Hyperinflation Fears

" David Buckner is here he's a professor of organizational leadership at Columbia university and -- wanted to talk to David how are you sir could see you good to see you. You disagree with the -- know we are -- and our debt it. You know that that the Fed Chairman Ben Bernanke said we never do that they he did say that but it's a backdoor approach. Also. Some others are being weasels about -- it's it's it's a back door approach it's legal. It just is not communicated. Broadly so people who represent a little to do it's legal in the way that the CEOs and all the things that got us into this mess were legal right. It's it's technically correct it just may not be complete in its infamous ha okay. I'll show you show you this okay W tell norm of this has happened a couple of weeks ago was last week that this happened yes -- last Wednesday and Thursday okay. So they don't they sell all of our bonds are debt correct except they sell it to the broader market to the primary buyer primary bar. And they -- and they are saying hey who wants it share of America. No there were no buyers nobody is really interest in -- there was a real kind of a problem kind of attention last week. So the primary buyers they did eventually -- it up. They by seven year bond and their seven year bond that's their long term bonds we do we we -- we all of this in seven years exactly right. After ten days these people. -- those seven years -- and after ten days they sell them to. The Federal Reserve all my gosh it was just coincidental as you -- wasn't let happen."

" That's the backdoor that is the back door and -- goes in they buy -- hand and the only issue here is is that the Fed had indicated in advance that these these would be in demand as did the federal government. He's so if there and demand there's no need for the Fed to backstop right but the Fed comes at -- stops it. In a secondary market after the primary buyer had bought it -- Paper that they print. -- What's -- mean that's the monetization of debt. They print money and they exchange the money for the piece of paper that the government ultimatum at a later -- this sounds a little to me like pigs. Actually what got us into this well it infuses the economy with cash and that's -- the Federal Reserve is supposed to do they are supposed to be. -- buyers and sellers of cash and to put money in a poll about -- this system last. Depends on how much cash and put out there. We don't know that they'll do if they continue to put more cash and we have two sources of cast right now we have the president putting cash and stimulus funds and that's coming from taxpayers. Theoretically your dad -- dad is okay. And then you have this being print it you -- volume of the double infusion of cash. Creates that fear of inflation. Tank and that's -- that's not how long does that last -- as -- either if this volume is so grand that inflation becomes hyperinflation if you write us with we have a problem."

" Yes but we have a -- we have a problem David because if I'm not mistaken I don't have it on here at chuck -- if if if I'm not mistaken the via the problem is is. We're filling. As the market goes down we're feeling all of this with cash to -- it's an artificial infusion or stimulus right. Then the the secret to survival is to know when the bottom -- correct so you can then as the market comes back up all this cash -- pushed out correct date because that's what causes hyper -- correct okay. Eight. We still are we still probably going down here. We're still a lot no one knows the other that I agreed -- in that direction where -- generally is probably going this direction correct correct okay. So we have all of this cash that we still have to fill in. So that's all the stuff that we still have to sell who still have to sell treasuries is up to get loans so there's a lot more money coming. If this thing kicks back in. All of this money has to be sucked back into that."

" It's gotta be pulled back by the -- how do they do that. Well that the way in which they can do that is is state polling and back they pull back the debt the government pays back -- debt how to how they they've -- got to be an increase in -- no they really do pay it back it's gotta be an increase in taxes. And that increasing taxes by the way can come through inflation okay got to be feeling that explain that well this is the dirty little secret government that economists -- people don't talk about. Would you prefer to make 10% on a hundred dollars or 10% on a thousand clearly 10% on a thousand. So we receive inflation and prices go up everybody says that -- government would not like inflation. Technically that's not true because the government can collect many more tax dollars if we have inflation without raising the tax rate once. It's politically popular but it -- a ton of money out okay. So how do you stop that cycle well well well there's only two things the government do -- either tax more. Or hope for inflation. Neither one of those are hopeful entity -- promises for people. I'll say it again need to tax more. Take money straight out of the pockets of Americans or hope for inflation we're it will naturally pull money out of the the pockets of America they will hope for inflation. They will it's it's called the government temptation. So."

" David. Yesterday and it -- show did you see the show last time I heard it okay. I I did the show and I talked about these crazy things that these -- are saying. Okay they're talking the president is saying I'm not gonna stuff -- grandma and I don't think the president wants to snuff out -- But you we have tough decisions to make especially -- in government run health care right so you're in government run health care. They're saying that they'll only do these things where they're gonna cut off the fringes the early life in the late stages of life for health care if we hit a crisis."

" Is this crisis this is a crisis in the sense that if we flood the economy with so much cash. Like Zimbabwe -- example that's really on the extreme -- but but like Zimbabwe or any other Argentina that I once it starts getting what's it starts you get control it all right that's the problem right they can't immediately pull the water back it in the metaphor of the water it's all the -- that's flooded out is what is happening here. Any really have any kind of relationship or feel to you as somebody who knows the system of an -- wrong. Or the CEOs I know you're saying that it's legal. But is it. See much of what Enron did was legal or we wouldn't have needed sarbanes Oxley to rectify it so they were doing things that -- technically correct. They were not ethical they were not ethical but it was technically correct ethical -- I think -- challenge here from a purely ethical perspective is the fact that you are. Waiting for these bond buyers to go out by -- the primary markets. And then you're coming around the other side absorbing it. Either go out and buy it initially and let everybody know you're gonna absorb 47% of the market don't tell everybody that there's demand for this or secondly. Recognize that ten days seems to smack of something that it's a little bit more plan."

" Let me -- I've got ten seconds here let me ask you this -- early on on this loans that we we've got to -- there's. Billions of more dollars that we're going to need it just just to hold this thing together if they're doing it this early on. What this our bond sales look like a year from now."

" That that that that's challenging and troubling because Geithner has already asked for the -- ceilings yet the debt ceiling to go up you know beyond the twelve trillion I mean it's just bizarre numbers."

" When he's asking for that at this point we're only eight weeks out from that from that point investigator -- we don't."

" We do not have an opportunity to absorb that so quickly even if the markets come back in an -- in efficient fashion thank you very much that."