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David Goldman

 
David Goldman on Wall Street, the Middle East and the 'Judeo-Christian Perspective'

The Daily Bell is pleased to present this exclusive interview with David Goldman

Introduction: David P. Goldman writes the "Spengler" column for Asia Times Online and the "Spengler" blog at PJ Media. He is also a columnist at Tablet, and contributes frequently to numerous other publications. Goldman was global head of debt research for Bank of America (2002-05), global head of credit strategy for Credit Suisse (1998-2002) and also held senior positions at Bear Stearns and Cantor Fitzgerald. In 2001 he was elected to Institutional Investor Magazine's All-American Fixed Income Research Team. Goldman was a senior editor at First Things (2009-11) and Forbes magazine columnist (1994-2001). His books, How Civilizations Die (and why Islam is Dying, Too) and It's Not the End of the World – It's Just the End of You were published by Regnery in September 2011. He is a regular guest on CNBC's "The Kudlow Report" and has appeared on Fox News and other national news venues.

Daily Bell: Give us some background on yourself. Where did you grow up?

David P. Goldman: In and around New York City. When an infant, my bedroom looked out on Ebbets Field, the old home of the Brooklyn Dodgers. There began and ended my exposure to spectator sports. I spent the longest time in Great Neck, then the most liberal community in the United States, and graduated high school there. My family was left-wing and secular, and I looked to classical music for spiritual sustenance. It was my passion. I played and composed but was never very good at either.

Daily Bell: Where did you go to school and what career did you embark upon?

David P. Goldman: My B.A. is from Columbia, and from there I went directly to a doctoral program at the London School of Economics. I suppose my idea was to become an academic but two years of London wearied me. I was a radical and a hothead, and had no patience for academic economics. Instead, I stumbled into freelance journalism. My first piece was published by the London Spectator − on the plight of East African Asians – but I gravitated towards the fever-swamps of the political left.

In 1977 I became economics editor of a dreadful publication controlled by the odious Lyndon LaRouche. He fired me five years later. By that time I had gotten to know Dr. Norman A. Bailey, then head of plans at the Reagan National Security Council, who recruited me as a consultant. When he left NSC I worked for his consulting firm, and then for the supply-side firm Polyconomics, where I became chief economist, mainly because no one else would take the job. I was a bit like Grimmelshausen's Simplicissimus.

In 1986 I tried to make a career change back to music and did all but the dissertation for a doctorate in music theory. I might be teaching music theory at some small college today except for the birth of my first child, who wanted to eat almost every day. That forced me into more remunerative work.

Daily Bell: You held senior jobs on Wall Street, including a gig as global head of bond research at Bank of America with 140 professionals reporting to you.

David P. Goldman: I didn't take the usual route to Wall Street. When at Polyconomics I had ample opportunity to speak to Prof. Robert Mundell, who was then out of favor with time to waste on me. Mundell was the grandfather of supply-side economics; in 1999 he won a Nobel. He had deep insights into the nature of capital markets, and I learned enough from him to look for the cracks in markets before they showed. I learned a tiny fraction of what Mundell knew, but it gave me an advantage on Wall Street.

My partner at Polyconomics, the supply-sider Jude Wanniski, pushed me out in 1992, and Larry Kudlow opened a door for me at Bear Stearns. Bear gave me a chance to learn the business. I left Bear in 1996 to start a small hedge fund; just before the Long-Term Capital failure in 1998, I closed it and paid out my investors with a modest profit and took a job at Credit Suisse. Credit markets then were in turmoil, and I built quantitative models to value corporate bonds and bond portfolios that became quite popular. On the strength of that success, Bank of America hired me away in 2002 to create a new fixed income research division, and I had a big staff to supervise.

Daily Bell: Give us some background on Wall Street and what you think of it. Has your thinking changed?

David P. Goldman: In the 1990s and early 2000s I believed that the financial industry had a major contribution to make to economic efficiency. In fact, it had made such a contribution. Mortgage-backed securities helped to mobilize capital locked up in homes and made capital available to entrepreneurs. So did so-called junk bonds, which made credit available to emerging companies. Credit derivatives initially helped banks to diversify their risks.

Take Bear Stearns, where I started my Wall Street career 20 years ago. They were upstarts and outsiders. They didn't have the country-club investment banking relationships to underwrite corporate debt. But the advent of mortgage-backed securities allowed them to become the top dealer in that market because they didn't need the country-club connections to do so. Bear was a solidly Republican shop; Steve Forbes got a lot of support from the partners before the 1996 presidential election. The firm failed, in large part due to its own complacency, in 2008.

The trouble was that Wall Street got paid the most for helping customers to take on more leverage than they should, or were allowed to, by creating arcane derivatives with embedded leverage. And by the mid-2000s a number of institutions were engaged in outright fraud in the packaging of mortgages. This is something I never saw at Bank of America, which refused to originate subprime mortgages; the bank's present legal problems are the legacy of acquisitions it made in 2008. The worst of it, perhaps, is that Wall Street helped Americans corrupt themselves. Lying on a loan application is a felony, and the financial industry's lassitude helped millions of Americans commit criminal acts the better to speculate in the home market. The moral damage to the country is incalculable. I want to emphasize this point to all your readers who think that Wall Street is the root of all evil: The main beneficiaries of the fraud, at least until 2008, were individuals speculating on homes, not the bankers packaging the securities.

Wall Street is now a shadow of its former self. The regulators are reducing banks to the status of utilities, that is, a highly-regulated industry with modest returns to capital. The entrepreneurial era of the 1980s and 1990s turned into an epidemic abuse, and the industry sadly deserved what it got. I am sympathetic to the idea of breaking up big banks. From my personal observation, our megabanks probably are impossible to manage or regulate.

Daily Bell: What do you think of fiat-oriented central banking? Should we return to a gold standard of some kind?

David P. Goldman: Robert Mundell, in my opinion the great economic mind of the postwar period, has long proposed a commodity price rule for monetary policy as opposed to a quantity rule. And of all commodities, gold best reflects expectations for the future price level. A gold standard on the 19th century model, in which nations settle trade balances in bullion, is impractical but a gold price rule for monetary policy has great merit. The result of such action, to be sure, would have been a much tighter monetary policy during the past five years, when the gold price rose to $1700 an ounce from $800. Would tighter money during a period of extreme economic weakness have been a good thing? That is a question that cannot be answered in isolation. Mundell also argued that policymakers should apply the tool that is most effective to each problem at hand. He inspired the Reagan policy mix: tight money and aggressive tax cuts to stimulate growth. Cheap money has failed to stimulate the US economy under the Obama administration. Taking that option away from the Fed would have forced the fiscal and regulatory issues to the fore.

With that in mind, I do not believe that fiat money has been our biggest problem during the last several years. Before 2008, regulatory lassitude fostered the creation of a shadow banking system through derivatives that did not depend on the relationship between central bank policy and bank lending. And the great obstacle to growth has been the failure of entrepreneurship. I don't think that fiat money and inflation risk was the main culprit. So I am in favor of a gold price rule in principle but I do not think that this is our most urgent problem. Inflation expectations distort capital markets, to be sure, but there are so many other things that kill entrepreneurs today that we don't get to see their impact.

Daily Bell: How did you become a professional writer?

David P. Goldman: I don't consider myself a professional writer. I'm an unemployed executive. No one has invited me to run a large organization for the time being so writing is a fallback option. As a research director for large financial institutions, I did more editing than writing, in order to incubate talent inside the organization. I would much rather run one of the federal government's intelligence organizations, for example.

Daily Bell: You did ten years of anonymous essaying at Asia Times Online. What was that like?

David P. Goldman: "Surprising" is the word that came to mind. I wrote a couple of pieces for Asia Times in order to get some things off my chest, and to my astonishment they attracted attention. Asia Times asked me to write weekly, and to my even greater astonishment the essays attracted even wider attention. Once it became clear that people would bother to read what I wrote, I felt an obligation to write it. I am a neoconservative by background; the supply-side movement was a facet of neoconservatism and embodied the same conservative social-engineering approach and the same optimism that America's success could be transplanted to any part of the world. By the late 1990s I became convinced that civilizational and above all religious issues would dominate such things as economic incentives or the political process. And after 9/11, I was alarmed that the Bush administration was doing the wrong things, although with the best of intentions. Anonymous writing was much less lonely than one might think, thanks to the Internet. My readers' forum at Asia Times had thousands of registered members and I conducted an extensive correspondence with readers, many of whom had strong qualifications in various fields of study.

Daily Bell: You worked for two years of editing and writing at First Things. Was that full time?

David P. Goldman: Very much so. After the untimely death of Fr. Richard John Neuhaus, I was invited to join the masthead. It was a wonderful time. As an editor, I worked with some of the most remarkable thinkers in several fields: Prof. Edmund Phelps, the 2006 Nobel Laureate in Economics; Rabbi Meir Soloveichik, who last August gave the invocation at the Republican convention; Michael Wyschogrod, perhaps the most important Jewish theologian of our time; Rabbi Shalom Carmy; and numerous others. Editing a writer's work is like getting a private tutorial in his or her thinking. It was a wonderful opportunity for which I'm grateful.

Daily Bell: You wrote How Civilizations Die (And Why Islam Is Dying Too). Can you give us a synopsis?

David P. Goldman: The explanation of the death of civilizations in many cases is that they no longer want to live. Most of the industrial world faces depopulation. As a matter of arithmetic, we know that the social life of most developed countries will break down within two generations. Two out of three Italians and three of four Japanese will be elderly dependents by 2050. If present fertility rates hold, the number of Germans will fall by 98% over the next two centuries. Fertility is falling at even faster rates − indeed, at rates never before registered anywhere − in the Muslim world. These are observations that raise two questions: Why is this happening and how will this reshape the world? To the extent that demographers can find an explanation, the decline of religious faith appears to be the decisive factor. I drew on academic work and some of my own investigation to support this view. And then I sought to explain why some forms of religion survive in the modern world and others come to grief. Islam among all the world's religions is the least likely to succeed in modernity, I concluded.

The consequences for political science and strategy are tremendous. Conventional geopolitical theory, which is dominated by material factors such as territory, natural resources, and command of technology, does not address how peoples will behave under existential threat. Geopolitical models fail to resemble the real world in which we live, where the crucial issue is the willingness or unwillingness of a people inhabiting a given territory to bring a new generation into the world.

I concluded: "Population decline, the decisive issue of the 21st century, will cause violent upheavals in the world order. Countries facing fertility dearth, such as Iran, are responding with aggression. Nations confronting their own mortality may choose to go down in a blaze of glory. Conflicts may be prolonged beyond the point at which there is any rational hope of achieving strategic aims - until all who wish to fight to the death have taken the opportunity to do so. Analysis of national interests cannot explain why some nations go to war without hope of winning, or why other nations will not fight even to defend their vital interests. It cannot explain the historical fact that peoples fight harder, accepting a higher level of sacrifice in blood and treasure, when all hope of victory is past."

Daily Bell: How did you come to write it?

David P. Goldman: The Asia Times essays were all really rough drafts for an eventual book. I wanted politicians and strategists to rethink the global equation with religious man in mind, focusing on the fundamental human need to find a connection between ancestors and descendants. There was nothing quite like what I wanted in the literature; Samuel Huntington's Clash of Civilizations is a great book but it does not answer the questions I wished to ask: why do some civilizations die, and try to take others down with them? To answer this question required attention to key events in history, including the decline of classical civilization and the decay of European civilization. I can say that I spent the past dozen years writing it.

Daily Bell: Now you write for PJ Media. Why did you join? What do you focus on?

David P. Goldman: It's an honor to write for PJ Media alongside such luminaries as Victor Davis Hanson, Claudia Rosett, Michael Ledeen and many others. Roger Simon built one of the most popular platforms on the Internet and I joined because he kindly asked me to join. I should add that I continue to write for Asia Times Online. I happened to come to the PJ platform in an election year, and that's been my main concern − including economic, strategic and social policy issues.

Daily Bell: Why is it called "Spengler"?

David P. Goldman: That began as a joke − a columnist for an Asian publication signing with the name of the author of The Decline of the West. The original Oswald Spengler was a nasty piece of work, something of a racist; the Nazis like him, although he despised them. But he was not remotely stupid, and he predicted the future population dearth in the West perhaps more clearly than any other writer. Once the moniker became something of a brand name on the Internet, I was sort of stuck with it. Given the choice today, I would rather use "Simplizius."

Daily Bell: You believe America is an "almost-chosen" country ... utterly unique in the world. How so?

David P. Goldman: It was Lincoln who called Americans an "almost-chosen people." That is a joke, of course. You can't be "almost chosen" any more than you can be almost pregnant. What Lincoln meant is that America has aspirations to be a new Israel, although as a secular entity, it cannot realize them in the biblical sense. Unlike any other country in the world, America selected out its citizens on the strength of a political culture informed by the biblical idea of covenant, expressed so clearly in the Declaration's language on the endowment of inalienable rights. It is a nation formed by an idea, indeed by the biblical idea of covenant, rather than commonality of territory, descent, language or culture. That is why we believe in the rights of individuals more profoundly than most other countries, and why we are more capable of altruism in our dealing with the world than most other countries. It worries me that America's sense of its own exceptionalism is in decline. In 2002, 60% of Americans agreed with the statement, "Our people are not perfect, but our culture is superior," according to a recent survey by the Pew Institute. In 2012 the proportion dropped to 49%.

Daily Bell: Aren't things worse in the US today? What went wrong?

David P. Goldman: Americans became complacent after the Cold War victory. When the Berlin Wall fell in 1989, America was the world's only destination for ideas seeking capital. Thanks to our success, there are many such destinations. America is no longer the great safe harbor for capital after the 2008 crisis. The flood of money pouring into the US during the 1990s and the early 2000s provided endless opportunity for chicanery − not just by financial institutions but by individuals lying on mortgage applications. We had an easy ride and a hard letdown. The people who have adapted best are Asian-Americans, whose kids spend their afternoons in cram schools and who dominate our best schools. All of us will have to emulate the Asians or we will be in terrible trouble.

Daily Bell: You've written that the world will be "a miserable and dangerous place without our leadership, strategic as well as economic." Can you expand please?

David P. Goldman: I mean this very specifically and concretely. We are the only country capable of altruism, even if we express that altruism in stupid or counterproductive ways. The rest of the world knows that. Asia is better off for the 7th Fleet; the Chinese, Indians and Japanese know that America will do a far better job as an honest mediator between their interests than any of them would do individually. America is the only power that can guarantee the flow of oil from the Persian Gulf. It's the only power that can avoid a catastrophic Shi'ite-Sunni war in the Middle East. It's the only power that can prevent rogue states like Iran from acquiring nuclear weapons. Whatever the Russians or Chinese might say about it, they would be relieved if a surgical bombing campaign destroyed Iran's nuclear weapons capability. Both of them have far more to fear from Islamic radicalism and from rogue states that sponsor such radicalism than we do − the Chinese in Xinjiang, the Russians in the Caucasus and elsewhere. Russia is a former first-rate power trying to maintain its position as a second-rate power and must play the spoiler to do so. China has neither the interest nor capacity to intervene far from its borders in a major way. Europe no longer cares. American hegemony is the world's best chance to prevent regional instability from turning into major catastrophes.

We are also the provider of the world's only global reserve currency. There is no possible substitute − surely not the Euro. If we go the way of England and the dollar goes the way of the British pound, the consequences for financial market stability will be terrible. The world is best off with a strong American economy, a stable American dollar, robust American capital markets and American leadership on behalf of economic freedom.

Daily Bell: You've written, "Most of the world's cultures are failing, and if we forget what makes us different, we will suffer the same decline." Isn't the US in decline in now?

David P. Goldman: We are fraying at the edges. Whether it is a decline or not remains to be seen. We just saw from the Census Bureau that 40% of children born in the United States in 2011 were born out of marriage. That is a devastating number. No society anywhere can foster a new generation in single-parent families. Charles Murray has shown that the pathologies that afflicted African-Americans, whose rate of out-of-wedlock birth is now around 70%, are also affecting the white working class. It's not a great exaggeration to speak of two Americas: one centered on nuclear families with strong religious values and another in distress. To the extent that the Republicans won the Cold War and the fight for the market system under Reagan, we have lost ground in the culture war. It now seems quaint to most young people to insist on traditional family values. But triumph of hedonism over tradition has devastating effects on our national integrity.

I'm very worried about changes in demographics. As the baby boomers retire over the next decade, they will be replaced to a great extent by Hispanics. There are a lot of wrong ideas about Hispanics. They work hard. They have a higher labor force participation rate than the general population and they are less likely to use food stamps. But their educational level is much lower than the general population, and 25% of American children today are Hispanic, which is to say that they come from families with low educational attainment. There is only so much that public schools can do to ameliorate the problem. We face a drastic mismatch of job opportunities and skill levels.

Daily Bell: You are disturbed by the Obama administration's attempt to "force Catholic institutions to violate their basic principles." Can you expand?

David P. Goldman: It is astonishing that the Obama administration in the midst of a presidential election would provoke the Catholic Church by attempting to force its institutions to include abortion pills as well as contraceptives in employee health insurance. Employees of such institutions have had health insurance for decades and the issue never arose until Health and Human Services made it an issue. If religions cannot build hospitals and schools in accordance with their fundamental tenets, the constitutional guarantee of right of free exercise of religion becomes a dead letter. The cynicism of the Obama campaign is noteworthy. Obama told the Des Moines Register Oct. 23 that if he won, it would be thanks to the Latino vote − an overwhelmingly Catholic constituency. Obama assumes Latinos will vote for federal handouts rather than their Catholic values.

Daily Bell: As a religious Jew, you write "from a Judeo-Christian perspective and often focus on demographic and economic factors in [your] analyses." What are some of these?

David P. Goldman: There are two big ways in which religion affects politics. The first is demographic: People of faith tend to have more children than secular people. That is not a controversial conclusion; secular sociologists observe this as keenly as religiously-oriented analysts. Demographics become a decisive factor when countries fail to raise sufficient children to maintain their economic and military position. That is a key issue for most of the industrial world. The second way involves apparent irrationality. A people that ceases to believe in its future ceases to have a rational self-interest in the ordinary sense of the word. Countries that foresee the end of their way of life, or their culture, or their national existence may undertake acts of desperation.

Iran is the prime example of both of these ways. It suffered the sharpest decline in fertility (from seven children per female in the 1970s to fewer than two today) of any country in history. Its demographic decline sharpens the government's apocalyptic leanings and its willingness to take extreme risks, for example, the development and eventual use of nuclear weapons. Some Middle East analysts insist on treating Iran as if it were a rational actor. This is a grave fallacy; Iran is a culture in terminal decline capable of extreme irrationality.

Daily Bell: Your subject matter proceeds "from the theme formulated by Rosenzweig: the mortality of nations and its causes, Western secularism, Asian anomie, and inadaptable Islam." That's an ambitious platform. Please expand.

David P. Goldman: We have parallel problems in the West, the Far East and the Muslim world. Most of the West and all of East Asia suffer from birth rates far below replacement. The great secular shift in the West explains a great deal of the fertility decline, as does what I call "anomie" − a sense of disconnection from traditional culture − in the East. The Muslim world is moving from infancy to senility without passing through adulthood, as pre-modern societies crash headlong into modernity. Iran, as I mentioned, is the most extreme case. It has post-modern fertility (not to mention social pathologies such as drug addiction and prostitution) in a pre-modern economy.

Daily Bell: You worked with Lyndon LaRouche. What did you think of LaRouche? Describe his outlook and why you left.

David P. Goldman: My connection with Lyndon LaRouche terminated more than a quarter century ago. I was raised in a left-wing family and joined the left-wing student movement upon arriving at university. In short, I was a wicked and foolish young man. I stuck with LaRouche because of all the imbeciles on the left, he offered the most intellectual form of imbecility. LaRouche is an odious fellow. As for his outlook, he is something like Leo Strauss on hallucinogens. Where Strauss saw esoteric messages in the writings of philosophers, LaRouche saw grand conspiracies for evil as well as good, in a weird sort of Manichean view of the world. I left because I came to accept the biblical God through the Jewish religion, and realized that LaRouche was a nutty Gnostic.

Daily Bell: Why is he so enamored of Roosevelt and the New Deal?

David P. Goldman: LaRouche always believed in top-down use of state power to direct the economy. He was a Trotskyite for 30 years and then became a notional right-winger but retained his statist proclivity. Roosevelt was a statist.

Daily Bell: You became a conservative and worked for the Reagan administration, and then later in Wall Street. What was it like working for Reagan and why did you want to work for his administration?

David P. Goldman: I didn't have a real job in the administration. I consulted for Dr. Norman Bailey, then Special Assistant to the President at National Security Council. What was it like? Wordsworth's phrase comes to mind: "Bliss it was in that dawn to be alive, But to be young was very heaven." Reagan transformed the world, with a great vision and at great risk. It was a privilege to have carried a spear in the crowd.

Daily Bell: You seem fairly antagonistic to Islam. Is that fair?

David P. Goldman: I do not think Islam is at all likely to make the transition to the modern world, in the way that at least some parts of Christianity and Judaism have made the transition. Franz Rosenzweig described Allah as the whole colorful panoply of the pagan pantheon wrapped up into a single god, a monistic paganism as it were, and I find his analysis persuasive. And I am also persuaded by the research of Prof. Sven Muhammed Kalisch of the University of Münster that the historical Mohammed never existed, not, in any event, as he is described by the Hadith. Utterly absent in Islam is the Jewish idea that the Creator of the world would limit himself by making a covenant with humans, not to speak of the Christian belief that the Creator would take human form and suffer for the salvation of humankind. In Judaism and Christianity, sacrifice is vicarious: the ram in place of Isaac, Jesus of Nazareth in place of humanity. Sacrifice removes the shadow of death from the individual. Islam has no concept of vicarious sacrifice (the slaughter of a lamb on the Feast of Eid is a custom, not a Pillar of Islam). There is only the requirement for self-sacrifice, namely through Jihad, the only religious act that ensures a place in Paradise for the Muslim. For those reasons I find the religion as it is practiced in all its mainstream variants unappealing.

Daily Bell: Is there a difference for you between Sunni and Shia?

David P. Goldman: There are many variants of Sunni and Shia Islam. There are moderate forms of Islam, for example, the Turkish Alevis, who do not fit into either the Sunni or Shia mainstream. As a practical matter, Shia Islam has been the minority for a thousand years with a longstanding sense of grievance and a new and dangerous kind of self-assertion. But there are Sunni extremists, notably al Qaeda, who are extremely dangerous. The United States has been allied to conservative Sunni monarchies in Jordan and the Gulf States and I believe that this alliance should be upheld vigorously in face of the threat from Iran. Turkey is also an American Sunni ally, but an erratic ally at best. We would do well to make clear to the Turks that they cannot take American support for granted, for example, by showing more interest in the Kurds as well as the Turkish Alevi minority.

Daily Bell: What's going in the Middle East today? Some say the US State Department and CIA are behind the upheaval in the Middle East. Your perspective?

David P. Goldman: If I were running CIA, we would indeed be behind the upheaval in the Middle East. When upheaval is inevitable, the best thing to do is to get into the fray and keep the initiative. But no such thing is the case. The State Department and CIA are convinced that the Muslim Brotherhood is the wave of the future, and they are trying to stabilize the new Egyptian government and to promote a Muslim Brotherhood government in Syria. That is not only futile but antithetical to American interests, and leads to colossal blunders, as at Benghazi.

Daily Bell: Is there a larger Money Power that is trying to create world government? Do they want to make wars?

David P. Goldman: There have from time to time been prominent bankers who favored more supranational governance but the financial industry today has less political power than it has had in generations after the 2008 crisis. There are some efforts underway to give more powers to the United Nations − Dick Morris has written a book about this recently − but this effort, however repugnant, has nothing to do with financial interests. Rather, it is the brainchild of liberal bureaucrats in the Obama administration.

The financial industry is beholden to national governments and unable to generate the sort of returns it showed in the past. The major banks will come to resemble public utilities, heavily regulated and thoroughly dull. The glory days of the investment banks is long over; their potential revenue from trading and mergers and acquisitions is a fraction of what it was before 2008, and the regulators won't let them take proprietary bets. The hedge funds as a group have earned poorer returns than the major public indices. Blackrock alone has twice as much assets under management as the whole hedge fund industry, and it has made a great deal of money bird-dogging for the US Treasury in the bank bailout.

I sat on the Fixed Income Executive Committee at Bank of America and saw a great deal of the operations of the world's largest financial institutions. The notion of a grand conspiracy by a single Money Power at this point in history is preposterous. There are, however, innumerable petty conspiracies to defraud the public: to falsify mortgage applications, to tip off big clients about forthcoming research, to rig the structure of complex securities to benefit speculators, to lie about the condition of balance sheets and so forth. Mark Twain defined a gold mine as a whole in the ground with a bunch of liars standing around it; I would define an investment bank as a thousand managing directors severally conspiring to defraud the public as well as the shareholders. As a senior executive at two major financial institutions, an inordinate amount of my time was taken up with suppressing such petty conspiracies.

Daily Bell: A little more on these conspiracy issues. Some say by replacing secular regimes with the Muslim Brotherhood, Money Power is trying to create religious tension between East and West to further world government. Is this a crackpot view?

David P. Goldman: Yes.

Daily Bell: What is your belief about conspiracy theory generally? Do families like the Rothschilds control central banking around the world? Do they control the BIS? Who controls the BIS?

David P. Goldman: People like conspiracy theories because they want to shift blame away from themselves. The American public speculated massively on housing and used its home equity like an ATM. Wall Street didn't force Americans to turn into a nation of speculators, or persuade millions of mortgagees to make false statements on applications.

Rothschild's is a relatively small investment banking firm today. I know senior people at Rothschild's and they do business no differently than any other investment bank. There is nothing nefarious about the institution. The notion that the Rothschild family is at the center of some global conspiracy is a paranoid delusion.

The BIS is owned and controlled by member central banks, for which it is a service organization. It provides a forum to work out regulatory standards, for which it depends on member central banks; it provides clearing services; it does a bit of money management for central bank services; and it collects and publishes statistics. I used to call on BIS as a customer when I worked for Credit Suisse. It is about as exciting to work at the BIS in Basel as it is to work for an insurance company in Cedar Rapids.

There are plenty of petty conspiracies, to be sure, for example, conspiracies to monopolize markets. The world's richest man is the Mexican telecommunications magnate Carlos Slim. It happens that Mexicans pay several times more for a telephone call than most other people, and that makes Mr. Slim rich. I don't think that happened by accident. I wish we had a government capable of running a proper conspiracy. What I perceive today is clueless blundering.

Daily Bell: What is your take on the idea that most Jews are Khazars?

David P. Goldman: It is an anti-Semitic canard, thoroughly disproven by genetic research. DNA analysis shows beyond a shadow of a doubt that most Jews are of Middle Eastern origin. The priestly caste has been shown to date back to a common ancestor about 3,200 years ago. The current state of research is summarized in a new book by Prof. Harry Ostrer, a geneticist at Albert Einstein College of Medicine, entitled Legacy: A Genetic History of the Jewish People. Anti-Semites, to be sure, will not be persuaded by any amount of scientific evidence but the fact that the evidence is available helps keep them in a corner wearing their dunce caps.

Daily Bell: Can Jews trace their heritage back to Israel and before?

David P. Goldman: Few Jews can trace their own family history back that far; we have been displaced so many times that it is hard to keep track. But we have enormous amounts of historical evidence of Jewish migration patterns. Even if individual family records are in disarray, the DNA record provides proof of an ancient Middle Eastern provenance for the Jewish people.

Daily Bell: Was Israel a mistake?

David P. Goldman: No. Israel is the second most successful country founded in modern times, after the United States. It is a pocket superpower in the sciences, the arts, technology and business. It also has the soundest demographics of any industrial country, with a total fertility rate of about three children per female. By any measure it is one of the world's happiest countries. And it is a thriving democracy, as well as America's only reliable ally in the region. If those are not criteria for success, I cannot imagine what are.

A couple of years ago I wrote a feature for Tablet, a Jewish webzine, on Israel's remarkable success in classical music. Part of it stems from the emigration of many great European teachers. But a large part of it is due to the fact that Israelis understand that their lives depend on getting things right the first time, and their willingness to take risk. They live in part of the world where first prize is a chance to compete for first prize next time, and second prize is, you're dead. I know Israeli engineering students who transferred to top-tier American universities because the Israeli schools were too tough. That helps explain why Israel produces a very large number of utterly astonishing people.

Daily Bell: Should Jerusalem be the capital of Israel?

David P. Goldman: Jerusalem is the capital of Israel, as well as a flourishing city of nearly a million people. It has had a Jewish majority since the 1840s, when religious emigrants came to outnumber the few thousand Arabs and Christians who lived there. Under Muslim rule it was a neglected backwater. During Jordan's control of Jerusalem, one couldn't renew a driver's license in Jerusalem, for example. The Jordanians behaved terribly. They dumped garbage at Judaism's holiest site, the Western Wall of the Temple, and desecrated Jewish cemeteries. Israel has done a very good job of ensuring freedom of religious practice since it took East Jerusalem back in 1967. Israeli Arabs have many complaints but few would want to live under an Arab government. An undivided Jerusalem as Israel's capital is in the best interests of Jews, Christians, Israeli Arabs and the world community in general.

Daily Bell: What is the future for Israel? Does it need to go to war with Iran? Will its leaders make war? ... Is it justified?

David P. Goldman: I believe (and have published) that an Israeli pre-emptive strike on Iran's nuclear weapons program is likely, if the United States fails to do the job (and I think the United States should). Our Arab allies, most emphatically the Saudis, have urged us to do so, or at least to encourage the Israelis to do so. Iran is a rogue state that must be declawed. More broadly, I have compared Israel to the Dutch Republic during the Thirty Years War. While central Europe fought a combination religious and dynastic war that reduced its population by about two-fifths, the Dutch had a Golden Age of culture, science and commerce. Holland had to face down Spain, then the world's greatest land power. Israel's opponents are weak by comparison to 16th century Spain. I expect more wars but I believe Israel will prevail.

Daily Bell: Is the West generally too militaristic? Does the US need 1,000 military bases around the world?

David P. Goldman: These are different questions. I saw no reason for the US to occupy Iraq or Afghanistan. It made sense to overthrow Saddam Hussein, but I supported Daniel Pipes's proposal to put in a pro-American strongman and leave. Under the Bush administration the US sometimes built military bases as if they were hotels on the Monopoly board. Some of this was unnecessary and some of it was destabilizing, for example in Central Asia. But we do have threats and need to address them intelligently and sometimes ruthlessly.

Daily Bell: Could the US cut its budget by cutting military spending? Should it?

David P. Goldman: We spent $1 trillion in Iraq and Afghanistan and got little out of it; I would have been happy to spend $1 trillion on military and aerospace research and development. Russia presently has superb surface-to-air missile systems, for example, which give it enormous bargaining room in the Middle East. I want America to have the unquestioned edge in that field. Israel has surged ahead in drone technology. Why isn't America in the forefront? India and Russia are building a fifth-generation fighter that can compete with our new F-35. We should be an eon ahead of them. This kind of R&D usually pays for itself, at least in part, because civilian applications make their way into the hands of private entrepreneurs and create a great deal of wealth. An example is the development of commercially-feasible lasers and CMOS chip manufacturing at RCA Labs during the 1960s, both funded by the Defense Department. I want more military spending, but for things that really make us safer and that enhance the technological strength of the American economy at the same time. On this topic I recommend an excellent new book by Henry Kressel and Thomas Lento, Entrepreneurship in the Global Economy, which I reviewed for the Wall Street Journal Sept. 27.

Daily Bell: Were the wars against Iraq and Afghanistan justified?

David P. Goldman: Yes, to the extent that we had an interest in rooting out dangerous governments; no to the extent that we got bogged down in supposed nation-building. I don't think our military should engage in nation-building. The military is there to deter and if necessary destroy our enemies.

Daily Bell: Should the US quit Afghanistan?

David P. Goldman: Yes, but carefully. We need understandings with the Indians, the Chinese and the Russians, not to mention Pakistan, about how Afghanistan will look after an American withdrawal. Five years ago the Indians were willing to take a major role in Afghanistan, which we should have encouraged. That would have let the Pakistanis know that their backdoor support for the Taliban was out of bounds. That probably is not an option at present but we should solicit India's support.

Daily Bell: Should the US go to war against Pakistan?

David P. Goldman: Of course not. Why? Pakistan has done many unpleasant things, but we are light-years away from a military solution. We should put pressure on Pakistan by developing a closer defense relationship with India, for example.

Daily Bell: Where does the US go from here?

David P. Goldman: At best, we will struggle to recover our technological and entrepreneurial edge. At worst, we will lose it, perhaps irretrievably.

Daily Bell: Will Obama make a good president in a second term?

David P. Goldman: I don't think the US will survive a second Obama administration. Permit me to quote what I said in PJ Media Oct. 11: "Be afraid. Be very afraid. The America of 2012 is not the America of 2008. If Barack Obama wins this election, the America of 2016 will resemble the beaten and bankrupt countries of Western Europe more than it will the America we grew up in. This isn't Chicken Little speaking. Take a hard look at the trends, and then drop everything else you had in mind for the next four weeks, and make sure everyone you know votes for Romney-Ryan. We have one last chance to save the republic."

Daily Bell: Any other books you are writing?

David P. Goldman: I have published a series of essays about the interplay of music, mathematics and religion, at First Things and elsewhere, and I hope to turn them into a book for a broader audience.

Daily Bell: Thanks for sitting down and answering the "hard questions." Your time is most appreciated.

David P. Goldman: You are most welcome.


Anthony Wile

The Daily Bell
After Thoughts

This interview touches on numerous controversial topics, and David Goldman certainly doesn't shy away from the tough issues.

A few points. We obviously disagree on certain perspectives. It seems fairly provable − if one examines socio-political and economic patterns − that some sort of directed history is at work in the world.

For lack of a better word, one could use the term Money Power to describe the organizational history of modern times. The patterns are seemingly irrefutable if one makes an effort to study them.

A century ago there were a few central banks and little globalist infrastructure. Today, there are 150 central banks, the BIS, IMF, World Bank, International Criminal Court, NATO, WHO and, of course, the UN. This globalist infrastructure was deliberately put in place by a handful of people. The historical record is clear on this.

Wars are used as a pretext to claim that globalism was merely a reaction to militarism. But if one looks at the funding sources for the Nazi Party and Hitler, the reality of what we call the power elite seems inescapable.

We recommend the New Yorker-acclaimed book, Who Financed Hitler: The Secret Funding of Hitler's Rise to Power, as just one historical effort that shows clearly Hitler's rise to power was supported by various nexuses of Western banking in Switzerland, the US and, of course, Britain.

As for the Rothschilds, while some may claim the family is not influential, history shows clearly that without Rothschild involvement, the state of Israel would not exist. As for current involvement, the Rothschilds helped build both the Knesset and the Supreme Court building. The insanity of the latter, with its loony Illuminati symbolism, must be seen to be believed.

Mr. Goldman also tells us, "The State Department and CIA are convinced that the Muslim Brotherhood is the wave of the future, and they are trying to stabilize the new Egyptian government and to promote a Muslim Brotherhood government in Syria."

We've shown fairly conclusively (along with others in the alternative media) that the State Department, CIA and supportive elements from the UN and NATO have destabilized the Middle East via such US sponsored organizations as AYM. The nations that have been attacked are all secular and the CIA-supported Muslim Brotherhood is the West's choice for a new ruling entity. It seems inescapable that the powers-that-be are setting up a quasi-monolithic Islamic crescent that will provide an opportunity for controlled religious tensions between the West and Islam – and perhaps outright war.

We could go on. We find ourselves on the other side of lots of issues from Mr. Goldman but we thank him once more for sitting down with us and providing a most interesting dialogue.

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