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Is The Japan Debt Crisis Ready To Blow And Is The Government Supporting Terrorists? with Tres Knippa and Patrick Poole– Episode 160

Tres KnippaWake up America! Wake up! During this week’s radio show our friend Tres Knippa opens our eyes to why the Japanese economy is bound to fail and Patrick Poole shows us that the government is helping terrorists accumulate weapons. This show is one that will show you the direction that Japan, who by the way accounts for a third of the world economy, is going. I’ll just let you know, it’s going south, fast! Knippa joins us to tell you about why the Japanese government is making some outlandish decisions when it comes to their bond market and why they are on a slippery slope to disaster.

For the second half of the radio show, we are joined by Patrick Poole who helps break down the inner workings of the multitude of government scandals, including Benghazi. Poole’s opening line is, “Basically, our overthrow of Muammar Gaddafi in Libya has set off a chain of events that is causing…that has empowered Islamist rebels in Africa and in the Middle East.”

This opening line will spark a mind-blowing discussion of how the man who is in line to assume the presidency in Libya, Abd Al-Wahhab Muhammad Qaid, is the brother of former Al-Qaeda second in command, Abu Yahya al-Libi. Poole goes on to say that we (the United States) made this happen. And if that isn’t enough, Poole goes on to tell us that the U.S. is moving weapons for a Syrian rebel group who is aligned with Al-Qaeda. What is going on?

Off The Grid Radio
Ep160
Released: June 6, 2013

Bill:                  We are back with our good friend Tres Knippa. Tres, talk a little bit about—you’re with us in March. Talk a little bit about what’s happened since then. At that time we discussed the Japanese Yen and some of the little problems, some of the fault lines starting to show up and just recently we saw some more of those with the Japanese economy. What’s going on these days?

Tres:                Well right now the—April 4th will be a date that traders and people in finance will remember forever because April 4th is the day that the Bank of Japan made their big announcement that they are all in. And what I mean by that is on April the 4th they came out with their plan to monetize their debt, to increase their money supply, they want to double their money supply in 18 months and the whole idea is to battle the horrors of deflation. Now what have they gotten for that and what has been kind of the—what has happened to the market in the meantime? Number one, the Nikkei is rallying. So people are saying “Hey great!” All the Kenzians are running and doing their victory laps saying “Hey, do you see? The stock market’s up. That means it’s working.” Well now what they are trying to do, and what with their new prime minister and the guy who’s now, Kuroda, who’s now the head of the Bank of Japan, they’re trying to create some inflation.

Now, in my mind, in my opinion here, when the Japanese—the chance that the Japanese will pay back their government debt is zero. I don’t think that they will ever pay that back and there will be a very painful restructuring of government debt in Japan down the road. And they will look back on April 4th and they will look back at the comments that they’ve made and the first thing that pops up into my head is is that when they write a book about this trade and about what happened in Japan, the book will actually read like comedy. So for instance, they are targeting an inflation of 2%. Why would you want inflation if the yield on your 10 year treasury is .60%? If I’m a bond holder and you have generated 2% inflation and you’ve done it by cratering the currency, which they’ve done. The yen is down 35% to the dollar. As a bond holder that is an IOU. I’m going to lend the government money, they’re going to give me an IOU and then I’m going to let them pay me back in devalued currency? No way. The smart money is selling those bonds and they’re selling lots of those bonds.

Let’s take a look at the market action since that announcement was made. The Bank of Japan announced that they’re going to buy an unlimited amount of Japanese government bonds. I would guess that if the US government announced that they were going to buy an unlimited amount of wheat, wheat prices would go up and wheat prices would go up a lot. So after the Japanese government announced that they were going to buy an unlimited amount of bonds, isn’t it logical that we might think that bond prices went up? But they didn’t. Bond prices have dropped since April the 4th. Wait a minute, how can that happen? They’re buying bonds. Why are bonds going down? Because just what I said about the currency. Why would I let you pay me back in devalued currency? So the bond holders are starting to sell.

Now, the yen weakens, the bonds drop off and then oh here comes an economic minister to the rescue. An economic minister for Japan comes out and he says “No problem. We understand that the bonds have seen some weakness. But the Bank of Japan will step in and try to calm the market down.” Really? By doing what exactly? By them announcing that they were going to buy bonds and weaken the yen it weakened the bond market. Now they say that they’re going to try to calm the market down by doing what? By buying more bonds because it’s all they can do is print more and buy more. That’s it. All they have is a hammer in their toolbox. So they’re going to hammer at everything that even looks like a nail. So what happens on that announcement that they’re going to buy bonds? The yen weakens even more. So they are in a trap. This is not going to work. You do not—you increase GDP and you increase growth by doing two things; an increase in population or an increase in productivity. Which one of those happens by doubling the money supply? Neither. It’s a complete joke and it’s just not going to work.

Bill:                  So, Tres, what if you’re a holder of…as we had talked the first time in an interview in March, if you’re a holder of Japanese public pension fund money, if you’re a school teacher or something in Japan; I think there’s 68 trillion, 64% of that fund is in the bonds that you were talking about.

Tres:                Yeah.

Bill:                  How does that play—I mean these are average people in Japan. And what I’m trying to play off is you’ve got another country near and dear to us trying to do something similar. How does it play out for that average pension holder? What happens to their savings?

Tres:                There is—there are going to be enormous losses of savings in Japan. There’s going to be enormous losses throughout the world when this goes down and it’s my job to not be one of them. And I think that there’s positions you can take that actually profit from if you saw rates in Japan spiked. I think rates are going to go literally into the teens or the 20s before they have a restructuring. But if you think about it, let’s say the bonds get restructured. Let’s say I own a hundred thousand dollars’ worth of bonds and they pay me back twenty cents on the dollar. What is the difference between that and—let’s say the yen goes to 500 to the dollar; by the way I think it will I think the yen has an enormous amount of downside to it because this is all they can do. They’re going to put off that haircut in the debt and they’re just going to destroy the currency. So if suddenly the yen goes to 500 to the dollar, why is that not the exact same math? I can buy one-fifth of what I could before or I get an 80% haircut on the debt that I own. So there is going to be an enormous amount of money lost but there’s been an enormous amount of money lost already just in devaluation of their currency. That is the definition of inflation.

Inflation is a reduction in purchasing power by every definition. So you reduce purchasing power not only on the expense side, all of their exports cost more, all their energy is imported; not exports, all their imports cost more, their energy costs more, food costs more. They’ve given their country some inflation but what I find odd here is when did inflation become a stated policy objective of a central bank? I always thought inflation and a weak currency, I always thought that was a side effect of central bank activity. Now all of a sudden it’s what they’re trying to do? I think all that’s nonsense. The stated policy objective, they know it’s a side effect so they’re just going to come out and say “Oh that’s what we meant to do even though we know it’s bad for the citizens.” And yet, not to imply the citizens are foolish but all that’s happening and the new prime minister of Japan, his approval rating is skyrocketing. Why? Because of the stock market’s going up with it because it is inflating.

Bill:                  So unlike—we’d talked about this as well in March. But unlike Greece and some other countries that have huge debt problems, talk a little bit about how Japan is different by virtue of the size of their economy, their place in the world economy.

Tres:                So Greece has the same size GDP as the state of Indiana. No disrespect to the Hoosiers who might be listening. But Greece doesn’t matter. The only reason Greece mattered was because people thought that there would be some contagion, it would spill over into Spain, Italy and whatnot. But guess what, the ECB came to the rescue. They said “No, no, no. We’ll buy all the bonds we have and we’ll stabilize this market” and yields dropped back down. Does anyone realize that these bond market—the government bond market in Japan is equivalent to the size of the US economy? They are the third largest economy in the world. If and when they have a debt crisis it will ripple through every financial market around the world. They’ve got a very significant banking center there. Their banking system is quite large. There’s just no getting around the fact that if and when this happens to Japan—and never mind that Japan has taken, I’m from Texas so I’m going to use football euphemisms all the time. Japan has our playbook and they’re following it. And what I find peculiar with their plan is this is the same plan they’ve been doing for 20 years; more government spending, more fiscal stimulus, more money printing, more monetizing the debt, etc. etc. And it hasn’t worked. So let me get this straight; I can sit here and hit this button and this button hasn’t worked so I just need to hit the button a lot harder. That’s the answer.

So Japan, they had their real estate crisis 16 years before we had ours. So we are headed down that road that Japan is on, too, of a no growth environment and high debt but they just have a 16 year head start on us.

Bill:                  So, Tres, what can people do? I think the average listener is saying “Okay, this still seems remote to me. It still seems a bit of an abstraction, a ticker that’s going on on MSNBC or just some kind of financial news program. The ticker goes by and it doesn’t change the game.” Create a little bit of a scenario for us. Let’s say the worst happens. Let’s say the worst in your mind happens. How does that affect the average person in the United States? I mean is there a similar situation to Jimmy Stewart in It’s a Wonderful Life? Are you on your way to your honeymoon and you see big lines at the bank? How does it—is it 2008 on steroids? How does it really come down?

Tres:                It will make 2008 look like a picnic. If you will go back and look at what the stock market did when Greece had their debt crisis, and like I said Greece doesn’t matter. Our equity market was under relentless pressure. We need to see what happens when Japan goes down. I mean we’re talking about a major part of the economy completely turning upside down and collapsing. That is a very very big deal and that will send shockwaves through the market. Just spit balling here but I think the US markets will be worth one-third of what it was after this happens in Japan because people are going to try to run to safety and this will ripple through the world economy and it will cause an inordinate amount of problems globally.

Bill:                  Well it seems like—you know someone had said there’s no markets, only interventions. It seems like things—the reason people are so jaded, Tres, it seems like it just goes on and on and on and there’s no cause and effect to the universe anymore anywhere. We don’t see cause and effect socially; you can do whatever you want, there’s no punishment. We see this in the economic world. Give us a little bit of a timeline, and I know that’s the hardest thing to do but we live in a crazy world.

Tres:                We live in a world where you can have a company that fails yet you do not have to declare bankruptcy. Listen, capitalism without bankruptcy is like Christianity without hell. It just doesn’t work that way. You’ve got to punish bad decisions. You also have to punish governments for making bad decisions. When they spend more than they take in, granted they’re able to kick the can down the road and they’re able to kind of extend this out over time to make it not seem as bad but this is a trap that these governments are in. So I welcome the—there will be enormous amounts of opportunity once we—the markets will push back against these horrible policy decisions.

You know, one number that I look at and it was a number that has been argued about and debated and that sort of thing, and it was this number of 90% debt to GDP, that once you get to 90% debt to GDP that it slows your economy. Now that number was come up with by Reinhart and Rogoff who wrote the book This Time It’s Different. So now some people on the other side of that argument have stepped in and they’ve said “No, no, no, their data was wrong and that’s not the number.” Okay, maybe 90% on the nose wasn’t the number but let’s just say it’s somewhere within 5% of that. But an increase—the point of the book and the point of the thesis was that if you increase government debt it slows down your economy in every instance throughout history, every single time. It is a negative component to an economy to have that much debt on the government. Tax rates are too high; you’ve got misallocation of capital, all those sort of things. So some markets need a reset and Japan’s one of them. This is the big Kenzian experiment. I think it’s going to fail and I think it’s failing right in front of our eyes.

Bill:                  Well and to use your football analogy, if your quarterback keeps getting sacked that’s not a bad thing. That’s a good thing because now you’ve got a feedback loop; you’ve got some information on what doesn’t work. The markets need this rapid loop and when you postpone it, Tres, don’t you sort of postpone and create something that is bigger than if you would’ve just let the problem, as you say, the punishment that’s available in the free markets adjust itself?

Tres:                Sure. I grew up in a ranching background and one of the things we learned about was controlled burning of brush and things like that. If you have small fires in the short term, then you don’t have a massive fire later on. So we’re going to put out all these small fires and so suddenly the underbrush becomes basically kindling for the fire and then when something happens, it gets completely out of hand. In the financial markets we can take that analogy and we can apply it to volatility. And what I think’s happening is central banks are repressing volatility as best as they possibly can. They don’t want something bad to happen. They don’t want people to see—what’s a shame is that investors and individuals, they don’t see the negative consequences. If you want to see the negative consequences of inflation all you have to do is study the Arab Spring.

The Arab Spring happened as a food riot. Why do people riot about food? Because it costs too much; it is an inflation problem. That is an outward sign that there is global inflation, that we do have an inflation problem around the world and it has negative consequences. Now in the Middle East they’re in a situation where they overthrew a few of the governments there. So and I’m not saying that that’s what’s going to happen necessarily in the United States. However, they’re going to continue to try to repress that volatility and keep those situations from happening.

Bill:                  Well, Tres, and we’ve got just a couple of minutes. Do you want to talk just shortly about your solution to this?

Tres:                Well for me, like I said, I think that taking a position shorting the bond market, shorting the yen, there’s a variety of ways to do this. Not all of my ideas are appropriate for every single investor. So I’ve got a website, shortjapandebt.com, listeners can go there, they can register and basically we’ll start a conversation. There’s a variety of ways to do this with a variety of ways of leverage and things like that. But I want to tell you a story. This happened when I was with my dad down on the beach in Texas. And we’re sitting on the deck of this beach house and my dad kind of turns to me and he says “Tres, what’s the world going to look like if you’re right?” And I said “Dad, it’s not going to be a pretty situation.” And he said “Why wouldn’t I put something…” I manage a fund and he said “Why wouldn’t I put some money in your fund and hope that you’re dead wrong?” And I think that he’s onto something because if I’m right and Japan has a debt crisis, this will ripple through the financial world. So I look at it as a defensive position to be short the yen, to be, you know, have positions short their bond market and things like that because when it happens I don’t think it’s going to be pretty at all.

Bill:                  What’s the minimum investment?

Tres:                The minimum in my fund is $30,000. But like I said, based on appropriateness for each individual person there are other things that they can do on a retail level by maybe shorting the yen, by maybe looking at some ATF’s and things like that. So there’s a variety of things to do and that’s just based on appropriate investments for the individual person.

Bill:                  And you can stay tuned to that by going to the website shortjapandebt.com. That’s shortjapandebt.com. Any other comments, Tres?

Tres:                I can’t thank you enough for having me on again. This is a dynamic situation and I think that the Japanese, by this never ending printing of more money and buying more bonds, I think that they have lit the fuse on the debt bomb in Japan and it’s a shame that our policy makers are clearly not learning from it. Some of our policy makers think the Japanese situation is a success.

Bill:                    Well, Tres, we hope…what can I say? We hope that you’re not right but it’s a ticking time bomb and it looks like it’s just a matter of time. So I want to say again it’s always a pleasure to have you with us and just thanks again.

Tres:                Thank you for having me.

Bill:                  Back with a different paradigm. Back with our good friend Patrick Poole to talk about the Middle East and Africa a little bit and just what’s been happening in the Islamic world. Patrick, thanks so much for being with us today.

Patrick:            Oh glad to be with you.

Bill:                  You know you sent me some articles over the weekend and I started cutting through that material and there’s a lot of it there but I think one of the things that’s certainly your area of expertise is just this Islamic extremism. And there’s a lot of things happening, Patrick, behind the scenes that I don’t think gets through on any mainline media; maybe Beck gets it a little bit and covers it. But just—why don’t you just start to fill us in a little bit on some of the material that you sent me? Especially a lot of the stuff that’s starting in Africa and it finds its way into all these other places.

Patrick:            Well basically our overthrow of Moammar Gadhafi in Libya has set off a chain of events that is causing—that has empowered Islamists rebels in Africa and in the Middle East. So Gadhafi—and again I’ve—Gadhafi was a horrible man. He got everything that he deserved. He had a longstanding blood debt with the United States going back to the discotheque bombing in Berlin and PanAm 103. So I’m not saying anything favorable about Gadhafi except for the fact he’d abandoned his weapons of mass destruction program in 2003. We began engaging with him. And Gadhafi was killing a lot of these Al Qaeda guys in Libya. In Iraq, Libya was the source of the highest number of jihadists fighting us in Iraq.  

Bill:                  I saw that chart that you sent. Was that a West Point chart that you sent? I think that someone sent over?

Patrick:            Yeah. That was the West Point Countering Terrorism Center did the analysis and it was the Libyans who were fighting us in Iraq and it turns out these were the same guys that we backed to overthrow Gadhafi. So much so that, you know it was reported here over the weekend; Jamie Densmore at Fox News had an article that the guy who’s in line to basically assume the presidency of Libya is the brother of the former number two of Al Qaeda who we killed in the drone strike last summer and the attack on our Benghazi consulate was for us killing al-Libi, the Al Qaeda number two. So we have the brother of the number two leader in Al Qaeda who’s now going to be basically the head political figure in Libya and we’re the ones who made it happen. And I would have to imagine that your audience hearing that would just think that that’s, you know, that this is just tin foil hack conspiracy talk, but that’s in fact what happened.

The senior military leader that we backed in Libya against Gadhafi, a guy by the name of Abdul Hakim Belhaj, who continues to be a senior militia and political leader in Libya, was a guy that we had captured in Bangkok and we had renditioned him; the CIA renditioned him back to Libya and he was in prison. So he was known to us. There was another guy, Abu Qumu, who was a former Gitmo detainee. Again, we knew exactly who he was. We had this Gitmo military commission profile. And the New York Times during the revolt called him a US ally of sorts. Well Abu Qumu is the guy that’s been fingered for being the one behind the attack on the Benghazi consulate back in September. So these were the guys we backed, guys who CIA had renditioned them. Abdul Hakim Belhaj, Abu Qumu, a former Gitmo detainee, and these were the guys we back to overthrow Gadhafi. So we installed Al Qaeda in Libya and have installed Al Qaeda.

Now when Gadhafi got overthrown he had these massive weapon stores and basically Gadhafi gets overthrown and Gadhafi’s soldiers just walk away from these weapons depots. What happened was all these Islamists groups from around Africa just ran and began grabbing these weapons stores. And what happened was these weapons are what’s now fueling the insurgency in Mali, which the French has invaded Mali to fight Al Qaeda in Northern Mali, Mauritania. Here in the past couple of weeks we’ve seen terror attacks in Niger, which is very important because Niger is one of the world’s leading sources of uranium.

Bill:                  And it was a mine. There was a mining incident, too, right? Speaking of that, right?

Patrick:            Yes.

Bill:                  Wasn’t that where one of these terrorists acts…?

Patrick:            Terrorist acts happened, yeah.

Bill:                  Yeah.

Patrick:            Was a French mine in Nigeria. In Niger, not Nigeria. And then you have Boko Haram in Nigeria, one of the biggest oil producers in the world, and Boko Haram is killing thousands of Christians in Northern Nigeria trying to establish an Islamic state. You have in Chad—and here’s the thing, here’s the kicker. As the Financial Times reported here back in January, many of these Islamist militia leaders are guys that we trained through the Pan Sahel Counterterrorism Initiative during the Bush administration, a lot of these Islamist leaders who are in the military in these various countries, in the Sahara region. So once again—and the title of the Financial Times article was ‘Mali Becomes Another Terror Boomerang for the United States’. And again, this is not Alex Jones. This is the Financial Times who’s reporting that all this going on is blowing back at us.

Meanwhile the weapons are also being moved by the United States to Turkey for the Syrian rebels and the most effective fighting force amongst the Syrian rebels is this group Jabhat al-Nusra, which has officially aligned themselves with Al Qaeda and they’re using Western weapons to bring Assad, who’s basically the Iranian proxy in Syria. And people wonder what we were doing in Benghazi when our consulate got attacked. Well Benghazi was a CIA outpost where we were moving weapons, weapons from Libya, to Turkey for the Syrian rebels. I mean that’s—it’s one of the worst kept secrets in Washington.

Bill:                  So, Patrick, who—which groups is it that McCain is sort of supporting now?

Patrick:            Well, he’s claiming to support the Free Syrian Army which is led by this general who’s a defector from Assad. But point in fact, the FSA is not being very effective. The most effective fighting force is Jabhat al-Nusra of the Al Qaeda affiliate and they control many of these areas including the area right at the foot of the Golan Heights with Israel. You know, Israel controls the Golan Heights and there have actually been attacks here in the past couple of weeks of these Syrian-Sunni forces attacking Israel outposts with predictable outcomes with, you know, the Israelis don’t put up with that and taking out these folks attacking them. But you have Al Qaeda basically in control of the area immediately by the Golan Heights and I mean that’s dangerous.

And the Syrian consulate has pushed hundreds of thousands of people into the neighboring countries like Lebanon, Turkey and Jordan which is incredibly destabilizing. You know, Jordan is one of our closest allies in the Middle East. You know they signed a peace agreement with Israel and the Muslim Brotherhood is agitating to overthrow Abdullah, King Abdullah. And all these refugees, hundreds of thousands of refugees pouring into these countries, like Jordan, are destabilizing them. You know you have Hezbollah units from Lebanon who are now fighting on behalf of Assad, you know basically under the influence of Iran and now you have—Assad is using Russian weapons. He’s a Russian military client state and it’s almost like Barbara Tuchman’s book The Guns of August, about the first month—how World War I got started. You know, how was—the series of events, which I would encourage your listeners to get that book, Barbara Tuchman’s Guns of August, because that’s what we’re seeing. Where you might—where one incident could set off a chain of events that we have World War III, literally World War III. And unfortunately of the United States, we would probably get into that game backing the wrong side. Well there’s no good side in Syria. You know, Assad’s a butcher and Al Qaeda are, you know, is Al Qaeda. I mean, those are our two options. Our national interest is to not get involved; you know not much good we can do there and pouring weapons into this conflict is—you know that’s what we did in Afghanistan and that ended up being the Taliban and Al Qaeda was the result of all that.

Bill:                  But, Patrick, go back a little bit. State Department policy has been to get involved. I mean I think that George Washington’s farewell address is considered to be archaic at this point because everyone says “Well the world has become such a small place and those rules don’t apply anymore.” But certainly Bin Laden was one of our CIA assets at some point and we got the blowback from that and yet it doesn’t seem like anyone gets the idea—you know if you watched Black Hawk Down years ago there’s this line where one of the arms dealers there say that “I don’t think that you should come here.” I mean he’s kind of trying to say “This isn’t your world and you don’t understand it and you shouldn’t be here.”

Patrick:            Yes.

Bill:                  And I think that we don’t understand that, whether it’s in Reagan’s case perhaps, in Bush’s case and here we are now with Obama; it’s the same policy.

Patrick:            A couple of different snapshots to demonstrate the very point you’re making that we don’t understand this region. It was only a couple of years ago that John Kerry, currently the Secretary of State, was having dinner with Assad and his wife in Damascus. You know, there are pictures of this dinner. And Kerry, when he was in the senate, and Hillary Clinton, when she was Secretary of State, were calling him a reformer. This was two years ago and now he’s a mortal enemy of the United States. And you mentioned McCain; you know McCain was just in Syria meeting with the Free Syrian Army. And again, McCain had no idea who he was meeting with because it was reported that one of the guys in the pictures where they were posing with McCain was this notorious kidnapper. You know, guys who were kidnapping Shiite pilgrims travelling through those regions. And I think that was Rosie Gray at Buzzfeed who had that article about this guy that McCain had his picture taken with. And of course McCain back in the early days of the so-called Arab Spring, he was interviewed by Der Spiegel, the German newspaper, and he’s like “Oh, we definitely don’t want—we definitely do not want the Muslim Brotherhood involved in any transitional government in Egypt.” A year later he’s in Cairo with Lindsey Graham in tow meeting with the Muslim Brotherhood. Again, within—and you have John McCain and Barack Obama for that matter meeting with Gadhafi. Two years later we’re backing rebels to overthrow him. I mean at this point it’s behind schizophrenic. I mean, it’s absolutely insane.

Bill:                  Well and don’t we, Patrick, kind of create some confusion among the sort of allies that we thought we had at one point? It’s a little bit like we’ve got a thousand little Bay of Pigs issues going on at once where someone thinks, as our esteemed president would say, “We’ve got your back” and then only to find out that we don’t have your back; we have somebody else’s back. And it just is totally destabilizing and this craziness has got to come back to roost. I mean you can’t launch this much anarchy across the Middle East and Africa without major—I mean you’re hinting towards a major cataclysmic event from it. But just even on minor economic issues you see, Turkey’s a big trading partner of ours and you see Turkey’s stock market collapsing as we speak. This whole thing’s coming unglued.

Patrick:            Completely unglued and we have no idea. You know you mentioned Bay of Pigs. Most of the analysts who are working at the State Department and these various think tanks were not alive during the Cold War. I mean you’ve got these…

Bill:                  Good point.

Patrick:            …20 and 30 something year old. I’m not old enough for the Bay of Pigs but I remember what the Bay of Pigs was.

Bill:                  It was recent enough to be in the media to sort of be part of how we lived.

Patrick:            Right. But because that was a Kennedy disaster it’s all covered over by the assassination and the Camelotness. So these 20 and 30 something year old think tankers and analysts and Foreign Service officers have absolutely no—they have no context, historical context, for this region.

Bill:                  Well, 1961 might as well have been the crusades as far as they’re concerned.

Patrick:            Yeah.

Bill:                  It just seems like ancient history.

Patrick:            Well and Ronald Reagan is something that they—they don’t remember “Mr. Gorbachev, tear down this wall” or even why that was important. A lot of these folks—I work on the hill. As you know I work on the hill quite a bit and meet with a lot of these congressional staffers, most of whom are between 25-30 years old and they don’t remember—they weren’t alive when the Berlin Wall fell. I don’t want to sound condescending but I think it’s—these are the people who are shaping our policies, who are advising our members of Congress, who are working inside these agencies and it’s just been a disaster and it’s getting worse and we have Americans getting killed. And that doesn’t even account for the fact the United States is getting its policy queues in the Middle East from these Muslim Brotherhood backed groups here in the US, that are the US government’s outreach partners who, as we’ve talked about before and in my article in Middle East Reporting International Affairs which is coming out this week, talking about the fact that the US government goes into federal court and says “These organizations and individuals support terrorism and they’re bad guys.” And those federal prosecutors leave court and the FBI and US government says “Oh these same groups of leaders are moderates and these are our outreach partners and they’re going to help us shape our policy.”

I mean, when Barack Obama gave his big Middle East speech here a year and a half ago at the State Department you had Mohammad Majid, the president of the Islamic Society of North America, sitting right in the front row. You know, you have all these folks who, again, the United States government has gone into court and said “These are bad guys” helping shape US policy. And surprise, surprise—the best example I have is a guy by the name of Louay Safi, who was the Pentagon’s top Islamic adviser. I wrote about this at Glen Beck’s ‘The Blaze’ last year. He’s the Pentagon’s top Islamic adviser. He’s visiting the White House and six weeks after his last White House visit he shows up in Istanbul as the new political director for the Syrian National Coalition. So the Pentagon’s former Islamic adviser is now a senior official in the group trying to overthrow Assad six weeks after he had visited the White House. And when members of Congress, Michele Bachmann, Louie Gohmert, Trent Franks, Lynn Westmoreland and Tom Rooney sent letters to all these inspector generals for these various agencies saying “Hey wait a second, you’ve got these people advising us who are known bad guys.” You know, people remember the treatment—a lot of the venom was directed at Michele Bachmann. You know, “Oh the Muslim Brotherhood conspiracy, etc. etc.” And I mean it was absolutely savage when these members of Congress popped their heads up and said “Hey, there’s something wrong here. Somebody needs to investigate this.” You know, why is Louay Safi, the Pentagon’s Islamic adviser, now living in (inaudible 0:40:00) directing the Syrian opposition against Assad? I think that’s a fair question.

Bill:                  It doesn’t seem to matter, Patrick. That’s one of the problems, too, I think. We’ve lost sort of sense of righteous indignation about things, whether it’s the IRS scandal or any of these scandals. It doesn’t seem like—you know, Jefferson talked about vigilance being a pretty important thing and the price of liberty but it doesn’t seem like people—you know I don’t want to take the culpability away from those, the insanity that exists inside our government but…who’s demanding sort of—who among the citizenry is demanding accountability is probably one of the most important questions. It’s not a fun question because you don’t get to point and say “Obama did this wrong” or “Bush did this wrong” or whatever but it kind of points the fingers back a little bit. Would this have been tolerated even 30 years ago?

Patrick:            I don’t think anybody could’ve imagined 30 years ago what we’re seeing. You know, with Nixon and Congress moving toward impeachment against Nixon, Nixon resigns and the stuff that Nixon resigned for, you know the abuse of political power and the abuse of the IRS, is exponentially less than what we’re seeing now. You know, one of the things, when I’m on the hill, that I’m hearing is frustration by members of Congress who say “Look, we don’t know what’s going on because the administration is keeping us in the dark.” You know, the most transparent administration in history, as Barack Obama built himself, has been one of the most opaque. And you have Congress, who can’t get the information, to be able to make any decisions and then you have Harry Reid and the Democrats controlling the Senate. So any attempt to take action on the basis of the powers that Congress have are nullified. And the best example is the House of Representatives censoring Eric Holder, the Attorney General, for contempt of Congress. Well, who’s the one who prosecutes contempt? Well it’s Eric Holder. And so he chose not to prosecute himself and that’s the end of Congressional power. Our system was not designed for the level of corruption and Chicago style politics that we see in the Obama administration. And I should clarify that I’m no big fan of the Republican Party. I’m no big fan of John Boehner. Republicans have contributed to this, but point in fact I think we’re at the point where the republic’s in danger. I mean you have the IRS persecuting political groups.

Bill:                  Yeah, to the point where if you—let me stop you right there, Patrick. To the point to where if you—here’s the future of America. If you bring something up against Islam you’re going to get audited, right?

Patrick:            And we see that in the case of Basseley Nakoula, the YouTube video guy, he’s in federal prison because of the video that he made that the Obama administration blamed for the Benghazi attack.

Bill:                  And it turns out…

Patrick:            It had nothing to do with it.

Bill:                  …it had nothing to do with it. He’s still in prison. Is that going to get him out of prison? No.

Patrick:            Nope. Nope, it’s not. And the only reason he’s in prison is because of that video. And interestingly you had yesterday—in Sunday’s Washington Post you had this former Joint Chiefs of Staff attorney by the name of Sarah Chayes basically defending the administration for reporters trying to get information. She was attacking saying “Look, you reporters want information. Well if you get it then you should be punished.” Well, back in September this same Sarah Chayes, again she was counsel for the joint chiefs of staff, as senior government attorney she argued in a Los Angeles Times article that criticizing Islam like the YouTube video is not covered by the First Amendment. These people have senior roles in government. You’ve got Tom Perez, DOJ head of civil rights division, who Obama has nominated for the Labor Department and this guy is an extreme leftist radical that—and we’ve seen it here in the past week with the story of the US attorney in Eastern Tennessee saying “You criticize Islam on social media like Twitter and Facebook and you could be facing charges.”

Bill:                  And we’re not talking about being demeaning; we’re just talking about asking questions here. And I think every religion…Yeah, go ahead, Patrick.

Patrick:            But even if it were demeaning, you’re allowed to do that under the First Amendment. You’re allowed to criticize and mock and defame Christianity or Judaism or Atheism. That’s what the First Amendment is about. The only thing prohibited are direct threats of violence. You know, the Supreme Court has been very clear on this, in Brandenburg versus Ohio. The First Amendment protects stuff that people would find repugnant. That’s why the Ku Klux Klan can march down the streets of Skokie, Illinois. But what this administration has said and Tom Perez, the head of his civil rights division at the Department of Justice, has said “You criticize Islam, you’re violating federal law. You’re violating Title Six of the federal codes. You’re engaged in discrimination.” And there’s no other religion or political view that gets this treatment. It’s very odd.

Bill:                  So I could—what if I just got—what if I made a YouTube, and maybe there’s a bunch of these out there but I don’t know. What if I just made a YouTube going through the Suras where there was sort of threatening language, the stuff that you said precisely? Would I—how could that be prosecuted or would we wind them up backwards by doing that?

Patrick:            That’s exactly what that Innocence of Muslim YouTube did was it took out—they were re-enacting some very unsavory elements of the Koran and the Soona, the stories of the life of Muhammad. You know, where he’s taking sex slaves and killing poets and stuff like that; that’s exactly what they did and he’s in federal prison today. Barack Obama went before the United Nations back in late September and told the world “The future does not belong to those that insult the prophet of Islam.” And the rest of the world took notice that that’s now our policy here in the United States.

Bill:                  Well and I think it really emboldens the people on that other side knowing that there can’t be a dialogue any longer, that it’s become a monologue. So what’s descent to do in a situation like that? What would Thomas Payne do if he were here?

Patrick:            Well first off…well he would definitely be speaking out. The simple fact is the United States government can’t arrest all of us. They can’t audit all of us. One concrete measure that needs to be taken is first off, we need some better representatives in Washington. And again, I’m no fan of the Republican Party but Democrat control of the Senate is one of the biggest obstacles from Congress being able to do their job. And we need more Ted Cruz’s than we need John McCain’s and Lindsey Graham’s. We need people primary—and, Bill, we’ve talked about this before. One of my frustrations with a lot of these “the third party movements are with yours” and things of that sort is people aren’t willing to do the hard work necessary for a winning campaign. They think that complaining about it on Facebook is actually doing something. The fact is you’ve got to go out, you’ve got to give money to candidates, you’ve got to take the time and knock on doors, hand our flyers, put up signs; it’s the hard work of the political process. You’ve got to get on the phone banks and make out calls to get out the vote. I mean that’s what makes it successful.

And we’re seeing this rapid cultural decay, Boy Scouts approving the gays in the Boy Scouts now. And a lot of that is people have been content, they’ve been fat and happy, they’ve got their dual income, living the life of Riley and they’ve let a lot of the political and cultural structure just go to pot. You know, sitting at home, watching reality TV, getting their news from Tom Brokaw and CBS news and CNN and it’s killing us. It’s killing America.

Bill:                  Do you know what I think, too, Patrick? And I throw another point out that I think you and I have discussed maybe over a beer before. It seems to me—maybe the last time I was in Washington we talked about this a little bit. But it seems to me like a lot of this sort of Christian candidates, people like Michele Bachmann, who I think she’s right up the middle. She kind of gets it. Okay? But what’s interesting is when people criticize her, this is almost like a sort of a Van Tillian kind of an issue because when people criticize her they take, the left that criticizes her takes this concept that there should be standards and the rules of Christianity and use them to sort of bludgeon Christians and Christians—forgive me, Michele or Trent or any of you guys that are sort of the good guys. But they seem to bludgeon these candidates with sort of standards and yell “shame, shame, shame” when the response—it seems to me they’re not trained in any kind of response. The response is “Well, where did you get a standard by which to judge me? That’s what I want to talk about.” I’ve never heard a Christian candidate once turn fire back on the media or back on the group and saying “Okay, well where do yours—mine come from the Bible. Sorry, I’m one of those crazy Fundamentalists. Here’s my standards and God said it and I believe it. But now I’m interested in you and I want to know—you say ‘shame, shame, shame’ on me or you’re mad at me for this and I want to know why it is that you have a standard that you want to judge me by.” I’ve never heard anybody say that.

Patrick:            It’s funny because I actually had a discussion that ended up turning into an argument with a prominent political media figure in Washington DC here last year, making that very point where they were condemning all the Republican for being hypocrites and I challenged him. I said “Well on what basis, what moral system are you able to say that hypocrisy is bad? You’re a moral relativist; for you hypocrisy should be good.”

Bill:                  Shouldn’t Michele Bachmann be able to say anything she wants to about Muslims in their world? Now in our world we’d say “Hey wait a minute.” Maybe there’s some Bible verses that might mitigate against certain behaviors that come out of our mouths or whatever but we also know that we need to speak the truth but once you leave that system of having some kind of code—they act as though there’s a code everyone should live by.

Patrick:            Right.

Bill:                  And it’s insane.

Patrick:            And that’s the problem. Hypocrisy is the bludgeon that they hound Conservatives with, Christians with. It’s “Oh you didn’t live up to it so therefore you’re a hypocrite,” which is somebody not behaving in accordance with their religious values. It’s a knock against the religion itself. I never understood that.

Bill:                  Well I thought we called that a logical fallacy.

Patrick:            Oh, okay. Yeah.

Bill:                  I thought that was like in the—you get that in high school or college 101, you get a logic class and someone says…

Patrick:            You didn’t live up to those principles. So therefore the principles are bad. It’s just amazing. But in this conversation I had with this very prominent DC media figure, “On what basis are you saying that hypocrisy is bad?” And I mean the conversation got very heated because I kind of exposed their own hypocrisy, so to speak. You know, you’re a moral relativist except when you want to be an absolutist. It’s the same thing with these—when it comes to interpreting the Constitution. The Left always criticizes the original intent but they’re the first ones to say “Oh, the Second Amendment just means militia. You know, it means musket” as Piers Morgan would say.

Bill:                  Sure.

Patrick:            They’re against original intent except when it goes against their interest, then they’re all for it. And that is the state of Washington today. That’s the political problem we have, in the outworking of that moral, ethical, spiritual schizophrenia is kind of bringing us full circle is what’s being worked out in our policy in the Middle East and in Africa where we’re backing bad guys. We’re sending weapons to them. We sent 20 planes and 200 M-1 Abrams tanks to Egypt, run by the Muslim Brotherhood. We were gun running to the Syrian rebels out of Libya and that’s why our Benghazi consulate got attacked, the CIA outpost. The two facilities there in Benghazi, they were running weapons. I mean it’s no big secret that that’s what they were doing. Things are completely out of control and earlier you talked about we’ve unleashed this anarchy. We’re seeing it abroad but with all these scandals, I mean just the multitude of scandals that in any other time in our lives would’ve brought down an administration. The political use of the IRS to target your political enemies; that brought Richard Nixon down, forced him to resign.

Bill:                  But at that period of time—and really, Patrick, during Nixon’s era 51% or more of the citizenry weren’t sort of on the “I’m going to consume like a parasite from this big entity” modality. You had more producers than consumers during that period of time. And I think that’s the tipping point really, is that people just have a vested interest in Barack’s policy and whether they like him or not they just eventually say “You know what? I can’t afford to have my faucet turned off and he promises to keep my faucet on.”

Patrick:            But all you can think—we see people acting against, admitting that that’s true; that you have—the consumers are outnumbering the producers. But even the consumers are pushing these amnesty policies. You know, we’re going to bring in millions of people, put the on the public dole that’s going to bankrupt the system and it basically ends the party for everybody. We’ve done that with Obamacare where now everybody’s going to be uncovered and uninsured.

Bill:                  But people that think that there’s free stuff, they don’t—they’re not capable of thinking that there may only be so much free stuff. I think that’s kind of the sad story about the whole thing. Because once you adopt a paradigm or a metaphor, the metaphor is “Hey there’s somebody out there giving away free stuff and it doesn’t really have any limits.” So the attitude is “Well let’s just keep taking and taking and taking.” And there’s no end to it. And the only time—because of the simplistic thinking, the only time that there’s an end to it is when it simply runs out and the economy collapses upon itself. Now it took a long time for Rome’s economy to collapse. I’m not trying to bump into that too quickly, but I’m just saying the cause and effect that you’re making mention of, this craziness, it’s a form of—it’s a belief system and it’s the belief system that’s the problem and not all the peripheral symptoms that seem to accompany the belief system. You know what I’m saying? Am I—does that make sense? I think it’s just a way of thinking.

And Islam, whether you like it or don’t like it, is being more epistemologically self-conscious, as long as we’ve brought Van Tillian to this, and emboldened by the fact of our president. So you’ve got kind of a dangerous formula there. At the same time Christianity is a rival—theology of a rival philosophy of way of thinking about the world in way of having a government. Seems to be very confused and it’s turned inward on itself and so forth and so I—the future outside of sort of trying to make people see this through some kind, and I’m not talking about a simplistic revival, Patrick. I think we both read some books on just the negativity sometimes of the reduction of Christianity to something that it’s not and making the Gospel too simple. Because the Gospel does have political ramifications but I think the action is just trying to have a fully orbed Christianity. But it would seem if all you did was just look around you, if you didn’t have any kind of faith, maybe the faith that the pilgrims had or something and you just looked around you’d say “Hey, I’m out of here. This ain’t going to work.”

Patrick:            Yeah. Fundamentally what we’re seeing is, at its root, a spiritual crisis. I was actually having lunch in Los Angeles here a couple of weeks ago and I mentioned that, and there was this fairly wealthy Conservative benefactor and it was like I started speaking ancient Hittite to him. “What do you mean that it’s a spiritual crisis?” I mean we don’t even have the signs and symbols in a culture to be able to communicate the spiritual truths to the American public anymore. And there’s really no recognition on the part of the Christian leadership. It doesn’t seem to me—you know, they’re caught in this fad or that fad, church growth, now it’s all Generation X, Generation Y. Fundamentally change starts with us. I keep telling people “Change happens…” You know people want revolutionary change and that only makes situations worse. You only need to look at the Middle East to see that or history; check out the French Revolution. They cut the head off the king and they ended up with Napoleon within a couple of years.

Bill:                  And that’s kind of where this is all going, as we kind of wind it down, Patrick. I mean, do you want to make a concluding comment? From my standpoint I’m thinking maybe that’s kind of how it ends. You’ve got anarchy that comes from this lack of having a firm conviction about what’s right and what’s wrong and we no longer can say what is the truth. It’s the Pontius Pilate question, right? What is truth? You would never get an answer to what is truth on the hill. So if Jesus would’ve wandered inside the Beltway and started asking “What is truth”, my guess is He probably would’ve found answers very similar to the ones that Pilate gave Him. So you do have this systemic issue. It creates chaos and then chaos begets sort of a strong response, right? Historically? And I know you’ve got a tremendous sense of history, but isn’t that what we’ve learned from history?

Patrick:            Yeah. And a revolution eats its own children. I think one problem that we have to overcome is that people need to realize you can’t be content with letting other people address the problem. You read Thomas Shirer’s The History of Nazi Germany or another good book, The Nazis Seizure of Power about—it was people who—the people who were evil were able to do what they did because so many people did nothing. If you’re sitting at home watching reality TV, getting your news from the establishment media networks, you’re not active in your community, you’re not active in your churches, you’re not active politically, then at the end of the day you’re the problem and people need to be proactive, if only for their own sake. And I know that’s what you’re trying to do with Solutions for Science. Look, if things come down there’s some kind of national emergency do you really want to put your life in the hands of FEMA? You know, they might show up two or three weeks after you’ve starved to death. People have got to learn to be self-sufficient, take initiative on their own and begin to act because it’s the inaction that’s killing us as a country.

Bill:                  Well I couldn’t agree more and I think if Edmund Burke were here he’d totally agree all that is necessary for evil to triumph is for good men to do nothing. Patrick, thanks so much for your time. We know that your time is valuable and we appreciate you spending a little bit of it with us. And as far as our listeners are concerned, we know your time is valuable as well and we just thank you so much for spending some of it with us.

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