Guest Post: David Galland: The System Is Coming Unglued

Tyler Durden's picture

Submitted by David Galland from Casey Research

David Galland: The System Is Coming Unglued

Our video host Stefan Molyneux speaks with Casey Research Managing Director David Galland about the debt situation in the US and whether the federal government can do anything about it… assuming they’d even want to.




David Galland - We're Living in a Degraded Democracy

Stefan: Hi everybody, it’s Stefan Molyneux, host of Conversations with Casey. I have on the line David Galland. Thank you so much, David, for taking the time to chat today.

David: Nice to be here.

Stefan: So, we are seven-tenths of the way towards fascism in the United States. I wonder if you could expand upon that. I sort of get a sense that that’s probably true, but you have a little bit more than my gut instinct – you actually have some pretty professional opinions to work with on that.

David: Well, all the elements for fascism are in place. We have a monetary system that is accountable to no one and that’s a very good start. If you think about it, the way that the monetary system is structured, the government at this point can literally spend money on anything. They talk about capping the federal deficits and all that, but they’ll get past that in no time at all. Probably by the time the viewers are watching this they will have announced a big deal, you know, that they have raised the debt cap. And you know, once you have – if you pin your money to nothing, if you have a monetary system that is based on nothing, then you can afford anything. You can afford all the wars you want, you can afford all the bureaucracy you want; and so they have. That’s a first step.

I mean, we’ve – just as an example, here in the little town in New England where Casey Research is located, they have a – they’ve just finished building a massive new Homeland Security center. This is a town of roughly 4,000 permanent residents; it’s a tourist town. It’s the kind of place where the worst crime you’ll ever see is somebody stealing skis from a ski slope, and yet we have something like 36 policemen. We’ve got this huge, brand-new Homeland Security center. Why? Well, because after 9/11 and the overreaction of 9/11 the government made this money available because it could make the money available, because there is nothing stopping it from doing that. And there’s all these local police departments, which should have an “Andy of Mayberry” type police force, took the money and they spent it, and now we’ve got a semi-militarized local operation. So this has gone on and this is multiplied right across the country… and the world.

Stefan: And of course, the decisions that people make in expanding the public sector have immediate implications in payroll, but I think what America is really facing are the long term implications of unfunded pensions that just run into the hundreds of billions of dollars. It’s a lot of the stuff that is not really counted in the public calculation of the debt, which is more immediate obligations, but the unfunded liabilities run $75 to $100 trillion according to many estimates. That’s not something that you see, which makes the whole conversation about should we have two trillion here or there ridiculous to anybody in the know.

David: Oh, absolutely. Again, on the point about whether we’re sort of on the way to a fascist state – and I – this isn’t just the US – it’s important that, you know, people understand this is all over the world. At this point, none of these governments is operating on anything that remotely resembles sound principles. They’re operating on a number of different priorities and a number of different interests – self-interests, because politicians after all are just people. So whatever it takes to kick the can down the road, they’re going to do. You mentioned $75 trillion in unfunded liabilities, absolutely. Because at this point, this is essentially sort of a rising tide of bureaucracy over the last hundred years that is cresting at this point. And they have done this because there are no real operating principles other than buying the votes that they need to get re-elected and to stay in office for as long as they can, and then they pass the baton to the next bureaucrat and the system continues. But it’s reaching the point where, I think, within a relatively short period of time it’s got to come to an end.

Stefan: Now you’ve written an article recently which I found very interesting – I just shared it through my Facebook as well – it’s called The Greater Depression. So you have the Great Depression and now we’re looking at the Greater Depression. I wonder if you could talk about the mechanics and the future as you see it as we go into this abyss.

David: Ultimately, what we’re faced with right now and this is, I think, just some fundamental principles – because there are so many aspects of what’s going on in the economy today that it makes it for most people – for virtually all people – it makes it very hard to really understand what’s going on. So sometimes you just have to sort of step back and ask a few questions to try to get some sort of a compass, if you will. And first and foremost the crisis we’re in right now is caused by debt, too much debt. As you mentioned before $75 trillion in government obligations – everybody knows that money is never going to get paid. So we’ve been brought to this point of extreme government borrowing. Who would have thought we’d see $1.5-trillion deficits? I mean, nobody – five, six years ago if you would have asked anybody on this planet if the US government could run a $1.5-trillion deficit they would have said no way. Well, here we are. So all of the conditions of what this – you can call it a debt-induced depression, all of the conditions that sort of brought us to this place have not improved since the beginning of this crisis; they’ve only gotten worse.

So what’s the ultimate outcome of this? Well, what’s the one thing that a heavily indebted person or an entity like the government can’t handle? And it’s rising interest rates. You can’t afford for the bank to bump your payments up to, you know, 20% because you’ve missed a payment. Well, the same thing’s true of the government and we are now – we are still – the US interest rates are still bouncing around, you know, all-time lows. It’s completely – it’s a complete aberration. And it can’t last. So why things are going to get worse is because interest rates have to go up. Even if they return to sort of a more normal five to six percent range, from a historical standpoint it would be devastating to the US economy. So the government is doing everything it can to try to get out of this trouble but there really is no way. They have very limited impact on long-term interest rates and if it wasn’t for the fact that Europe was such a basket case and that Japan was such a basket case right now, interest rates in the US would already be taking off but I don’t think we’re going to have to wait long for that and then things are going to get interesting.

Stefan: Let’s take a tour as you have done in a recent article around the world in eighty seconds, or so, because I think you have correctly identified that – I mean obviously North America is a basket case economically; South America has always had its problems economically; Europe is facing catastrophic debt situations; China is in pretty artificial command of the economy, Japan has had a twenty year recession/depression and now it is facing all of the problems that have come out of the nuclear power plant meltdowns. It really seems like it’s a perfect storm in a way, that there are not a lot of safe havens to go to even for good news, let alone for investor security. What are your thoughts about how all of this stuff is coming together at the same time?

David: Well, it’s scary. I mean, I didn’t coin the phrase “Greater Depression,” that was Doug Casey, my partner; and I think Doug had it exactly right. I think, you know, there has been so much of a, as I’ve said, this sort of rising tide of bad policy and extreme spending and a takeover of the economy – and not just the US economy, but all of the economies by these governments, the nation-states – that things have reached the point, people tend to think that things are going to stay the same and continue as they are, but they don’t. Sooner or later, history shows over and over again, things break, systems break, and I think we are very close to that.

I think it is important for people to understand that in – they look for the politicians to solve the problems, but to solve the current problem in America would require draconian efforts that would immediately cost the politicians their jobs. It would be, for a politician to stand up there as everybody watching this knows, and advocate deep slashes to Social Security or Medicare – and I am not talking about the stuff that they are talking about now, where modest little rearranging of the deck chairs over the next ten or twenty years, but real fundamental changes in the amount of government services being provided because all of these government services have grown and grown and grown over years now – and so to start cutting them back, every one of these government services has a constituency, people that depend upon it. You know, you start looking for cuts, and you say, okay, we have got to cut school lunches. You know, government didn’t used to give away school lunches. Well, now everybody is up in arms because you can’t cut the lunches of people because then they will have malnutrition and so on and so forth. Every single government bureaucracy has got a constituency. But the reality is that you can’t keep kicking the can down the road indefinitely.

Or put it another way: There is never a good time to fix this kind of a problem. So politicians will always make the choice to not actually address the problem, but rather to leave it to the next person’s watch. This isn’t – this would be a horrible time, absolutely a horrible time to fix the problems that face the American economy. Slashing the deficit, slashing the debt, slashing the government spending at this point would have catastrophic consequences to the average person. There would be riots in the street; but if you don’t fix it now, when do you fix it? Okay, well, do you fix it in the next year? No. Do you fix it the year after? The government will do whatever it can to keep pushing this down the road, but they can’t push it down the road much further.

Stefan: Well, it’s because fundamentally – and there are lots of reasons why politicians will not tell the truth to the population as a whole and say, “Look, we are not slashing spending if we go back five years in our deficits. You know, America and the world was not a rubble-strewn anarchic wasteland in 1995, and if all we do is cut spending back to that we will have made massive progress,” and people aren’t willing to just tell the truth and say, “Look, you people have become lazy and entitled and you have lost track of reality, we have lost track of reality, we have encouraged you to lose track of reality, so we really need to make decisions before reality makes those decisions for us in a much more brutal way,” but it seems hard to imagine anyone could get elected without sort of chanting, “USA Number One,” and actually telling the truth to the population, so it is almost like the market of the delusional population is driving politics in a way.

David: Oh, completely, because again – and this is nothing new, the people watching this know this – you know, you can point the finger at the politicians, but the people behind the politicians, the fact that, I think, Congress’s approval rating now is something like six percent, I mean it’s ridiculous, but come next election, most of those guys, most of the incumbents will be re-elected. And anybody who is elected to replace anybody who gets voted out will be just as bad as the people that they are replacing.

So you know, you have got a system, you’ve got a situation here where we live in a degrading democracy, you have to just face that fact. It is degrading, people have been trained – just like they were in the Soviet Union leading up to that collapse – they were trained to look to the state for virtually everything, and once you have stopped relying on yourself, once you start relying on the nation-state to take care of all the things that you think it needs to take care of, or that you would like it to take care of, you know, the whole thing comes crumbling down and we have absolutely reached that point. If you look at it – and again, very few people, I would say it’s sort of the fringe, if you will – people like yourself, Doug and the editors at Casey Research, and you know, the people that might be considered, you know, outside the mainstream, will talk about things like the $75 trillion of federal obligations, and – but it’s there, it’s a reality, it’s a fact, yet the mainstream media pretends that it’s not there and they do their calculations about the government covering its costs and debts and all that stuff based upon, you know, really falsified information. I mean, so if you can’t even acknowledge the scale of the problem – you can’t acknowledge the actual reality of the problem – how can you begin to come up with a solution? You can’t. And fortunately for the US, we had a great economy, and it’s still better than most. We’ve managed to get to this point although it goes far down the path of corruption, if you will, as we have, but the monetary system, at this point, is absolutely coming unglued, and I don’t think we are going to have to wait much longer. I mean, I think we might have a year before this thing really starts to break down, but I don’t think we have got much more than that.

[Are you prepared to face the coming debt storm? Learn more about it, including how to protect yourself and your assets, by joining us for a free online event. The American Debt Crisis will be held September 14 at 2 p.m. EDT. Sign up today.]

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
X.inf.capt's picture


lynnybee's picture



Spirit Of Truth's picture

I think Helicopter Ben and the central printers have something in mind more along the lines of paper mache...

[Fitting image at link.]

Ahmeexnal's picture

And Ron Paul is finally getting a clue.

I pointed out months ago (actually years ago, but not on ZH) that the border fence was not designed to keep "illegals" out, but to keep people from leaving the US.

Having made similar comments to the Alex Jones Show last week, Presidential candidate Ron Paul warned last night during the Republican debate in California that constructing a border fence could be used to keep Americans in rather than illegal aliens out in times of economic turmoil.


“Every time you think about this toughness on the border and ID cards and REAL IDs, think it’s a penalty against the American people too. I think this fence business is designed and may well be used against us and keep us in,” said Paul, adding, “In economic turmoil, the people want to leave with their capital and there’s capital controls and there’s people controls. Every time you think about the fence, think about the fences being used against us, keeping us in.”

The escape window is narrowing.  It will soon be closed shut.

Dick Fitz's picture

Goddamn that's a scary thought. #greaterdepression is the hashtag we need to push on Twitter.

D.M.'s picture

Finally getting a clue? He's one of the few politicians with enough balls to talk about issues that actually matter. But regardless the system is fucked, rotten to the very core.

TheMerryPrankster's picture

"None of you seem to understand. I'm not locked in here with you... you're locked in here with me!"" - Rorschach - The watchmen

Two Towers AU AG's picture

IPAD Bitchezzz... you cannot eat silver.. you can eat a IPAD.

redcorona's picture

No elmers, but a country full of old horses.

Taku's picture

More printing today, more war tomorrow.

OutLookingIn's picture

Print. Trade wars. When goods cannot cross borders, armies often do!

X.inf.capt's picture

war, the real driver for ecomonies

TwelfthVulture's picture

Trade is the antithesis of war.

Apathy is the antithesis of love.

Alea Iactaest's picture

Ah yes. The opposite of love is not hate, it's indifference.

Q: What do you think of me?
A: I don't.

kito's picture

lynnybee's picture

must .... go buy more canned goods ..... buy more silver !

X.inf.capt's picture flour....

bread baker WSHTF..........


centerline's picture

The longer this goes on, and higher the stakes get raised, the more concerned I am getting about how bad it is going to get.  If the system goes down hard, it could get seriously ugly within a week.  If the government were to truly break down and no sense of order is maintained, within a couple of weeks it would be utter chaos.

With the maniacs currently at the helm, and it seems there no reasonable escape (or soft landing possible), the outcome looks more dire each day.  I dont think we go all "Mad Max," but can't rule it out.  This really bothers me.

X.inf.capt's picture

as a new 2lt in the NG in '92, the LA riots were no joke. but they stopped in 72 hours, why? because good people ,civilians, banded together and made it very 'unhealthy' to riot. we just cleaned up the mess....

Falcon15's picture

Yeah, I have a lot of "unhealthy" heavy metal pills for future rioters...7.62x51's...

Freddie's picture

Korean-American merchants were laying down a lot of supression fire in S Central.  The white libtard TV news reporters were shocked.  Tet Offrensive comes to The City of Angels.

F**king hilarious.

X.inf.capt's picture

when we showed, they got nervous, we told it was alright, its cool, just put theautomatic weapons away! We didnt need any problems from them. sometimes, discresion is the better part of valor.....lots of food for thought.

Silver Dreamer's picture

Comparing what is coming to an isolated event in a single city many years ago is hardly appropriate.

Freddie's picture

I always thought Obama would be Mugabe but hoped I was going to be wrong.  I was not wrong.

Dick Fitz's picture

I try not to "go there" in my head when I think of the inevitable doomsday/Misean "crack up boom" that is coming, hoping that it will be swift, somewhat brutal but short-lived as reason and sound money is restored. Articles like this, and everyday experiences with morons, make me doubt my apocalyptic Pollyanna POV.

NumNutt's picture

Heelo Center line, first let me say I have been drinkin, so be patient. I am not familiar with the author of this interview, is he some one that can be trusted to tell the truth? I read shit on theis site all the time of doom and glooom. Soom of it reports that the end is next week, or next year, and some was supposed to happen two years ago but here we are!! Just trying to put this in perspective......why does the room move when I clode my eyes?....

spdrdr's picture

Numbs, that was truly excellent!

The slow motion train-wreck will develop incredible momentum when the SHTF goes exponential.

The author, or the message, makes no difference (unless your want "peer-reviewed" climatology).

The message counts - that's the thing you weigh up against one's knowledge or experience.


BigJim's picture

Just because something is inevitable, doesn't mean it's imminent.

No man knoweth the day or the hour....


TheMerryPrankster's picture

There won't be enough gasoline to go Madmax - when the power goes off all bets go off with it. No power means no water pumping, no sewage treatment, no gasoline pumping and all the nuclear reactors go off line.

what happens if the diesel generators fail? fukushima come to America on steroids. Bullets won't stop radioactive cesium.

The power grid goes down easily in a storm, its a wire on a pole waiting to fall. Ipads, cellphones, laptops, become ballast without power.

I'm long candles myself.

DaddyO's picture


5 gal bucket of red or white wheat berries and a Country living grain mill much better than bread flour...just sayin


X.inf.capt's picture

hey, daddy-o, got it covered, big time. just fleshing it out.

goldfish1's picture

"""...we might have a year before this thing really starts to break down, but I don’t think we have got much more than that."""

X.inf.capt's picture

that long...your a optimist...

reader2010's picture

Dont you get it? The whole thing happens by design. You either get along or you don't.

DavidPierre's picture

Doug (Pump&Dump) Casey and his crew of husslers just don't get it.

As Bill Murphy has said many times...

"Gold was bombed in MINUTES last night during a SLOW gold trading period. The deliberate tanking of the price was eerily similar to the exact time silver was savaged in late April. The Gold Cartel’s honcho made like a football coach, going with the same play that worked so well the last time he called it.

What we got last night in the gold market, with follow through today, ranks up there as the most obvious manipulation of the price of gold ever.

It is a day like this that reduces the Doug Caseys of the world to mental midget status.

Casey is an egomaniac, inflicted with the Not Invented Here Syndrome Complex.

GATA's work is not his personal brainchild, thus of no importance. That's his problem.

I guess they know more than the Chinese do, who happen to agree with GATA.

Casey has been correct about gold all these years, but has a severe complex when it comes to GATA.

Years ago at a Cambridge House conference, he talked about the foolishness of the US Government manipulating the bond market, yet scoffed at gold being manipulated. He isn’t grasping that money-wise any gold losses (until recently The Gold Cartel made money with their market raids which buried spec longs) are a drop in the bucket compared to what the dollar and interest rates do … as well as our stock market.

In addition, knowing types like him, he probably hasn’t even taken the time to read any of the massive amounts of evidence GATA has collected over the years that prove our case."


gwar5's picture

Love GATA. They've been hammering at it for years, and they were right. 

The last ditch effort of the cartel would be to cave in and give up the useless gold suppression. Plan B is then to just remonetize gold at much higher price and then partial-back the currency with it. That's what the Chinese cables say they think they're really going to do.  That's what Rickards says they should do, with gold at $5-7000 minimum.



DavidPierre's picture

HAPPY ... 1 year... BIRTHDAY gwar5 !!!


macholatte's picture

The other day the Swiss decided to peg thier currency to the Euro and that was what grabbed most of the news. Simultaneously with that announcement gold popped something in the $240 range ($120 down and $120 up) and not much of anything was said about it (maybe there was and I missed it). My point here is that a decision of that magnitude is not made by 1 guy all by his lonesome and my suspicion is that the huge move in gold was pre-planned by TPTB who made yet another fortune. Also, with that announcement, the CHF popped against the USD and EUR and that was clearly a bank intervention. However, again, a lot of folks knew about it well in advance and as someone here mentioned, the announcement was not made on the weekend or on Monday when all non-USA markets were functioning. They waited until Wall Street was ready to pounce on Tuesday.

I find I it hard to believe that such moves can be so completely ignored. Yet, as so many have commented, it is happening, repeatedly, with impunity.

X.inf.capt's picture

they can manipulate prices all they want....

PM's in hand

pre-65 dimes

riley martini's picture

You left out the fraud ,theft , murder , general corruption and selective political prosecutions that Fascim manifest. Fascism failed before for the same reasons there is no reason to think it would suceed this time. Oblamer-Buffet Fascism personified.

Lester's picture

America is facing far greater crisis than "debt crisis".

We (and the rest of the world) have been carpet-bomb nuked by fraudulent derivatives which were used to collapse creditworthiness of Nations and loot National Treasuries via deficit spending and bailouts.

Greater depression?  This is ethnic cleansing of a holocaust nature, with those entrusted with fiduciary duty toward their countrymen doing the cleansing.  Unless you are in their club, they want you gone.  Don't matter if you and yours will have to die for them to ensure their "vision of the future"...

I grow weary and impatient of fathead bastards touting economic conditions and discussion as "vital" when it is too apparent that this is the bottom of the 9th Inning, and most of the world doesn't know it is in a game for all the marbles quite yet.

It is time to suspend the fraud and halt the "progress".  The world has not yet gone over the cliff and there still remains a Forensic Audit Trail to show where and who got the money.

I am not spending my last hours watching the circus for fear I will miss the show.  I don't need to understand the hows and whys for the collapse as much as know it is upon us and that to have a chance to live through this, I must prepare, plan, and be ready.

Enjoy your video conferencing.

reader2010's picture

Who's going to bankroll guys like Adolf Hilter this time around?

centerline's picture

Sigh.  All too true.  Lots of folks have been "targeted" for elimination.  Population has peaked.  Most people dont know it and/or are baffled with the bullshit that is the daily news.



Hulk's picture

Editorial in todays wsj stated that debt to gdp is a useless figure. Better to compare income, $2.3T to debt, $14.6T. He then compared this to a person with a $50k income having a credit card with over a $300k balance on it...

THE DORK OF CORK's picture

Molyneux is a retarded puritan - all knowledge does not reside with Austrian scripture.

I find it difficult to listen to the man - his voice and attitude grates with my Zen.

See Ireland if you want to try to reduce the defecit without destroying the banks first - if we had nothing to export to and nobody  visiting we would be eating raw turnips now.

I am with Jesse when he states in reference to the Great leader "The only thing he could do to satisfy this Jacksonian is to fire a number of his appointees in the CFTC, SEC, and Justice, bring in Eliot Spitzer as his Attorney General, William K. Black to head the SEC, Liz Warren at Consumer Protection, Bart Chilton as Head at the CFTC, Robert Reich at Labor, Ron Paul at Defense, Michael Hudson at Treasury, and to let justice be done, though the heavens may fall.
Fat chance of any of that, so gold and silver look like enduring safe havens."