From the Easy Chair

The Shape of the Future

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 184-214

Genre: Speech

Track:

Dictation Name: RR161J18

Year: 1980s and 1990s

Dr. R. J. Rushdoony, RR161J18, The Shape of the Future, from the Easy Chair, excellent colloquies on various subjects.

[ Rushdoony ] This is R. J. Rushdoony, Easy Chair number 69, April 14, 1984.

Today we have, again, the pleasure of a visit from David Rhoads. And here with us to chat with him are John Stafford and Otto Scott.

David Rhoads is with us for a day of planning. We will let you know subsequently about some very interesting and important developments. We are embarking on a common project which I think will be of very great importance in the Reconstruction movement.

Well, David, it is a pleasure to have you with us again. And we have had very fine reactions to your last visit and your last interview with us.

John, do you want to start with a question for David as we discuss the economic outlook?

[ Stafford ] Sure, Rush. David, I have been reading your latest letter and you had a number of comments to make about the investment scene. Why don't we start off with that and contrast it with what you were thinking in our last visit and then we will go on to some other topics.

[ Rhoads ] Yes. The last visit, of course, I thought 1200 would be about the bottom for the Dow and that turned out to be wrong almost immediately. I did have one caveat in that, though, and that was that if the international banking think held together, 1200 would be that bottom. And, of course, we know now that the situation with Argentina began coming undone about that time. And it reached its peak and its crescendo then at the end of March when it was finally bailed out by the U S government. That accounts for a large portion of the hot money flow out of the country. Some of that flow was, of course, because of some foreign {?} and raise. But a large portion of it, I think, is a readjustment of investment positions by large investors to what looked like a potential banking crisis. This crisis, of course, will be hanging over our heads until it finally breaks down and let’s go and I figure that we may have four more years before that happens. Some people think we have got less than four months. And I don’t know of any way to tell who is right.

I see the banking situation being relieved now for a few months. It will be coming back at the end of June when Argentina comes up with their plan for who they are... which debts they will recognize and how they are going to pay them off. It should be followed quickly by a number of other South American and Central American countries and, of course, the whole eastern block and the whole third world debt situation is watching what happens in Argentina. So June could be another crisis month.

In the interim, though, I think we are due for a good rally in the stock market. What happens then in June we will have to wait and see. The interesting thing that happened in this Argentine crisis which is different from 1982 in the Mexican crisis is that once the... the fed began pumping up the money supply in 82 it kept it up through the end of the year. This time it kept it up just for two weeks and then it pinched off again. This is ... accounts for the big huge spike in the monetary base that we saw in February. That they are back now to a restrictive money growth. It is restrictive in ... in view of the way the economy would like to move and so what I see happening now is a pinch off in the economy coming. We are seeing the early signs of that already. This, I think will tend to relieve the pressure on the money supply and I think interest rates then, because of that and also because of a seasonal inflow of tax monies to the fed will tend to pump up this rally that is going on. Now it could carry it into the summer, but, again, this situation with the international banking problem is going to be over our heads for years and it is going not burp ever so often. It is going to cause a number of my projections to go into the tank just as it did in January. But as long as the thing holds together, why, I am still very optimistic about the situation in bonds and stocks.

[ Stafford ] What is fascinating from a number of standpoints is this scenario of one thing I think might be helpful of the listeners is to zero in a little bit and for a brief period and get your comments on this question of the fed pursuing a tight money policy versus a loose money policy. There are those who say that it is the one and some that say the other. I think you tend to agree or you tend to also believe what I believe and that is that you have to measure looseness or tightness based on the needs of the economy rather than just charts. And what... what ... I know what I have been saying to my people is that it is a loose policy if it matches the debt needs of the economy and the legitimate economic demand needs of the economy and then goes beyond that rather than just being an arithmetic type of approach to measuring what that policy is.

[ Rhoads ] That is... yes, I agree with that. I think the term I prefer instead of loose or tight would be accommodative or non accommodative. And the way to tell when you have non accommodation is that interest rates go up. They can go up even though the monetary base is expanding at a record rate. Interest rates can still go up because the demand is outstripping the... the supply. That is not accommodation. They can down even though the monetary base is shrinking because borrowing demand can shrink faster than the monetary base and so there is relief in the market and that is accommodative.

We saw that kind of accommodation in 80, 81. We see non accommodation now which actually started last June. And the effect of non accommodation is to pinch off the expansion and I think we are on the verge of... of some very clear signs that that is happening.

[ Stafford ] Well, if that is true, let’s tie that in to a fairly extensive article that you had in a recent letter in real estate which we didn’t discuss the last time. Could you give us our views on real estate generally and the possible effect of this accommodative or non accommodative policy of the federal reserve?

[ Rhoads ] Well, the thing to remember about real estate is that it is funded largely with debt and when the price of debt gets too high then a number of borrowers are disqualified and even if they want to buy and they are willing to pay the price, they aren’t allowed in by the... by the lender. And we are in a period of rising interest rates now so that is bound to have an effect on real estate. The analog or the model I like to use for this period, though, is the period of the 20s. The 1920s were roaring. It is also called the stable leg of the {?} wave. And I believe we are in a similar period now. The 1920s were kicked off by the end of inflation in 1920 and we had lower dropping interest rates and a rising money supply without inflation then for almost, well, until the blow off in the stock market in 1929.

Two other things happened. With the collapse of the commodity market all the farmers went in the tank and the farmers never had a roaring 20s. They were in bankruptcy and in trouble from 1921 on until World War II. The other thing that happened was the collapse of the real estate market which started, I believe, around 1925 or 1926 with the explosion of the bubble in Florida. So I expect these two things to happen. Now, the third thing, of course, is the fact that... that the capital goods market does not recover. You can have like a bear market rally, but you never have a real recovery of the capital goods market and we are seeing a consumer recovery, but not a capital goods recovery and I think some of these predictions are a little off base in that regard.

But now for the real estate aspect of it, we have had a collapse in real estate values all over the country except in a few hot spots. And one hot spot I watch is San Diego. It has got a good, broadly based economy and was not really hit all that hard by this last downturn. It also was one of the real boiling pots for speculation back in 79 and 80. The graph I keep on that has a number of moving averages and all these averages, moving averages peaked out in 80 and 81 and flattened out and just recently then toward the end of 83 they began to turn down. And it tells me then that speculation is off in San Diego and that we are looking now toward a potential for a bust. If you buy on speculation then you are ... you are on a ... you are on a precarious position. You are over leveraged on debt and if the prices don’t go up, if the material doesn’t move, then you have got to unload it. And when the great unloading comes the price will go down.

[ Stafford ] One of the reasons, Dave, that I thought that the stock market would take off in the 80s was because of the fact that during the 20s if you looked at bank clearings in Miami they went from over a billion to under a hundred million in the five year period beginning about 1925. And much of that money flowed out of the speculative land boom in Florida into the New York Stock Exchange and powered that huge surge in the market there.

[ Rushdoony ] Otto, would you like to comment or...

[ Scott ] Well, the real estate thing really interests me because so many millions of Americans regard that as the central point of their lives, their home, their residences and so forth. And you said something before when we started here comparing the real estate progression to the famous tulip speculation and so forth. I think you said that you felt the values had gone up by a factor of five.

[ Rhoads ] Oh, yeah, we are just coming out of the... the worst inflation in 150 years and this is a general observation, not just on real estate, but the ... a period of inflation is a period of insanity and people lose their sense of values. Thomas Mann, I believe it was, wrote about the fact that Germany could embrace a man like Hitler only because it had gone through the crucible and the inflation of the 20s where it lost all sense of value. That is what happens when inflation goes too far. Perhaps ours hasn’t gone too far, but by certain standards of measurement of value the world at this point seems to be overprice by about a factor of five. Now we have seen some pretty significant adjustments in commodities. We certainly saw an adjustment I the bond market, but we haven’t seen a real adjustment, an adequate adjustment yet in the price of real estate. So I think that when all of these adjustments do take place and we come back to reality we will see probably 80 percent of the values lopped off and this will be as true of real estate as it is of anything else.

[ Scott ] Well, 80 percent is going to be an awful shock to an awful lot of people. We started out with houses selling at 2500, 3500. A 10,000 dollar house, I remember, was quite elegant. And now in California, at least a 100,000 dollar house is apt to be a hovel.

[ Rhoads ] That is true. This is part of the irrationality that comes with the inflation. I hope that we have a return to reality. It is sobering and it is very difficult for people who have based their plans on what they think... or what turns out to be an illusory value. But the alternative to this is continuing the illusion until everything comes apart including our institutions.

[ Scott ] Well, what effect, what social and political effect do you suppose a collapse of real estate values would have. I mean, I recall that, although I was pretty young, when the Florida collapse occurred, that I believe I have been reading about it ever since. But some people never forgot it, never forgave the state of Florida for being the place where it occurred.

[ Rhoads ] Dramatic return to reality can cause all kinds of dislocations. There would be tremendous ec... economic dislocations, no question about that. And the people who see 80 or 90 percent of their wealth disappear overnight are going to be very angry.

One thing that isn’t talked about very much is the fact that a lot of the wealthy people are older and they have a lot of their wealth in paper. And the big adjustment will come in paper. I think that the people who own their real estate outright will be able to maintain that ownership, but if they have their money in a t-bill or something like that and the thing is repudiated or whatever device is used to bring us to destroy that illusion, they are going to lose everything they have got in it.

Now I see on the freeway, for example, during almost any time of the year I see, you know, old timers tooling up and down the freeway with motor homes that are 30 feet long and they are towing on a boat or they are towing on an automobile and they are going from their summer home to their winter home. And all of the sudden these people will fid themselves without any way of paying a food bill let alone keeping up the payments on a motor home or these other things and their illusion of value will be destroyed at a time when they can’t possibly replace it. And these are the people who are going to be hurt most. They are also very politically powerful people. And if I were to say something to them, I think it would be this. Let it go. Let it happen.

I read a book some time ago that talked about the same situation in terms of war and the point that ... that the author made was that the producers have to have something in return for their work or they won’t produce. And when this great illusion is destroyed then the producers, the young people we depend upon, they have to get the major cut of the pie or they are not going to produce.

Now in World War II in the cities in Germany that were heavily bombed, the older people that were unable to scrounge and ... and... and support themselves died. And a whole generation just disappeared in the cities in Germany, because when it comes to survival the producers will survive, but the people who can’t produce, if they persist in trying to assert their, quote, rights at that point to an illusion that is suddenly destroyed, they will find themselves with nothing. So I think the thing to do in any kind of an adjustment like this when we come back to reality is to just let it happen and accept what happens and... and try to make your contribution and not try to assert some irrational promise that was made at a time when the world was kind of drunk with some kind of an illusion.

[ Scott ] Well, I remember the Depression of the 30s. And that was the general reaction then. Every one made do. There were relatively little public demonstrations or violence. There were some few incidents in the Midwest, I recall, where farmers chased the sheriff bailiffs off the property and wouldn’t allow them to auction it off. A few such bailiffs I think were lynched here and there and at one point I remember a newsreel where the farmers were dumping milk on the highway and things like that.

But generally speaking most of the agitation was in the cities and most of the agitation, then, came from the intellectuals who, incidentally, were not suffering much themselves. And most of it was inspired by the Communists, the Social Democrats, various and sundry other Utopians, Marxists, et cetera.

This time, however, I think we have a different situation. We have large groups of people who have been continually agitated into the idea that the light and the world owes them not only a ... a living. It used to be a living to their grandparents. It now owes them the results of a living. And I wonder how the United States today with this idea of this ... the government is god as Rush tells us, when the god fails to provide all the goodies that the god has provided, what will happen?

[ Rhoads ] Oh, I... the... the significant difference is that back in the 30s people still believed that there were such things as acts of God and acts of nature. And an economic adjustment to a large number of people they had seen them before and they could accept it. Since the 30s we have been filled with this idea that government can run the economy and make it perform and give to us the things that are our rightful due. Now if all of the sudden it can’t perform, even though an act of nature people won’t accept that and they will say, “Who screwed it up, you know, who got my share?” And they wail go to the government to try to pound their share out of somebody else and there is an awful lot of jealousy and envy that is going... it is coming up now. And it could lead to some very rash acts on the part of government. It could lead to some very un... it could lead to a revolution.

[ Scott ] Well in Germany it led to Hitler.

[ Rhoads ] Yes.

[ Stafford ] In this country it looks like it is going to lead to ... to a continuation or acceleration of the hyper inflation that we are already into. One of the other differences between now and the 1920s is the fact that we are not on the gold standard. And government has the unlimited ability through the banking system and through direct printing of currency, they have hired these five high speed printing presses from, ironically, Otto, Germany to be in place by 1985 and Jim... James Grant when he was writing the current yield section in Barons calculated that it would only take them nine weeks at 24 hours a day, seven days a week, all five operating to pay off the then current national debt. So we may be facing not only on a massive credit inflation to through the provisions of the monetary control act, as a response to what you all have been talking about, the inability, the coming inability of the government to pay off on the promises that it has made and to buy off the protests and rebellion and potential revolution. They will create money out of thin air to pay. As a matter of fact, Senator Proxmire, the Democrat from Wisconsin has been quoted as saying, “What do you mean we are not going to pay social security? Of course we will pay social security. The money we pay off in might not be worth anything, but we will pay.”

[ Scott ] Well, I am sure the politicians will take the... what looks like the easiest way out, will try to buy time no matter how. If there is a... a collapsing real estate market in political terms more immediate terms, I imagine it would impact on the present administration first.

[ Rhoads ] Yes. You know, there is no doubt but what the incumbent administration has to have a growing economy and a good market in order to get reelected and if these adjustments come before the election, why, then, Reagan will be a one term president.

[ Scott ] Just a look at what the politicians have done to themselves. They have guaranteed summer weather forever for everybody and there is no way that they can possibly meet that promise.

[ Rhoads ] Right.

[ Rushdoony ] Yes. I like your analogy of summer weather for everybody all the time, because in the last Easy Chair I did express one of my pet peeves, weather men, total Humanists. All they eve talk about is how good the weather should be. They never realize that you need rain. You need snow to keep life going on this planet.

Well, it is horrifying to listen to Hart and Mondale because they are promising perpetual prosperity and sunshine for everybody if they are elected. And the Republicans aren’t very far behind in their promises. So people are being fed impossible promises. And, hence, both parties are ensuring disaster for themselves.

[ Scott ] Well, this is a... a... an attitude toward life which you have put your finger on. Hard times as I look back on it, probably were almost gifts of... of God because they forced me on various occasions and various ways to pull up my socks and prove my ways, sometimes to change what I was doing and so forth. But that whole perception has been denied by the modern schools and perpetuated by the government which has lost sight of essential honesties.

Now here you have a population, I... I remember talking to a young man just yesterday about some period of history and he got very angry with his school because they had never told him anything about it. He said, “I just now began to realize I have been cheated.”

I think that people are going to feel that they have been cheated because they have been told that he government can manage the economy and can guarantee them against the tribulations of life.

[ Rhoads ] This method is being perpetrated, in particular, by the people who are managing the international debt crisis. We were talking about Argentina. And, David, you mentioned Brazil. I had occasion when I was director of hearings and appeals at interior to attend a luncheon at the national {?} club which was made up of the general counsels of most of the federal agencies and departments. The speaker that day was a very bright young man who happens to be the deputy to the treasury secretary Donald Regan. His name is R. T. Mc Namara. And his talk basically had two thrusts. Number one that there wasn’t any problem with the international banking situation. However, they were managing it very well. And he had just come back from Mexico where almost single handedly, at least... at least as the point man for the Reagan administration had kept the ball of wax which we have talked about before together.

Afterwards, well, just right after his speech he asked for questions and I read him a piece from a ... a insert in the Congressional Record that Ron Paul had made quoting a number of authorities and that really didn’t go over too well. It went over like a lead balloon. Afterwards, I had a chance to talk to Mc Namara directly and I said to him, “Instead of continuing to try to cover up, why not meet the issue head on? Why not—and I meant this only semi facetiously—have Donald Regan... Regan the treasury secretary call a press conference for two o'clock in the afternoon at the treasury building and announce that the United States government hereby repudiates all of its debt, loan guarantee obligations and pension fund liabilities. Get it over with and start on a new base,” because, as you have mentioned, Otto, or were getting at, I think, history shows that when you face up to the truth and you face up to the realities, are willing to take on the hard task of Reconstruction rather than continuing to pretend that things are all right the consequences are always better. And I even offered to provide him with a bibliography of books and papers that made this point as an historical fact.

Do you know what his answer was? Absolutely disinterest and a blank stare. This... this man was hired to do one thing and that is to maintain the pretense.

[ Rushdoony ] Well, for us repudiation would only give them freedom to begin all over again and we will have repudiation. We are in the process of some form of repudiation, direct or indirect and I think we will probably see that repudiation before the end of this decade. What would you say about that?

[ Rhoads ] Oh, yes.

[ Rushdoony ] David.

[ Rhoads ] I... I... I don’t see us going past the 88 elections without a total disaster somewhere and that is the time frame I am looking at. I think we will be able to hold it together, probably until 87 or 88 and if we do then the process of holding it together will give us a good stock market, probably a good bond market. And it would be a good time to make some money there, but by 87 or 88 I begin converting the paper then to real wealth in terms of real estate, gold, commodities, things of that sort. The... but on the subject of real estate I think you have to ask yourself, first of all, how do you view the real estate that you own? Is it your home? Is it a place that you are going to live in? A place you brought your children up in, a place you would like to will to your children if that is the case? Then don’t look at it in terms of what it is worth and get it all paid off. It is an investment then treat it like any other investment. When your yield... when you can get a better yield somewhere else, sell it and convert to ... to wherever you can get the better yield.

[ Stafford ] Right.

[ Rhoads ] About the ... the reaction to a ... an economic dislocation of major nature, I think you will see two kinds of reaction from two different kinds of people. There will be people who will want to hold on to their illusion. And there is an old psychiatric saying that you always try to kill your snakes in your neighbor’s front yard. You project your desires or your sickness onto your neighbor and then you go over there and try to kill him. That is... that is like casting your sins on the swine and then killing the swine. It is all right if it is a pig, but it is a little tough on your neighbor if it happens to be him.

There will be people who will insist on continuing with the illusion that they are wealthy and that they are taken care of. And they will insist that government can step in and kill these snakes. Even if that is a sacrifice of their neighbors. Other people, though, I think will be shaken back to reality and then this, I think, will be... would take the form of a religious reawakening and an understanding that it was an illusion, that government wasn’t all that powerful, but we were all on a train that somebody else was driving. And the politicians would be sitting in the caboose saying that we are running the train, see, and every time it would take a turn they would say, “That is the turn we wanted it to make.” But it kind of reminds me of Roosevelt in the mid 30s was bragging that he and his brain trust were bragging about how great their control of the economy was. Look ... look at the recovery we have brought here through our manipulation of the money supply and so forth. Aren’t we great? Then along came the 1938 depression which is the only depression within a depression we have ever had. And everybody said, “Hey, you know, if you are so great, how did this happen?” Well, don’t talk to me about that, you know.

[ Stafford ] It was nicely covered over.

[ Rhoads ] Oh, yeah. They didn't want to talk about that.

[ Rushdoony ] Well, that was a classic example of the power of the people to delude themselves, because with the stock market crash in 1929 the unemployment was a million and a half. It wasn’t a bad situation. With the Smooth Hawley tariff bill protectionist, let’s buy American and so on, it went to three million. After a few years of Roosevelt it went to 16 million. And yet the people were sure Roosevelt was curing the situation. It was very, very unhealthy in those days to criticize Roosevelt.

[ Scott ] Oh, yes. I remember that and I also remember that it was a weird thing, a myth that floated around and that was that the businessmen were responsible for the collapse of their own enterprises.

[ Rushdoony ] Yes.

[ Scott ] Now though bankers and stock brokers and everyone else who was in business suddenly got... was in bad standing, well, now this time I think the odium will fall on the politicians. And I think, therefore, if people lose faith in politics your assumption that there will be a greater religious revival is probably accurate.

[ Rhoads ] I hope, because the alternative is not...

[ Scott ] Well, the alternative is chaos and people...

[ Rushdoony ] I...

[ Scott ] And people must believe in something.

[ Rushdoony ] I think the signs are already there of that taking place.

[ Rhoads ] You know, there are people that are pretty heavy in hard times already.

[ Rushdoony ] Yes.

[ Rhoads ] This recovery has been very selective and there is an estimated two million homeless, rootless people floating around and they don’t even have a place to lay their heads at night and they are 30, 40, 50,000 of them in all the major cities in the United States. And you see them floating up and down the freeways. These are the disenfranchised and ... and the... the Americans than have dropped off the bottom rung of the ladder.

So there are people in hard times already...

[ Scott ] Isn’t it... isn’t it ironic that they are floating around in the middle of the welfare state and the welfare state isn't taking care of them?

[ Rhoads ] Well, it is a condemnation of the welfare state. It says that it is an illusion, that it can’t take care of them. That they... they become potential clients for, what is the term, demagogue?

[ Rushdoony ] Yes.

[ Rhoads ] Or if the churches can get to them in time with a ... with a sensitive statement then I think we can recoup or recover them for Christ.

[ Scott ] There is a sort of a struggle underway. Doug Kelly called not too long ago and told somebody, I believe, that during the typhoon...

[ Rushdoony ] Yes.

[ Scott ] ... the crisis...

[ Rushdoony ] He called me about that.

[ Scott ] Well, that was very interesting. Why don’t you tell us about that?

[ Rushdoony ] Well, I did refer to it in the last Easy Chair.

[ Scott ] I see. I see.

[ Rushdoony ] Namely that during the tornadoes which struck the Carolinas one particular church went to a community with food immediately, 200 fried chickens and a lot more food. And, of course, the Red Cross, the state and federal officials were there. They were going to control the thing. And they took the food away from the church women and tossed it into trash cans. It was not government inspected.

Now this is the kind of thing that is taking place. That is a dramatic example. But all over the country efforts by Christians to meet human need are running into the road block of statist intervention and interference. And this is only going to increase, but I think the resistance to it is going to increase also.

I do not believe the state has the answer to the situation. More than one person in this area of expertise has pointed out that if welfare recipients were paid directly they would get 45,000 dollars. But it goes through so many hands they wind up with very little. This is where Christian activities shine. A lot of people with dedication are working to deliver the goods to the people. And churches, black and white, are beginning to expand their ministries in this area. So some remarkable things are taking place from coast to coast.

[ Scott ] Well,

[ Stafford ] One of the great... one of the great advantages the churches have is that it ... they are based... if they are sound Christians on truth in Jesus Christ and so the love that they show is true love...

[ Rushdoony ] Yes.

[ Stafford ] Soundly based. And even the recipient recognizes that. And the provisions come from hard decent work. We are told that in Paul’s epistles, that that is where it should come from. I think it is Ephesians four. And in contrast the state can only give from what it takes by force from others. So even the recipient recognizes that he is receiving, in effect, stolen goods and that is why I think some welfare recipients are not grateful over the handout because they have really the decency to recognize where.... where it comes from. So I that very important respect the churches and, you know, sound Christians, because of the source of the wherewithal and because of the reason for which they are doing the charity based on true love rather than coerced love or forced love, they have a tremendous opportunity.

[ Rhoads ] No, that reminds me of Marshal Mc Luhan’s remark about an election is an advance sale of stolen property.

[ multiple voices ]

[ Stafford ] Your comment about government actually getting in the way of ... of a charitable act reminds me... I can’t remember the ... his exact statement, but Christ was being upbraided for healing somebody on the sabbath and he said something to the effect that laws were created for man. Man wasn’t created for the laws. And we ... and in these periods of illusion we seem to lose sight of... of ... of our priorities and some people who embrace the law and use it, I don’t think is so much in an honest misunderstanding, but they use it because they are vindictive, mean people. And they ... it is just struck me one day that, you know, I don’t want to affront anybody, but some people become policemen because they like to beat heads and give tickets.

[ Scott ] Well I think that is true.

[ Stafford ] And...

[ Scott ] I think always when we talk about the welfare state we should recognize that most of the people that receive welfare are those who administer it. And ...

[ Stafford ] That is really well said.

[ Scott ] And... and... and when... if the welfare state collapses, we are going to have eon our hands millions of drones.

[ Stafford ] Right.

[ Scott ] Who have no skills beyond pushing others... people around.

[ Stafford ] Exactly. This is one of the things that happened in the collapse of the Austro Hungarian Empire. Austria was inundated by all these bureaucrats who had been working in other countries for generations and all of the sudden here came these bureaucrats and they couldn’t clamp anything. And Austria has never been a power since then. Totally destroyed by this inundation of... of repatriated bureaucrats.

[ Rhoads ] For years... for years ...

[ Stafford ] {?}

[ Rhoads ] ... that the ... that the world seemed to be divided... divided into various groups of people, two of which are those who like to tell other people what to do and those who don’t. And the bureaucrats, of course, fall into the former category.

[ Rushdoony ] Well, the sad fact is that one country did not liquidate its bureaucracy, the Soviet Union. It used them, expanded them and has made them the basis of its power. The Soviet Union is the most bureaucratized country in the world. Its power rests on a tremendous bureaucracy.

[ Scott ] Well if we were to follow that analogy the bureaucracy here, as we know, is liberal left. Now at a recent meeting of the Philadelphia Society Arnold Beichman author of Nine Lies About... Against America.

[ Rushdoony ] Yes. A very good book.

[ Scott ] ... was talking about the fact that he had been receiving mail from a great many graduate students who are getting C mines grades from Marxist professors if they submit papers that tar not pro Marxist. And I don’t think anyone has ever estimated the number of Marxist professors we have, but they number in the tens of thousands.

When we add those to the left liberal bureaucracy... bureaucrats, what we have in process under our feet and around us is a shadow government in formation. And it was that crew, social workers and school teachers and bureaucrats that Hitler most effectively appealed to and that Lenin and company most effectively organized.

[ Stafford ] I remember in undergraduate school taking courses in ... in intercultural sociology and also area studies in the Middle East and the Far East. And one of the things that we studied I in looking at undeveloped countries or under develop countries, LDCs they called them now, is the fact that the sons and daughters of the well to do had nothing to do. And so they were sent to universities in the United States and when the came back they were given jobs in the government because they couldn’t do anything useful. And we used to sort of laugh at that because it was happening overseas. And I think that Otto’s comment is right on target that it is happening right here in the United States under our feet. In that respect we are an under developed or LDC, under developed country and LDC.

[ Scott ] In terms of creating skills for our young people and also for our college crowd and so forth, I would say we are doing a very strange job.

[ Stafford ] Well, it used to be, as I understand it, 40 or 50 years ago that no more than approximately four percent of the senior high school class went on to college, because of the needs of the educational bureaucracy, I understand upwards of 50 percent now at least attend in the first year. That is a massive misallocation of man power, because I can’t believe that that many people should go to college, that that should be the course that they should pursue to learn some way to be helpful and productive in life.

[ Scott ] Well, that is reflected in our military. We have more generals now than they we had in World War II.

[ Stafford ] Yes.

[ Rushdoony ] Well, to throw in something that gives a better look to the future, we have had a lot of trouble on the farm in recent years, precisely because since 1975 the weather has been so unstable and is likely to continue and this has created major dislocations for farmers, losses of crops, sometimes three, four years in a row. And people have lost their farms.

However, we have, perhaps, the highest percentage of farmers whose farms are paid off now than we have ever had. So we are developing out of all of this fall out a nucleus on the farm that is stable and is better able to ride out disaster than every before. That is a very healthy fact, because usually your economic catastrophes are prefigured by the collapse on the farm front. And the farming community is stronger now than it has ever been before.

[ Stafford ] There are some interesting analogies to the investment market and the financial markets out of that, Rush. During the period 1966 to 1980, roughly, something like one third of the stock brokers left the business and during that period of markets which were very unstable the stock that was available for trading tended to accumulate in the hands of what we call strong holders, people who were going to hold it for a long period of time, were not going to be easily shaken out of their positions so that anyone who wants to come along afterwards and purchase, say, American Telephone, General Motors, whatever, will have to bid the price up to get it and that is why it is interesting that you have commented, David, and others now have seen it coming up more and more in the last several months that the analogy is being made to the 1920s when we had that tremendous stock market boom.

One other thing that we were talking about earlier was the process by which the disintegration would take place, hopefully not leading to revolution, but perhaps. And many have been talking about an outright almost over night collapse. You suggested the possibility that the process could take actually many decades, although there would be many crashes that would look like the real thing along the way. And then you were talking earlier about how capital can be destroyed slowly and about the arrogance of certain persons of ... in the over 60 category who have the two homes and the trailer that they drive in between. Having come from Florida I saw a lot of that and what I also saw was the destruction, as you were talking about, of paper assets. These people felt that if they put their money in treasury obligations either t-bills or treasury bonds or they put their money in municipal bonds that they were entitled to be protected against any threat to those securities or to those investments. The realty is that the inflationary or I would rather say currency destruction policy of the U S government has reduced the purchasing power of these investments so that even thought these people have the illusion of being wealthy, in fact, on an incremental, day to day, week to week, month to month basis their capital is being absolutely destroyed.

[ Rhoads ] Well, there is no question about it. And it... really in... in philosophical terms I think what we can say is that we are coming to the end of our materialistic era and like all pendulums in the human world this spiritual and materialistic pendulum swings too far in either direction, too. A friend of mine said once and I thought it was profound that human begins tend to extrapolate to the ridiculous. So now we have extrapolated to the ridiculous on a materialistic world. What will have to happen is that we have to come back to our senses. And the swing then will go to the spiritual side and this swing takes maybe a thousand years for the full period, from one to the other. We are coming to the end of a thousand year materialistic swing and we will head back in the other direction and it is really said, though, when the swing begins to take place. People find out sometimes in a... in a... in a really hard way who they think they are. And in a materialistic world we tend to identify ourselves with our possessions and to lose a possession is to lose a piece of ourselves.

And a friend of mine who is an attorney in Tampa, Florida and works with a lot of retired people down there and he told me that his concurrent indicator in inflation is the suicide rate at the retirement community there that he services. And whenever the inflation went up another notch people would begin shooting themselves or taking gas or whatever because they saw their standard of living going down and they couldn’t face it, you know? It turns out that the destruction of the bond market or stock market collapse will have the same effect. The people going out the window I the 20s there in 29 to 32, were people who had their identities tied up solely in their assets. And when their assets disappeared, they disappeared and all they did was throw the empty shell out the window. We will see more of that as this adjustment takes place.

On the other hand, there will be people with perhaps a more sensitive to... just more sensitive to religious things and are able to come to their senses and understand where their real being is. And then we will begin nurturing and ... and growing the spiritual values in will see us into the next era.

[ Stafford ] I had no idea that this discussion to day would have... end up having anything to do with abortion, but recently I saw a NOVA program about the China one child policy and apparently the way that the people in China are being sold on the idea of limiting their family to one child is that they are ... an appeal is made to them on the basis of materialism, that if there are fewer mouths to feed that all will have more. And what that has led to is the justification of even seven and eight and nine month abortions. It has led to infanticide, especially the destruction of a ... an infant girl because if you can only have one, then ... and you would rather have a son then you have to get rid of the girl so that they will give you a piece of paper that allows you to try again.

And what you were saying about these elderly committing suicide because they foresaw a lessened materialistic world for themselves, I think, almost fits in perfectly with that experience in China right now. That is the People’s Republic of Red China that I am talking about.

[ Scott ] That is a... signs of a dying era. And in some respects I some times feel like a citizen of the old Rome in its decline. But what is under way here as well as was under way there is a revived Christian community and probably nothing else would revive it so much as the decline of all these icons of false gods and, hence, illusions.

[ Rhoads ] Total discrediting of the state is what this to happen.

[ Rushdoony ] Yes.

[ Rhoads ] And it is taking place now.

[ Stafford ] Right.

[ Rhoads ] It... I... I was very impressed as I began digging into this economic situation and finding a story book parallels and all said the end, the end, the end and somebody said, “Well, you find what you look for.” And if... if... if you don’t like the scenario of the end, then go looking for a beginning and, by golly, there are beginnings out there.

[ Rushdoony ] Yes.

[ Rhoads ] And ... and ... and it is just thrilling to be associated with them, you know?

[ Rushdoony ] There is a line in the poet William Blake who despite some Gnostic ideas and all sometimes came up with profound insights. At one point in one of his poems he wrote, and I quote, “I saw the finger of God go forth giving a body to falsehood that it might be cast off forever,” unquote.

Now to me that is superb. And this is what is happening now. The false god of Statism is being given a body in the providence of God so that people might see the enormity of their hope, the evil that is embodied there so that it might be cast off forever.

So I feel, yes, we are in the dying days of Rome, Otto, but I think we are the young Christians who are going to take over and remake the world and, by the grace of God, see some marvelous things come forth.

[ Stafford ] Amen.

[ Rhoads ] Well, they are happening already.

[ Rushdoony ] Yes.

[ Rhoads ] And they happen in ... and they happen in each person and each one that goes looking has the opportunity to find that in himself.

[ Rushdoony ] Yes. Well, this has been a most rewarding discussion and I think we do need to recognize the hope is there. The future is ours, because we are living in a world that is committing suicide. All around us we see the old world of Humanistic Statism following an suicidal course. There is an old saying in both Christian and pagan forms. The gods are god would destroy they first make made. Well if you want to see that madness, listen to the evening news and listen to what the politicians are telling us and the candidates especially.

Hart and Mondale have promised everything except 12 months of spring and a reversal of aging processes, but maybe they will get around to it, because they are going to run out of promises.

[ Scott ] Never.

[ Stafford ] Otto is the guardian of the promises bag.

[ Scott ] They will never run out of promises.

[ Rushdoony ] Well, they are going to repeat themselves before long, because I don’t know what else they can promise.

[ Stafford ] A car in every garage and two chickens in every pot.

[ Rushdoony ] Yes.

[ Rhoads ] Well, I think the thing to... to keep upper most in mind is that we are not destroying anything real. We are destroying the illusions and while we would like to think that we are very wealthy we have to come to the reality that we are not and once we come to the reality and that understanding then there is a lot we can still do with that, because even with 20 percent of what we think we really had, we have got a lot more than we had 40 or 50 years ago.

[ Stafford ] We have got a lot more than anybody else in the world has.

[ Rhoads ] Why I...

[ Stafford ] You know, David, you and I yesterday were talking about how we have made mistakes as well as successes in the investment markets and how we have felt after...

[ Rhoads ] Please, now, we are on tape.

[ Stafford ] Oh, I am sorry. Whoops. I thought this was over. And how you feel pretty bad, very, very low... from a very high to a very low when the markets move against you. And it seems as though the... the world is over that the... you know, at least as far as you are concerned, but as I went through this process back in the ... in the 70s trading for my own account, I found that ... that after I went home and had dinner and went to sleep, I got up the next morning, the sun had risen. My apartment was still there. Seattle was still there. Mount Rainier was still there. And the world was just going on. The fact that Stafford had lost a couple of thousand dollars in a stock trade the day before really didn’t have too much effect on the world.

[ Rhoads ] Yeah.

[ Stafford ] So I think as this whole discussion has pointed in this direction, if we get back to basic values, sound values, the family and personal relationship and communities, that this is where it is really at as they say in the current vernacular.

[ Rhoads ] Yeah.

[ Rushdoony ] Yeah. Well one of the exciting things that big John, John Saunders Quaid who is on film location right now and can’t be with us has discussed with some of us is this. He is in touch with a number of men, inventors and the exciting thing is there is a tremendous new technology in process of development and the key figures in this new technology are Christians, Christian inventors.

So we are going to take leadership away in one area after another simply because we have a bankrupt faith and you have the reign of the dunces and in the other camp. I shall never forget how some years ago at a major university one of the professors angrily and with disgust commented that there were not among the many, many, many thousands on campus 15 first rate minds. Most of the rest were into the drug culture, the sex revolution and anything and everything except thinking.

Well, we have the minds on our side now. During the 50s when I was speaking on campus it was painful. Those who called themselves Christians were the dimwits, the left overs who did not want to think, who had no business on campus and were painful to be around, because they were so deliberate and determined not to face up to what the world was. They wanted to run away into their little pietistic devotions.

Now if you go to any campus in most instances the most intelligent students are Christians. We are capturing the leadership. So the future is ours.

Well, David, it has been good to have you with us. Is there a last word you want to say for this particular taping session?

[ Rhoads ] No, I can’t think of anything. It seems like we just had to ... we had to try a lot of things before we finally decided, as I did some time ago that I just can’t live this life by myself. I am going not have to have some help from God and we have been through some rather traumatic periods and tried everything and the results have pointed to the fact that we just can’t live this life by ourselves. And a lot of people are coming to that understanding now and with that understanding I think will come a whole new era.

[ Rushdoony ] Yes, I agree. Well, thank you David and thank all... I want to thank all of you who are listening. God bless you and keep you. We will be with you again in two weeks.

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