From the Glenn Beck Show - 10/13/08

BECK: Hello, America. I know you`re tired, and I`ve got some news that we really have to face together. I`m going to try to -- try to make it easy. It`s making my head hurt. 


When I hear people talking about the bailout, the first question that comes to my mind is, oh, really, which one? Every time I turn around, it seems like someone else -- the government, G-7 -- I don`t know, is Ronald McDonald in the government yet? -- is writing some giant Jerry Lewis check, you know, to save somebody`s butt, somebody who should have to live with the consequences of their own bad business decisions. Why are we continuing to pay for this mess? 

Here`s "The Point" tonight. These bailouts have got to stop, and they have got to stop now or we`ll be using wheelbarrows of cash to buy loaves of bread. These bailouts are the last bullets that are in our gun, and if they don`t hit the mark, there`s no more money and there`s no time to reload. And here`s how I got there. 

Over the weekend, the leaders for the International Monetary Fund and the G-7 nations got together in Washington to coordinate their efforts -- that sounds spooky -- to stabilize the world financial market. One world government conspiracy theorists take note. They ended up with a three- point plan. And here they are. 

Point No. 1: keep cash flowing through the financial system, a.k.a., print more money. Recapitalize the banks. Print more money. And restart lending to businesses. Print more money. Gee, all those sound pretty obvious. Why haven`t we been doing them all the time? 

Here`s the thing. These ideas all cost money. Buying a new Ferrari sounds like a good fourth idea. You know, I don`t have the cash to pay for it. Big deal. Can you imagine, if you wanted that new sports car so bad, but just declared bankruptcy, I`m completely penniless. 

Let me ask you the question. Can you imagine being so overleveraged, so -- so out of cash that you can`t even afford the basics. Only you come home and say, "Honey, honey, honey, I was just at the bank, and I got a whole bunch of more money. Let`s go shopping and stop by and get that Ferrari I`ve always wanted." 

This is -- we`re talking trillions of dollars, and it`s a gamble. And these guys are gambling. They`re putting us, you and me, all in. All of our chips are on the table. Are you comfortable with that? 

Tonight, America, here`s what you need to know. One of the biggest sticking points with this financial crisis is that banks aren`t lending money to other banks. They`re stuffing it in the proverbial bank mattress. There`s been a run on their banks. Over the weekend, the Fed, who has mishandled this situation, oh, I don`t know, since maybe 1914, finally did the smart thing by deciding to insure the loans from one bank to another. The problem with this idea is, it should have been the first thing they tried and not the last. Instead, they`ve put you and me way out on a limb. 

When everybody figures out that these schemes don`t work, and I believe they`ve already figured that out, there`s not going to be any place for us to go but into hyperinflation. 

Representative John Culberson is the Republican from Texas. 

Congressman, you voted against this bailout bill, I believe, two times. 

REP. JOHN CULBERSON (R), TEXAS: Twice. 

BECK: Yes. They did it anyway. 

CULBERSON: Right. 

BECK: But now over the weekend, all of a sudden it`s like, "Oh, yes, you know that thing we talked about in Congress? No, we`re not going to do any of that. But we`re going to take that money, add to it -- right -- and do something entirely different." 

CULBERSON: Right. 

BECK: When did this happen? Where is this in the Constitution? 

CULBERSON: It is unfortunately, probably, constitutional because of the commerce clause, Glenn, but what we`ve done, however, I think the level of authority that we`ve granted the secretary of the treasury could be challenged because it`s so unprecedented. 

We`ve literally created a king, Glenn. Secretary Paulson is now King Henry, has complete authority to do whatever he wishes with that $700 billion. We in Congress were told this emergency required that this $700 billion be given to the secretary so he could buy up the toxic debt. And then, you`re right, this weekend he said, "No, never mind. We`re going to nationalize the banks." 

BECK: And wait a minute -- the -- well, first of all, nationalizing the banks, do we have that clip? This is me from, I don`t know, three months ago or so. Watch this clip. And this isn`t the first time I said it. Watch. 

(BEGIN VIDEO CLIP)

BECK: If you look what our government is doing, they`re talking about, "Ph, it`s too big to fail," or "We should nationalize these." We`re looking at the financial, energy, transportation, and health-care sector. 

(END VIDEO CLIP)

BECK: I said back then...

CULBERSON: Right.

BECK: And it`s all coming. It`s all coming. 

CULBERSON: Right. And how do you stop feeding a shark? I mean, if you feed sharks, they just get hungrier. What`s next? I mean, we`re going to bail out the -- we`re going to nationalize the automotive industry? 

BECK: They will.

CULBERSON: California said they don`t have enough money. 

BECK: They will.

CULBERSON: There`s no end to this, Glenn. Unfortunately, this is where it ends. 

I don`t know if you can see this. This is a $50 billion bank note from Zimbabwe. And if we`re not careful, this is going to become the Weimar Republic. 

BECK: It is.

CULBERSON: This is what`s concerned me for years. This is why I burnt out my "no" light on the floor of the Congress, voting against all of these incredible spending programs. And we have to have a revolution in this country at the ballot box and elect rock-ribbed, hard-nosed fiscal conservatives who are going to get this under control and get back control of the government. 

BECK: Congressman, is it true that Fannie and Freddie is now getting $40 billion a month -- $40 billion a month to bail out these bad mortgages. That`s an additional $500 billion. 

CULBERSON: That`s right. In fact, Glenn, it`s hard to keep track of how many hundreds of billions of dollars have been pumped into not only Fannie and Freddie, but into the investment banking system by the former chairman of Goldman Sachs, Henry Paulson, bailing out these investment banks with our dollars. And as far as I can tell, Glenn, the banks have been burying the money in the backyard. 

BECK: I know, I know. They`re holding on to it. Because they know what`s coming. They know what`s coming, and it ain`t pretty. 

CULBERSON: And they won`t show each other their real balance sheets. 

BECK: Right.

CULBERSON: It`s a real concern to me that the minute we change that mark-to-market accounting rule, we didn`t see a change in the asset sheets of these banks. 

BECK: Congressman, I thank you very much. And keep up the hard work. 

CULBERSON: We are going to keep it up, Glenn. And thank you for ringing the fire bell on this. And this is too important. We`re going to get this country back. We`re not going to become France without a fight. 

BECK: I think we`re already there. Congressman, thank you very much.

More on the madness of this bailout in 30 seconds. Don`t go away.

(COMMERCIAL BREAK)

BECK: I have a lot of people who talk to me offline, if you will. They -- they`ll tell me things they won`t tell anybody else because of their position or, you know, they don`t want to seem crazy or whatever. 

I got a call from a friend of mine who is very high placed. He said, "Everybody I know, Glenn, is reading about the Weimar Republic." 

And I said, "Oh, jeez, the Loaf-of-Bread-with-a-Wheelbarrow-Full-of- Money Republic?" 

He said, "Mm-hmm." 

It is what a lot of people believe is coming. Try to buy a book online about the Weimar Republic. You will have a hard time finding some of the books. A lot of them are suddenly gone. Who`s reading them all and why now? 

Peter Schiff, president of Euro PAC and author of the "Little Book of Bull Moves and Bear Markets."

Peter, worst nightmare looks like it`s coming -- coming true, because you know, as much as anybody wants to say that we`re borrowing this money, we are borrowing some of this money. But people are also asking for insurance, if you will, on our treasuries, which has never, ever happened before. 

We need credit default swaps on our treasuries now to make sure that - - because some people are saying, "I don`t know if they`re good for the money." 

We`re printing a lot of this money, aren`t we? 

PETER SCHIFF, PRESIDENT, EURO PAC: Well, I think that`s where it`s going to come from. Remember, credit comes from savings. And we blew through most of our savings when the dot com -- dot com bubble crashed. And then we started borrowing a lot of money from the rest of the world. 

Wall Street helped us do this with these structured powers, so we tapped into the global savings glut. We borrowed from China and Saudi Arabia and Russia and Japan. But now we can`t pay the money bank, and nobody wants to lend us any more, so they`re trying to recreate it with a printing press. And that`s exactly what happened in Weimar Republic, Germany. That`s what`s happening in Zimbabwe right now. 

BECK: When you have -- when you have inflation, let`s just say -- let`s just say that unemployment next year, next summer is maybe 10 percent. And you inflation at what -- what do you project next year, just by the amount of money that we put into the market? 

SCHIFF: Well, I think it`s already running a little bit north of 10 percent. I think pretty soon, maybe a year or two down the line, it`s going to be going at least 20 or 30 percent a year. The government won`t admit it, but it will be. 

BECK: Right. But they won`t admit it, but we`ll feel it. When inflation is 20 percent, you have unemployment at, you know, at least 10 percent. What happens then? People can`t pay their bills. They can`t pay their mortgages. They can`t pay their credit cards. I mean, the whole thing starts to fold. 

SCHIFF: Glenn, they already -- Glenn, they already can`t pay their bills. They already...

BECK: I know! 

SCHIFF: And the government, instead of encouraging us to start saving now so we can pay back the debt, they`re trying to encourage us to borrow even more money and spend that. 

You know, what`s going to happen, of course, is as inflation starts running out of control and prices start going through the roof, the government again is going to focus on the symptoms and not the disease. 

And they`re going to impose price controls on energy, on food, on a lot of other things that are vital, which means shortages, which means long lines, black markets, civil unrest. All this stuff is coming if we don`t stop. 

BECK: OK. Peter, let me be just a conspiracy guy here for just a second. Because what drives me crazy is, all these people are so very smart. They know. I mean, I got a call from somebody who`s in the know, and says, everybody is reading about this. Everybody is where. And this is a guy at the highest level of global banking. 

Are we being pushed into a global one-financial system? What is happening? 

SCHIFF: I don`t know what`s going to happen as far as the global currency, but if you remember the Weimar Republic, they were in trouble because of the reparations from the treaty of Versailles. Huge external liabilities. 

BECK: If you`re not -- if you don`t -- if I may take you back one step, they got into a war and decided they didn`t want to finance it with taxes or finance it with bonds. They just decided to run a deficit. That was the first step. 

SCHIFF: Right. That sounds very familiar. 

BECK: Yes.

SCHIFF: That`s what we`re doing with Iraq. But the thing is, we owe the world probably as much, if not more, than Germany owed, only we didn`t incur this debt fighting a war. We incurred it remodeling our houses and buying cars and television sets and iPods and all these little gadgets that we didn`t need. And now we owe the world trillions, and we`re reaching for the printing press to pay it back. 

BECK: And we`re also reaching for a stimulus package, which we have to go to the printing press to get that, too. And all those tax rebates and everything else. 

SCHIFF: All of it is coming from a printing press. There`s no more money. 

BECK: OK.

SCHIFF: We can`t borrow it any more from the rest of the world, because how can we pay it -- we can`t pay back the money we`ve already borrowed. 

BACK: Somebody -- I talked to somebody at church yesterday, and he said, "I was reading something" -- I want you to stick around for a second after the break. I want to talk to you about something else that has been on my mind and apparently, at least according to one of my friends at church, you -- it`s on your mind, as well. 

Did the administration hard sell Congress on the bailout by dangling the threat of martial law? What`s all that about? And martial law. Peter just said it. We`re going to talk about it next.

The issue of racism also is rearing its ugly head on the campaign trail. What does a 1960s segregationalist [SIC] have to do with today`s presidential race? Yes, I`d like to know the answer on that one, too.

(COMMERCIAL BREAK)

BECK: Coming up, Barack Obama will cut taxes for 95 percent of Americans when he takes office next January. Sweetness. I mean, unless you`re part of that nasty 5 percent. 

Shouldn`t be a problem, you know, to cut taxes in the middle of the largest government spending spree of all time, right? Cutting taxes is a good thing. 

Oh, yes, and by the way, he`s going to squeeze out universal health care, as well. That`s the kind of change I`ve been hoping for. I`ll tell you the truth behind the tax plan in tonight`s "Real Story." Don`t miss it. 

But first, when people are frightened, they make different decisions than they would when they were feeling safe or secure. Sometimes when that fear is justified, I mean, it`s common sense. But when that fear is manufactured, it feels an awful lot like coercion. 

For instance, when the U.S. bailout Bill was trying to be jammed through Congress, some members say there was an organized effort to scare them into signing. 

Here is the California Democratic Congressman, Brad Sherman. 

(BEGIN VIDEO CLIP)

REP. BRAD SHERMAN (D), CALIFORNIA: Many of us were told in private conversations that, if we voted against this Bill on Monday, that the sky would fall, the market would drop 2,000 or 3,000 points the first day, another couple thousand the second day, and a few members were even told that there would be martial law in America if we voted no. That`s what I call fear mongering. 

(END VIDEO CLIP)

BECK: OK. We`ve called this congressman`s office. He`s not speaking to the press. I wonder if there`s more fear or intimidation going on. Martial law, could it really have happened? 

Joining me once again is Euro PAC president and author of -- and author Peter Schiff. 

Peter, let`s talk a little bit about martial law. Why would that even be a consideration? 

SCHIFF: Well, I don`t think it was a threat if they had rejected the bailout Bill, but I think it is a possibility a few years down the line. We just spoke a little bit about price controls and the effect that they`re going to have. 

If we have shortages of food, if we have rolling blackouts. And people are upset, and they`re hungry, and they`re cold, there could be civil unrest. There could be looting, rioting, and that might be the impetus for the government to declare martial law. 

BECK: You know, I don`t think you`re a couple of years away from something like that. I mean, honestly, Peter, I mean, look at what`s happening. In a half hour, I`ve got a congressman on about -- about the racism cries. I mean, there are people that are right now so disenfranchised, and I think being encouraged to be disenfranchised on both sides, that at any time this damn thing could break apart. 

SCHIFF: Yes. And we`re giving the government so much power. And you know, you give up a lot more civil liberties. When you have martial law and you`ve got the military policing our streets, when you`ve got suspension of habeas corpus, you`ve got curfews, you can`t be out of your house after dark, and they can just pick you up and put you in prison and keep you there indefinitely without charges, and there`s nothing you can do about it?

I mean, we`re giving up one liberty after another, all to protect ourselves from this economic crisis, which needs to happen anyway, but it doesn`t need to be nearly this bad. 

BECK: Peter, this is -- I mean, we`re in Crazytown, USA. But my gut tells me that, two years down the road -- let`s just use that number -- this country is not going to look anything like it does today. Our world has changed; it just hasn`t caught up. 

SCHIFF: Of course. I mean, we`ve blown way by France already. We`re not going to become France. I`m hoping we don`t become Zimbabwe, but that`s where we`re headed. 

BECK: Explain that. Because most people -- most people will say that`s -- I sat with a guy -- I sat with a guy this weekend who`s a good friend of mine. He said, "Glenn, I`ve got to tell you something. Six months ago" -- he`s in the financial business -- he said, "Six months ago, I thought you were crazy." He said, "How did you know?" 

And I said, "It`s common sense." 

SCHIFF: It is common sense. 

BECK: Right.

SCHIFF: And, you know, people think that hyperinflation can`t happen here. Well, you know, the laws of physics works everywhere. If you throw a ball up in the air in Zimbabwe, gravity`s going to bring it back down, just the way it is here. 

And economics is a science. There are laws. And it doesn`t matter where you apply them. You`re going to get the same result. So if we follow their monetary policy, that`s where we`re going to go. 

We need to replenish our savings. And the government is not letting us do that. The government is forcing spending. They`re force-feeding spending down our throats. 

BECK: Peter, do you -- do you remember -- do you remember in the Great Depression -- I mean, not like you or I were there -- but I`ve been doing my homework on the Great Depression the last couple of years. This is what -- exactly what the government did. 

In fact, in 1935, they said to companies, "You must spend your money or we tax it all and take it away." 

And the companies said, we can`t do that, we won`t have any money for a rainy day. Low and behold, a rainy day came, crash again. 

SCHIFF: The left-wing agenda wants us to think that the reason there was a depression was because the government didn`t do anything. That`s not true. 

(CROSSTALK)

SCHIFF: There were actually people that were advocating the government do nothing, but they didn`t. They did a lot. Hoover did a lot of things, and he created a lot of damage, and then Roosevelt came in and did even worse stuff. 

BECK: Yes, yes. And it goes -- you know, America, go look for the little blue eagle. I remember always seeing that little war eagle. That was price control. That meant -- the government was basically saying, "Do not shop or buy any product without that blue eagle, because they won`t promise to sell it at a certain price." I mean, what kind of country were we living in? And we`re going back. 

Peter, thank you very much. 

SCHIFF: Thank you.