Former US Treasury Official – U.S. To Experience Total Collapse
Today a former US Treasury Official shocked King World News when he warned that the U.S. would experience a total collapse. He also warned that the entire Western financial system will be brought to its knees because, unlike 1980 when he and others saved the United States from collapse, the collapse cannot be stopped this time. This is without question one of the most powerful interviews Dr. Paul Craig Roberts has ever done.
Dr. Roberts: “The (U.S.) deficit projections, if they are honestly done by the Congressional Budget Office and the Office of Management and Budget, will show a larger deficit projection then Congress faced the last time they refused to deal with the issue.
So, what will they do when as of mid-October the new Treasury Secretary has said that ‘The Treasury will have run out of tricks’ to get around the debt ceiling limit. For example, what the Treasury has done to evade this limit is to pay itself dividends out of Fannie Mae and Freddie Mac.
“They have to (do this) because otherwise they can’t pay their bills. The deficit ceiling stops them. So they use this to produce revenues. They also use these kinds of gimmicks to claim that there have been reductions in the cash base current fiscal deficit. These are all deceptions they (the U.S. Treasury) are using to avoid the letter of the law. Of course they (still) violate the spirit of the law.
The real danger is the whole world looks at this and says, ‘The Americans are printing up 1,000 billion (one trillion) new dollars every year to bail out the banks and to finance their current operating deficit, and there doesn’t seem to be any end to this. There is no resolution and the deficit is worsening.’
So, if you then see people (and countries) bailing out of dollar and dollar-denominated assets in the international markets, you will have a real crisis because if the dollar drops, the Fed has lost control. Interest rates will rise, the banks will fail, the bond market will collapse, the stock market will collapse, and you will see a total wipeout.
So, by refusing to realize the severity of the situation, and by pushing it off in the future, it’s now harder than ever to deal with. And if you think the Congress has the kind of intelligence and leadership to deal with this problem, you’re mistaken.
I think this problem will resolve itself in a crisis. You could see (a mass) exit from the dollar. So I think the country is facing a series of shocks, and no one trusts it (the U.S.) anymore … This is a tremendous blow to everything that is said, from economic policy, to every statement that will come out of the Federal Reserve, and the U.S. Treasury.
People now look upon the United States as a country where public officials are incapable of speaking any truth. This just destroys confidence in the country and every aspect of it. The United States is going to find itself in a very, very difficult situation.”
Eric King: “Dr. Roberts, as Ronald Reagan took office as the President of the United States, he called on you and others to basically come in and rescue the United States from collapse. In the 1970s we saw a stock market that was collapsing in 1973 and 1974 as gold and silver were skyrocketing. And then from 1976 to 1980 stocks were really struggling and gold and silver essentially went into a mania (that frightened the world). Is that a scenario that you see going forward — global stock markets collapsing and gold and silver skyrocketing?”
Dr. Roberts: “Yes. I think that’s the most likely effect. I think it probably starts this fall/winter, and next year will be a dismal year in terms of economic history. In the Reagan administration we were able to solve the problem. We did (solve the problem).
That’s what the supply-side economic program did — It solved the problem for 20 years. But the problem we have now is that policy doesn’t address it. Supply-side economics can’t solve the problems we have now, and there is really no known economic solution. It really doesn’t have a solution at this point. It’s gone on too long.”
Eric King: “Dr. Roberts, the people that were looking for a collapse of the U.S. dollar and the financial system 33 years ago (1980), is that (finally) in front of us now?”
Dr. Roberts: “I think it’s likely that we are going to see that. But what they were looking at then (in 1980) had a different cause. The problem then is not related to the problem now. There was a solution (in 1980), and it was solved. So it (the collapse) did not come about.
The situation today is in no way comparable to 1980. When you’ve got 3 or 4 American banks with derivative exposure that is three of four times larger than all of the wealth in the world combined, these bets can’t be covered. No amount of money can be printed to bail that out.
It’s the Americans that deregulated and destroyed their own financial system. It will have repercussions worldwide because, to varying degrees, every part of the world is connected to the American financial system. The ones most connected will be hurt the worst.
I think the results of the toll will fall on the United States and Europe. So it will be Western civilization which is simply moved aside, and is no longer the #1 arbiter and decision-maker (in the world). They (countries in the West) have brought failure to themselves. They, the United States and Europe, are going to become 2nd world, and 3rd world countries.”