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Glenn Beck

Economic Shell Game: What Should We do to Halt Financial Crisis?; Dirty Politics on the Campaign Trail; Author Pens New Inspirational Book

Aired September 18, 2008 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(BEGIN VIDEOTAPE)
GLENN BECK, HOST (voice-over): Tonight the feds throw out the playbook in a bid to save America`s financial system. But are they destroying it at the same time? Can we do something to stop the next Great Depression or are we facing a financial meltdown like the Soviets faced in the 1980s.

Then more political dirty tricks. Governor Palin`s e-mail is hacked by the same kind of people that were all so worried about how George Bush and Dick Cheney were reading your e-mails.

Then flushing the Constitution right down the old crapper. We`ll talk to Ron Paul on his mission to get our most important document a little more respect.

All this and more tonight.

(END VIDEOTAPE)

BECK: Hello, America.

I told you a while back that one day you`re going to wake up on a Monday and by Friday your country won`t be the same. This may be that week.

In response to the big steaming mess on Wall Street, the world central banks have been injecting huge amounts of cash into the world`s financial system to make sure that firms needing the money to stay afloat can actually find some cash. If it were only that easy. Here is "The Point" tonight, America.

I hate to say it, but I`m beginning to believe this story can only end one of three ways. Another Great Depression like 1929. Economic stagflation like 1979, or a Soviet-style collapse like 1989. My grandfather told me when I was very young, never think that -- never think it can`t happen to you. I think it can. Here`s how I got there.

Our conservative candidate, John McCain, is now saying yes to bailouts. The FDIC is running out of money to insure your life savings. Uncle Sam is printing money in the basement or stealing it from Peter so he can pay Paul, and our politicians are still promising us more free stuff. What the hell is wrong with us? We can only play this shell game for so long. You know it and I know it. This cannot go on.

Tonight, America, here is what you need to know. We have got to make a choice. We are either capitalists or we`re not. We either believe in the free market system or we do not. We can`t play both sides.

We`ve had every politician tell us for years, we`re spending too much money, our deficit is out of control. So what the hell do these people do when we`re up to our eyeballs in debt? They do out and buy half of the mortgages in the country. And then to top it off the world`s largest insurance company. Now they`re packing their bags to head to Detroit. Only politicians would be that reckless while we are in the position that we are in.

Peter Schiff is the president of Euro Pac and author of "Crash Proof: How to Profit from the Coming Economic Collapse." And Steve Cordasco hosts the "Big Money" show on 1210-AM WPHT in Philadelphia.

Peter, let me start with this. Please give me another one if you think it`s possible: 1929, 1979, or 1989 Soviet Union. Which -- which are we doing?

PETER SCHIFF, PRESIDENT, EURO PAC: It could be a combination of all three. That`s the scary part. Because not only are we going to have a giant recession, depression, whatever you want to call it, but we`re not going to have falling consumer prices like we had in the 1930s. Consumer prices are going to go through the roof.

With all the money they`re printing, it`s not accident that gold was up more than $100 an ounce in the last two days. This is pure inflation. And unfortunately, as you mentioned, you know, the government created these problems. And now the government is saying that the solution is more government. They`re trying to blame the free market for the problems that they created. We wouldn`t have had this bubble if it wasn`t for government intervention in the market in the first place.

BECK: OK. Steve, where do you think we`re headed?

STEVE CORDASCO, RADIO TALK SHOW HOST: Glenn, I say, you know, if you look at the system, the system has already buckled. You have the creatures of the system in there trying to fix it.

Hank Paulson broke the rules, as many Wall Streeters did, to create this problem. Now, he`s breaking the rules again. So of your three, I`m going to throw a fourth in there. But let`s take a look at stagflation. If you go back to the `60s, LBJ saw the Fed`s budget, saw the balance sheet expanding. That`s why he brought these Fannie Mae off the balance sheet. That led to the inflation of the `70s, the fight the Vietnam War. The Fed did the same thing then. The `70s were the fallout.

But I`m going to give you a different twist. Here`s what the market is saying today. And Peter knows this, as well. It`s saying that we have deflation happening or could happen in the future, and it could look like Japan, a deep, long recession, where they were handing money out on street corners and couldn`t get consumers to buy. Right now, the bond market`s saying deflation.

BECK: OK. What is the difference between inflation, or stagflation, and deflation? I know -- well, inflation means it just costs you more to buy stuff. But what is deflation?

CORDASCO: I`ll default to Peter on that.

SCHIFF: Well, what we`re going to have is we`ll maybe even have a combination. Everything that we want to buy is going to get more expensive, food and energy. But everything that we own, like stocks and real estate and bonds, they`re going to fall in price. We`re not going to be like Japan.

See, Japan was a wealthy company. Japan was a creditor nation. We`re flat broke. We owe Japan trillions. We owe the world trillions. We`re not going to have a situation like Japan. It`s going to be much, much worse.

And what the government just did was AIG taking $85 billion and buying -- nationalizing a private company. Not only is this a waste of money, they`re going to lose a lot more than $85 billion. But they have no legal authority to do this. And when you let the Federal Reserve print money and buy private companies, what do you call that?

CORDASCO: Hey, Glenn, we`re not smarter than the market. And if you look at what the market is saying, he says that there`s the possibility of Japan. Japan was AAA rating. And they lost that rating. The U.S....

BECK: Steve, what Peter is saying is we`re not Japan. Japan saved their money. We spent all of our money.

CORDASCO: I agree.

BECK: And that`s why we have massive, massive debt. And if you go back to the 1930s, it can`t be the Great Depression, because we had our money backed up by gold.

CORDASCO: That`s why you -- and that`s why the market is telling you that our assets are going to be worth less. Food costs, energy costs, it goes back to the `70s.

Peter, wouldn`t you say that they expanded the balance sheet of this country in the `60s, and the `70s were the fallout?

SCHIFF: Sure. And remember, until 1971, the dollar was linked to gold. We didn`t -- we didn`t default on those promises until 1971. So the minute we went on a fiat-based monetary system instead of an honest money system based on gold, that`s when the inflation took off. And it`s going to be a lot worse this time, because the ties to gold are a lot less.

CORDASCO: They have taken -- they`ve taken...

BECK: Wait, wait, wait. Stop, stop, stop. Tell me what this means to the average person, because there`s a lot of people that are like, "Oh, please, we`ve been through this a million times. We`ve always had these problems. We`re America. It will come back. Don`t worry about it."

CORDASCO: It -- it means -- it means a low return on your investments. It means inflation down the road. It means the cost of living going up. And it almost -- I`d say it`s going to look like the `70s. And it comes down to breaking of the rules.

BECK: OK. OK. OK.

(CROSSTALK)

BECK: 1979. We have been through this before. Peter, you agree?

SCHIFF: No, we haven`t been through it. It`s going to mean a lower standard of living for every American. We`ve been living in a phony economy. We`ve been buying things we couldn`t afford with money we didn`t have. This is a complete collapse of our financial institutions and our way of life.

The reason that all these investment banks and banks are going broke is because Americans can`t pay back the money they`ve borrowed. And since we`ve been living on this consumer-based economy, when this credit collapses, Americans are not going to be able to borrow money to buy things.

BECK: So Peter, tell me -- explain to me, because I still can`t get my arms around, what does this mean for the average person? What is their life going to be like? Is it going to be like it was in the former Soviet Union in `89? Is it just going to be horribly miserable like under Carter? Or is it going to be like 1929 where we`re selling apples?

SCHIFF: I don`t know how bad it`s going to get. But the average American is never going to retire. Many Americans who are now retired are going to have to reenter the workforce. Americans are going to be spending money on the basic necessities of life.

We`re not going to have money to buy new cars, new flat-screen TVs, and new cell phones all the time. We`re going to be living in a dramatically-reduced standard of living. We`re not going to be traveling in airplanes as much. We`re not going to be traveling. We`re just going to have to get used to a lower standard of living, because we squandered our wealth. And unless we dramatically reduce the size of government, we`ll never be able to get back to anywhere near where we used to have as an economy.

BECK: Do either one of you guys -- I only have time for a yes or no - - even one of you guys think that we have a candidate that will reduce the size of government.

SCHIFF: Just Ron Paul, who you`re going to be interviewing later. And unfortunately, he`s not running. Maybe we can all write his name in.

BECK: All right.

CORDASCO: I agree.

BECK: All right. Peter, Steve, thank you very much.

Coming up, dirty politics reach a new low. I`m going to tell you about Sarah Palin`s personal e-mail account and how it was hacked. But I have to tell you, Barack Obama has also released a latest ad campaign that`s not only wrong; it`s dangerous.

And we`ll continue our weeklong series, "Exposed: America`s Broke." Tonight, we switch our focus from our financial deficit to the deficit of leadership in Washington. Is there anybody out there that will lead us through these tough times?

(COMMERCIAL BREAK)

BECK: Coming up, our so-called leaders in Washington are responsible for dragging our country into this financial mess. Don`t listen to anybody else. It`s both sides of the aisle. They are the ones who have created this.

Now, how can we possibly count on them to pull us back out of this hole that we dug? Find out as we continue our weeklong series, "Exposed: America`s Broke," a little later on in the program.

But first, I guess comic books stores must have been deserted last night, because a group of hackers known as Anonymous -- that`s a clever name -- broke into vice-presidential candidate Sarah Palin`s personal e- mail accounts.

What was the smoking gun they uncovered? A couple of boring e-mails and some family photos. I knew it. Not exactly the Watergate tapes.

They said they wanted to uncover the fact the governor was conducting state business from her personal e-mail accounts. Federal investigators were already looking into that. And I just have a question here for Anonymous. In fact, two questions for you.

First, I mean, you`re not the guy screaming about Dick Cheney eavesdropping and reading your mom`s pie recipe over the e-mail or on the telephone, were you? Because I mean, some might find that a little hypocritical.

Second, I hope you don`t have any plans for the next five to eight years. Because I think when the feds finally find you, I`ve bet they have got some plans for you. I`m just saying.

Barack Obama also been keeping busy. This time not taking shots at the Republican opponent but radio talk show host Rush Limbaugh. I saw this ad in Spanish, and it is despicable. It really is. It`s dangerous.

Obama has released a new Spanish language ad tying Limbaugh`s purported views on immigration with Republican presidential nominee John McCain. First of all, Rush wasn`t just taken out of context: it was a bit, a comedy bit. Funny how people like Obama cry the loudest when their words are misrepresented, but they never seem to mind doing it to others. This is dangerous stuff.

Here to sort through it all is CNN political contributor Amy Holmes and Stephen Hayes, senior writer for the "Weekly Standard" and author of "Cheney: The Untold Story of America`s Most Powerful and Controversial Vice President."

Amy, let me -- let me start with you. These guys, what do we know about them, Anonymous?

AMY HOLMES, CNN POLITICAL CONTRIBUTOR: Anonymous? So far we don`t know who they are. But the FBI is on the case. And these guys could face time in federal prison.

Glenn, this is an incredibly serious breach. And I want to ask, where are the civil libertarians, the people who say we can`t listen in on terrorists` phone calls. And then we have these hackers gleefully posting private e-mails of fellow citizens. I hope that they find them and that they spend time in jail. And I`d really like to see the Obama campaign come out -- come out and denounce these malicious tactics.

BECK: Stephen -- they`re not. Nobody seems to have any outrage on this stuff. Can you imagine if somebody from the right was going in and -- and going after Joe Biden`s e-mail? Could you imagine what would be said? And nobody`s saying anything here.

STEPHEN HAYES, AUTHOR, "CHENEY": To say nothing of Barack Obama`s e- mail. It would have been the front page of the "New York Times" this morning. We know that there`s a stunning lack of outrage, I would say, at this point.

Amy is exactly right. I get in my e-mail probably four or five e- mails a day from the ACLU. There aren`t any e-mails from the ACLU in my inbox. I don`t know why they`re not outraged. I mean, one would think that having somebody hack into a vice-presidential candidate`s personal e- mail account in search of something that they didn`t find would provoke this kind of outrage, and it simply hasn`t. And that, in and of itself, is outrageous.

BECK: Amy, let me ask you this question. I think this is dangerous because the record -- ABC did a scathing report on how bad this Obama ad is. I mean, it is -- there`s no question on what this was. I mean, three sentences after they quoted him, he said, "By the way, if you think that`s outrageous, because that`s not my view, that is the view of the Mexican government." Yada, yada, yada.

It`s dangerous, because ABC and while we`re correcting this, I wonder if Telemundo, I`m wondering if Univision, I`m wondering if the Mexican community or the Spanish speaking community is actually getting the truth, as well.

HOLMES: You know, that`s a very good question. And those are newsgathering organizations hosting presidential primary debates, so it is their responsibility to be just as tough, just as critical of this -- of this ad which, Glenn, is so sleazy, so in the gutter, I think it should be called the two faces of Barack Obama.

BECK: Oh, it...

HOLMES: Where is the candidate who said that he was not willing to get into the gutter to win? And now it looks -- this is coming from his campaign. This isn`t a 527.

BECK: You know what? I have to tell you. Amy, I have to disagree with you on this. I don`t think this is a sleazy ad. I`ve never seen an ad like this before. You`ve got -- and correct me, either one of you, if you think I`m wrong.

I have read five stories -- I`m doing a monologue on radio on this tomorrow. Five stories that are based on that there are going to be race riots if -- if Barack Obama doesn`t win.

If you keep telling people that, you know, everybody who `s against this guy is a racist -- it`s only because they`re a racist and they hate you and you`ll never make it, blah, blah, blah, and then you have the media pile on and say we`re going to have race riots if he doesn`t win. If this guy doesn`t win, what the heck do you think is going to happen?

HOLMES: Well, there goes Barack Obama`s message of being a racial healer. I mean, he is accusing John McCain of being a bigot. This is a man who got 70 percent of the Hispanic vote in Arizona in his reelection to the United States Senate. It`s disgusting. It`s taking Rush Limbaugh`s quotes out of context, and it`s trying to slime John McCain.

Not only that, it`s stupid politics. You know, I talked with your producer. If you`re going to air a sleazy, in-the-gutter ad like this, then you should do about the weekend before the election before the guy has a chance to defend themselves.

BECK: Stephen?

HAYES: Yes. Yes, the only thing I would add, I mean, look, I agree with you, this is sort of a new low for Barack Obama`s campaign.

BECK: A new low for anybody.

HAYES: But what we -- what we can`t do, and I think this is what our colleagues in the mainstream media have really missed the boat on this story -- is pretend that this is new. Barack Obama keeps announcing that he`s going to take the gloves off, that it`s time to get tough. That now he`s going to start to fight. That`s bologna.

You look back at the forum that he had in mid-August with Rick Warren, where John McCain was asked about who counts as rich, and McCain made a joke about people making over $5 million being counted rich. It was clearly a joke. McCain said it was a joke, and then predicted that the words would be distorted.

Well, Barack Obama has been using that for six weeks, saying John McCain thinks you`re middle class if you are below $5 million of income. I mean, it`s a crazy distortion. I think not as disgusting as this one. But it`s a crazy distortion. And you have news organizations fact-checking Sarah Palin when she says the sky is blue, but they can`t deign to fact- check Barack Obama when he deliberately and repeatedly distorts John McCain on something as crucial as, you know, who`s rich in this country.

HOLMES: And I would add to Steve`s point, Barack Obama himself bragged to ABC that he has the most negative, irrelevant ads on television. I mean, it was this bizarre bragging. I don`t know if it was a Freudian slip. But we saw in the "Washington Post" today that Barack Obama has aired more negative ads than John McCain.

BECK: Seventy-seven percent, as opposed to McCain`s 56 percent.

HOLMES: Indeed. So Steve is exactly right. The media is not holding Barack Obama to the same standards. And you know, we can see. Are they going to let him get away with this Spanish language ad thinking that Republicans don`t speak Spanish and can`t understand what he`s saying about John McCain?

BECK: Again, I don`t put this in any other category. This one is dangerous. I think we are -- seeds are being planted for very bad things. Amy, Stephen, thank you very much.

Coming up, when you are down and out, there`s always a way to turn things around. I believe that. I`ve done it in my own life: I`m a recovering alcoholic.

Well, there`s a new book called "Recovering Charles." Author Jason Wright stops by to discus life`s second verses. Don`t miss it.

Plus, is there a leader anywhere in Washington that we can trust to pull our country out of this financial crisis? I mean, they are the ones who got us there in the first place. How do we trust them to take us the other direction? Are they even able to? Find out. We continue our weeklong series, "Exposed: America`s Broke."

(COMMERCIAL BREAK)

BECK: You know, I tell you about books all the time on this program. But I have to tell you, Jason Wright is one of my favorite authors. He is an author that writes from the heart. He`s written "Christmas Jars" and "The Wednesday Letters," which is now out in paperback. His latest work is inspiring. It is called "Recovering Charles." And the author is here with me.

Jason, how are you?

JASON WRIGHT, AUTHOR, "RECOVERING CHARLES": I`m good.

BECK: You and I are friends. And Katrina, for me, has become such a political nightmare that I can`t read anything about Katrina. You sent me this book in -- I think in June and I started to read it. And when I found out it was -- you know, revolved around Katrina, it was really hard for me to read the first couple of pages. Did you know that was happening with people, that it was politicized? And that...

WRIGHT: Absolutely. Absolutely.

BECK: I called you. I wrote you the next morning. I actually didn`t go to sleep that night, because this is such an amazing book. It`s about people who have a lost life, lost childhood, and then they take a second chance, take another stab at it, right?

WRIGHT: They get another verse on their life. And on the Katrina issue, it is important, I think, for people to know that the book is not about Katrina, per se. It just happens to take place in New Orleans during that incredible time.

BECK: It makes so much sense once you know the story.

WRIGHT: And there`s a great metaphor there with second chances. I think not only do you and I deserve second chances and second verses, but probably American cities sometimes deserve a second chance.

BECK: So this is the story, it starts and -- because I know you and I know that -- I mean, I`m riddled with alcoholism and suicide and everything else in my family, but you have so captured a dysfunctional family early on. It starts with the main character`s childhood and it kind of goes into where he was as a kid. How did you capture that?

WRIGHT: Well, dysfunction. Nobody knows dysfunction like the Wrights. I certainly don`t have that level of experience with the issues that folks like you experienced early in life. But I think I`ve known enough people and I`ve gotten to know you, certainly over the last several years, that I`d be lying if I said your name didn`t plaster my mind a lot as I was holed up in a hotel room the last week, finishing the book.

I thought a lot about some of the stories you told me over the last three or four years. And I think there`s a little bit of Glenn Beck there. And there`s a little bit of everybody who thinks that they need a second chance in life, and maybe the people around them aren`t willing to give it.

BECK: Is it -- is it always a pivot -- with me it was a pivot point where it was just like, "Oh, my gosh, I`m wasting my life. And I am being trapped in all the crap that happened to me as a child," or whatever, or I did. Is it always a pivot point? Is it always one moment? Or is it -- do you think it can be a slow realization of that?

WRIGHT: That`s a good question. I think -- I think it probably depends on the person. I know when my dad died, and I looked at my life, and I said, "Here I am, 16 years old." All these dreams I had, things I was going to do with my dad, things he was going to see me do, when he died when I was 16, I thought, "Well, what`s my life going to be like now?" And it`s taken probably 20 years of small, little pivot points along the way...

BECK: Right.

WRIGHT: ... before I could say, "You know what? I can have a second verse on my life, and my dad will be proud of me."

BECK: Speaking of verses, there`s a song that goes with the book?

WRIGHT: That`s right. Cherie Call wrote a fantastic theme song for the book. It`s called "Love Me If You Can." You can hear it on the Web site, RecoveringCharles.com.

BECK: Listen, America, you need some hope, you need some inspiration, this is it. "Recovering Charles" by Jason Wright. It`s in bookstores everywhere this week.

Thanks, sir.

WRIGHT: Thanks, Glenn. Appreciate it.

BECK: You bet.

(COMMERCIAL BREAK)

BECK: Welcome to our continuing series, "America`s Broke."

I just want to have a conversation with you here for just a second before we start. We are selling our country out. Our country is becoming a pawnshop and it`s being sold for power and money and politics. Where is the person that is representing you? I mean, you`ve seen all of this stuff happen this week.

Who is the person that`s representing our country? And says no, way, this isn`t the right thing for our country. I`m to a place, don`t listen to these politicians. Listen to your gut. Listen to yourself. You just do know instinctively you know these things can`t last.

When it comes to energy, you know we`re going to need energy. Why are we listening to people that tell us we don`t need energy? Why do we keep listening to people that say it`s more free stuff. It`s never, ever free.

These bailouts, you know that we went and they we`re actually thinking about selling one of our investment banks to China. China is sending us baby milk with poison in it. What is happening to us? With Social Security, you know, look, I`m 45 years old, I`m never going to see Social Security. You know it and I know it.

If you`re 65, why are you retiring? I have a father who is 85 years old. He`s not able to work. I have another group of parents that are 65 years old, they are not retired. Why would you retire? You`re not useless at 65, you`re needed at 65. Please do the patriotic thing and don`t retire when you`re 65 years old.

If you`re somebody who is working a low-paying job, you`re not a loser. You can make it. Don`t listen to anybody who tells you that you can`t make it. You`re not a failure. And there is a difference between failure and a loser. Failure leads to success. Losers stop trying to be successful.

Where is the person that will just tell us the straight truth? America, this has been a hard week. I fear for our country. I fear that my children will not be able to have the country that I had when I was a kid. You want it as much as I do.

Remember what you were like on 9/10? On 9/10, you had your head in the sand. On 9/11 if you were like me you were freaking out. You didn`t know what was coming.

But On 9/12, we knew what was important to us. And we were willing to do the hard thing for our country. We were willing to do it for our children.

Are you a 9/10 person that has your head back in the sand, are you a 9/11 person that is just freaking out. Or will you please join me as a 9/12er, somebody who is willing to do the tough things. We can accomplish anything. We`re the country that changed the world. And if you`ll just be that 9/12 person, we will change it again.

Our guests tonight, David Walker, the former chief comptroller of the United States and president of CEO of Peter/Peterson Foundation and Robert Bixby, is the executive director of the Concord Coalition, a nonpartisan group dedicated to fiscal responsibility.

David, I have to start with you. Right before I went on the air, I met with a guy who is an immigrant to our country. And he -- it`s so close to me today because I -- he said, you know, how are you doing and I said fine. And I could just seeing him made me think, I wonder if he`s ever really going to see America at its best with the way we`re treating it right now. We`re selling us down the river and nobody is really paying attention. Agree or disagree?

DAVID WALKER, FORMER U.S. COMPTROLLER GENERAL: Well, America is for sale. I mean, America is mortgaging its future. It`s mortgaging the future of our children and grandchildren. We`ve seen a lot of disruptions here this week, and in recent times with regard to the sub-prime crisis but what people don`t realize is the same factors that led to the sub-prime crisis with regards to the financial institutions and the mortgage-based securities exist for the government finances.

So the real question is, are we going to do what we need to in the short-term or are we going to prevent the super sub-prime crisis which is the federal government`s finances.

BECK: Ok, Bob you have access to a new study that shows that Americans are willing to do the hard thing, right or wrong?

ROBERT BIXBY, EXECUTIVE DIRECTOR, THE CONCORD COALITION: That`s absolutely true. I mean, if Americans are told the truth and realize what the stakes are, particularly for their children and grandchildren, they are willing to make some sacrifices and make some tough choices. They are not being asked of that by the politicians and they`re not being given the truth about our fiscal situation.

BECK: Ok. Here is my problem, and maybe I don`t know if either one of you can answer this. My problem is I am willing to do the truth. I am willing to sacrifice for my children`s sake and for my grandchildren`s sake but I am not willing to give people another dime. I`m not willing to say, no, you can take my Social Security money that I`m paying every month and pay down the debt or do whatever we need to do.

I`m not willing to do that, because I believe they`ll spend it on something else.

WALKER: Well, I hate to tell you, Glenn, they`ve already spent the Social Security Trust Fund. I mean, it`s really an oxymoron. I mean and only the government would call the Social Security Trust Fund a trust fund. It does not the same as Webster`s dictionary.

What we need to recognize is that ultimately we need to have some tough budget controls because Washington is spending $1.20 or more for every dime that it gets.

I wouldn`t send another dime to Washington unless and until there are tough statutory budget controls. At the same point in time we`re going to have to reform Social Security, and Medicare, and Medicaid. We`re going to have to reprioritize and constrain spending. We`re going to have to reform tax code and our health care system. We may need more revenues down the road but not until we do these other things.

BECK: Ok, Bob, we aren`t getting another -- Bob, help me out on this. They are talking now about lowering our credit rating. Just -- they were talking about this back in January because of Social Security and Medicare. But now they are talking about taking our credit rating and lowering it as a nation, which is the same kind of thing if you`re going to buy a car, if you`ve got poor credit, you`re going to pay more in interest.

Just lowering the credit rating, and now they are really talking about doing it because of what we`ve done in the last week. That takes everything we`ve said about the $53 trillion and throws that out the window. It`s much worse if they lower our credit rating. Right?

BIXBY: Sure. There are a lot of things we`d have to pay higher interest rates, and with the debt that we`re carrying and the new deficits piling up each year, that would be a direct cost to the taxpayers. We pay about $230 billion or $240 billion a year in interest cost already; it`s about nine percent of the budget and not the direct cost running deficit. And interest rates are low.

The federal government`s borrowing rate is low. So if it goes higher, which it would tend to do, if we`re going to have to attract capital and have a lower bond rating, then it`s going to cost more. Yes.

BECK: David, your pin on your lapel is the Sons of the American Revolution. We`ve talked about this before. I know you`re an honorable man. And I know it drove you crazy to be in Washington and actually to be instructed to just put it on another book. Just make another book. We now have a fourth set of books because of the mess we made.

If somebody would have walked into your office and said, oh by the way, we`re buying Freddie and Fannie, and just put it on a fourth set of books, what would you have said to them this week? What kind of advice, from the inside being the chief bean counter, would you have said to these people.

WALKER: Well, first I think Washington is out of touch and out of control. I think Washington did not have adequate oversight and intervention when we had clear warning signals going off. It would help them to understand, that look, we may need to do some things in the short- term to try to deal with the immediate disruptions but we need to start dealing with our fiscal cancer.

We need to learn lessons from this to make sure that we don`t allow the same thing to happen on a much bigger scale.

BECK: I`ve asked you this before. And last night I had these two guys on. And I got calls about it on my radio show last night. Both of them shifted a little bit and tried to make sure that the Republicans were better than the Democrats or the Democrats are better than Republicans. And you`ve held these guys up as great leaders on this.

How can -- I mean, we`ve got Ron Paul on in a second. And I`ve got to tell you something, Ron Paul is going to be mad as hell. And there and anybody there everybody calls him an idiot for saying financial disaster is coming. How do you get people to move? They`re still not willing to move this week?

WALKER: First, the American people need to get informed and involved. They American people need to understand the future of our country. Their children and grandchildren are at stake.

And they need to ask tough questions, we need to hold elected officials accountable for what they do or failed to do. It`s absolutely critical the next president makes this a priority. If they do, we can turn things around. If the don`t we could have a super sub-prime crisis.

BECK: Ok, guys thank you very much. I appreciate it.

That`s what`s coming up in our future. Now if you missed any part of our "Exposed" series this week, please go over to glennbeck.com and sign up for my free email newsletter.

In tomorrow`s edition, we will include links of all of the videos, the transcripts and the information that you need to get up to speed and hold these weasels, their feet to the fire. That`s in my email newsletter. You can sign up for it right now at glennbeck.com and it is completely free.

Coming up, we know big government bailouts are bad for you, the taxpayer, but is it even constitutional? Congressman Ron Paul stops by to weigh in. Next.

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BECK: When Ron Paul was running for president of the United States, he had controversial views, caused a lot of people to dismiss him as out of touch or on the fringe, or worse. And some things he is on the fringe on. It is unfortunately our loss that people, you didn`t have to vote for him but you should have listened to him.

I don`t agree with Ron Paul on everything, not by a long shot. But one thing I do agree with him on is the economy. And when you look back at this man`s economic positions and you see the red flags that he was talking about I mean years ago, you`ve got to give credit where credit is due.

Now, what I`m wondering is have the billions we`ve spent on the bailouts of Freddie and Fannie and AIG, is that even constitutional?

The maverick himself, the actual maverick from the great state of Texas, Congressman Ron Paul.

Congressman, help me out on this. The -- is this constitutional? I mean, I was sitting here watching the bailouts happen, the president is not there, it`s just the Treasury Secretary and the Fed and then a bunch of people like they are going into a pawnshop. How much you give me for this?

REP. RON PAUL, (R) TEXAS: I think you`re suspicions are correct. It`s absolutely not constitutional. But the monetary system is unconstitutional. And these problems have been building for decades.

So what Treasury did and what the Fed did is unconstitutional. The constitutional rule is for Congress to regulate the money and its value and they are totally neglectful. They didn`t do anything about this. They are just sitting on the sidelines sitting on their hands.

BECK: They are saying what? Woodrow Wilson helped create putting the Fed in here that that makes it constitutional? But if I read the constitution, isn`t Congress in charge of the purse strings? Only Congress can spend my money, right?

PAUL: That is right, and they`re getting a round at this way, they spend $85 billion yesterday and they say, well, it wasn`t appropriated. We just created the money. But they are stealing value from your dollar by increasing the supply of money they de-value your currency. You pay the tax by higher prices.

And the whole process of appropriation and the Congress being responsible, totally neglectful. I`ve -- right now this week I got to thinking, Congress ought to just go home. I think they are irrelevant if they don`t take upon themselves the role that they are supposed to perform.

BECK: Do you think we`re headed towards 1929, 1979 or a 1989-style Soviet collapse?

PAUL: It could be the `89 Soviet collapse. It won`t be the same. But the system will have to be revamped.

BECK: And how long do you think before --

I mean today is another anniversary. I had you on a couple of weeks ago, and you gave a speech -- no, no two years ago and you said this is coming. And I had you on that anniversary of that speech, and you were dead right.

I think today is another one where you said in 19 -- where was it -- 19 or 2003 you called again for things happened and that`s what`s happening this week. So how long before we see the real ramifications of this?

PAUL: Well, if one understands Austrian (ph) economics you can predict trends but you can`t predict precipitating events. You can tell when the foundation has eroded and it has eroded. So the precipitating events that causes the panic is an emotional reaction. But the fundamentals are such that we`re on the verge of a collapse.

It could happen, if we do something foolish or stupid or continue to do some things that we`re doing today, by bailing out everybody any day and nationalize all our industry, eventually the world will give up on our dollar.

We`re still benefiting, believe it or not with the privilege of issuing the reserve currency of the world. And now so many people hold the dollar they`re cooperating with us on this fraud and to the exclusion of the Congress.

Congress neglects their responsibility that Federal Reserve shouldn`t even exist on the Constitution. There is no explicit authorization for a Central Bank and the Treasury is just complicit in all that we do. Economic law will end this eventually.

BECK: I will tell you, Congressman, that while I`m not a conspiracy theorist by any stretch of the imagination, I will tell you that it almost feels like we`re being set-up by players. That for instance, the Secretary of the Treasury right now he worked at Goldman Sachs. He was a big guy at Goldman Sachs. All of the players, they all know each other. It`s the old boy network here. And they cannot be this stupid to not see what they are doing.

PAUL: I don`t have the final answer on that, because I`m bewildered by that, too. You see them making a lot of money. They love the system.

But I think what happens is they believe they can control it. And they have this president`s working group on financial markets, the Plunge Protection Team and they always believe that they can be bailed out.

But eventually the markets are more powerful than all those who do this planning, with the central economic planning through banking and monetary affairs, eventually the market rules. And this is what`s happening today. The market is shouting that you`ve overstepped your bounds and you can`t do it any longer so it will bring us to our knees.

BECK: Ok, Congressmen, the Democrats are saying this is Bush`s problem, the failed economic -- the right is screaming this is Congress`s problem, the Democrats. I think it`s both of their problems.

But yet it`s so much more than that because this isn`t seemingly getting very much attention connecting these two. Our politicians are saying one thing but the rest of the news on TV is showing this is a global problem. This is happening all over the globe.

Is that Congress`s fault, too? Is that the president`s fault? Did we cause it in the rest of the world or have the Central Banks done the same thing to the rest of the world?

PAUL: No it isn`t, the seeds were planted in 1913, they really came to bloom in 1971. It was made worldwide because we have a total fiat currency created by the -- in which breakdown in 71`.

But the world accepted the dollar as the reserve currency of the world. It literally said you can print your gold as much as you want. So everybody is in bed together. So this idea that if you think the dollar is going down in value that you can protect yourself by going to the euro or the yen, it`s not going to work.

Only hard assets will protect you because prices are going up. And the world economy is global. Global economies are good when they`re market driven. But when they are driven artificially by Central Banks colluding. So it`s not just our central bank, all the central banks talk to each other.

But we in the Congress can`t even audit them, we don`t even know this. If we can find out more information about the CIA, which is rather secretive than we can about the Federal Reserve. And just like the other day when they come up with these bailouts, do you think they even consulted Congress?

BECK: No.

PAUL: Spend $85 billion and Congress just doesn`t do anything. We`re nationalizing these industries and there doesn`t seem to be any that much concern.

BECK: Yes, we`ll there is here Congressman, I want to take a quick break we`ll back with some final thoughts with you in just a minute.

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BECK: Back now with Texas Congressman Ron Paul who is the guy who has seen this financial situation coming for a very, very long time. I know that you`re being tracked now, finally the media wants to talk to you and wants to hear from you because everything you`ve been talking about is now coming to fruition.

It seems to me, Congressman, that we are ending up with bigger and even more powerful banks. We`re losing everything small and retaining the only thing that is very big, global and powerful. How do we ever escape the global clutches of these gigantic financial institutions and the Fed when we are now handing them all of the power?

PAUL: It`s going to be very difficult unless we have a real serious discussion here in Washington where the mistakes were made and undo those mistakes and devise another system. It`s going to continue that way and the big guys will end up owning everything.

You say oh, no, it`s the Federal Reserve, it`s the taxpayer. Somebody`s involved and somebody is going to be controlling that and somebody is going to be benefiting.

The CEOs aren`t suffering. They`re still getting their parachutes and their millions of dollars and the big guys are protecting themselves but eventually it always comes about. Monetary history shows that this type of a monetary system will not last and eventually they have to sit down and devise a brand new system.

The biggest question is will it be in a free society or will it be in a totalitarian society and right now we`re moving rapidly toward more government and bigger government and control by big banks and big corporations.

BECK: It is very frightening.

You know, I said at the beginning of the show I said, I don`t know about a year ago, one day, America, you will wake up a Monday and by Friday your country will not be the same. This is not necessarily how I envisioned it because I thought people would wake up by Friday. Is this that week, Congressman?

PAUL: No, this is the preliminary. There will be worse weeks; worse weeks to come because the seeds have been planted.

You say what can you do to prevent the recession? You can`t do anything. When you cause the problem of over-investment, mal-investment and excessive debt, you can`t solve the problem unless you do the liquidation and that`s the painful part that nobody wants to accept. And we haven`t taken care of that problem program so unless we understand that and the people understand that, they won`t know why we have to go through this problem.

BECK: Congressman, I only have about ten seconds. Yes or no, has anybody in Congress come to you that wasn`t necessarily on your page and said, "You know what, Congressman, don`t tell anybody, but you were right."

PAUL: More every day, but not those in leadership yet.

BECK: Thank you very much.

From New York, good night, America.

END