying bonds to help finance the federal budget deficit they have decided to just change the base to a higher level. So the percentages then look better if you change the base. That is in the money supply area.

This is very similar to what they have been doing for some time with the consumer price index. They start with a base of 100 as they did in 1967, but in the past the pattern has been that any time it got up to around 300 showing that the currency had been depreciated in terms of purchasing power to one third of its previous value, then they just changed the base. So I am expecting, frankly, that any time now the government will come out and say, “Well, for this purpose and that purpose...” And the will give you a bunch of phony excuses and reasons, that we now are going to, let’s say, a 1976 base and we are going to call that 100 and then, you know, things won’t look as bad. And also I think one of the points that {?} was making that the components that he uses to make up the {?} inflation index are based on real things that real people buy rather than the semi phony components that make up the government’s consumer price index. And just as you were suggesting, Rush, if you... you know, if you go to the store, what has gone down in price? I ... I can hardly think of anything that costs less today than it did a year ago. But the public is being deliberately brainwashed into thinking that inflation is under control, partly to help the government finance its huge budget deficit by inducing people to purchase government bonds, the same thing on the municipal level and then also to help the banks from being even more obviously insolvent because a lot of money has gone into the banks in the form of huge deposit increases. And the government has facilitated that process by deregulation and very expensive advertising campaigns on the part of the banks to get people to put their money in the banks. Even the government now, I see, in a recent ad is coming out and talking about own that you can buy U S government bonds which they characterize as ... as risk free which is untrue and especially in terms of purchasing power. And also as having other characteristics, you know, which are not true, because of the variable rate aspect.

By the way, I think that is a signal that we are, in fact, going to see a huge resurgence in interest rates. But, again, for ... for as long as they can get away with it, they want to cover up the embarrassment of the fact that the situation is getting more and more out of control and so they are taking just about every route that they can conceive of to mislead people into thinking that things are all right and... and... and that the ball of wax will be held together, whereas, in fact, beneath the surface things are deteriorating at an accelerating rate.

[ Rushdoony ] Clint, do you have a question here?

[ Miller ] Well, John, yes. I just... to get back for a moment to this potential loss of ... of a decent data source in the form of the Saint Louis federal reserve bank. Is there... if that does, in fact, occur, is there another place where an interested layman can get decent data first hand?

[ Stafford ] Well without going into all the specifics and I don’t know really what you do in this respect, Rush, in Easy Chair series as far as giving plugs are concerned, but I would say at least in a general way that you would go to the private newsletter industry for your information. And there are a number of excellent services which you can’t necessarily read and immediately react and act upon without thinking and doing your own thinking and filtering, but will give you a much better view of reality and of, quote, truth, unquote, than you will find in the pop media or even from governmental statistics. And I have in mind the bank credit analyst. That is one that is off shore, not as far as I know part of the U S establishment and they do probably the best work of any one that I know of in the world in analyzing the U S domestic banking situation and the international monetary situation and the international banking situation.

But there are a number of sound services and, again, I could give a list of ones that I watch and take now and or would intend to take in the future at the time that I felt that it was necessary because of what you just were suggesting. I think of the next few weeks or months you can probably count on some of those statistics from the federal reserve bank of Saint Louis, but I would say by some time next year they will... will have become much less reliable than they have been in the past.

[ Rushdoony ] I terms of what you said earlier, John, that we are now seeing the highest inflation of money and the increase of credit in the history of the federal reserve, doesn't this point to hyper inflation?

[ Stafford ] Well, it think absolutely so. And I would recommend to anyone that they purchase a copy and you can buy it through the Foundation of Economic Education. I know the Cato Institute has reprinted it and others, Fiat Money Inflation in France by Andrew Dixon White who, I understand, was the first president of the Cornell University.

[ Rushdoony ] Yes.

[ Stafford ] And he did an historical study of the French Asignon inflation in the late 1700s which coincidentally—and this is the thing I care myself more about than really making money or the economic angles—is that every time you have had hyper inflation it has led to the rise of a dictator. So a careful study of that book and it is a very small book—I think it is less than 100 pages—would show you that as a hyper inflationary scenario develops and prices, interest rates, et cetera, start to rise at an exponential rate, which is just the flip side of a currency depreciating at a reverse exponential rate, if you want to call it that, that the are temporary periods where all seems well or under control. And I think basically what this happened—and we predicted this about five years ago which was about two years in advance—that the past, roughly, two and a half going on three years have been a ... a lull period. Actually it is less of a lull period in reality than, again, what you might have been propagandized into believing if you read, you know, the standard media and watch, you know, Dan Rather on CBS and especially the CBS Morning Show. I have gotten to the point where I watch it, go out of my way to watch it, but only for the same purpose that a Soviet citizens read Tass and Pravda, to find out what the latest party line is. And so really the... that is sort of the bottom line on it.

[ Rushdoony ] Well, one of the ugly facts about such a situation as this, John, behind such an inflation is the erosion of character, a faith. And what you see as inflation steps up is an erosion not only in money, but in law enforcement, in the very nature of the law so that it becomes no law at all.

In the restraints upon people so that you have a growing lawlessness, there is an inflation in evil in every area of life and thought.

[ Stafford ] Precisely. I have been saying to my investment clients for some time that currency depreciation—I like to use that term rather than inflation, because the word inflation has gotten meanings and connotations which really aren’t as accurate as they should be. But this is that the process of undermining the value of the basic accounting unit of society has the collateral effect of undermining all other values in society.

Now for those who like to control other people this has a lot of advantages. One of the essays which hopefully may become a book that I am working on is entitled, “A monopolization of America.” And this cuts right across the board not only in, say, the gold mining area where there used to be 14,000 gold and silver mines in the United States and then at least for a 35, 40 year period there were only about four or five. Automobile manufacturers started out with 20. Now we are down to four. Even now with the computer boom we are finding that there were 50 or 100 companies that were I the, say, personal computer business. IBM is coming in now and I think the are really going to blast all but a few others away. So both in the economic and business sectors as well the governmental sector you have monopolization. Well, monopolization coincides with Totalitarianism and Totalitarianism is just the flip side of ... of liberty and we are facing and I think a tremendous squeeze as Jim Davidson’s book points out in the book by that title, Be Squeezed. The squeeze is on the middle class and our potential not only potential for losing freedoms... we have been losing freedoms at a relatively steady rate but the rate of loss of freedom is... is picking up just as the price level and interest rates, I think, are about ready to start zooming again. And the time frame on that, it is hard to tell whether, say, gold starts up a day from now, a week from now, a month from now, three months from now or a year from now I think is less important than the realization that it will, in fact, move up and it will move up substantially and that this is one of the few ways that a person can protect himself by having a portion, at least, of his assets in gold or silver or gold and silver related assets. It is like buying an insurance policy. And so this, just as you say, not only leads to a ... a loss of freedom generally, but frankly could lead to the... real change in the nature of the American government. I think we are already into that process. Professor Larry Reid of Northwood Institute has come out with a piece entitled, “Are we going the way of Rome?” And I really see the possibility that we will lose our status as a constitutional republic. I see, even as I said in my previous ... our previous talk, the true potential for the rise of a dictator in the United States, a man on the white horse.

And what this means for Christians in particular and for the Church and the work of the Church is frightening and we have perfect examples of what it means in the Soviet Union and China are two places that come immediately to mind.

So we really are under attack and not only from the standpoint of the fact that there are certain people who have a deliberate purpose in gaining political and economic control this monopolization concept, but also because they are running scared as well. They have built their house on a foundation of sand and it is starting ... their ball of wax is starting not unravel and just as a wild animal backed in the corner will reach out and slash anyone who tries to get near to him, these people, I think, will do just about anything to try to keep their entities in business, to maintain the control that they have and primarily to cover up the embarrassment that they are already facing from having done the wrong thing and having created these horrible situations that we are faced with. So really I remember Mad magazine back in the 50s, not only was there the phrase that everybody remembers from Alfred E. Newman, you know, “What, me worry?” But the other thing that was always talked about was who is covering up? And really what we have is a massive cover up, this ... the Watergate thing was just sort of one little peak, one little indicator of the much more general, much broader much deeper, much more important cover up process that has been taking place in this country. And I think that process will accelerate. So you are going to your point, Clint, I think it will be increasingly more difficult to gain access to good information. I know in my own mind, in my own life I am taking the time to beef up my personal relationships with people who I think are, you know, quite excellent and know what they are doing, whether it is Chalcedon, whether it is Don Mc Ilvaey or R. E. Mc Master. There are a number of excellent people and I am just, you know beefing up my personal relationship, my professional relationship, my business relationship with these people, with these sorts of people. And I think we are... we are ... we have to do that, because we are not going to be able to get the information from ... from other sources.

[ Miller ] Good. John, you have mentioned currency depreciation. Could you address for a moment the strength or weakness of the dollar, what might... what might be happening in future? Obviously it is depreciating, but how will it compare, say, with other ... with foreign currencies.

[ Stafford ] Well, you know, I don’t like any currency, because I think that the ... the overview, world wide basis, is that all governments are in trouble because they have pursued the wrong policies, socialist, basically. And that being all in trouble they are all turning to the same remedy and that is throw more money at the problem, print more money. And when I say print I don’t only mean physical printing, but also now with computers it is just a matter of zeros. It is just a matter of moving decimal points. If the... for instance, Argentine peso was at one time one to one with the dollar it then depreciated to 10,000 to the dollar so they decided, well, we will do a 10,000 for one reverse conversion and we will call it the new peso. So they came out with a new peso and it was back to one. Well, the only problem with that is that then that peso was depreciated by a factor of 10,000 times and now they are coming out with the new, new peso.

So, you know, it... these people are, you know, scrambling to... to try to cover this up but the way that they feel that they can do it most easily and keep the people fooled for the longest period of time is by continuing to depreciate the currency at an accelerating rate. So, you know, the specific advice that I give to my clients is that they should convert as they are able more and more of their increasingly worthless paper in to increasingly worthful pieces of metal, especially precious metals, gold and silver. Now there are other inflation hedges and each is appropriate for different purposes at different times. I wouldn’t even be adverse to participating in the diamond market now. You... you know, in terms of bargaining very hard for ... of deals, because the other angle now is that I think we are going to be faced after the 84 election with a series of controls, whether it is wage and price controls, currency export controls... I could think of a number of different things.

I have never recommended to my clients until about a year and a half ago that there was any necessity, really, to go off shore with any part of their assets, because I felt the United States, you know, relative to the rest of the world was in the strongest position. And I would rather have my money in a small community bank where I knew the president and the chairman and maybe was even on the board myself and, you know, saw all these people at the local lion’s club on a regular basis and, you know, I was part of the community. So if necessary I could call the banker and he would get out of bed at two o'clock in the morning and at least let me into my safe deposit box if not my checking account if it came to that. But really I think now, especially with Thatcher in... in London that... and I am not, you know, saying everyone should go off shore, but for certain people I think it might be important to place a portion of their assets, say, in London and, say, Bermuda, some of these other tax shelter and haven operations. I have... have increasingly found difficulties with and I am not recommending them and I am certainly not recommending this in any way as a way to avoid any of your existing obligations under, let’s say, the tax laws. But just from the standpoint of having diversification, geographic diversification, and diversification of your assets because I do see these coming controls. I think that the U S government having made so many promises that it cannot keep relating to social security, relating to loan guarantees, relating to disaster aid, relating to military and civil service pension funds, let alone the national debt on budget and off budget, does not have the wherewithal to pay for it. So one way to do it is to expropriate capital. And to do that you have to have control of the capital. And to do that you have to keep it within the United States. And to do that you keep it from going off shore.

[ Miller ] One other thing. How do you feel about, say, accounts you have mentioned, putting some monies and diversifying a little bit, what about Swiss denom... or Swiss franc denominated accounts?

[ Stafford ] Well, you can’t get a Swiss franc denominated account in the United States.

[ Miller ] Right.

[ Stafford ] That has been one of the problems. So that means you have to go to Switzerland. I ... you know, I don’t necessarily have anything against Switzerland, but I have never recommended any of my people go to Switzerland, partly because if you go to Switzerland then you are going to be under scrutiny by the IRS because they are going to suspect you of something which, you know, hopefully isn’t true at all, that you are trying to evade taxes.

The other thing that bothers me, though, about Switzerland is that they are within a few hundred miles of 200 Russian divisions. And even if you had a very limited theater, tactical nuclear weapon exchange the way the prevailing winds are, the whole country could be dusted with radioactive material. So I... you know, I just cannot... I just have not been able to get excited about putting my money in Switzerland and that is one of the reasons I mentioned London and Bermuda in particular.

[ Rushdoony ] Well, we have already touched on it in what you have just said. We dealt with the negative side of protecting what one has. But ultimately what we have got to do is to reconquer. Now in the economic sphere, what can we as Christians do to exercise dominion and to bring back a sound order? Let’s begin with the presupposition that all this that you have said—and I—is going to happen and I have long believed it is. But it is the death throes of the humanistic order. So we have got to think of bringing into birth something else.

Now, do you want to talk about that, John?

[ Stafford ] Yes, this is extremely important, Rush, and why I am so interested in your ministry and the work here of the men and supporters and associates of Chalcedon, because you don’t just point out the problems, you actually are suggesting solutions.

I bought all of your books, but unfortunately I have only read all or part of about five of the 30 so far because of my especially the last year my double commitment of having the job with the interior department plus taking nearly a full year of seminary courses at night. So it became a five or six in the morning till midnight situation.

[ Rushdoony ] Well, in January when you are back for the month we will give you homework to do every day.

[ Stafford ] Ok. But still it has been amazing to me that ... that I almost seem to know even before I buy the book or as I put my hand on the book before even opening and looking at the table of contents that you and I are on the same track. So there are a number of things that can be done. I think the number one thing that you start with is for each and every one of us to get our spiritual life in order. And I do really love Dr. D. James Kennedy of Coral Ridge Presbyterian Church.

[ Rushdoony ] Yes.

[ Stafford ] I think he is a very sound man. And the way he describes it is getting right with God and that goes back to what I said some months ago. My favorite verse in Scripture, Proverbs three verses five and six. “Trust in the Lord and lean not on your own understanding. Walk in his ways and he will make your paths straight.”

So if each of us as an individual Christian gets our spiritual life straightened out then there are many benefits that will flow from that. That is the covenantal promise. And so if we got our relationship with our wife, with our children, our own economic house in order in terms of our own family budget and so forth and so on, then we will serve as examples. We will be the salt. We will be the preservers.

Now on the other hand we can be salt in terms of, you know, in the wounds of the world. Hopefully not in a way that would be offensive, but in a way that would bring attention to the ideas that we do have. And I think that the ideas that we do have would range right across the board.

I can think of a myriad of different things that could be done. Sticking of the moment to the personal investment situation, I think that it is extremely important and, again, Dr. Kennedy has mentioned this in a sermon. I have bought all of his printed sermons. I think three or 400 of them. Again, I haven't read them all but one of them dealt with the idea that really we who are of the reformed faith in particular, but believers generally should take a very positive view of the world. Man has been given dominion and as long as he does things for the glory of God and God’s way, that he will receive a temporal reward as well as the eternal reward. Now what is the purpose of receiving the temporal award? To advance, you know, God’s purposes. And Jesus said to us in the Great Commission, “Go forth and spread the gospel.” And so to the extent that we are successful, that we are profitable, we will have the wherewithal to back organizations which are engaged in promoting the Word in a true orthodox Christian fashion, not falling into error, but adhering to the faith. My favorite hymn along with Blessed Assurance is Faith of our Fathers. And really I just took a ... finished a course with Scott Hahn on creeds and councils of the early church. You wrote a book on this. As a matter of fact, that was the text book for the course. And, really, that has been the work of the Church besides its outreach and the salvation side of it is to guard against heresy and error and to maintain the integrity of the gospel message. Not only the message of Christ and just limiting it to the New Testament, but taking all of Scripture as a whole and integrating both the New and the Old Testament. So that is one thing we can do.

In the political area I think it is extremely important to use this wherewithal to advance the cause of... of good candidates for Congress, the Senate, the Presidency, but also on the local level. And I have grown increasingly interested in the concept, even though I have been personally associated for so long with the federal establishment. I am almost a creature of the federal establishment, having been raised in a military family, my dad being a retired marine corps colonel.

But really I keep coming back to the 10th Amendment and that basically says that only certain limited powers are given to the central, federal government to do only those things that only it can do such as external defense and the maintaining... the maintenance of internal control on an interstate basis. All else, really, should be ... should devolve and reside in the states and in the local municipalities. And then any other powers that the people do not want to go ... give to those governmental entities resides with the people. So, for instance, this whole privatization process I think is very important and I am talking about {?} a recent magazine and reason foundation about this. He is quite interested in your work, especially privatization of the school systems. And hopefully we will be able to build a relationship there. So I think as people speak up and say, “Hey, it is ridiculous to have a public school system financed by forced exactions which is taxation, especially property taxes and... and income taxes which a recent poll showed the American people hated the most those two forms of taxation.”

And so I would go so far as ... and I am working with Herb Titus on this and you and I have talk about it, this concept of defunding public education, the concept that no public monies should be raised and spent on public schools. And we might not go right out and, you know, just from a realistic political standpoint offend everyone by saying we are for overnight abolishment of public schools, but it think if we promote constructively the idea of .... of putting all schools on a tuition basis that both public and private schools will stand or fall based on the value that they are offering in services. And so I think that is a very, very important area of reconstruction and so forth and so on. It is one I know you are ... you have been the leader in and one that really is the core of ... of this whole scenario, because as the humanistic empire does fall apart, we who stand where we stand should be preparing, should be learning, should be educating ourselves and others so that we can stand ready, you know, phoenix like to come out of the ashes with a constructive positive program based on sound principles.

[ Rushdoony ] Well, we have discussed some very important areas, John. You have cited the essential character of a personal faith. We have dealt with ideas and that are biblically grounded and, of course, that is our work here. You have dealt with the impact of Christian action in the area of politics. And good sound political action and we have three very good friends of Chalcedon who are active precisely in the political arena. Of course, there is Howard Philips of Conservative Caucus. There is Bill Richardson with Gun Owners of America. And there is Paul Warich, Committee for a Free Congress. Three of the perhaps top political groups if not the three top political groups in the United States.

[ Stafford ] I agree.

[ Rushdoony ] All working with common emphasis and inessential agreement with us. So we are accomplishing something there and we have made a difference in Congress already. Then, as you went on to say, there is the Christian school movement. Let me add to that a very important thing and Clint and Elizabeth Miller were discussing this with us the other day, the home school movement which is growing so very rapidly and someone who was with us Sunday was telling us about a convention of home school peoples, I believe in Dallas. They filled an entire auditorium. That is a tremendous movement. So we are seeing the forces for Reconstruction developing very, very rapidly and I am glad you stress the fact. And I am reviewing this because I want everybody to get these points, because I feel they are so essential.

I believe that we do have a moral obligation to do what you suggested, to conserve and improve our assets.

[ Stafford ] That is right.

[ Rushdoony ] Because the Scripture says it is the Lord who gives us the power to get wealth.

[ Stafford ] Right.

[ Rushdoony ] And he does it for his purposes. So if we are growing in our material assets, we have an obligation to grow in them in order better to serve God wherever we are and to better fund his kingdom activities.

[ Stafford ] Absolutely. I am ... I am really.... I stand firmly in the anti non profit mentality mode, you know. I... you know, the concept of ... of being not profit oriented, I think, can lead to... can lead to defeatism. If we didn’t have the internal revenue code—and I am basically opposed to the federal income tax—we wouldn’t even have to consider this whole non profit idea.

[ Rushdoony ] Yes.

[ Stafford ] I think maybe that is one of the reasons that the federal income tax code was put in so that over a period of time people would develop a not for profit or non profit mentality.

[ Rushdoony ] Yes. In a biblical system there would be no income tax and no property tax and no inheritance or estate tax. And every organization would be under God. They would then tithe. That would be God’s tax and the only tax by a civil government would be a poll or head tax on every male 20 years old and older.

[ Stafford ] Right.

[ Rushdoony ] We did have that in the colonial era.

[ Stafford ] Right.

[ Rushdoony ] We have had it at different times in history and it works. It keeps the state small and humble.

[ Stafford ] Right.

[ Rushdoony ] It means that the essential government is in the hands of families, institutions, agencies and so on.

[ Stafford ] Voluntary.

[ Rushdoony ] Voluntary. We are a governing agency. That is our function as individuals, as churches, as families, schools, businesses, whatever we are. We feel that in Chalcedon we are a governing agency. And we are teaching people how to govern.

Clint.

[ Miller ] John, I wanted to ask you one thing and this is actually a very broad question, but in... in building our assets as... as Rush just... just suggested, can you address your thoughts to perhaps the types of businesses that people that are so inclined to perhaps form new businesses that they might think about getting into? And I ... obviously you could only keep this in a very general level, but...

[ Stafford ] Well, I don’t look at any one thing in making investment analyses and recommendations. I look across the board. In other words, I am not 80 percent Eliot Wave or, you know, 75 percent Dow theory or Richard Nay, of course, is into specialists activities which I think are very important. But he seems to solely base his advice on that. I am very eclectic. You know, I look at everything.

And one of the things that I find fascinating and I think because there are biblical basis for it although I haven’t had the time to research it. If I had it exactly what... what they are, but Martin Selbride had a ... a piece that he composed during the arts festival that we just completed in Sacramento and, again, I don’t know much about music, but he said that the... the musical piece was based on certain harmonic... harmonic relationships that exist in the universe that God created. And so I really do think that there is a lot to cycles.

Well this is all a prelude to saying among other things that real estate, by and large on a very general basis, I think, is an area not to be in for the next few years. I really don't see it as being an exciting place to be. Now real estate is such an individualistic type of thing and geography is so important that, again, I have to reemphasize. I am talking on a general level. But there is an 18 point three, an 18 and a third year real estate cycle which peaked out in about 1979, 1980. And so it wouldn’t be expected to bottom until around 1989. And so I think that at least in terms of a relative value versus other places that you could... places you could put your money, real estate, by and large, is not the place to be. I will be looking to buy, maybe heavily the latter part of this decade, the first of next.

The only thing I would say there is that again, I am not necessarily recommending going into debt, even on a 30 year basis for the purchase of an asset such as a home or a piece of commercial property. But partly because I think there is an immoral aspect to it. You ... you are... you are beggaring your creditor neighbor, because if I am right and we see 30 percent inflation rates and 25 percent mortgages it will all be very well for you to have locked in a 30 year loan at 12 percent and benefit from that, not so much that the real estate has gone up in value, but total package including an assumable loan will be very attractive and allow you to get more for your property in the future.

But again, you have engaged in a way, you know, no one can predict the future so maybe the creditor will come out better, but... and, of course he is an adult and he is, you know, taking his risk, but basically what I am saying is that with the exception of the financing angle, that I don't really see real estate as an exciting place to be. So except maybe setting up a discount real estate firm to under cut the competition and actually make sales when others can’t, because they have kept their commissions too high in the six to seven percent area, I don't see a lot going in real estate.

I guess the only other thing would be that apartment complexes in the three to four million dollar range, garden apartments might be good, because, for instance, even the one that I am living in a new management company has come in. They have jacked the rates up quite a bit from being too low to being a fairly reasonable now and there has been very little construction of new apartment buildings. Everybody is ... went condo the last few years. And so there could be, for the larger investor an opportunity there, but otherwise I am unexcited about real estate.

The stock market I am extremely excited about. And I guess the short hand way of saying it is... this is that I just see a replay of the 20s. I mean all these options that are coming out and new futures contracts and options on futures. And I mean it... it reminds me... and then you can buy futures on the indexes of the Standard and Poors, and the Dow Jones and the Value Line and so forth and so on. Really it is like the bucket chop operations of the 20s where you just went in... it was a gambling type situation. You bet on whether the Dow would be up five points or down three points that day. And, of course, now, again, this concept I have been promoting of it is just a question of zeroes and moving the decimal point instead of three and five point days up or down in the stock market, we are talking about 30 and 50 point days up and down in the stock market as we predicted two years ago.

And the ... the New York Stock Exchange as long ago as three years ago was preparing for 200 million share days. We haven’t had those yet, but no one believed me when I said we were going to have 100 million share days. And I think we are just going to get a wild inflation based blow off of to the upside in the stock market for the next, two, three, four year followed by perhaps a substantial set back in the late 80s which may appear to the vast majority of people as being the end of... similar to the 1929 crash. And a lot of the people hate to mention names, but it is.... let’s face it. Tom Holt and others who have been predicting immediate crash for the last 15 years may well be right finally or what I think is really true more likely based on the work that lieutenant commander David Williams has done and anybody who is 85 years of old... of age and has done as much as serious work as in his fine shape mentally as he is, I have to, you know, give a lot of credence to him respect to his analysis, which suggests that ... that we have a reboom in the 90s.

And so what I would... one way of, again of saying it is that we could have a ... this would be similar right now to the early 20s, not the late 20s. And so we could have a boom followed by a severe set back, followed by... followed by another boom in the early to mid 90s and then, perhaps, in the late 90s the deflationary depression that everybody has been talking about for so many years may actually take place. It is just that many people will have ... will have turned out to have been 20, 25 years premature. Well, you know, that isn’t very helpful. If they tell you deflation is just around the corner and you have bought bonds and the bonds as the whoops bonds did—which I warned people about for 10 years—drop from a price of 100 down to five dollars and then you have lost purchasing... that is market value. And then you have lost purchasing power value on top of that because of inflation. I mean this is insanity. You have to deal with reality. You can’t just be ideologically committed to some particular view of the future. And my view of the future is a... is one of currency depreciation which is another way of saying inflation. And until I see serious sound, good reasons for thinking otherwise, you know, I have to go with the flow. A trend once set in motion continues until it ends. And that sounds like sort of a crazy idea, but it really works. It is ... it is related to Newton’s law of motion and unless some external force acts on it or internal crumbling changes the scenario, you have to except that the purchasing power value of money will continue to decline. And that the only thing really that could that change that that I can see is, again, with the bank credit analyst euphemistically calls a financial accident. In other words, if the people who are currently controlling things lose control then, yes, you could have, in fact, a deflationary collapse, but I have been more and more impressed in ... in recent weeks with international money line in Julian Snyder. He is talking about an inflationary depression, in other words, continued depreciation of the currency at the same time that the economy deteriorates at least in terms of certain sectors. Some groups and industries will do well. Others will do poorly. And that from an investment standpoint means that you have to be increasingly more selective about where you put your money whether it is on an entrepreneurial basis where you put your own company together or whether you are buying stocks on one of the exchanges or over the counter.

[ Rushdoony ] Do you have another question, Clint?

[ Miller ] Yeah, well, one thing about gold and as far as if... if this would... if we would have a boom through the 80s. Sort of a bust, but a temporary and then even a bigger one in the 90s. How do you think gold will be following that?

[ Stafford ] Yes. In other words, contrary to my ... a man for whom, you know, I really have had a lot of respect and who has done a lot of pioneering work Jim Dynes, who used to put forward the idea of contra cyclicality that if the stock market were going up that the gold market would have to go down. Well, that may have been true under the and was true under the conditions which previously prevailed, but as you move into a hyper inflation, just the opposite is true. The stock market and gold get into gear together and there are a lot of sound reasons for it which we really don't have time to go into. But if you examine, for instance, the Weimar inflation in Germany in the 1920s, late teens and 20s, you will find that the best way, the two best ways, the three best ways to protect your increasing the purchasing power of your increasingly worthless German marks was to invest in either foreign currencies such as the U S dollar or to invest in gold or silver or ... or diamonds and the third area was the stock market. And I have seen charts which show that as the price levels went off into an exponential rise that the stock and gold and diamond and foreign currency markets basically kept pace with the currency wipe out. And so I think that is the way that you protect yourself. You want to be in owned assets, not owed assets. An owed asset, for instance, is a bond. And I think {?} a little crazy as some people think he may be and a lot there is a man who has been around for a number of years. I have great respect for {?} he has been through four hyper inflations. I have been through two myself. I was in China in 47 and Shang Hai doing the {?} inflation and I was in France when they did the 100 for one reverse conversion of the franc. I think that he is basically right about bonds that they are certificates of guaranteed confiscation. They are issued by people who have no intent really morally, ethically or legally to make good on their promise to pay the interest and the principle. And partly because they don’t have the wherewithal and party because they don’t have the moral integrity. And so you are loaning money to a bad debtor and this is no different from what the New York banks have gotten themselves into with these international loans. And I don’t know, Rush, whether it is really scriptural, but at least there is an old folk saying that neither a borrower nor a lender be. Maybe you could comment on that.

[ Rushdoony ] Yes, certainly. We are told in Scripture that we are to avoid debt except for real necessity and then for a six year span. And we are told that we can be a lender when it is a charitable loan to a brother, to a brother in the faith. But apart from that we are not to be lenders except we are told the ungodly are slaves to begin with and debt is a form of slavery so there is nothing wrong in being a lender to such, beaus they are seeking slavery. They are going to have it.

This tells us that we are predominantly a slave people today.

[ Stafford ] Right.

[ Rushdoony ] That is why we are moving into slavery progressively as a nation politically.

[ Stafford ] Right.

[ Rushdoony ] And all over the world because people have departed from the faith, whatever label they wear, Protestant or Catholic, they have departed. They have made it secondary instead of primary and essential. They are departing from freedom. They are slaves. And they are going not feel the whip lash of slavery progressively until they return to the faith.

Well, our time is about over. Is there a last word from either of you for a matter of a few seconds. Anything you would like to say?

[ Stafford ] Well, the only thing the I was thinking we didn't get a chance to comment on it earlier it is a thought that I have had and then it was expressed indirectly in the cartoon in of all places the editorial page of the Wall Street Journal the other day. It was a cartoon showing a gentleman and his wife leaving a church and shaking hands with the pastor who is standing at the door saying goodbye. And he said, “Boy, I sure wish the government would adopt your philosophy and only ask for 10 percent.”

[ Rushdoony ] Yes.

[ Stafford ] And my thought has been that—and I would like to find some scriptural basis for this—maybe some of the people who are listeners to this tape and others can help us with this research project to find out whether it is biblically correct to take the position that we as citizens of eh United States for instance have an obligation to give no more than, let’s say, a maximum of 10 percent minus a dollar to the government. In other words, why should the government be entitled to the same as or more than God is entitled to and requires from us.

[ Rushdoony ] Yes.

[ Stafford ] In the form of the tithe.

[ Rushdoony ] Morally you are on sound grounds there, however the state has its own morality today and the state’s morality reflects that of the people. If people will not give 10 percent to the Lord as the minimum as God’s tax, God is going to sell them to a slave owners who are going not demand far more of them. And that is what the Lord has done.

We are in slavery to Washington today and to the state house. We are in slavery to them because God is judging us and punishing us. And until we give God his due, any many who thinks that he is entitled to be a free man is a fool. He is morally unsound.

[ Stafford ] Exactly and in a recent Bible study and even with some of my judges at the department I have discussed 1 Samuel eight and where it shows quite clearly the contrast. God is a great provider and I would also mention Matthew six, versus government as a taker. The king is... is no more than a taker. And not only is the contrast important on that kind of a basis, but it backs up the... exactly the point that you are making that once we look to a temporal god for false security, we are only enslaving ourselves. And just recently I was reading your Institutes of Biblical Law. I think it was footnote two that discusses 1 Samuel eight. I thought it was really fascinating that you were pointing out that the vast majority of theologians and interpreters of that particular passage have totally misread it. I mean, the plain meaning is exactly as you were just describing it and yet they have come up with all kinds of alternative explanations and interpretations of what is involved there.

So if I could make a plug for your book, I would recommend people pick up a copy of The Institutes of Biblical Law and look at that footnote. I think it was footnote two that deals with 1 Samuel eight and also reread that Scripture and... and give it a lot of serious thought themselves.

[ Rushdoony ] Yes. Well, our time is up. Maybe in January, John, we can go into this matter of taxation and debt and its social implications. We just mentioned this when we were talking the other day with R. E. Mc Master, of course, who has 80 pages of work he has done towards a study of Christian economics, 80 pages just on the social implications, the economic implications of debt.

Very few people realize how far reaching it is. Well, we will leave that till January.

[ Stafford ] Good.

[ Rushdoony ] Thank you all for listening and it has been good to be with you again and we will look forward to our next session together.

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