Yesterday, in Part 1 of my interview with financial expert, Max Keiser, we learned how Wall Street is manipulating markets and stacking the government with politicians and appointees. As a result, the public regulatory and oversight system is complicit with the interests of speculators, hedge funds and the mega-banks. Today, the ‘Oracle’ of will tell us how to fix the economy, or, at least, how to survive it’s collapse.

AZ: What would you, Max Keiser, do if you do first to reform the banking system?

MK: Well, I would increase the margin rates. The margin rate is the rate that is charged for borrowing to speculators. This is not the Fed Funds rate or the Discount rate, or the Prime Rate. This is the margin rate which is exclusively the rate banks charge to borrow which is predominantly for speculation. I talked with Jimmy Rodgers about this when he was a guest on my TV show last year. He agreed with me whole-heartedly. It is in the purview of the Fed to just increase the margin rate, to squeeze out the speculation and therefore de-capitalize the speculators from their abilities to hire politicians, that is to say, rig elections, to change the laws and make it easier to speculate.

AZ: What would be a good margin rate?

MK: Well, I think you have to start raising the margin rate to find the ‘sweet spot’ incrementally. You would notice right away how the market reacts and how it’s impacting prices. I would begin by raising it 50 basis points in the margin rate and then revisit it every month. The Federal Reserve Open Market Committee meets every month or every three months and decides which way to move the rates. I would begin with an increase of 50 basis points and then look at it again a month or two later.

AZ: So just resetting it to 10% or 20% right off the bat isn’t the way to go?

MK: Yes, you have to increase it immediately and then look at it again in a month or two and if need be, then raise it again. They do it all the time in the futures market. Anytime they think the speculation is getting ‘irrational exuberant’, they raise the margin rates or they revisit the position limits. It’s done all the time in the commodity markets. Now since the entire American economy is trading like a hedge fund with trading on box office futures and entertainment futures markets, you have to revisit the margin rate and find the key rate that effects activity on these exchanges and avoid bubbles. The CFTC should be ahead on the curve on this, but they don’t because they are in the pockets of the speculators and hedge funds that are bleeding the system of cash.

AZ: What would your suggestion be to individuals to protect and prepare themselves and get through this financial crisis?

MK: There’s only one choice, gold and silver. Precious metals. It’s the only option available to anyone who is concerned about this collapse of currency and sovereign debt. Clearly, when I started telling people five years ago on my radio show in the UK to move into gold, those people are extremely thankful because gold is up 400% against the Pound just in the last few years. It’s making new, all-time highs against the Euro. It will soon be making new highs against the dollar. There’s no accountability and no reform movement that is substantial. So that leaves only one choice, precious metals.

AZ: Do you think it’s time to ‘End the Fed‘?

MK: Well, America will have to decide if it wants to be a free-market, Capitalist society or a Socialist society. You can’t have both! The Fed is essentially a central-planning-Politburo, a central committee that sets interest rates. The market doesn’t set interest rates. Against that backdrop, they allow speculators and money manipulators to push prices around. You have to decide which one you want to be, either free market Capitalism or Socialism. You can’t have both.

Having said that, I just said you have to raise the margin rate, because I recognize that you cannot have a sudden shock to the system. This is a gradual approach to wean the markets off the centrally planned Fed-bank model. Ultimately, once you achieve a steady equilibrium by adjusting the margin rate to where it should be then you can start to move to a market-based system, because then you could effectively get rid of the Fed. You don’t want any central planning. Central planning has no place in a free market, Capitalist system. It’s anathema to everything in a competitive economy. There’s no place for it what so ever!

AZ: So would you say that the United States stopped being a Capitalist society when the Federal Reserve was created?

MK: Well, it became a mixed economy. It stopped being a pure economy and became a mixed economy. Depending on who’s the president and different variables, it tends to love free market Capitalism during booms, like the Dot-Com boom, then when things slow down, they revert back to Socialism. It’s the worst of both! It’s not fair to the entrepreneur on the way up, and it’s not fair to the citizens on the way down.

AZ: Are you generally an optimist?

MK: Well, the two things I’m most optimistic about right now are Iceland because they are in a position to reform a constitution that would keep with the principles of freedom and democracy and free market Capitalism. And I’m also very optimistic about, which has managed to take the place of all of the failed media in America which has fallen down on the job in the past 20 years. They’ve failed to do any investigative journalism, whatsoever.

AZ: Will America and the industrial nations at large have a great awakening and crawl their way out of this mess?

MK: After the collapse, yeah! But there is still the collapse to come.

AZ: So there will be a collapse?

MK: Well, yes, there has to be! The U.S. dollar is on it’s way to oblivion.

AZ: Do you have any time frame on when?

MK: You have this dance of deception going on with the central banks. The European Central Bank, the Bank of England, the Federal Reserve, the Bank of Japan, the People’s Bank of China. They’re all eyeing each other, to bury each other. It’s a controlled demolition of each other’s currency. It all depends on the politics that is going on between these countries. It’s a massive game of global poker and the U.S. has the weakest hand. Ultimately, everyone will have to show their hands and the U.S. has the weakest hand. When will it be? I think we’re in the process of it now. Look what’s happening in the Euro Zone. Greece is causing a great deal of instability in the Euro Zone. The European Central Bank is vulnerable to be taken over by the IMF. Germany is trying to get in bed with the IMF and is trying to do deals with the Bank of England. Everyone is jockeying for position in a post-Bretton Woods world where a whole new currency grid is reconstructed. But in that scenario, the U.S. dollar will take a 40-50% hit.

AZ: Wow! Ok, Max, I have one more ‘fun’ question for you. What movie would you say would best represent the economic collapse? “Mad Max”? “Rollerball”? Or “Zardoz”?

MK: (chuckle) I would say it’s a toss-up between two movies, “Dr. Strangelove” and “The Caine Mutiny”.

AZ: “The Caine Mutiny”?

MK: Yes, the final scenes of “The Caine Mutiny“, when the court-martial is looking at Humphrey Bogart and they are struck dumb by the revelation that he is in fact insane.

AZ: And this is when Alan Greenspan and Ben Bernanke testify?

MK: Exactly! There will come a collective moment in the American psyche that they will come to realize that Bernanke, Summers and Geithner are actually completely and utterly insane. They’re suicide bankers! They believe in a market-fundamentalist doctrine and ideology that justifies blowing themselves up and the banks that they work for due to a very selective reading of Adam Smith. Now, how is that different than Osama Bin Laden who very selectively reads the Koran and interprets it as violent jihad? Where you have Ben Bernanke and Tim Geithner interpreting very selectively from Adam Smith to commit jihad against free market Capitalism and are willing to blow themselves to do so? How are they different from Osama Bin Laden? They’re both terrorists. One is a financial terrorist, the other is a religious terrorist.

AZ: Well, Bernanke claims that he is an expert on the Great Depression and is doing what he can to prevent it.

MK: Well, again, he seems to be the definition of insanity, doing the same thing over and over again and expecting different results. He’s making the exact same mistakes made during the (Great) Depression. And the results will be the same.

NOTE: I want to thank Max Keiser again for being gracious and consenting to this interview. For more information and insights, I highly recommend visiting for the latest news on Finance, Markets, Scandal, and, now, Hollywood, too! Max is leading the charge to help the Motion Picture Association of America fight against the virtual, box-office futures market. He is also a proponent of the No-Pay Movement, advocating that governments, like Greece, whom were essentially swindled by the mega-banks and major investment firms simply not pay the money they owe. Kick the banksters out of their borders and just ‘digitize’ those debts.

You may say that’s pretty radical, but the situation is reaching a point where the usual, timid, half-measure ideas will no longer help. Does anybody REALLY expect us to ever make good on the dozens and dozens of trillions of dollars that the American government owes? We don’t even REALLY know how much we owe as a nation! A couple-three years of chaos is a far better choice than a couple-three centuries of the Dark Ages! It’s time to wake up and smell the coffee!