Latest / The Catholic Current / What Next for America? (Karl Denninger) 8/20/26

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What Next for America? (Karl Denninger) 8/20/26 · The Catholic Current

0:00
This is The Catholic Current with Father Robert McTague.
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I don't see a lot of heroes in this story,
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and I see a lot of people who can't wait for
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the next round of beat up the church. Am I just too jaundiced
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and cranky today? Well, it's possible to be jaundiced and cranky and
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correct, so both of those can be true at the same time.
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Your mileage may vary, but that's been my experience. Uh, yeah,
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there's, there's no one on the side of the church as far as the
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government's concerned. Praise be Jesus Christ.
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This is Father Robert McTeague of the Society of Jesus, your daily host for The
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Catholic Current, where we bring Christ to the world and the world to Christ.
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You're listening to us from the Station of the Cross Studios, your local radio station,
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and the iCatholic Radio mobile app, where we proclaim the fullness of truth with clarity
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and charity. As always, let's start with prayer. In the name of the Father,
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Son, and the Holy Spirit. Almighty God, through the intercession of Saint Ignatius Loyola,
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we ask that you pour forth your Holy Spirit upon us, a spirit of discernment
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that might hear your voice and obey your command. In the name of the Father,
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Son, and the Holy Spirit. Amen. Well, friends,
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anniversaries are on my mind today as we
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record this. Why do I say that? Well, you know, there was the 250th anniversary
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of America recently, and I was there for the 200th when I was a kid.
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The 200th anniversary of America seemed to be a big deal.
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The 250th anniversary seemed to be rather subdued.
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And then there is my own anniversary in the Society of Jesus,
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36 years on August 15th, the Solemnity of the Assumption.
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And when you're hearing this, it will be August 20th, which will be my 8th
1:38
anniversary hosting The Catholic Current.
1:42
My thanks to my good friend Jim Wright, who's the president of the Station
1:45
of the Cross Catholic Media Network. And there are
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good days of this program, and then there are some very
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good days. And among the very good days, when people who I've been reading
1:55
for years and I respect and admire answer my phone calls and
1:59
my emails and agree to talk to me, not only once but more than once.
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And today is one of those days. My returning guest is
2:07
the host host of The Market Ticker. He's a former CEO
2:10
of MSNNet. He is operator of
2:14
Ticker Forum. He's— gosh, he's got lots of really smart
2:18
opinions on lots of things, and he knows numbers better than I do. Carl Denninger,
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welcome back to The Catholic Current. Well, thank you for having me on, Father.
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Carl, speaking about American anniversaries and so on,
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you had a column— we'll put it up in the show notes here— from
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earlier part of July. And the question I wanna ask is,
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why has America been working and how
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can it keep on working? Now, as a philosopher,
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I'm concerned, I talk about things like rights and privileges and
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governmental limits. And I always tell my students, when you're talking
2:50
about rights, if someone asks, should a person
2:54
have a right to do X, Y, Z, that means they don't
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know what they're talking about. 'Cause rights come from the kind of creatures that
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we are. We're rational, moral, free, and made in the image and likeness of God.
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And you either have rights or you don't, and good governments
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respect rights and bad governments don't. That's the philosopher concern.
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You're a businessman, you're a numbers guy, you know that civil society
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doesn't work unless certain numbers
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are reliably in place and the rule of law is trustworthy.
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I want to go out on a limb here and say government hasn't been doing
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real well in respecting rights and human beings.
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And I think you would argue too that the government has been doing real well
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for a really long time respecting numbers and
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reality. I think we're heading towards a train wreck. What do you think?
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Yeah, there's, uh, there seems to be this concept
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within certain circles, and I am not really sure where it comes
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from because there isn't, there isn't any set of facts to
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back it up that, uh,
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humanity is just one amorphous
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mass. That all humans, you know, we have this thing in
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our Declaration of Independence that says that all humans are created equal and
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that they're endowed by, by our creator with certain unalienable
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rights. But nowhere among that
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list was the right to take something from someone else.
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Right. Life, liberty, and the pursuit of happiness do
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not involve being able to take
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that which you cannot produce on your own or through some voluntary
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means of exchange. And so there's this
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idea that if I don't have an equal result
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to someone else, then I'm entitled to it whether I earned
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it or not. The problem with this is that
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nobody argues, for example, that pit bull Terriers
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are much more likely, just on the statistics,
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to be the perpetrator of a very serious assault
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on a human being. I mean, that's, that's an accepted statistical
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fact, right? You bring that kind of conversation
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into the realm of humans and all of a sudden you're a racist pig,
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even though the facts of the matter is, is that there's, there's what, something like
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200 or 300 recognized breeds of dogs, yet all are dogs.
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Right. Is it unreasonable to think that if you're going to have
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a nation that respects the equality of human
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beings, that that comes with a standard of conduct?
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And we don't allow dogs to bite children and
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get away with it. Well, why do we allow humans to, you know,
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to behave in ways that are more like a pit bull than a
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little cocker spaniel? Okay. Right. Right.
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Okay. Yeah. And I mean, the same thing's true with cats.
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All felines are wonderful. I don't think you want a bobcat for a next-door neighbor,
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right? Or a lion. As a rule, no. Yeah. As a
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rule, that probably is going to end pretty badly. So, you know, we don't allow
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that kind of thing to go on. But I think
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it's interesting that as we went through the 250th, I was around
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and an adult, more or less kind of an adult. I wasn't yet
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18, but for the, for the 200th
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anniversary, I happen to have 2 whiskey decanters
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that my father bought for the 1976 thing.
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They were Jim Beam, and there was a Democrat and a, you know,
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there was a Democrat and Republican one. It was an elephant and a donkey.
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Okay. They're both sitting on my mantle that my parents
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have passed on. But I, you know, I'm the keeper of the coffra in the
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family, so to speak. Sure. Yeah. Okay. And these were a couple
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of things that were in the house that I thought were kind of cool.
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And there was a lot of fanfare back then. And yet This time around,
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not so much. Right. And I think some of
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that is political polarization, but some of it is also that we've lost
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our way as a nation and where we can't—
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we can't seem to find parity.
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We not only suborn the kind of, of rank theft
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from others, but then we even to a large extent, we cheer it
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on. You take a look at the, at the government's just
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fixation with asset prices, for example.
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And Christianity has held for a long
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time that money is
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the root of all evil, although actually, I think greed and avarice are kind of
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the two. Yeah, the full quote is love of money
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is the root of all evil. Right. And so, it's greed and avarice are
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part of the 7 deadly sins, right? Sure. Yeah. And yet,
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we look at the system today, Just recently,
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it was announced that Kroger was taking 5,000
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jobs, well-paying jobs in Cincinnati, and moving them to India. Why are they doing
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this? Well, because in India, that same role pays $30,000 a year,
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and in America it pays over $100,000.
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And not only do our corporations see no problem with this,
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neither do the people or the government. There are always
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going to be places where you can leverage either
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wages or environmental parity. If you're going from somebody that has a median
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income in American dollars of a couple of thousand
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dollars and ours is $25,000, well,
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that person of reasonable comparable
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skill within the American milieu is going to be more
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than willing to take a tiny fraction of what they would here in the United
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States with all of our cost of living circumstances.
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And as long as we've been able to finance
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that by just printing up more credit at the government level. So you fire 5,000
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well-paid Americans, you force them out of the workforce.
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What does this do? Well, this forces them into other jobs.
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It forces them out of their homes. It forces them out of their communities.
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And then you say, well, here's a Section 8 check. Here's a food stamp
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card. Here's a this, here's a that. Okay. Right.
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Except What have you really done there? Well, you stole that
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money from everybody, everybody in the country. Right. All right.
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And so from the future too, right? Well,
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yes. But the thing is, is it appears you can get away with this as
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long as every time you go to refinance that
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debt, the rate is lower. Okay. Because if
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I borrow, let's just take an easy example. I borrow $1 million as
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a corporation. And the rate of interest I have to pay is 10%.
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That means I have to— and let's say the term of this loan is 3
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years. So in 3 years, I have to pay the entire million dollars back.
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But during that interim period of time, I have to pay $100,000
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in interest every year. Okay. So I have enough
9:58
profit coming in to be able to do that and make whatever product
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or service that I produce and sell it and pay that interest. Then the
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time comes, the 3 years are up, and rather than pay back
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the million dollars, now the rate of interest is 5% in the market for the
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same million dollars. Well, now I can roll that over and I can pay $50,000
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in interest for the next 3 years. Of course, that's less than $100,000. That sounds
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like a pretty good deal. Or I could borrow another million and
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pay the same $100,000. I'm going to interject just for a second because we're
10:31
coming up on a hard break here. It seems to me, and I've
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talked about this in my medical ethics class, that we're running a
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pyramid scheme, a Ponzi scheme, and we need
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an infinite stream of suckers to kind of pay in to
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keep it all going. And here I'm going to mix metaphor, that the
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Ponzi scheme is a lot like musical chairs, and once the music stops,
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not only one person but nearly everybody is going to be in trouble.
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Friends, when we come back, we're going to continue our conversation with Carl Denninger.
11:02
You can find his good work at market-ticker.org,
11:06
and I do recommend to you his book called, uh, Leverage.
11:10
Remember, our rallying cry here at the Catholic Current is Christus Mundi, Mundus Christo— bringing
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you help fund programs that defend our Catholic faith. We're asking what's
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next for America. My returning guest is Carl Denninger. You can find his good work
13:00
at market-ticker.org. Carl, just before we came up
13:04
on the break, you said that if a business borrows some money,
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it has to pay it back with interest. It can roll the debt forward
13:11
a bit as long as the interest rates
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continue to get lower. Is that correct? Well, yeah, well, actually,
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you can roll it forward infinitely as long as rates continue to get lower.
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That's, that's the ugly part of paper. Well,
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in point of fact, I mean, we've got a a
13:30
40-year example here, right? Sure.
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But there's a problem with that, which is that historically
13:37
speaking, the rate of interest in the economy runs
13:42
on a long-wave cycle. And these, these cycles are
13:46
known in the vernacular as Kondratiev cycles,
13:49
after the person who first noticed them and wrote them up. They seem
13:53
to be correlated to approximately the lifetime of a
13:57
human being. The, the most obvious
14:01
explanation for this is that all the stupid things that people did get forgotten
14:06
when the last one who did it the last time dies. Now, whether that's
14:11
actually the reason, I don't know. Well, but yeah,
14:15
but yeah, I mean, you know, correlation is not causation,
14:18
but— and yet, okay, there seems to be this,
14:22
this rather interesting pattern that plays out repeatedly
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across, uh, you know, across, uh, recorded history.
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And it— yeah, there we are. So the last
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bottom in the rate cycle occurred in 1944.
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Go figure, right? Just before the end of World War II, right?
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Okay. And the top in that cycle was approximately
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1982. All right. Now, exactly where it is is always subject to some
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dispute because, sure, uh, one, one set of rates turns before
14:54
another and whatever have you. But I, I came of age as adult into
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the peak of that period of time and witnessed the very last part of
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it, the 1970s and early '80s. And I think it's
15:05
fair to say and can be said on the air, that sucked.
15:09
Yeah, fair. I remember gas lines and all the
15:12
other fun stuff and the squeeze that was on the American middle class and
15:16
everybody else. And then we have had a period of time that everyone
15:20
says is fabulous prosperity. Well, what it really is,
15:24
is slow bankruptcy because every
15:28
time we faced a challenge, the answer has been put it on the credit card
15:32
and just continue doing that. And as long as the cost of
15:36
keeping that credit card fed keeps going down, this all looks
15:40
just fine. And what we are— and one of the most dangerous things for anybody
15:43
to ever believe in is this time it's different because,
15:47
alas, historically it never is.
15:52
Patterns that have happened in the past will happen again.
15:55
And we've seen them multiple times. We had a 70,
16:00
80, 90-year period of time when people have flooded into the American West
16:04
believing that the water resources in particular
16:08
would never turn on them. Well, they did about 15, 20 years ago,
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and we have these nice big reservoirs, but eventually they run out.
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And will that happen before the cycle turns?
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I have absolutely no idea. But it
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is certainly as night follows day,
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and the other way around, these cycles will repeat. And so,
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we are now reasonably well into the start of an
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increasing rate cycle. I would argue that this attempted
16:41
to really get going in 2019.
16:45
They suppressed it. The pandemic was certainly part of the justification.
16:50
Whether or not that was engineered or whether that was just a response
16:55
doesn't really make any difference. But here it is,
16:58
and that's not coming back. So now the problem is you have
17:02
all of this debt that has been accumulated, and per the
17:07
Constitution, you cannot just walk away from that. Never mind that
17:10
if you did, nobody would ever lend you money again. As a nation. So,
17:15
as a practical matter, you can't do it. As an
17:19
operational matter under the Constitution, you can't do it. And so,
17:24
now the idea that we're just going to continue to put it on the credit
17:28
card is gone. And this is where the country needs
17:33
to come to the realization that we cannot continue
17:36
to ship everything overseas, We cannot continue to subsidize
17:40
that which cannot pull its own weight. That has to end.
17:44
And the monopolist practices that have taken place within
17:48
the last 50, 60 years had—
17:51
the laws are already on the books. We don't need new laws passed by Congress,
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but we do have to enforce them and they have to be enforced equally and
17:59
against everybody. 2 quick interjections. Number one, you know, I spend
18:03
a lot of time with religious people, not surprisingly, and most
18:07
religious people have they have this illusion that the
18:10
only Christian response is more free stuff for everyone to infinity,
18:14
and the best way to do charity is to take coin from Caesar, who wishes
18:18
everyone well. And as long as we take our cut off the top from administrative
18:21
purposes, the bureaucracy can keep on humming as God intended.
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So that's the first thing. Um, but the, the second
18:29
thing is when you talk about monopolistic practices, I think I
18:33
have a sense of where you're going. It's got something to do with medicine and
18:36
insurance. Could you unpack this? Am I reading you right on this? Well, it's not
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just there, but yes, it is there. Okay.
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Within the federal budget, CMS is the only
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place that there is enough spending going on
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to actually impact this trend. And that directly
18:55
implicates healthcare. When, when I
18:58
was younger and growing up and,
19:01
and as I was coming of age, you went to the physician's
19:05
office, you pulled out your checkbook and you paid them. And you could
19:09
do this because the cost was reasonable. I saw my parents do it when I
19:12
was a kid, for sure. I saw my parents do it when
19:15
I was a child. We had a pediatrician's office, had 2 sides, one for
19:19
well checkups, one for people that were sick. And, you know,
19:23
if you had something going on, you went in there, they took care of whatever
19:27
it was, and you paid for it, and that was it. There's— you had insurance
19:31
for catastrophic circumstances. You know, you break your leg, you get in a bad car
19:34
accident, whatever have you. But these— this was
19:37
not something that you thought of as an ordinary thing. Well,
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we have gone from about 4% of our nation's
19:45
product in being consumed by healthcare to
19:49
20% today. That's a multiplication of 5. Now,
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that has nothing to do with the size of the economy. That's the percentage
19:56
of the economy. Right. No, there's no market force involved
20:01
in any of that. It's stolen. The, the group of people in
20:05
the building next to the local hospital are there simply
20:09
to collect money. They do not provide a single second of care to
20:12
a single person over their entire professional careers. There's no
20:16
reason for them to be there. And yet these
20:20
are well-paying jobs. If you get rid of them, well,
20:23
the demand for houses, for all of these other things that they
20:26
buy, will go down, obviously. If you were to expel
20:31
all the illegal immigrants, the same thing would happen. Supply and demand is the
20:34
first law of economics, and price is the
20:38
integration of supply and demand. So when people say
20:42
that there's no way for the ordinary person coming
20:45
of age today to expect
20:49
to be able to work a job, an ordinary job,
20:53
have enough money to raise a family, own a house, buy a have
20:57
a car, pay the insurance, pay your power bill, your food,
21:01
everything else. Well, they're right. But the reason isn't because supply
21:05
and demand has suddenly changed. The reason is,
21:08
is that we've stepped on one side of the scale,
21:12
and then we've covered it up with government credit emission. In contrast,
21:16
Surgical Center of Oklahoma, they're basically a cash-only
21:20
operation. And they do everything from toenails to
21:24
brain surgery. And their prices compared to those who
21:28
take insurance insurance. If I remember the numbers correctly, it was about
21:32
70% lower. So even if I'm wrong about that, it was only 50%
21:36
lower. Doesn't that demonstrate that in,
21:40
in a lot of what passes for insurance is it,
21:44
it's fraud? Well, it's even worse than that because it's actually about
21:47
1/5 of the price typically. Okay,
21:51
but here's the other thing, that's a soup-to-nuts price. If they screw
21:55
up and give you a secondary infection they have to cover it because it's—
21:59
you already paid the bill. That's it. Mm-hmm. If you have— if
22:03
the hospital screws up and gives you an infection, they bill you
22:07
for treating the infection. Wow. So, I mean, it's even
22:10
worse than it first appears. Now, interestingly enough,
22:14
Obamacare banned creating any more
22:17
of those surgical centers. It's actually illegal under
22:21
federal law to set up any new ones. I did not know that because I
22:24
wondered why this would catch on, you would think.
22:28
And I always know I'm in trouble when I preface a statement with, you know,
22:31
yeah, it seems to be a really attractive business model,
22:35
you know, cut out the middleman. So,
22:38
well, I mean, think about this. You know, we've integrated
22:42
employment-based healthcare into our, you know,
22:46
into our economic model, which was from a bunch
22:50
of things, including Eisenhower and also Nixon's policies is how
22:54
those things came in. And disentangling that would essentially
22:58
solve 95% of the problem, but good luck doing it.
23:01
The thing is, is that even with that employment-based model, if there
23:05
was one of these centers in every city,
23:09
most places, most enterprises could just self-insure
23:12
because they just, okay, we'll write the check to those guys.
23:16
Right. And you wouldn't have those layers of bureaucracy.
23:19
Now, you've written about this before, and if I understand you correctly, if we
23:23
were going to have just a kind of a pay-as-you-go with
23:28
the prices, you know, 3/4 lower, there would
23:31
be a really painful transition period
23:35
of about 6 months to a year, and then we
23:39
would come out the other side. I just realized I asked you a massive question.
23:41
We only got about a minute left in this segment, but am I in the
23:44
ballpark that it would hurt, the contraction would hurt a lot, but then
23:48
life would be better afterwards? Can you answer that in a minute?
23:51
Yeah, it would be an extraordinary adjustment. But on the
23:55
other side of it would be probably, other than the 1920-21
24:00
recovery from the Depression, there would likely be
24:04
the best burst of productivity improvement in American history. Well,
24:08
you see, some things make so much sense that one despairs of them ever
24:12
happening. I mean, a lot depends on whose ox is gored. And speaking
24:17
as a Christian, Advocating delay of gratification
24:21
and accepting present pain for future benefit doesn't win
24:24
you a lot of applause and fans, and that's just from preaching.
24:28
In terms of politics either, I don't think that we have
24:32
the virtue anymore to embrace
24:37
present pain for the sake of a greater future
24:40
good. And I think the pain that's going to come raining
24:44
down on us as a result of that lack of virtue is it's,
24:48
it's gonna be memorable, and we're going to be talking about it in the history
24:52
books for a very long time. Friends, we come back and continue our conversation
24:55
with Carl Denninger. You can find his good work at market-ticker.org.
24:59
Look for his book called Leverage. We're talking about what next for America.
25:03
And as you listen to this, it will be my 8th anniversary here at the
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helm of the Catholic Current. Thank you for your generous report for my work and
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25:30
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25:34
who give to you. Together, let's take it around the world. Be back in just
25:37
2 minutes. Please do stay with us.
26:00
This is the Catholic Current from the Station of the Cross Catholic
26:04
Media Network. Catch up on an episode
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26:19
Praise be Jesus Christ. This is Father Robert McTigue of the Society of Jesus,
26:23
your daily host for The Catholic Current. We bring Christ to the world and the
26:26
world to Christ. You're listening to us from the Station of the Cross Studios,
26:29
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26:32
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26:36
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26:41
Here in The Catholic Current, we engage issues seriously and faithfully,
26:44
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26:48
Support us at thestationofthecross.com. And a thank you to all our
26:52
supporters as you listen to this. It is the 8th anniversary of me
26:56
behind the the, the big microphone here at the Catholic Current.
27:00
Thank you for your support. My returning guest is Carl Denninger. We're talking
27:03
about what's next for America. Carl, my birthday is August
27:07
29th, and according to the Terminator timeline, I was born on the
27:12
calendar day of Judgment Day, you know, rise of the machines and all that.
27:15
So what all the cool kids are talking about now is AI, and it
27:18
reminds me of a titan in business around 1929.
27:22
He says, you know, the stock market is doomed when the shoeshine boy is giving
27:26
advice on, on stock markets. So we're in a
27:30
situation where all the cool kids are talking about AI. It's either going to absolutely
27:35
save us or it's going to be rise of the machine and a dystopian future.
27:40
If I'm reading you correctly, it's gonna run out of gas long
27:43
before that. Tell us about that, please. Yeah, that's the— that
27:47
I'm not into the rise of the machine thing because first off
27:52
There has never been a computer, even with all these frontier models
27:56
that everyone is gaga about today, there's never been
27:59
a machine that ever has ever once demonstrated the ability
28:03
to act out of scope. Now, what does that mean?
28:07
That means something original that it was not programmed to be able to
28:11
do. Okay. Your cat is quite capable of this.
28:15
Sure. And anyone that owns a pet of
28:18
any kind has seen it. Oh yeah, you certainly have seen it if
28:22
you have children. I've heard hell. I myself
28:26
was once a child, so I'm just saying, I, I, I might
28:30
have taken apart clocks because I was just curious as to how they worked when
28:33
I was younger. My parents were not impressed with this behavior,
28:36
however. Well, yeah, I did that with my slippers. I cut
28:40
them open with my pocket knife to see what was inside. My curiosity was
28:44
not rewarded. Well, that's, you know, the problem was not
28:48
taking the clock apart. It was the inability to put it back together in its
28:51
original form. Right. So the— this, this was— this
28:56
is just something that is a limitation there. But there was a very interesting statistic
28:59
that came out. And this is, this is being driven by ever more financial
29:04
games that what we have going on right now.
29:07
And a very interesting piece of information just hit the wires the other day.
29:11
And that is that Cloudflare, which is a company that exists by
29:15
trying to prevent denial of service attacks against large sites.
29:19
That's its business. That's what they do. And the way they do
29:23
this is by analyzing traffic patterns to try to figure out whether
29:27
or not you are an actual human or whether you're a robot that's trying to
29:30
do something nefarious to the target. And if you're doing—
29:34
if you're the former, then it lets you through. And if you're doing the latter,
29:37
it attempts to block you. And that's their entire business.
29:41
And that's what they do. And unfortunately, this is a necessary
29:45
business because there are so many malicious SOBs out there in the world that
29:49
would try to crash something that's talking about something
29:52
they don't like or whatever have you. So it has become a fairly
29:56
substantial business. They make a decent amount of money selling the service. They've noted
30:01
that of the traffic on the internet, that driven by robotics,
30:05
that is AI, has now surpassed that driven by humans.
30:09
Oh, now on the trend that they currently see,
30:12
their projection is that there will be 1,000 times
30:16
as much traffic driven by robots by 2030.
30:21
Oh, in other words, for every one key click of
30:26
a human that goes across the internet, there'll be 1,000 of them that get driven
30:29
by these things. Now there's a problem with that. Sure, the problem is I
30:33
pay for a connection to the internet, whether it's on my telephone whether
30:37
it's a fiber cable coming into my house, specifically because
30:42
I want to use it to find information of various kinds,
30:46
communicate with people. Okay, I'm not interested in talking to a computer.
30:50
I'm communicating with humans.
30:53
Every piece of all of the money I spend
30:57
to do this goes into the pieces I don't see.
31:00
And I know this because guess what I used to do?
31:04
Okay, that was, that was my business, was building those networks. You were
31:08
an internet service provider. Yeah, yeah, sure. Yeah, I was one of those people that
31:11
built that stuff. Okay. Okay. So for each $20 I
31:15
took in from a customer, some piece of that $20,
31:18
the majority of it went to provide the local services that they saw,
31:22
the modem on the other end, the email server that collected
31:26
their email and allowed them to see it and things like this. But a piece
31:29
of that went into what we had to buy in order for that to be
31:33
useful. For them to be able to communicate with people across the globe.
31:37
Okay? If 1,000 times
31:41
as much of that is robots talking to each other
31:45
as is humans having conversations, then even if
31:49
that was only 1% of the total,
31:52
and it was quite a bit more than that,
31:55
let's just say, I'd have to actually go back and look at business
31:58
records to figure out exactly what the number is. But if it's just 1%,
32:02
you're talking about multiplying that by a factor of 1,000.
32:06
Okay, so now all of a sudden, I'm going to pay a bill instead of
32:11
$60 a month, I'm going to pay $600 a month. And the only reason I'm
32:15
doing it is so that these robots can have this communication. No, I'm not.
32:20
Right? Yeah. Neither is anybody else. All right.
32:25
Right. So this, these,
32:28
these kinds of exponential expansion expectations
32:33
never work that way, because they can't.
32:37
Trees do not grow to the sky. They never have.
32:41
Everyone believed that this would continue in the 1990s.
32:45
They were wrong. The crash was ridiculous.
32:49
Now, this has imbued everything,
32:53
and it has gone so far After the 2008 crash,
32:57
there were some very serious reforms put into the
33:00
way that debt is packaged together and marketed because you had
33:04
companies that were taking mortgages, their own people in their
33:08
own, on their own desks were calling these things vomit.
33:12
And then they were calling up clients and selling it to them as good investments.
33:18
I know that's a sin. It's probably a crime in some jurisdictions too.
33:21
It is absolutely a crime. And yet nobody went to jail for doing it.
33:26
It. That is fraud. It is knowing
33:29
misrepresentation of facts. That is not an accident.
33:32
It is not bad luck. It was intentional. Not a
33:36
single person was sent to prison for doing it. And there was hundreds
33:40
of billions of dollars that was evaporated in a puff of smoke when it blew
33:43
up in everyone's face. Now, the SEC has just issued
33:47
guidance recently dropping those constraints on data center debt.
33:52
Packages. Oh, so we now have the official
33:56
imprimatur of it being okay to not
34:00
retain any of these risk controls as long as the
34:04
subject matter is a data center or an AI buildout.
34:08
Now that is not going to end well.
34:11
That's actually, gosh, you know, we don't want the car
34:15
to slow down, so we're going to remove the brakes. Is that Well,
34:20
actually, worse than that, we're planting a 10-pound
34:23
weight on the accelerator. Yeah,
34:27
this is the kind of insanity that has taken over
34:31
the marketplace and the equity and debt markets. And it's
34:36
absolute lunacy. The other problem that
34:40
is going to show up, and it has been true in every
34:44
single area of technology since I started doing this stuff. I've been
34:50
I'm in my 60s now. We're talking about 50 years worth of seeing this in
34:52
the tech space. Every single new technology that comes onto
34:57
the scene is essentially valueless as
35:01
a commercial thing within 18 months to 2 years.
35:04
It's not that it doesn't work anymore. It's that the next generation
35:08
is better, faster, and cheaper. And in the case of AI, and as
35:11
was the case back then in the 1990s, It also uses less power.
35:15
And so your competitor will buy the new one. If you do not,
35:20
you will go bankrupt because he can undercut you. And as a result,
35:23
you go out of business. He gets all the business, you get none. Right.
35:26
And that means you have to spend that money,
35:30
except how do you do it when you're still trying to pay off the last
35:34
generation? So if you can't cover the entire expense of
35:38
what you built within 2 years, you're finished.
35:41
And it is not going to blow up instantly. It never
35:45
does. But the first guy that realizes this and runs for the door gets
35:49
out with his hide intact, and everybody else gets trampled in the fire. And I,
35:53
and I do not know what's going to set it off, Father. I have no
35:56
clue. Right. I don't have a crystal ball, but I can guarantee
36:01
you this same thing is going to happen because this pattern has never
36:06
been violated in my years in this industry. Never once.
36:11
You know, I'm trying to think, you know, there's a popular— Ryan
36:15
George, a Canadian YouTuber, has this really clever thing called, you know, Pitch Meetings,
36:18
where there's a really bad movie and the producers— the writers trying to
36:22
pitch it to a producer. But for someone to come in and say, hey,
36:25
I got this great idea, and then when you describe it
36:29
the way you described it, how could anyone reach for their
36:33
wallet? Is it really just every generation This time it'll be
36:37
different. This bubble we can blow indefinitely. This time the math
36:41
won't be so mathy for us. Is, is it human weakness?
36:45
Is, is it nefarious? Are there lizard people living under the
36:49
North Pole who control us? What, what's going on? The people
36:53
that are doing this are carnival barkers, and they're fully aware
36:57
of the history. Elon Musk is one of the, one of the prime examples
37:01
of this nonsense. He has announced this thing that he calls TeraFab,
37:04
which is going to be the largest chip fabrication facility
37:11
in the world by far. Okay. Now, his justification
37:14
for this is that he's going to be launching 100
37:19
of his Starship vehicles in order to put data centers in space
37:23
per day. That seems a lot.
37:28
It's a physical impossibility. Okay. Because you
37:32
cannot— the only way you can come back from orbit, just on
37:35
the physics, is by using the atmosphere as a brake. So just
37:39
like brake pads in your car, you have to have that— those heat shield tiles.
37:43
You cannot come back under power. In other words, you can't slow down enough using
37:48
fuel. And the reason is you can't carry enough fuel to do it. You can't
37:52
get it off the ground. Right. Okay. So it's not a choice. There's only— and
37:55
as long as we're constrained by chemical propulsion,
37:59
this is the physical reality of this type of
38:02
event. Does it matter what you— there is no technological
38:07
advancement that can overcome this as long as you're using chemical propulsion.
38:11
Now, if Scotty shows up, now all this changes.
38:14
But, but so far there's been no Scotty Doohan. Okay.
38:17
Okay. No, no James Doohan. So There you go.
38:22
And yet the idea that you can take one of
38:25
these craft that has just done this, immediately stack
38:29
it back on top of another booster, fill it up full of fuel, and in
38:32
an hour, like an airplane that you fill full of kerosene,
38:36
put it back into space is not—
38:39
you get away with it once or twice, and then the second or third time,
38:43
there's an integrity problem with one of those heat shield tiles and it explodes.
38:48
And there isn't anything you can do about this. There is no way to get
38:51
the cadence he's talking about. It can't be done given the physical realities.
38:56
And yet everything that they're basing all of the profitability
39:00
of this in the future on is based on that.
39:04
Oh, that seems to be it. But he
39:08
has one operating profitable business right now, and that is
39:11
those Starlink terminals, which is a profitable
39:15
business. Sure, sure. But no fraction of imagination
39:19
justifies the kind of value that's been put on this company.
39:23
All right. I'm going to interject because we're coming up on a break.
39:26
I remember seeing a Far Side cartoon where there
39:30
is one chalkboard full of complex formula. And then
39:34
on the far side, there is another complex formula. And in the
39:38
middle, it says, and then a miracle happens, which leads to step
39:42
3. And I think this is where we're heading now is that
39:47
we've got a starting point, we've got very desirable results, but it's— and then a
39:50
miracle happens to how we get there. And I think that's just
39:54
asking for trouble. Friends, we come back and continue our conversation
39:57
with Carl Denninger. We're talking about what's next for America. You can find his
40:01
very good work at market-ticker.org, and do check
40:05
out his book called Leverage. Be part of the conversation, follow what
40:09
we're following by following us on Gab. That's gab.com.
40:13
The channel is The Catholic Current, and you can influence the conversation.
40:16
Contact us, thestationofthecross.com/askfather.
40:20
Comments, questions, suggestions, recommendations— we want
40:24
to hear from you. Let's do this good work together. Let's be so very much
40:27
more than merely relevant. Be back in just 2 minutes. Please do
40:31
stay with us.
41:01
Have a question or feedback about today's episode?
41:04
Want to suggest a guest or a future topic? Go to thestationofthecross.com/askfather
41:12
and help influence the conversation.
41:20
Praise be Jesus Christ. This is Father Robert McCaig of the Society of Jesus,
41:23
your daily host for The Catholic Current, where we bring Christ to the world and
41:27
the world to Christ. You're listening to us from the Station of the Cross studios,
41:29
your local radio station the iCatholic Radio mobile app, and we proclaim
41:33
the fullness of truth with clarity and charity. My returning guest
41:37
today is Carl Denninger. You can find his good work at market-ticker.org.
41:41
Carl, when I was in Jesuit school being trained, they said
41:45
when you're talking to people, whether it's teaching or preaching, confession,
41:49
spiritual direction, you have to be as honest
41:52
as you're able, and then you also have to leave people with hope.
41:56
So the people listening to us in our candid conversation, and they're
41:59
you know, driving home from work or thinking about what they're going to make for
42:02
dinner or helping the kids with homework,
42:05
ordinary people who are not billionaires,
42:08
what's, what's their response to this? What, what can
42:12
they do? What do they need to stop doing? Well, the first and most important
42:16
thing is to the extent that you can get out of debt.
42:20
Okay. Um, now that's, you do not want
42:24
to be beholden to somebody else. And you also need to sit
42:29
down, take a pencil and piece of paper, and figure out what your monthly nut
42:32
is, what you actually have to have, what are the bare necessities.
42:36
If you don't pay this, you have no power, your toilet
42:39
doesn't flush, that kind of stuff.
42:43
And that's different for everybody. And in addition to that,
42:47
a lot of it has to do with where you live. There's a huge difference
42:50
in those base costs from one part of the country to another. So,
42:54
you know, general piece of information that I give somebody for here,
42:58
it would have absolutely no applicability somewhere else.
43:01
But getting out of debt is the first and most important thing because
43:05
as the system undergoes the kind of violent
43:10
cataclysmic reactions that are going to come when people
43:15
all of a sudden find out that the American credit card can
43:18
get declined, Oh, okay. Yeah.
43:22
Well, I mean, you know, maybe not in ways that, you know,
43:25
that like you think at the store, right, when you go swipe it. But yes,
43:30
it can. And the reactions to that are not going to be pleasant.
43:33
You need to be in a position where you can survive that. And if that
43:37
means that your job gets downgraded or whatever have you, there's a period of time
43:41
balance will come back, but it takes
43:44
time to happen and you have to be okay during that interim
43:48
period. And that's the important thing because there's
43:52
always the possibility of things spiral completely out of control and we get a civil
43:56
war or social collapse or something like this, or a funny Austrian painter shows up
44:01
and gets elected. You can't bet on those kinds
44:05
of things. End-of-the-world bets are a mistake always. So the
44:09
key is to— well, and it's just simply because if you're dead,
44:12
they don't make any difference, right? And now you're talking to St. Peter.
44:16
So you must plan for, okay, how do
44:19
I get through this and come out the other side? Because assuming
44:23
that those really horrible cataclysmic kind of things don't happen is
44:26
always the right base case. It's the only thing you can place
44:30
a wager on. But you have to survive the interim period
44:34
without ending up homeless. And that's
44:37
the key. And to go along with that, you have to take control
44:41
of your personal health. If you are dependent on the pharmaceutical and the medical industry
44:45
and you have a way to address that, through what you eat, through what you
44:48
do, you need to do it. I've been talking about this all the way back
44:52
to when Obamacare was first put in place. I said this exact thing that is
44:55
coming is going to happen. Now we're seeing the leading edge
44:59
of it in that the system is unable to sustain itself
45:03
and the government's not going to be able to pick up that piece. So,
45:07
if you need that, you're in a lot of trouble.
45:10
Right, right. So, again, getting out of debt.
45:13
Committing to, uh, to a healthy lifestyle. It's not just
45:17
a one-and-done thing. It's not like getting— it's not like getting your
45:20
healthy certificate. And then of course, you know, from my angle, you know,
45:24
you got to get right with God as well. Where does friendship and
45:28
community come in? Because I, I think one of the things that's pernicious about
45:32
our present culture is we don't know our neighbors and we don't
45:37
know how to trust each other. Where, where does I don't know, fellowship and friendship
45:40
fit into this in your view? It's really tough because
45:44
it's easy to be someone's friend when things are easy and everything's working out
45:49
okay. It's whether or not somebody holds that
45:52
position with you when things are not is a
45:56
different question. So this is,
46:00
you got to be careful who you let into the circle on the other end,
46:04
and that even goes for family members. I mean, I think every one of us
46:07
knows someone that, that had a horrible fight over an estate after,
46:11
you know, after someone dies. Alas. Yeah. Yeah. I mean, it happens
46:16
all the time. It's a, you know, you can make movies out of it.
46:19
So you have to be a little bit aware
46:22
that those, you know, those people that have gone through really difficult
46:26
times with you or where you've done that with them and,
46:30
and things have been good between you, even when things
46:34
are not good. Those are the people you can have some kind of that you
46:37
can count on. But everybody else, I'd be very careful with your exposure
46:40
across that as well. I know self-reliance sounds
46:44
like, you know, that sounds like something out of Reagan, right? You know, rugged individualism
46:48
and stuff. But there— but it is dangerous because for
46:52
the last 30 or 40 years, it's been easy to be— to show compassion.
46:55
And yet how much of that is real? I, I don't know
46:59
the answer to that for any particular individual in any particular situation.
47:03
I, I just caution people to be very careful in believing that,
47:06
you know, that most people are good. I— they're good when it's not
47:10
hard. Whether or not people are when it's difficult is
47:14
a different question. So I'm taking it you're not going to, uh,
47:17
move to New York City to get your 30% discount on
47:21
essentials at the city-owned grocery store? Am I reading that correctly?
47:24
I suspect that that discount will be available as long as the
47:29
shelves last, which will be about an hour. Well, yeah,
47:32
interestingly, you're gonna need a photo ID for
47:36
that. I know, I have to, I have to actually be, you know, well,
47:39
and, and, you know, that's another interesting aspect of it. You think about, you know,
47:42
Mandami, he actually let the, let the cat out of the bag.
47:46
He says, well, you know, I support free healthcare for everybody, and then he He
47:49
said, well, excuse me, there's no such thing as free. Who's going to pay the
47:51
bill? And his answer was very candid. He said, you are.
47:55
Well, okay, so long as we're clear about that, as long as we're
48:00
clear on those things. So, there is
48:03
no easy way out because, you know, we live
48:08
in a finite world. We live in a fallen world. We're surrounded by human beings
48:11
who are at least as weak as we are.
48:14
And we have to find a way to, uh, to, to work that
48:18
out. It's safe to say, though, that we've been lied to
48:21
or misled or led stupidly for a
48:25
very, very long time. Is it fair to say that a healthy degree
48:29
of skepticism is also necessary? You really got to do your own homework? Oh,
48:33
absolutely. And, and that is especially true today
48:37
because so much of what's available through
48:40
what we used to consider to be reasonable sources of research, whether they
48:44
be online or in print, have been corrupted by all this AI nonsense.
48:48
Right. And, and the problem with that is, is, you know, there's always
48:52
this disclaimer at the bottom. Well, you know, AI-generated answers may have errors or
48:56
omissions. Oh, really? Oh, okay. So, so yeah,
48:59
you better be fact-checking everything that somebody tries to tell you
49:03
just because, I mean, I see this all the time. Stuff on social media is
49:06
just absolute garbage. And, and some of it's coming from overseas
49:10
influence operations. Some of it's coming from robots. Some of it, you know, but it's
49:15
just take a look at some of the stuff that's been put up in the
49:18
Smithsonian, for crying out loud. I mean, if, if there's somewhere you'd think you'd find
49:22
actual facts, it'd be there. But even the, even the woman who's
49:26
in charge has admitted that she considers her job to be one of advocacy,
49:30
not presenting of history. Right, and it's— but,
49:34
you know, also your tax dollars at work,
49:39
and, you know, facts are stubborn, and facts
49:43
don't care about our feelings. Carl Denninger, thank you for a fascinating
49:47
conversation. God bless your very good work, and I do
49:51
look forward to next time. Thank you very much. I'm Jesuit Father Robert McTeigue,
49:54
your host every day here at The Catholic Current. Friends, thank you again. You've been
49:57
keeping me on the air for 8 years. I'm glad to be of service.
50:01
May God grant us very many more together. Thank you also for your generous support
50:06
of thestationofthecross.com. Uh, join us tomorrow. We're gonna have
50:10
another round of Let's Talk About This. We're going to continue in our series in
50:13
novel prophecies. We're going to be looking at Aldous Huxley's
50:17
Brave New World Revisited, a really interesting sequel/reflection
50:21
on his prescient 1931 novel Brave New World.
50:26
Through the intercession of Our Lady of Mount Carmel, may God our Lord surround you
50:29
with a legion of guardian angels with flaming swords to light your path, to protect
50:33
you from all harm and every evil, to reach the happiness of heaven. May almighty
50:36
God bless you, Father, Son, and Holy Spirit. Go in peace, and please do pray
50:40
for me, for I am a sinner.