SID: Hello, Sid Roth, your investigative reporter here with Dr. Larry Bates. Outrageous to believe the greatest country in the world, the United States of America, is heading rapidly to becoming what is known as a third world country. Sound outrageous to you, maybe not, my guest Dr. Larry Bates as been a state legislator, a CEO of a bank, he has been studying banking, finance, money for many years. Larry, are you a doom and gloom type of individual? I mean the US is headed to becoming a third world country?
LARRY: No, I’m excited about the future Sid.
SID: You’re excited that we’re going to become?… I’ve been to third world countries, Larry, I’m not so excited.
LARRY: Well, I’m excited for those who understand the times and have the discernment of what to do because you know the Bible tells us in the last days the wealth of the wicked is going to be transferred to the righteous. The good news is this, in periods of economic crisis, or even in economic collapse, wealth is not destroyed, it is simply transferred, and money is the transfer agent.
SID: And as I understand the scriptures, especially coming from a Jewish background; the Tanach. it’s when Israel did right, they were blessed in every possible arena of life.
LARRY: That’s right.
SID: And so, under the new covenant how much more will those that are walking in intimacy with God – But before we get to the wealth transfer, because you see this wealth transfer is where you put your money, and I’ll tell you something, that’s a pretty tough question. What about real estate? I pick up the newspaper; I hear trailers in Hawaii are going for close to a million dollars. I mean this is craziness Larry, what is going on in real estate?
LARRY: Well what is happening is you have is a lot of money that is chasing a limited amount of houses, and you have low interest rates. People are buying more house than they ordinarily could afford. And the good news is this, none of what is happening today has caught God by surprise, He’s not having an anxiety attack over what’s going on planet earth. And if we want to understand the times, we have to press into His wisdom. It is supernaturally discerned. You see, the natural mind out there listening and viewing right now doesn’t understand what we’re talking about. It is spiritually discerned, First Corinthians 2.
SID: Now because of your background in economics, banking, and money, let me ask you, why do you feel, and most people do feel this way, that the real estate market, especially houses, it’s a big bubble that is going to burst at some point, most people recognize that, they’re just greedy and they’re saying, “Well, tomorrow – I want it to keep going up, ten, twenty percent a year.” Uh why, you said something about money is easy to come by, explain that.
LARRY: It really is. The good news about real estate is that a third of all homes in America are paid for. No mortgage.
SID: Now that’s an interesting statistic. If you had said, ‘Sid, guess how many are paid for with no mortgage,” no way would I have come up with that high a percentage.
LARRY: But the two-thirds that have a mortgage, they are in pretty bad shape. We have a lot of banks that are just pushing money out the door, people are no down payment, even their closing cost are being paid for, we have a lot of this exotic financing, creative financing, reverse mortgages, interest only mortgages –
SID: What’s a reverse mortgage, I’ve heard about that?
LARRY: Reverse mortgage is where you have a level payment, even though interest rates go up on an adjustable rate mortgage, you have a level payment and then you are adding to the balance of your mortgage all the time as interest rates go up, you have a balloon.
SID: And well, the balloon means that at some point you are going to pay the price and what happens if someone’s salary is going up, you know, cost of living, but all of a sudden you bump into that balloon payment, then there’s no way you’re going to come up with that money.
LARRY: that’s exactly right, remember this, the only difference between those in the ghetto and those in the suburb is their line of credit and their ability to service that line of credit.
SID: Speaking of credit, it’s not only with houses, the United States of America owes a great deal of money, it’s at historic highs, what is this?
LARRY: What we are doing, our total domestic debt is plus or minus seventeen trillion dollars, that includes the federal government debt, state and county municipal debt, corporal debt, mortgage debt and consumer debt all put in one big pile. Now here’s the problem, we have a debt-based economy, we have a debt based monetary system, and we have a lot of people in my profession of economics that say well you know the United
States ability to borrow is unlimited by definition, but let me tell you this, as a former banker, I can tell you this, that a person’s capacity to borrow is predicated upon their creditors confidence in their ability to repay. And our trade deficit, we have twin deficits, we have the budget deficit, we have a trade deficit. Our trade deficit Sid, is consuming 2.4 to 2.5 billion every working day. Now to put that in perspective, that is 80 percent – eight zero, eighty percent of the entire world savings. My question is, “Is that sustainable?” I don’t think so.
SID: Well, but as long as we’re a great country and there is something behind our white paper and green ink, but you say no, there isn’t.
LARRY: Well, the only thing behind our white paper and green ink is over inflated value of assets. And when you have over inflated value of assets and you cut off the money supply, and Sid, one of these times in order to keep the dollar from collapsing, the Federal Reserve will raise interest rates even more drastically and a lot of people, you see capital is always looking for a home, and it looks for two things, either political stability or economic stability. We have this other mix of terrorism, natural disasters, all of these could be catalysts that would precipitate a decline of the dollar –
SID: What would happen if some of the people that lend us money all of a sudden said we’re not lending you money anymore, would that hurt us?
LARRY: Well, by the same token, let’s say you have a company out here, their banker pulls their line of credit, what happens? They go under. We will go under –
SID: But we can keep printing up money.
LARRY: Well we can print up money, but we then get in the situation of hyperinflation.
SID: You know this does not sound really good to me, I don’t know about you. But, Larry says he’s not doom and gloom, He’s only doom and gloom for those that do not have wisdom. We’re going to be talking when we come right back about not natural wisdom because natural wisdom can’t solve what’s going to happen to the housing market, can’t solve the fact that most Americans are a paycheck away from filing bankruptcy, can’t solve the problem of hyperinflation, can’t solve the problem of terrorism, can’t solve the problem of what the world calls natural disasters. But there are answers, and it’s not bad, it’s good. Don’t go away we’ll be right back after this word.
