Sid: There seems to be so much fear on the economy, there seems to be so much fear on terrorism, there seems to be so much fear on natural disasters, or perhaps I might even call it God’s judgments. Fear isn’t of God and there are solutions and God has raised up people with Godly wisdom and solutions for the last days. I have such a man on the telephone, a man that’s been a friend for many years Dr. Larry Bates; he’s publisher and editor of Monetary and Economic Review. He’s a former bank CEO and actually a former member of the Tennessee House of Representatives where he chaired the Committee on Banking and Commerce. He’s an internationally recognized speaker on political systems, the Federal Reserve, and in particular how the Federal Reserve and the political systems are going to affect the economy and your assets. Larry the thing that is on everyone’s mind right now has to do with the housing market, and in particular the takeover by the government of the mortgage giants Fannie Mae and Freddy Mac. Most people felt they were government even before the takeover; could you put a little light on this matter?
Larry: Yes sure can thank you Sid, good to be with you. We’re in really one big mess. When I say one big mess this is probably the worst crisis that we’ve ever faced. We have toxic death, we have bail outs, we have financial crisis, we have massive inflation and a lot of people are looking at their homes and pretty well wondering, “Well how’s this going to affect me?” Well, I was at the White House last month and participated in a briefing, and I asked Dana Perino the White House Press spokesman for the President about the fact that the Congressional Budget Office had just come out and said, “Well we out to put this bail out on the books of the government.” And I asked her, “What does the President think about that?” She said, “Well, we have the Office of Management and Budget looking at it and we’re not really sure.” Well, let me tell you what this really means; we also saw Lehman Brothers having major problems, and have been our Wall Street firm. And it really gets back to paper, the paper that when they sign their mortgages on their house, their loans were sold and packaged and bundled and repackaged to time on end and who know whose holding all that paper. Now when the housing market goes down and why does it go down, simply because you don’t have buyer who have financing. And Fanny Mae and Freddie Mack hold about 5 trillion dollars of the paper of mortgages. As a result all of this is in trouble and when you don’t have anybody making loans you probably don’t have a buyer for your home and as a result the prices of real-estate keep going down.
Sid: Did I hear you say 5 trillion dollars?
Larry: That’s right, 5 trillion with a “T”.
Sid: Well, that’s hard to even comprehend; so if the government has taken it over does that mean that we the tax papers are going to be taxed to pay the bills?
Larry: That’s right, but that’s part of the story Sid. Let’s say that we follow the advice of the Congressional Budget Office we put it on the books of the U.S. Treasury, and let’s say that 20% of those loans are bad. Twenty percent of 5 trillion is 1 trillion dollars additional deficit on the books of the United States treasury. Now what else could we do? Well, we could sell those loans to the Federal Reserve, which by the way is neither Federal and has doubtful reserves. How do they pay for them, they simply print the money. Now what does that mean to us? Well, when you inflate the currency it is a tax that is greater than the direct tax that the Congress lays on the people. So this is why we have $4.00 a gallon gasoline, this is why we have high prices for bread, milk and eggs in the grocery store, high prices for everything. This is the inflating of the currency and the devaluation of the U.S. currency.
Sid: So, you’re saying to me that this takeover by the government or the mortgage giants will result in us losing our purchasing power in everything.
Larry: Absolutely, there is no way around it Sid.
Sid: What’s going to happen to the housing market as a result of the government now giving this money which they don’t have they’ll just print up.
Larry: Well, I have forecast in some video’s I produced in our publication “Monetary and Economic Review” that probably in the real-estate market we have another twelve to twenty-two months of down turn. And you see the solution to the problem Sid is what caused the problem to begin with. The only reason we had over valued real-estate was because of the massive amount of money credit that was being flooded into the economy. People were buying houses that we’re more expensive and more house than they could really afford and then when they need to sell the house or they got some creative financing where maybe Henry Stonily, or just poor rate mortgages and now the mortgage rates go up on those and they can’t afford them. We have a recession here that’s come on to the country and again we have this one big mess and it’s kind of a downward spiral until they get a handle on it.
Sid: But where the rubber meets the road, what does someone do that wants to buy a house now? Should they wait? What does someone do that’s in a house right now, should they sell? What’s your advice?
Larry: All real-estate is local and there’s a formula that I’ve put together, I call it the Bates Formula. It’s not scientific, but it works. Go to your local Board of Realtors and get the average number of days for the past years that a house has been on the market to sell, and you can plot when the average number of days starts increasing for four to six months in a row you can pretty well plot where the market peaked in that real-estate market. Conversely when you see that the average number of days in the future start declining four to six months in a row you can pretty well plot this is where the economy has strengthened, and the housing market has bottom out. And this is where you want to buy a house is at the bottom of the market, wait right now, I would wait for another twelve to twenty-four months depending on the locality. The only real-estate I would advise people buying right now is agricultural real estate paid for no mortgage.
Sid: Larry I’m very excited over your new three DVD’s that you’ve just come out with; this was recorded before a live audience with questions and answers. You call it “Economic and Political Crisis.” It’s really making sense of the economic and political crisis worldwide and then the strategies for weathering any crisis while keeping your finances and political freedoms intact. Tell me how this came into being.
Larry: Well, it came into being, let me backup in history a little bit. Back in 1983 I had the opportunity to debrief a former Soviet KGB agent who had defected to the United States. His name was Tomas Schuman and he gave me a chart, this disinformation chart. He was part of the Disinformation Campaign directed toward the United States and the western world. In the Disinformation Campaign the Soviet Union was spending roughly 400 million dollars a year back then on this Disinformation Campaign. And he showed me over a period of fifteen to twenty years was a demoralization period; we show you step by step in the areas society, law, fabric, family, church, religion how they have been targeted primarily using the control news medium, and the end result. I believe that we’ve ended the demoralization period that we show in the step by step in the charts, and we now entered the destabilization period and this period is two to five years, these destabilization and then you enter a crisis period. This is an early warning device that will help people understand the strategies that you need to take, we see what Satan’s plan is because I can tell you Sid unequivocally that we have a war of world views going on. It is the kingdom of Satan challenging the kingdom of God and it is down to hand to hand combat. You see Satan has his agents on planet earth. God has us, His agents and we better get into battle; this is not a spectator sport.
Sid: You know you hit upon something, in our lifetime it’s amazing transformation of morality, what’s acceptable and what is not acceptable; and what is Biblical and what is not Biblical. I mean it seems as though before our very eyes daily society is self-destructing from a moral viewpoint.
Larry: Oh, it really is; as we’re doing this broadcast I’m in Washington, DC and I can tell you I hate to come to this city Sid; there is such an oppressive spirit here, it’s a spiritual war. You know Ephesians chapter 6 says “We wrestle not against flesh and blood but against principalities, rulers of darkness in high places.” The people we disagree with with the immorality issues, the political issues, they are not our problem. It’s the spirits that are controlling them are our problems.