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Tuesday, December 28, 2010

Glenn Beck Program, December 28, 2010

Theme for today is economic periods in the past and what we can learn from them.

Depression of 1946
  • During the war, the debt went from 50% of the GDP to 120% of GDP.
  • At wars end, 47% of labor worked for the US government, 27% worked for a union.  (At the time, you could not work for the government and be in a union.)
  • Economic forecasters said that the government war spending, the disbanding of the army and the removal of all controls could not be done all at once without plunging the country back into a depression.
  • Spending dropped from $84 billion in 1945 to $30 billion in 1946.
  • There was no depression, despite the projections.
  • In the period following, the war debt was paid off and 4 million jobs were added.
  • Entrepreneurs brought out new products, e.g., television, portable sewing machines, refrigerators, housing subdivisions, etc.

The biggest (and only) economic weapon we now have is people.  Government needs to get out of the way and let people produce.

Small government, low taxes, innovation, free market.  These conditions worked for America in the latter half of the 1940s.  Today, we have lost our way.

Guest today is David Buckner, Columbia professor (

David discussed the Weimar Republic.  This was the government of Germany in the period after World War One.  It lasted from 1919 – 1933.
  • During WWI, the economy was entirely converted to war production.
  • After the war, there was not much being produced that could be sold abroad.
  • They decide to print money.
    • At the beginning, the Mark was worth about 4 US dollars.
    • At the end, one US dollar was worth 1 trillion Marks.
  • As a result, people lost faith in democracy and the free market.
  • They bought into the promises of the Third Reich.

Today in America there are similarities
  1. Large divisions between the left and the right.
  2. Huge debt.
  3. No goods to produce.
  4. We have started printing money.

There are also differences.
  1. Size of the economy.
  2. Consumption of our economy.

Some people feel that the U.S. is too big to fail and that other countries would not let our currency be debased.

How did Germany turn things around?
  • They shifted to a new currency and backed it up with land as the underlying value behind the Mark.
  • In the US, our underlying value is trust.  Our money will remain good as long as people have trust that it will be repaid.

At the end of the Weimar Republic, people lost their morals and their trust.
  • The middle class felt that whatever they did, it did not matter.  They lost hope.
  • Today, in America, in Atlanta, the lower class has lost hope.  They feel that they will never get ahead.
  • Without hope, morals fell apart.  This, in Germany, was epitomized by the German Cabaret where “anything goes” was the motto.

During WWI, in Germany, the government took over the churches and used them to support the war effort.  When Germany lost the war, the churches lost credibility.  The parishioners lost faith.

What to watch for in America today.
  • Hopelessness (Misplaced faith in government.)
  • Perversion of faith (Social Justice and Collective Salvation)
  • Possibility of deflation into hyper-inflation (Government buying it’s own bonds.)

Today, Germany is the largest economy in Europe and they are bailing out other countries.

The European economies are in crisis.
  • Spain – Highest unemployment in Europe at 20.5%.  They led the way with green jobs.  Their debt is 53% of GDP.
  • Portugal – Unemployment is 11%, debt is 76% of GDP.
  • Greece – Unemployment is 12.2%, debt is 120% of GDP.
  • Ireland – Unemployment is 14%, debt is 65% of GDP.
  • European economies are all tied together.  What affects one, affects all.

Will America reach the level of problems in Europe?  Glenn says yes.

The Federal Reserve claims that printing money will keep interest rates low and therefore affordable.  However, what is happening is that people are not buying the federal debt.

The balance sheet of the US looks like those of Greece, Portugal, Spain, etc.  Soon our actions will be the same as well.

  • First, they said that Greece was fine.
  • It makes up only 2.5% of the E.C.
  • It is the 27th largest economy in the world.
  • GDP is $300 billion
  • E.C. economy is $16 trillion.
  • If Greece goes, the contagion could pull down the E.C.  If the E.C. falls, it is the largest economy in the world.
  • Since Greece is only 2.5% of the E.C. and if it could make the entire E.C. fall, what affect on the world economy would it be if the E.C. falls?

  • Is 13% of US GDP at $1.8 trillion.
  • It is the largest state economy in the US.
  • It is the 8th largest economy in the world.
  • The US economy is $13 trillion.

How do we fix the economy?  Glenn’s book “Broke” addresses this issue.

The first 1/3 – How did we get here.
Second 1/3 – Cover-up
Last 1/3 – What can we do to fix it.

Glenn feels that a balanced budget amendment will be required.

Currently 81% of the Dept. of Education’s budget goes to state aid.
Currently, 47% of the Dept. of Energy’s budget is for departmental purchases.
More examples are in the book.

  • US Army Specialist (with 4 years service) - $22,676.
  • Average US citizen - $50,462
  • Average federal employee - $74,403
  • Basic congressional pay - $174,000

Glenn feels that a congressman or a federal worker should not get paid more than an army specialist.

Harry Reid (D – NV)
  • Entered House in 1986.
  • Net worth then was $1.8 Million.
  • Today his net worth is $4.6 million.

Nancy Pelosi
  • Entered House in 1987.
  • Net worth in 1989 was $7.5 million.
  • Today, her net worth is $21.7 million.

He showed a clip of President Roosevelt in 1933 saying, “The only thing we have to fear, is fear itself.” 

Glenn’s saying is “The only thing we have to fear is being unprepared.”  If we are prepared we can deal with problems that come up.

What do to?
  1. Vote properly.
  2. Educate yourself.
  3. Find God.  Take the 40-Day Challenge.
  4. Get out of debt.

What is coming?
  1. Inflation
  2. Higher food prices
  3. Higher energy prices
  4. Higher interest rates

In summary
  • Be prepared.
  • Do your own homework.

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