Welcome to a discussion of radical fundamental principles of freedom, rational self-interest, laissez-faire capitalism, and individual rights. The Yaron Brooks Show starts now. Good morning, or at least here in California, it's still morning. Good afternoon everybody, and hopefully you're having a great weekend. So I guess the most interesting story this week, and the one that is still kind of reverberating through the media and through world events, is Donald Trump's announcement that the United States will now recognize Jerusalem as the capital of Israel, and will actually move its embassy to Jerusalem. This is something that almost every, I'd say every Republican candidate for president over the last, I don't know how many decades has promised to do, and then failed to do once in office. So in a big part of Trump's speech where he announced this, he made a big deal out of exactly that fact, that he is fulfilling a promise for a president known for flip-flopping on so many different things, of changing his mind on so many different things. He wants to emphasize when he's actually doing something that he promised to do, and you know Jerusalem is one of them. So I thought that would be a good topic for us to discuss partially because you know there's a little bit of a personal for me at stake here, for those of you who don't know, listening to me here on the blaze. I was born in Jerusalem, spent my first three and a half years of my life in Jerusalem. This is before the Six Day War, so I was born in West Jerusalem in the Israeli part of Jerusalem. And you know to this, spend most of my life in Israel, almost my early life in Israel I think I've spent now more years in the United States than I did originally in Israel. But so now I'm more American than anything else. But certainly my early days were all in Israel. So this is personal. In addition to that, Israel has an interesting status for the United States in terms of the way the United States treats Jerusalem. So I was born in Jerusalem, I have an American passport, and almost anybody who has an American passport, it says a country of birth, and it gives the country where you were born. If you were not born in the United States, it gives the country where you were born outside of the United States. I was born in Israel, in the city of Jerusalem. But the United States doesn't recognize Jerusalem as part of the state of Israel. The United States does not recognize Jerusalem as part of the state of Israel. Now maybe that will now change now that it recognizes Jerusalem, or that Trump has said that it will recognize Jerusalem as the capital of Israel. But it does not recognize Jerusalem as a part of the state of Israel. So in my passport, it doesn't say place of birth Israel. It actually says place of birth Jerusalem, as if Jerusalem is some floating city not attached to any particular location. And we're going to talk a little bit about the history of why that is. Why is it that Jerusalem is not recognized by the United States, or I think about 160 countries in the world do not recognize Jerusalem as the capital of the state of Israel. So we'll talk a little bit about the history that has led to that bizarre state of affairs. So this is kind of a personal thing for me because I was born there being my passport. I wonder if my passport is not going to change. And being originally from Israel, I have a certain view of Jerusalem. I have a certain view of the Israeli-Palestinian conflict, which we're going to get into today as part of this. So we're going to spend a little bit of time, a little bit of history, a little bit of analysis on the Israeli-Palestinian issue, a little bit of history about Jerusalem and why it is that it's treated the way it is, and why it is that to this day it's taken until today. It's taken to 2017, 70 years after the United Nations declared that Israel was going to be a legitimate state. It's taken that long for Jerusalem to be recognized as the capital. And then we'll get into the value of the particular declaration that Donald Trump made. But let's start with some history for those of you who are interested, because it is also 70 years, or was 70 years a couple of weeks ago, to the actual declaration of the creation of a so-called Jewish state, of the state of Israel in 1947. In 1947, the area, which is the state of Israel, was at the time occupied by the British. It was part of the British Empire. It was part, just as much of the rest of the Middle East had been conquered by the British from the Ottoman Empire during World War I, and during the period between World War I and post-World War II, the whole area was ruled by a British mandate, a mandate granted to the British by the United Nations. Now, I have a view of the United Nations, which is not positive. I'm very anti-United Nations. I think it's an evil organization, and we can get into why I believe the UN is the evil organization that it is. But the fact is that in 1947 the British basically went to the United Nations and said, we don't know what to do with this land, this land between the Mediterranean and the Jordan River. The land that at the time was called Palestine, today is called Israel. We don't know what to do with this land. There are Jews there, there are Arabs there, and they keep fighting between each other, and the UN, you guys need to come up with a solution for how to deal with this. We British, we want out. We want to get out of here. We've had it with the Middle East. It's too complicated, it's too hard, and we're leaving. We're leaving. So the United Nations, you need to solve this problem. So while the British did not leave, literally then they handed it over to the United Nations with the threat that if a solution wasn't found, they would indeed leave. And the solution in 1947 that was found was to partition this little sliver of land called Palestine at the time into two states, a Jewish state which would be called Israel and a Palestinian state which would be called Palestine. Both would be tiny. Both would have borders that kind of made sense, kind of didn't. And as part of this whole thing, as part of this division of Israel into these two countries, two divisions, Jerusalem, which was not connected directly to this new Israeli state, Jewish state, Jerusalem, which would be plop in the middle of a Palestinian era, was actually declared as a international state that did not belong to any particular state. So this was a transnational, international city that was not ruled by the Israelis or Palestinians. And this is to a large extent the origin of this idea that Israel, that Jerusalem is not the capital of Israel, and it's not a capital of anybody, that it is this transnational international state. So that's kind of, that's historical in terms of where it came from. Now, where did it go from there? That is, how did we get to where we are today, where Israel not just has West Jerusalem, it has the whole of Jerusalem, East Jerusalem, where the United States still hasn't recognized, or until Donald Trump did it last week, Jerusalem as the capital. Well, what's the deal with all that? Well, we're going to cover that after we take a quick break here to pay for the bills. So we're going to take a quick break. You're listening to your book show on the Blaze radio network, and we'll be right back. All right, we're talking today about the Middle East. And specifically, we're talking about Trump's decision to make Jerusalem the capital. And I'm giving it a little bit of history lesson here, a little bit of history lesson in terms of why this is even an issue, how how Jerusalem became an issue. And as I mentioned earlier on, this is a little bit personal. I'm from Jerusalem. I was born in Jerusalem. I know Jerusalem fairly well. I speak in Jerusalem about once a year when I travel to Israel and give talks about capitalism and about about freedom and liberty. So I have a personal connection to this one. But you know, so let's let's talk about this. So we said 1947 Israel is the United Nations decide to take this British mandate and split it into two countries. Now, remember, Israel is this tiny little sliver of a place. I don't know how many of you have ever visited Israel. And I highly recommend visiting Israel. Fascinating place, both in terms of ancient history, religious history, but also in terms of modern history, so many wars have been fought there. Everywhere you go, there's something interesting to be seen. It's also an incredibly modern party, partying place. It's a fun place. It's incredible, incredible in terms of the high tech industry. Every time I go there, every year I go to Israel, new buildings are being built, new office towers, new companies are being founded, just an exciting, exciting place I recommend everybody visit. But the point I wanted to make was how tiny, tiny, tiny country it really is. It's, if you think about it in terms of driving, Americans like driving, and we think of things in terms of driving, the length of Israel, the total length of Israel is about a six-hour drive, about a six-hour drive. The width of Israel, if you had a highway that went from the Mediterranean to the Jordan River, it's like 40-minute drive. I mean, it's nothing.  Anyway, the UN partitioned this tiny, narrow little country into two. And that was in November, I think in November 29th, 1947, exactly 70 years ago. And what happened? What happened when this partition was announced, when this decision by the United Nations was announced? By the way, just to the side before we get to what, it was a close vote. And the United States, it wasn't clear how the United States was going to vote. The Soviet Union, then under Stalin, voted yes in favor of partitioning Israel, in favor of creating an Israeli state. And the United States under Truman was unsure about whether they, how they would vote. In the last minute, because, to a large extent, I think, because the Soviet Union voted for, the United States also voted for. And they voted for because they were afraid that if they didn't, Israel would fall under the influence of the Soviet Union. Remember, the founders of Israel were all socialists. Many of them former communists. Many of them came from Russia. There were strong ties between certain people in the Soviet Union and the leaders of the Israeli state. And there was a real risk that Israel would become part of the Soviet kind of satellite country system. But, you know, so the United States decided to jump in, vote yes, not because necessarily they had a huge belief that Israel was a country that should exist. Unfortunately, but more for kind of geopolitical reasons. Anyway, that night, when the, when the United Nations decision was announced, Jews all over Israel went out into streets and danced. And you could find pictures of this. I mean, it was massive celebration. I mean, here was a dream that many people, many Jews that had for 2000 years of creating their own country, here was an opportunity post-holocaust, post-World War II, to actually create a country where Jews could defend themselves, defend themselves against rampant anti-Semitism. There was that, that he had obviously just generated a Holocaust that still existed in the world. And, and he was an opportunity to actually engage in active self-defense, no longer be victims, no longer be sheep sledding to slaughter, but actually have your own country, have the ability to defend yourself against the anti-Semitism that seems to be part of the world in which we live, and seems to have always been a part of the world in which we live. And it was celebration, even though what they were given was a tiny sliver of land, even though it would, it would be incredibly difficult to defend that land because of how tiny and how disjointed it was. I mean, look it up, go and look at the UN partition plan of 1947. You can find it, I'm sure online, if you Google that, and you can find a map of it, and you can see how, how ridiculously disjointed it was. There was celebration, huge celebration. The following day, the Palestinians basically announced their view of the UN partition plan by launching military attacks on Jewish settlements, on Jewish villages, towns, all over, all over what was then Palestine under British occupation. So the Palestinian rejected, rejected wholeheartedly, at least the Palestinian leadership, I think the Palestinian people probably cared less, but the Palestinian leadership rejected wholeheartedly the UN partition plan. They rejected the idea of Jews being there. They rejected the idea of there being a Jewish state, that they're being an Israeli state. They rejected that, and they turned to violence to combat it. By the way, if you have any questions on the history, if you have any questions on Trump's decision, if you have any questions on Jerusalem, on any of this stuff, feel free to call in<PHONE_NUMBER>,<PHONE_NUMBER>, and I know somebody tried to call earlier, and there was no answer. Keep trying, it must have been a glitch in the system, but keep trying, there are people answering the phone. So<PHONE_NUMBER>, for any questions related to the history, or to Jerusalem, or to the United Nations, or to any of the stuff we're talking about right now, and we're going to talk about this probably for the first hour. There's enough content here to really get into it, and hopefully the history is interesting, because I think most people don't need to know the history. I know certainly most young people have no clue about the history. I mean, one of my arguments against the legitimacy of a Palestinian state today, one of my arguments against the idea that the Palestinians are legitimate negotiating party today is that at every opportunity they have had for 70-plus years, the Palestinians have rejected those opportunities, have turned their backs on them, and have always resulted to violence, have always resulted to violence when offered peace, when offered their own state, when offered the opportunity to live side by side with Israel. And it started, it actually started before 1947, but officially it started in 1947 when the Palestinians completely rejected the UN partition plan, and launched basically violence against the Jews living in Israel. Now, this violence continued from November 1947 through May of 1948, and in May of 1948, the British who were in charge of this area, who had a mandate, again this is a territory that they had conquered during World War I, and again why did they conquer it? They conquered it because the Turks, the Ottoman Empire entered the war on the side of the Germans and they lost, they lost. So what we had is basically a war between the Palestinians and the Jews in Palestine at the time, and this this war continued until about until May of 1948. In May of 1948, the British announced that they were leaving, that they have had it, that they were not going to try to continue to bring peace to this area, but they were going to leave. And Ben-Gurion, the founder of the state of Israel, together with other political leaders, announced the establishment of the state of Israel, that with the leaving of, with the fact that the British were leaving, the state of Israel would be created. The next day, armies from seven, I think it was seven, seven, let's see, Egypt, Jordan, Syria, Lebanon, Iraq, and I'm missing a country, but I know it was seven countries, Arab countries, Muslim countries invaded. Not by the way, not by the way, to establish a Palestinian state, no, no. But each, because each wanted a peace of this ancient land, each wanting a piece of this sliver, sliver of land on the Mediterranean, between the Mediterranean and the Jordan River. I mean, Jordan wanted it, Egypt wanted it. Would it be interesting if Israel had lost that war if they'd still be fighting, if all they have states would still be fighting over that piece of land today? Probably, probably, because it wasn't clear who was going to get what. They all invaded with the idea of killing the Jews, kicking them out into the sea, destroying any hopes for a Israeli state. Israel fought back, and I think you know who won that war. Israel won the war, ultimately pushed back the forces of all those countries, pushed back Palestinian forces, actually expanded on the territory that the United States Partition Plan had allocated for it, expanded in a war of self-defense, created a land mass that was much more easily defendable. The only portion of land that was not taken between, between the Mediterranean and the, and the Jordan River was what today is called the West Bank, and the West Bank of the Jordan River was occupied by the Jordanians, who did not turn it into a Palestinian state, by the way, into the Jordanians, and the Gaza Strip, which is in the news again today, because they're launching rockets into Israel from the Gaza Strip. The Gaza Strip was occupied by the Egyptians. So other than those two pieces, tiny little pieces, slivers of land, the rest of what had been partitioned between the Jews and the Palestinians was now occupied by the Israelis, and annexed into an Israeli state, as it should have been. Thirty. If the Palestinians had accepted the Partition Plan, that would have been the state of Israel. They did not. They launched violent attacks against the Israelis. Israel acted in self-defense, and therefore all the landed occupied should be theirs. They also took over Jerusalem and will get to Jerusalem when we come back after the break. We'll also get to, to Lukos calling from Switzerland to talk about the United Nations, and we'll take that call when we come back right after this. You're clear. You're on. On the Blaze Radio Network. From the show. Hey, everybody. We're doing a bit of a history lesson today. We're going over a little bit of the history surrounding the whole Jerusalem issue. And why, why for 70 years or almost 70 years, Jerusalem has not been declared the capital of the state of Israel. And we'll talk a little bit about the consequences of Trump declaring it such maybe later in the show. Before I continue kind of the way with the history lesson, which I hope you guys are enjoying. And feel free to call in if you disagree or if you want to take the Palestinian side of this story or if you want to, I don't know, just ask a question about something I haven't covered or I have covered<PHONE_NUMBER>. And we're going to go to, to Luca from Switzerland who wants to ask about the United Nations. Hey, Luca, how's it going? Hey, Aaron. Great to be contributing finally with a question live after following your show for the last couple of years. I appreciate that. I have thanks. Appreciate what you mentioned with the United Nation in the beginning of your segment. I have a deeper question. Do we really need United Nations at all? Can we do without them? And could Trump swing things in a different way? We've seen that the United Nations has been very controversial throughout history with this Israel decision that they took. And now they swung the other way because they're very much anti-Semitic and Elal Neuer and you and watch are doing an amazing work here in Geneva to basically denounce all of what they're doing against the state of Israel. Can you tell us? Oh, absolutely. Look, I think the United Nations is an abomination. I think the first thing, one of the first things I would do font policy-wise if I became president, is kick him out of New York and basically withdraw all U.S. support from the United Nations. The United Nations has always been an abomination. So we can talk about its current history or its recent history with the United Nations civil rights commission, having human rights commission, having Syria and Saudi Arabia and Venezuela and Iran and China on it. You know, these are countries that violate the individual rights and their civil rights and human rights of their citizens on a daily basis. Yet they are there to judge other peoples, other peoples, you know, how they treat their own civilians. It's just, it's just an absurdity and an evil absurdity at that. So I believe that the United States should be shut down. Now, let me go historically. At its founding, think about the founding, think about a system, an organization that has as equal partners the United States and the Soviet Union, the United States and the Soviet Union. Now, the United States that symbolizes at least and at least in some of its history lives up to the ideas of liberty and individual rights and freedom and capitalism and sitting right next to it with equal veto power in the Security Council, eating equal voting power, equal everything is Stalin, Joseph Stalin, responsible for the deaths of hundreds of millions of people, well tens of millions of people, not hundreds, tens of millions of people. And he gets the veto or anything that's passed. And then later on, starting in the 1960s, you have Mao Tse-tung sitting at the, you know, Security Council and being able to veto resolutions and having the same decision authority as the United States. So there is no international organization that is valid in which the United States is sitting at the same table with the same power as Stalin and Mao Tse-tung or imagine a world in which Hitler is a member of the United Nations. Hitler is Germany, why not? If communism, if the communists are members of the United Nations, why can't Hitler be a member of the United Nations? I mean, it's a sovereign country. It would be recognized as a sovereign country by the United Nations. What are they going to kick out? Hitler's Germany? No, it's anybody can, anybody can be part of it. So by definition, an organization that unites all countries under one banner, no matter what the moral status of those countries is, an organization that has Israel and its banner and Saddam Hussein or the Iranian theocracy or the Saudi Arabian theocracy under the same banner is an illegitimate immoral evil institution that should not be taken seriously by anybody. I think that they're not to be taken seriously to begin with if you think that Saudi Arabia plays a big role in, you know, in women rights. Absolutely. Exactly. So how can Saudi Arabia be on the Human Rights Commission when it treats women the way it treats women? What say can the Saudis have with regard to women's human rights if this is the status of human rights within their own within their own culture? If people who accused of blasphemy are stoned or whipped or sent to jail for the rest of their life, talk about the right to free speech doesn't exist in Saudi Arabia and yet Saudi Arabia is on the on the Human Rights Commission. So it's things like that that make it an institution that must be banned. There must be that the United States should have nothing zero zilch to do with. We should not be funding it. We should not be contributing to it. We should not be supporting it in any any way. And so would you think that the Trump is trying in waters with pulling out of the Paris Accord and what he will be doing with UNESCO also pulling out of the funding of that? No, I mean America's pulled out of UNESCO in the past, but it hasn't really done anything beyond that. And there's no indication that the Trump is going to pull the US out of the United Nations. He's put a pretty powerful spokesman. I think Nikki Haley is a pretty significant person at the United Nations. She's actually fairly good in terms of it. But look, Donald Trump doesn't have a consistent principled foreign policy. It's not like he has a vision of America first. He says American first, but it's an empty slogan when Donald Trump says it. And a real America first foreign policy, yes, would have the United States withdraw completely from an organization that puts America last, which is the United Nations. It's an anti-American interest organization. So the problem is that we have a president who doesn't have a coherent foreign policy. Neither did any other president. Trump is less coherent than any other president, but no president since World War II, in my view, has had a coherent systematic pro-American foreign policy. And that's true of even Reagan. I think I'd like to mention, and you're probably going to cover that further today, is the shift that we've seen between Israel and Saudi Arabia, and the possible role that Trump and Kushner played there, and what that might mean moving forward, thanks for your answers. Well, sure, thanks. Thanks, Lucas, for calling. Yeah, I mean, I think there was a shift going on in the Middle East. I think that the United States is playing a very small role in it. I think at the end of the day, the cooperation between the Saudis and the Israelis goes back probably five, six years. Since the Saudi Arabia has really identified Iran as the major threat in the Middle East and identified the United States as basically a weak, impotent power in the Middle East, I think once it became clear that the only winner in Iraq, post-Iraq war, post-the United States supposedly winning that war was Iran. I think the Saudis have come to the realization as a consequence of that, that Israel is their only ally or the only party that they can trust in terms of fighting off the Iranians. And I don't want to get sidetracked here to talk about this, but look, the winner in the Middle East since 911, the overwhelming winner in the Middle East since 911 has been Iran. Iran, the 5,000 American kids who died in Iraq to overthrow Saddam Hussein and to bring democracy to the Middle East basically, unfortunately, tragically treasonously maybe of our leadership. Their death at the end of the day, the only beneficiaries of their death, the people who have actually benefited are the Iranians. Not America. America is not safer because of their deaths. The Iranians are more powerful. The Iranians are stronger. The Iranians control huge swaths of the Middle East now. Iran has been systematically winning. Now it can't win by itself. If you remember the Iran-Iraq war, some people might remember that during the 1980s, Iran-Iraq, they fought to steal me. Iran could not defeat Iraq and could not take over Iraq and could not dominate Iraq. So it basically, in a sense, roped in the United States to fight the war for it. The United States defeated Iraq for the Iranians and then handed Iraq on a silver platter to Iran. Iran now controls vast amounts of influence in Afghanistan, of course, in Iran itself. In Iraq, the government in Iraq is beholden to the Iranians, into Syria where Assad is an Iranian puppet at this point, all the way into Lebanon where the Lebanese government is controlled by Hezbollah, which is a terrorist arm of the Iranian government. So it controls all of that. Plus it is fighting a war to take over Yemen, fighting against the Saudis. The Saudis have realized that Iran controls all of this, that they're basically surrounded by Iranians, almost surrounded by Iranians, and therefore have aligned with Israel. It has nothing to do with Kushner. It has nothing to do with Trump. It has everything to do with the survival of the Saudi regime. Again, people don't know this, but the part of Saudi Arabia where the oil is has actually a majority Shiite in that part of Saudi Arabia. Shiites are aligned with Saudi Arabia, with Iran. So again, the Saudis are threatened, and that's why they're turning to Israel for help. Again, nothing to do with this administration. This administration has no foreign policy strategy in the Middle East. If anything, all this administration has done is followed the path of the Obama administration in handing over big swaths of the Middle East to the Iranians, to our biggest enemies in the Middle East. All right, we're going to take a quick break here. When we be back, we'll go to Sandy from Troy, who's calling in to ask about the Palestinians. And you're listening to your Unbrook show on the Blaze Radio Network. We'll be right back. All right, we're doing a bit of a history lesson today and discussing a wide array of issues from the United Nations to the very existence of the United Nations to really all motivated by Trump's decision this week to announce that we're going to move the embassy. The United States is going to move the embassy to Jerusalem, a decision that really United States presidents should have made a long, long time ago, but did not. So hopefully, it will actually come to fruition and we will see the embassy actually move and we will see a full recognition by the United States of the capital of Israel being Jerusalem. All right, all right. We have Sandy on the line who's calling in. So hi, Sandy. How's it going? Hi, thank you, Iran. I was wondering, how did the Palestinians rather be then created? My understanding, like kind of prior to the land being devided out, that there was no Palestinians, that they were sort of just, whether they came from the Philippines. I'm sorry, my throat is so sore. But basically, it's that when and how did Palestinians start being there? Because I understood there was none until then. No, I mean, there were always look, there were always Arabs in the area that we call Palestine or the in the area that we call Israel today, there were always Arabs there for thousands of years. I mean, since since the Jews in a sense were thrown out by the Romans, there were people living there. They lived there under various under the Arab Empire when the Arabs controlled it under the Ottoman Empire when the Ottomans controlled it. And then under British mandate, when the British controlled it. So they're always Arabs there. They didn't necessarily call themselves Palestinians, but you know, so what? You know, there were no Jordanians in that sense, or Syrians or Lebanese. You know, the whole idea of nationalism, the whole idea of states was a relatively modern phenomenon, really a European phenomenon, a European idea that many of these people that the Palestinians embraced at some point and created their own national movement. That national movement was, you know, really established, really got going in the early part of the 20th century, just like many national movements all over them, at least and all over the world got going during that period of time. So I don't I don't think denying the existence of the Palestinian people as a people gives us anything, the Arabs. Now, many of them came into what's today called Palestine. Many of them came into the during the 20th century as Jews were developing the economy of of of what is today Israel and establishing industry and building up and drying swamps and doing things. Many of them came there to get jobs as as in a sense immigrants. They came in from Syria and Lebanon and Jordan and places like that. But all right, the Jews all came from all over all over other countries as well. It's not like the Jews were born there. They came from Europe and they came from Morocco and Iraq and all other countries across the Middle East. So I don't think it helps to say that there's no such thing as the Palestinian people. Okay. Yeah, so that's not helpful. One more question. Yeah, go ahead. I mean, the history of the Jews goes back so long. Why are they denying that they were ever there and it was never their land? Because history shows that they were in Israel way back when? Sure. But what does that mean?  I mean, we were all in different places. 2000 years ago. Do we really want to go back 2000 years and say, where were your ancestors and where were my ancestors give them all their little countries back if they want to really countries 2000 years ago? What were they exactly? I think it's very, very, very dangerous to do that and very complicated to do that. So I don't think it's legitimate to approach. You know, if you were to approach the whole issue as this is 2000 years ago, and we're going to we're going to mimic the world as it was 2000 years ago. Not helpful, not helpful. I think for anybody to do that in terms of in terms of deciding which peoples belong, I mean, even if you go back 60 70 years, you're going to find it very difficult to place people and where do they belong? I mean, do we want to give America back to the Indians? Do we do we want to give Mexico back to the Mayans? I mean, it's just impossible to do. You can't do it. It's it's it's it's a large extent. It's a it would be it would be a waste of time. So I don't believe the Jews have an historical claim on Palestine, because they were there 2000 years ago. It's meaningless. It's meaningless to the does, you know, I don't know. Do the Mongol hordes have a claim against half of the known world because they occupied it at some point? No, I mean, I just don't buy those kind of arguments. I think Israel, and I'll try to end on this point and then come back to Jerusalem after the break. I thought I could get all this done in an hour. But it seems like thank you, Sandy. Thanks for calling. I really appreciate it. I think the Jews claim it as well as the fact that they built it, they created it, and they didn't just build and create anything. They didn't build and create an autocracy or theocracy or some horrible state in which people are whipped and which people are denied their rights. Quite the contrary, they created a country that respects the most bought rights, that respects property rights, that respects individual rights, that respects freedom of religion, that respects the ability of people to live their lives as they see fit, that that is not a dictatorship. So they created a free country. I think quaff free country, it has a right to exist. I think the reason it has a right to exist as a Jewish country is because Jews are persecuted everywhere. Jews are killed everywhere. Anti-Semitism still exists in much of the world. History has shown us that anti-Semitism keeps popping back into the dialogue and these people who are murdered and killed and destroyed over and over again throughout human history need a place where they can protect themselves and defend themselves. In a world with no anti-Semitism, I don't believe in a Jewish state any more than I believe in a any kind of ethnic group state. But in a world with anti-Semitism in which we live, I think Israel is different and therefore it should be the one ethnic state that I would not ethnic state really, but religious cultural ethnic state that I think needs to exist because otherwise Jews will be killed like they have been killed throughout human history. All right, when we come back after this news break, we're going to talk a little bit more about Jerusalem, about the history of it and about the consequence of this decision to move the embassy. We'll be right back after this break. Be clear. All right, we've been talking about Jerusalem and Israel and you know a bit of a history lesson hopefully hopefully once in a while these history lessons you guys enjoy them. I don't think you get this kind of content anywhere else particularly from somebody who has intimate knowledge and intimate experience of this not just because I've studied the history and and but because I've experienced it. I was born in Jerusalem in 1961 when it when Jerusalem was still partitioned between West and East Jerusalem. I was born in the West and you know I've lived through the unification of Jerusalem in 1967 which we'll get to in a minute. I used to know Jerusalem really really well. I used to you know tour there quite a bit and lived in Israel for most of my early life at least now. I'm getting to the age where I can say I've lived longer in the United States than I have in in Israel so I'm I am now more of an American than I am in Israeli but but I do have the background and and as as many of you know served in the Israeli military and military intelligence so know know the know the region a little bit just a little bit. All right for those of you by the way interested in in the history of the Middle East and the history particularly of Islamic terrorism in the Middle East I have two courses that I've done that are available by podcast. If you subscribe to my podcast on iTunes the Iran Book Show podcast you can get these courses. One is a course on the history short history of the Middle East. I think it's five lectures and another one is a short history of Islamic totalitarianism. Both of those courses available on my website Iranbrookshow.com also available through my podcast. Just go to iTunes and look for your on book show and subscribe and you can just scroll down the podcast and you'll find those podcasts you know those two courses. I think really give you a perspective on the Middle East that you will not get anywhere else give you a real history of the Middle East that you will not that you would have to spend you know dozens and dozens of hours to try to replicate yourself. So a real shortcut for those of you interested please go and consume and enjoy. All right so we kind of ended up their history we had some diversions about the Palestinian people we had some diversions around the United Nations but basically coming out of 1948 out of the War of Independence of 1948 is all controlled the western part of Jerusalem east Jerusalem which is the old city all the holy sites were controlled by the Jordanians by the way all the Jews who lived in east Jerusalem were kicked out by the Jordanians and and sent to you know sent to the to the eastern side and it was sent to the western side the Jews were not allowed to worship at the wailing wall during this period there was no freedom of religion in Jerusalem under the Jordanian control Jordan also did not create a Palestinian state in the West Bank when it controlled that area and neither did the Egyptians create a Palestinian state in the Gaza Strip when they controlled the Gaza Strip instead in 1967 for a war was launched it was initiated by Nasser the Egyptians the massing troops on the Israeli border Israel preemptively struck the Egyptians begged the Jordanians to stay out of the war but Jordan thought that this was their opportunities to basically destroy Israel completely take Jerusalem and and create a unified city under Jordanian rule destroy that the country completely the same happened with the Syrians the Syrians started moving down the Golan Heights and and and shooting from the tops and invading invading Israel Israel fought on three fronts fought the Egyptians in the Sinai fought the Jordanians and in Jerusalem in the West Bank and the Syrians in the Golan Heights uh won all three war all on all three fronts in six days it's called the Six Day War 1967 as part of that Israel took control over the Gaza Strip over the West Bank and the whole of Sinai as well as the Golan Heights uh those of you again who know a little bit of history the the Sinai Peninsula was returned to the Egyptians as part of the peace deal cut with Sadat in the late 1970s and then early 1980s Israel withdrew from the Sinai uh so that uh but the West Bank and Jerusalem are still occupied if you will by Israel although Israel has a next annexed the East Jerusalem and and declared Jerusalem as a whole its capital and uh well we can get I don't want to go into the Gaza Strip but the Gaza Strip Israel withdrew from lifted to the Palestinians today controls the Gaza Strip so you have kind of a big picture Israel still has the Golan Heights luckily because given given that now Iran is on on on the border there if they had given back the Golan Heights the Iranians would be looking down into Israel from the Golan Heights it would just be a strategic military strategic nightmare to have returned to Golan Heights uh given the hostility of Syria and the hostility of particularly the Iranians now uh and their presence over there all right so here we are post 1967 so now Israel occupies the whole of Jerusalem declares the whole of Jerusalem its capital by the way Israeli parliament has always been in Jerusalem at least since 1949 I think has always been in Jerusalem uh Israel has always counted Jerusalem as its capital um and uh but the United States has refused to do so as of most the countries in the world partially going back to the 1947 idea that Jerusalem should be an international city should not be ruled by anybody and then post 1967 post Israel taking the whole of Jerusalem the Palestinian claim particularly I'd say over the last 30 years that East Jerusalem is going to be their capital one day and the United States not wanting to get into the middle of East Jerusalem West Jerusalem Palestinians Israelis who owns it who should have it which part should it be partition should it all be under Israeli rule should it be should we go back to the old UN idea of an international city that is not ruled either by the Palestinians or by the Israelis and indeed one of the indications one of the real weaknesses of of Trump's announcement with regard to the Jerusalem moving the Jerusalem is you just heard it on the news Rex Tillerson just said look this is nothing about the final solution that we envision for Jerusalem this is nothing about whether Jerusalem would be partitioned or not this is nothing about the final status of Jerusalem all right so what's the point right what's the point now I believe and I don't have we don't have a lot of time for me to get into this but I believe that the only way you will get peace among between Israelis and Palestinians is when Israel recognizes that it is engaged in a war of survival something the Palestinians realize clearly because they they they are engaged in that war and they they clearly right now are engaged in a war to to destroy Israel and to kill as many Jews as possible and to destroy the state of Israel this is explicitly the policy of the Hamas they don't hide it and implicitly the policy of the Palestinian liberation organization the PLO they hide it but it not an internal communication they just try to hide it from the world the world plays dumb by pretending that Palestinians actually want peace when clearly they do not now I'm talking here about the leadership I'm talking about a significant proportion of the Palestinian people clearly I'm not talking about every Palestinians there are plenty of Palestinians who would love peace and who would in a moment recognize the state of Israel actually many of them would like to live in the state of Israel they'd like to move and live in the state of Israel because Israel treats its Arab population its Muslim population better than any country in the Middle East treats its Muslim population that's true the Muslim population in Israel gets to vote the Muslim population in in in Israel has right to free speech the Muslim population in Israel has property rights now I'm not saying Israel is perfect a lot of things that Israel does with this Muslim population which I find offensive and wrong but they are treated better than Muslims in any other country in the Middle East better than in Egypt better than in Jordan better than in Syria indeed many Arab Muslims that I knew in Israel used to bless Allah that they were born in Israel because they knew that they were freer in Israel than any of their cousins who lived in Jordan or Syria or Lebanon or Iraq or any of those other places so so what the move to Jerusalem should have entailed it should have not just been we're going to move the embassy to Jerusalem pounding my chest while saying look I finally fulfilled the I fulfilled the promise that I made during the campaign nor the nor the republican has done that look look how great I am and then go on and say well but you know we still recognize the rights of the Palestinians and there's going to be you know we recognize the possibility of a two-state solution and the Palestinian Israelis are going to have to negotiate and ending the speech with God bless the Palestinians God bless the Israelis God bless America as if they're all morally equals no what a proper speech for a principled foreign policy would have been a complete moral condemnation of the Palestinians and the Palestinian leadership a complete unequivocal support for the moral right of Israel to exist and to thrive and to be successful and to do whatever was necessary to secure the rights of its own citizens to protect itself in self-defense without any qualms without any hesitation and declare that the final whatever the final negotiation between Israel and the Palestinians it has to secure Israel and the Jerusalem as long as these really believe that Jerusalem is its capital the Americans will support that decision there is America cannot be partial here cannot be indifferent they are good guys and they are bad guys it's time for America to decide and to declare unequivocally unequivocally who is who all right we're going to take a quick break here we'll be right back uh after this break all right we're talking Israeli Palestinian conflict we're talking Jerusalem we're talking American foreign policy and so I just want to I just want to be clear here the Israeli Palestinian conflict will only be resolved only be resolved when the Palestinians unequivocally realize come to completely comprehend that they cannot and will not ever win that they are that they are more likely to be destroyed than to ever see the day where Israel is wiped out in other words there's a war here and one of the parties has to win I believe that party should be Israel unequivocally there's no moral equivalency between the Palestinians the Israelis there's no let's arbitrate a dispute between equally worthy partners no there is one partner that is seeking peace that is seeking prosperity for its own people that is seeking success and achievement and human flourishing and then there's another partner that all they want is death and destruction and those are the Palestinians unfortunately at least Palestinian leadership and what they have led the Palestinians towards they've rejected every attempt at peace I don't believe any negotiations should be engaged in I don't think the United States should have anything to do with the Palestinians they should unilaterally unequivocally declare their support for Israel and tell the Palestinians to shape up if they shape up if they reject violence if they turn against their militants if they turn against the suicidal attitudes within their own culture and within their own you know practices then only then only then once they realize they've been defeated once they realize they will never be successful they will never defeat Israel when they realize that their own culture is is is destructive and evil and bad because it emphasizes the world of violence suicide bombings of little girls only when they denounce and reject all that can you sit down and negotiate some kind of deal with them only when they reject that can you think about a two state solution or even a one state solution whatever the solution happens to be but the idea that you negotiate with people committed to your to killing you that you negotiate with people who want to destroy you you negotiate with people who are committed to oppressing their own people never mind oppressing your people that is the essence of a self-destructive suicide of foreign policy and that's this foreign policy of the Israeli government that's been negotiating with the Palestinians at least since 1994 and that's a suicidal nature of the american foreign policy under all presidents including donald trump the fact that he just announced the jewish something does not change the fact that he has an unprincipled foreign policy that he still continues this immoral ambiguity or moral equivalency between israel and the palestinians and that is shameful shameful and not america first anti-american never mind america first so i want a president who's really willing to be radical really willing to stand up for freedom and liberty really willing to be america first i love america first i love the idea of america first but what aches me what pains me is that when america first is used as a slogan that is empty that has no content that is that is meaningless and that's unfortunately what the trump administration is doing and it's it's not just trump it was obama and bush and almost every one of and every one of these uh of these presidents they don't understand what america first is they have no clue because they don't understand what america represents with individualism and liberty freedom the right to life liberty in the pursuit of happiness of individuals and that a foreign policy that is an american first foreign policy is not a foreign policy that treats people who are not morally equal as equal it is not a foreign policy that is in the un that has anything to do with an organization like the un it is not a foreign policy that has anything to do with the palestinians and negotiating with palestinians by the way the the response to this announcement of moving the embassy is reflective of what the palestinians are really about riots days of rage demonstrations missiles from from the gaza strip what is that anything have anything to do with anything what are they trying to gain here other than to see some of their people sacrifice some of their people die and therefore to to guilt israel into accommodating them in some way to guilt the united states into withdrawing their statement what are they going to achieve by by by using violence in response to a a fact an historical fact that has existed since 1949 that israel's capital is in jewsland what are that what is violence how is violence going to solve the problem that the palestinians face they've tried violence and violence doesn't work in their favor violence works against them so every time something happens they don't like go out into the streets and and and throw stones or worse and launch missiles from the gaza strip that's going to get you really far now it will because we live in a world unfortunately where it's it's quite likely that the american government will get guilted into withdrawing that the suddenly european countries are going to feel guilty oh my god people are dying we can't have that so we're going to withdraw support of israel withdraw support of the united states ah all right but i just wish i really really wish the one day i will be able to support an american president in their foreign policy i so i would love love love to be in a position where i would say this president's foreign policy is right or admirable or right in a certain aspect even right in a certain aspect but nothing these presidents from trump to obama to bush at least to clinton to bush senior i mean there were elements at least of of reagan's foreign policy that i could respect particularly his attitude towards the soviet union but other things that he was terrible on but but none of these guys since then has even an iota iota of anything that i can respect when it comes to foreign policy and trump unfortunately well predictably is is no different in some aspects is worse because he claims to be a cowboy he claims to be out of the box he claims to be free of all the shackles of conventionality and yet he's just conventional he's so conventional his foreign policy is so conventional everything he does you know once in a while he'll throw out something like this embassy stuff which is meaningless in the big picture but but in in terms of the essence of his foreign policy he's completely a hundred percent conventional there's no difference between him obama or bush no fundamental differences is other than he says outrageous things and and they were a little bit more thoughtful in what they said but in terms of actions in terms of what the united states is actually doing out in there in the world you know you we forget those american troops who died in niger for that's in africa by the way for what uh all those troops fighting alongside the iraqis to eliminate isis so we can hand over that whole territory to iran that sounds like a an obama policy that's not america first that the lack of support for the Kurds the one the one element in that part of the middle east that is pro-american and we've completely abandoned them as a country you know the the american leadership has completely abandoned the Kurds there is no america first strategy coming out of this administration this administration is a completely in terms of the actual policies they engage in is completely a hundred percent conventional uh uninteresting interesting only in in um in what's the unpredictability of some of the statements that they made not policy-wise policy is is very predictable and and uh conventional very very very conventional all right um remember that the last segment here we're going to take questions on anything i know uh so feel free to call in um at any anytime but during the last segment we will be uh taking calls uh and uh let's see it's uh the phone number you probably want the phone number it's 1-888-900-3393 1-888-900-3393 and you can call in pretty much anything uh we're going to be taking a break soon and uh after the break i am going to um i'm going to talk a little bit about the us economy and uh switch a little bit this phone policy stuff is a little uh is a little depressing so we're going to switch a little bit and talk about uh and talk about the economy so let me summarize a little bit of kind of what we've what we've covered here generally it's absolutely the correct policy of the united states uh to uh it's the correct policy of the united states to recognize this Jerusalem is the capital of of Israel it's an abomination that this hasn't happened years and years and years ago Jerusalem is the capital Israel views it as a capital Israel is the legitimate free country that relative to most countries and certainly relative to any country in the Middle East respects individual rights and respect by it respects minority rights respects religious rights and therefore as a just as a just as a courtesy it's its capital should be recognized by all states in the world unfortunately it did not come with a more principled position on general foreign policy which would have been nice all right you're listening to your own book show we're here on the blaze radio network we'll be right back after this break you're on brook all right i want to switch gears here and talk a little bit about the us economy and we got some decent job numbers on friday uh i think was 228,000 new jobs um we uh the economy is still growing it's it's it's we'll see at what rate it's growing but it clearly is still growing it's the the us economies you've been expanding now for more than eight years which is for eight years which is a long expansion period without having a recession which is fairly unusual um we still got some we still got some issues and we'll get to some of the problems in the us economy but overall unemployment rate is 4.1 percent which is uh it some historical low we'll get to whether that number means as much as it used to mean or what it exactly means in a minute but overall the us economy is doing okay it's not doing gangbusters it's not doing phenomenal it's not doing amazing but it's doing okay and and it's we're talking a little bit about why that is how it could be doing a lot a lot better and um what are the risks that we're facing in terms of the us economy uh if you want in on the conversation eight eight eight nine zero zero three three nine three we're coming up on the last segment of the show in a little bit i usually have that you can ask about anything so you can ask about bitcoin or you can ask about i don't know anything you want to ask about eight eight eight nine zero zero three three nine three is uh is a number and uh in the last segment i'll talk about pretty much anything so as i said the us economy is doing pretty well um and um it really is to some extent amazing that it's doing so well because uh you know the great recession of uh of that started exactly uh what is it nine years ago in uh no 10 years ago exactly 10 years ago in december of 2007 that's the official start of the great recession that was a pretty deep recession it was pretty devastating recession and it crushed employment and it crushed production and productivity has never really rebounded from it and uh it really really did a lot of damage to the u.s it also resulted in a mass of new regulations like dot frank uh so on particularly on the financial uh sector so we have massive new regulations but since about middle of 2009 um the the economy has grown slowly tentatively wages have not grown very much and uh productivity has not grown very much but the economy seems to be growing and uh and that's you know pretty amazing we've gone we've done better than than the than europe has we've done better than most of the world has um the developed world that is and it's interesting to think about why and i don't have to get into all the reasons why but i'd say there are a few that need to be uh need to be addressed uh maybe the most important one is is the fact that there's something in the american spirit that is entrepreneurial that is flexible that can shift and change and adapt and and accommodate and even when there are lots of regulations we we find ways around regulations we don't just accept regulations we spend expend a lot of energy getting around them we're a flexible economy and we're flexible economy primarily because of the genius of individuals entrepreneurs who are willing to take risks and to innovate in spite of everything government does so i i think that the main tribute to job creation and to expanding economy and and a growing economy is goes to the entrepreneurs it goes to the business people it goes to american business that continues unabated no matter what washington seems to throw at it somehow they continue to grow innovate create jobs produce make stuff and and and that's that's amazing and and europeans don't have that it's why europeans are slower to recover much harder for them to recover from shocks much harder for them to to pivot when there's massive technological change or big regulatory change europe is it's much harder for them to change the u.s much more nimble much more flexible and i think primarily because of the entrepreneurial culture we have and and by the way i'm gonna say something very unpopular that entrepreneurial culture is to a large extent or to a large extent fueled by immigrants and you know the by a scientific community that is fueled by immigrants you know the 35 percent of all u.s noble prizes are won by immigrants 83 percent of the finalists in the 2016 intel science talent search which is known as the junior nobel are children of immigrants i'm getting this actually from a op-ed in the new york times by bet stevens the 40 percent of fortune 500 companies accounting for 4.8 trillion in revenues 19 million employees had founders who were immigrants or children of immigrants that immigrants start businesses at about twice the rates of other americans uh and that we would our population would not have grown since 1970 if not for immigrants so a big part of this flexibility is the fact that we have always attracted the best and the brightest and the most entrepreneurial and the risk takers from all over the world who come here and start businesses and and and in spite of the difficulties and the and the challenges created by government and regulations they adapt okay so that's the flexibility in the u.s economy that to some extent is driven by by immigration the second reason the u.s economy is doing well is global growth other countries are doing well right now particularly uh developing countries india china is doing okay but india is going even faster than china a lot of asian countries even african some african countries are doing fairly well um the growth of and the increased impact of markets of semi capitalist economies out there in the world of of the continuing destruction of statism socialism in much of the developing world and an increase in respect for markets it's still still out there it still happens has increased growth rates in these economies increased growth rates in these countries could be much much higher could be much much better and it's because of that uh we are exporting a lot more export is up even though our trade deficit might be expanding we are exporting more which creates more economic activity in the united states the fact that we're importing more is also a good thing it means that we're getting cheaper and cheaper products from overseas which means we have more and more capital to invest it also means that foreigners have dollars those dollars have to flow back into the u.s they flow back into the u.s as investment dollars so they so the fact that we as americans don't save and don't invest is compensated for by foreigners who because they have dollars because we have bought this stuff invest those dollars in the united states and and and grow our economy by doing so so uh investment continues by foreigners in spite of the fact that we because we don't save uh investing little um so global growth has played a big role here even europe now is doing fairly well in terms of economic growth and and there's a bunch of reasons for why that is but but even there um deregulation under trump is probably played a role in in in the background so some industries now not all industries and i i talked earlier this week and one of the shows that i did one of the podcasts i did on the fact that the treasury department is actually becoming a huge advocates of dot frank and actually want to use dot frank more than even obama administration did so i mean the trump administration sending mixed signals on deregulation but i think in some industries there's been deregulation i think the message of deregulation has gotten out to business leaders they are optimistic about the prospects of deregulation and there's a consequence in engaging in investments and and uh expansion we'll see the evidence on the wall of deregulation in this economic expansion right now is mixed we will see if that's true i think the prospects of tax reform lowering capital gains taxes also might be having a positive impact here i would also add in addition the the central banks pumping money into the economies over the last 10 years over the last 10 years has had an impact on nominal economic growth and what we're seeing is economic growth now now whether that is a healthy thing or not i doubt it whether that's health economic growth i doubt because usually what happens when that happens is you have to pay the piper with some significant recession or some significant decline later on but you know it it's it's the fact is that so far part of this growth is fueled by you know the fact that there's money being pumped into the system that that's true of the developing markets it's suddenly true in china and in japan japan's a developed market of course it's true in the united states and true in in europe that it's it's kind of this loose monetary standard but of course part of the problem of adding central banks is we don't know what would have happened in a free market we don't know what a proper monetary policy policy would look like a federal reserve a federal reserve a central bank distorts all that as i'm i'm a believer in a free banking system where interest rates and and money get determined by banks and by free banks not by central banks not by central planners of any kind i don't believe in central planning because it doesn't work and its rights violating it it intrudes on the freedoms of individuals but it could be responsible part of this expansion to the extent that it is it will probably have negative consequences down the road that is in by creating bubbles or creating creating mal what austrian economists call malinvestment investment in industries we should not be investing investing in products that the market does not really demand that the demand for them is actually artificial and then the recession comes along and corrects for that and eliminates that malinvestment of course if we allow the recession to happen so the economy is going for all those reasons um there are quite a few risks involved here and what i want to do is when i get back from the break we're going to take a quick break here when i get back talk about those risks talk about the risk the the economy is facing i also want to take this call from kevin uh from wisconsin and any other calls any other questions that you all might have will do that right after the break you're listening to your own book show on the blaze radio network will be right back this is the your own book show all right we're back and uh in uh in this part of the show uh i take uh i take your calls so feel free to call in uh with questions it's one eight eight eight nine zero zero three three nine three one eight eight eight nine zero zero three three nine three nine let me quickly mention what i think are the biggest risks to this uh economic expansion then i'm going to take a call from kevin and then uh any other calls if anybody else wants to call in um i think the biggest risk short term is probably protectionism it's uh donald trump's anti-trade attitude it's threatening uh it's if we really do something like withdraw from nafta or seriously damage nafta or if we withdraw from any of the of the trade deals that we have uh i think it would be a massive economic disaster that would have massive negative implications on the united states and economy and jobs on on any kind of economic expansion and look jobs are not as good as the numbers say but they're not bad they're not bad um i also think uh i also think this attitude to immigration is a real risk to a continued economic expansion the fact that the republicans are proposing to cut in half legal immigration now i i agree with them about shifting away from family reunification towards a job-based uh immigration legal immigration policy but why cut in half let's just get double the number of people coming in based on jobs and shrink the number of people coming in based on uh family i mean i would like to see a massive expansion of job-based immigration into this country h1b is any kind of any kind of immigration that's based on on work and jobs i think should be expanded i think by by restricting immigration we are we are destroying um our ability to be flexible to to build to change to to innovate we'll have a less flexible labor force we'll have labor shortages coming down the pike particularly of skilled labor but labor shortages across the board i expect to have if we continue with our attack on immigration and then finally probably the biggest uh the biggest risk well one big risk is financial regulation the fact that the justice department the treasury department is is big on regulating banks and regulating financial institutions and actually wants to increase their power to regulate that is scary and finally central bankers are probably the biggest risk ultimately in terms of uh long term short term middle term because of the somewhat randomness of their actions i could see easily the federal reserve raising interest rates to higher than what they should otherwise be and and that could trigger the net will probably trigger the next recession um but you know let's talk about all that another time in the meantime we're going to take this call from kevin hi kevin you're in the uran book show what's up thank you for taking my call pleasure can you hear me good i can i can hear you great okay i want to go back to something you said because i was listening to the um what some of most most of what i knew when you're talking about the history of the israelites and finding the whole man finding the safety net finding the place they can protect themselves and then um the president you know declares that we as the united states are recognizing jerusalem as the capital of israel and doing it officially means our military is bound to protect israel now no that's not true kevin that's just not true when you said it was meaningless i said what so i just would ask you sir why is it meaningless that declaration well let me first say that what you said about the military being bound to protect israel now is just not true the fact that we declare a particular country as a particular city as being the uh the capital of particular country does not make us bound to protect that country we're not bound to protect china because we recognize bejean as its capital or to protect france because we recognize paris its capital we're bound to protect france because we're members of nato there is no treaty between the united states and israel where the united states is bound to protect israel i don't think israel needs such protection or wants such protection israel can defend itself all israel needs is for the united states to stop putting pressure on it to negotiate with the palestinians to try to cut peace deals that are bad for israel i think that is what's important and the fact is that that all indications are that the president is continuing to use diplomacy to try to put pressure on israel to try to negotiate with the palestinians uh you know rex tell us in just this morning said this declaration has nothing to do with the final status of of jewishland well it should the united states should declare unequivocal support for israel and unequivocal withdrawal of support from the palestinians and as long as it doesn't do that then yeah this is symbolically a good thing and if it had come from uh from an administration that had any kind of consistent foreign policy then i would say it's a good thing but i don't know what this means when donald trump does it because i don't know what he's going to do tomorrow i don't think anybody knows what knows what he's going to do tomorrow he's inconsistent he's all over the place and his foreign policy is not consistently pro-israeli and pro-america i think his foreign policy is very conventional it's it's not that different from obama's or from uh or from bush before him so i just don't think it's that big of a deal it it should have been done it should be done 70 years ago it should have been done a long time ago go ahead kevin today and i thought tillerson was like contradicting the president no no read read the president's speech from uh when he announced jewsland i mean he clearly says this has nothing to do with the fact that we'll recognize the two state solution if the parties get to that we encourage the parties to keep negotiating we will support that negotiation we're not in a sense taking sides in that negotiation the speech is full of that kind of compromising language full of it but that can never happen you know there's never going to be a two-party solution because people want to destroy israeli i i agree with you then why doesn't the president say that why doesn't the president say i think he's learning he's learning well he's surrounded himself by advisors who are not going to help because mathis and kelly and uh i forget the name of the guy who runs the national security council all those generals are not particularly pro-israel they're not they do not have a proper stand on on the israeli palestinian issue they are much more likely to advocate for compromise and appeasement of the palestinians and uh i i just don't see this foreign policy i don't see a foreign policy that's coherent coming out of this administration uh in a way that would reassure me that this declaration about jewsland is is really that meaningful i mean again in and of itself it's the right thing to do it should have been done a long long time ago it's just that as i've said many many times on the show and if you keep listening to me i will say many many times in the future um there is no real understanding what america first foreign policy really looks like in the middle east i see no indication of america actually pursuing unequivocally itself interest in the middle east i see appeasement i see russia uh being russia and iran as the two parties that have benefited the most from the trump administration's policies in the middle east and iran is clearly an enemy of the united states and russia is no friend of ours one minute so i i i just see i don't know meandering pragmatism uh unprincipled uh policies and therefore i just don't see i just don't see that this jewsland thing is that meaningful now again i think the palestinian response to it is very indicative of the fact that if the palestinians wanted peace here's here's a good indication of palestinian wants peace if the palestinians wanted peace they would recognize jewsland as the capital of a state called israel just like sadat went to jewsland and and talk to the knesset the palestinians would recognize jewsland that would mean they want peace that would be an indication and i would change my position on then all right uh we're coming to the close here thank you all uh for listening thank you kevin for calling and uh we hear every saturday at 12 o'clock eastern time on the iran book show on the blaze radio networks see you next week to the iran brook you're clear thanks


It has been slow and go for traffic over the past three months as road construction along Highway 197 in Bemidji continues. Over the summer, the focus of the project was on sidewalks, curbs and utility work. The final stretch of construction is currently underway with new pavement being laid, which is reducing traffic down to one lane, causing severe backups throughout downtown Bemidji. While the bulk of the road work has been completed, the end of the project is now in sight. You're looking about another week or two left in that. They're in the paving portion. And interestingly enough, when you do construction projects, actually the paving is the fastest to go through. Really what takes so long is when they're doing utility work, sidewalk work, you know, and when you're doing it under construction, it just really delays those projects and pushes them back. For motorists traveling along Highway 197, it's recommended to plan for extra travel time and to pay close attention to the road and traffic signs. If you've enjoyed this segment of Lakeland News, please consider making a tax-deductible contribution to Lakeland Public Television.


Hello and welcome to the session in which we will discuss intercompany inventory sale. What is this topic? Well intercompany inventory sale is when we have a parent company and a subsidiary. Now the parent company might sell inventory to the subsidiary or the subsidiary might sell inventory to the parent company as long as this transaction is within the parent and the subsidiary's subsidiary parameters. What does that mean? It means as long as the inventory is not sold to an outsider. For example, the parent company did not sell this inventory to a third party or the subsidiary did not sell this inventory to a third party outside this box. What happened actually is there was a transfer of inventory inside the company. Why? Because the parent and the subsidiaries are consolidating. So when they sell to each other and no sale is conducted is no inventory is sold to a third party then it's merely transfer of inventory between the two. As a result we don't recognize any profit. Now if the inventory is sold to a third party then a profit is recognized. If some of the inventory is sold and the other is not then we're going to have to have a third profit and we'll discuss all these topics in this session. Let's go ahead and get started. Basically the central team is the profit cannot be recognized until the goods are finally sold to an unrelated party. I call it third party. The reason I called it third because I'm assuming parent and sub. Now if the sub also sold to another sub that's part of this group then it's still not a third party. Third party means unrelated party but I call it third to kind of make the point it's parent sub and we have a third outside party. But however this is what we have to keep in mind. From a record keeping perspective both parent and subsidiaries record sale and purchase. Now when we have the parent and when we have the sub remember each one of them they have their own accounting system and you have to keep that in mind. So for example if the parent sold to the sub we have a sale here we have a purchase here of the sub sale to the parent we have a sale here and we have a purchase here. So each company because they're independent they keep the record but it's merely a transfer of inventory for the overall group for the overall company. Now the consolidated financial statement when we consolidate between the two it should reflect the transfer of inventory if it's not sold to an outside party. This is the and the reason I'm emphasizing the theme because if you understand the concept it's easier to start to see the journal entries because it's going to get a little bit more complicated. So once again if we have a parent selling to a sub as long as it's inside this box the sub did not sell to an outsider nothing really happened we have to eliminate this entry the sale and the purchase because it's merely a transfer of inventory and the same concept if the sub sold to the inventory. Now the best way to start to illustrate this concept is to actually look at an example. I'm going to start with a simple example as always to illustrate the point get you familiar with the journal entries then we will work another more challenging we'll add scenarios to the example to make it more challenging and to make the point of the lesson. So we have a parent company sold 80 000 of inventory to a sub the cost for the parent company is 50 000. So first we're going to look at the journal entries from the parent company what would the parent company do the parent company will debit cash assuming they've debited cash now if they don't debit cash they will debit something called do from sub which is a receivable which is a receivable from the sub all they simply have an account receivable just in case in your tax book or in your CPA review course use different language but I'm going to keep it simple and using cash so it could be do from sub or account receivable they will credit sales they will debit cost of goods sold and they will credit inventory the sub the subsidiary they will debit either inventory or they're using the periodic purchases and they will credit cash all they will credit accounts payable if they bought it on account or due to parent if they use due to do from if the company uses this now here's what we're going to assume we're going to assume that the subsidiary did not sell anything from this inventory so this is the first assumption we are going to make to keep this example simple to kind of get you warmed up so simply put they purchased the inventory and they did not sell it to an outside party so they did not sell it there was no sale well what's going to happen then when we consolidate we're going to have to assume this sale did not exist okay that's the first thing this did not happen so we have to kind of do something to make this go away and we're going to have to make an adjustment to reflect the original original the original cost for the inventory because now based on the subsidiary if you look at the subsidiary it looks as we have inventory with a cost of 80 000 that's wrong that's not true our inventory has a cost of 50 not not 80 000 so we have to fix this problem how do we fix this problem let's see how do we fix this problem let's start step by step well let's see what what problem fix itself we have credit debit the cash credit the cash basically those naturally they will eliminate each other we have sales of 80 000 we have credit sales is this a legitimate sales and the reason is not you cannot report the sales when you do the consolidation so we have to debit we have to debit sales we have to get rid of sales we also have cost of goods sold of 50 000 do we really have cost of goods sold of 50 000 and the answer is no we don't this cost of goods sold was related related to the sale and the sale is not really a good sale so we have to credit cost of goods sold one more problem we have we have if we look at our inventory overall for the whole company if we look at it that way we have inventory of 80 inventory of sorry inventory debit of 80 on the sub and i'm going to combine the two inventory credited 50 on the parent we have 30 000 in access inventory what do we have to do with this access 30 000 and this is basically well it's we have you can look at this 30 000 access inventory in two ways you can say it's it's the same thing you can say this is access inventory that's one thing you can call it access inventory which is which it is our inventory is inflated by 30 000 or you can say this 30 000 is the profit for the parent profit for parent how so let me show you the parent recorded sales which they did on their books they would still record the sale of 80 000 they record the cost of goods sold of 50 they have a profit of 30 so this profit is this inventory here so whether you say it's an access profit from the parent or you say it's inflated inventory it doesn't really matter we have to remove that 30 000 of inventory therefore we credit inventory for 30 000 let me show you the journal entry that we prepare so this way you are familiar with this so this is the journal entry the 30 000 we said cash is gone we debit sales 30 000 sales is gone we credit cost of goods sold 50 000 this is gone and what we need to do here we need to credit inventory in additional 30 000 to get rid of the the get rid of the access inventory to get rid of the access inventory so the inventory is reported at 50 000 so this is the elimination entry what did we assume here we assume that nothing was sold to the outsider so we have to kind of eliminate everything and this is exactly what we did now in some books or in some cost accounting not cost accounting some advanced accounting courses in some books or some cp review course they will combine those two they will combine those two and they will debit sales and credit cost of goods sold for the total because they assume you know once it's once it's once it's on the subsidiary it's sold so first they assume it's sold therefore the whole thing was cost of goods sold therefore they debit sales credit cost of goods sold so this is alternative alternative way of looking at it so this is one way to look at it maybe your textbook do it in two steps maybe your textbook first they assume they reverse the sales and they assume everything is sold then then they remove the the third gross profit then they debit cost of goods sold then they would reduce inventory then they will credit debit cost of goods sold and credit inventory which is if you take those two entries it's the same thing as this and take a second and look at it those are the same two entries except in your book first they kind of debit sales and debit cost of goods sold for the full amount then they find out that there's 30 000 of the third profit we have to kind of back out the deferred intra company gross profit we do so we increase cost of goods sold and once increased cost of goods sold we reduce profit and we credit inventory to reduce inventory so this 30 000 reduced reduction in inventory is to reduce the inventory and as a result what happened is you increased cost of goods sold which is you eliminated your profit again this you don't do both you either do this your textbook will show this or it will show this i want to make sure i cover both this way you are covered now one more thing i want you i want to make sure you are very familiar with before we proceed in this one is this formula here how to compute cost of goods sold beginning inventory plus purchases equal the goods available for sale then we deduct ending inventory from goods available for sale to get to cost of goods sold make sure you know this formula inside out now here's what we need to know if your if your ending inventory goes up your cost of goods sold goes down and you can use numbers to say this there is a negative relationship between ending inventory and cost of goods sold so in your textbook or in your cpr view course what they might be using they might be they might be adjusting inventory remember every time we increase ending inventory every time we increase ending inventory we reduce cost of goods sold and the opposite is true if we reduce ending inventory we increase cost of goods sold and if we increase cost of goods sold we reduce profit okay so make sure you know this make sure you know this okay now here's what we need to show so that's why i'm showing you here what happened here is we is we reduce so notice here just kind of show you this point in this problem we credited inventory so ending inventory went down as a result cost of goods sold went up as a result the 30 000 dollar is gone the 30 000 profit is gone now sometime in some textbook what they use they adjust sometime you have to adjust beginning inventory the relationship between beginning inventory and cost of goods sold is a positive relationship what does that mean it means every time you reduce beginning inventory you sorry you reduce every time you reduce beginning inventory you reduce cost of goods sold okay they they work together and every time you increase beginning inventory you increase cost of goods sold and the reason i'm mentioning this once again because we're gonna use beginning adjusting beginning inventory but also it's something that you critically need to know because this is how they try to trick you on the exam now let's move on to the next option the next option is the subsidiaries bought this inventory well obviously they bought them but they don't plan to hold them forever in this example we assume they they purchased them but they did not sell them so now we have to work with the example where they actually sell the inventory some of it if they sell all of it it's easy if they sell some of it there's some complication we're gonna assume they sell some of it but before we proceed i would like to remind you to show you how to sell part of it whether you are a student or a CPA candidate take a look at my website farhatlectures.com the reason you are watching this is because you are either a student or a CPA candidate looking for something and you found me that's great i'm glad you did but i can help you further with your CPA review course i don't replace your course that's not my intent nor your accounting course i can help you understand the material better i have lectures multiple choice through false that that helps you with your accounting courses everything is organized by chapter my CPA review material is aligned with your becker wiley roger gleam so it's very easy to go back and forth between my material and your CPA review course i also give you access to all previously AI CPA released questions with detailed solution please connect with me on linkedin if you haven't done so take a look at my linkedin recommendation like this recording the mere fact that you found it it's helping you it might help others so share it with other connect with me on instagram facebook twitter reddit and i started a facebook group me account called CPA exam support group by all means join us so you can connect with other individuals that are studying for the exam now the subsidiary again what we said is they don't hold the inventory they want to sell it let's assume the subsidiary sold 60 000 out of the 80 000 remember they purchased this this is the entry from the prior slide they purchased 80 000 of inventory now they sold 60 000 and they sold it for 110 it doesn't matter what they sold it for but we're going to assume for 110 now the subsidiary will have to journalize the sale why because now this is a revenue recognition process that has been completed so the revenue recognition has been completed for 60 000 this is what the subsidiary would do they will debit cash 110 or they will debit a count receivable if they sold it on account they will credit sales 110 then they will debit cost of goods sold 60 000 they will credit inventory 60 000 let's now take a look at the sub inventory the inventory they originally recorded 80 000 when they purchased it from us now they sold it to an outside party of 60 000 they have inventory left of 20 000 good this inventory is an interrelated inventory why because it's purchased from the parent company part of this inventory is actual inventory and part of it is profit how do we know which part which part of it is profit which part of it is inventory because this 20 000 is inflated inventory inflated inventory well we have to compute the gross profit of the parent company the parent company sold you for sold you the inventory for 80 000 we said we have a cost of 50 so cost 50 divided by 80 the gross profit percentage for the parent company is 36.5 what does that mean it means part of your inventory is profit and that profit is 37.5 what does that mean it means of that 20 000 20 000 7 500 is profit and the remainder which is 12 500 is actual inventory again the 20 000 of inventory this is inventory on the sub books it's inflated it's inflated because it has a profit portion and an actual inventory portion so what do we have to do we have to fix this we cannot report the inventory at 20 000 at the end of the year because we still have 20 000 of inventory and if we sold everything then there's nothing to worry about if we sold everything we sold everything for example if we sold the whole 80 000 for 150 will debit cash 150 credit sales 150 debit cost of goods sold 80 credit inventory 80 and we have no inventory to worry about practically it will be easy peasy problem but we have to worry about this 20 000 now we have to look at the adjusting entry that we have to make elimination entry to take care of this 7 500 and report the proper numbers on the financial statements on the consolidated financial statement so i'm going to have three columns for you what should we report on the consolidated financial statements what's reported on the parent company what's reported on the sub and i'm going to show you what adjustment do we need to make let's start the parent has a sales of 80 000 correct this is this is the sales of 80 000 the sub has a sale of 110 000 well the sub has this sale to an outside party in your opinion which of these sales should appear on the consolidated financial statement and i hope you know that only the sale to an outsider should appear because remember this parent company sale is an interrelated party therefore what we have to do we have to debit debit sales 80 000 if we debit sales 80 000 this is gone what's left is the 110 it doesn't matter what's left what's whatever is this could be 110 could be five zillion okay it doesn't matter what we sell to an outsider is what's left what's reported on the financial statement consolidated financial statement therefore now we are starting to prepare the elimination entries we're going to debit sales this is debit sales of 80 000 let's take a look at inventory how much inventory is on the parent's company for that for that inventory and the reason is zero there's no inventory on the parent's company because they transfer it to the sub the sub has inventory of 20 000 this one right here the sub has inventory of 20 000 is this really true is this how much we need to report on the consolidated financial statement and the answer is no we need to report only 12 500 12 500 right here well if that's the case we need to credit our inventory credit our inventory 7 500 by crediting inventory 5 500 we would report inventory 12 500 remember what is this credit inventory this is by this credit is deferring the profit so by crediting inventory remember crediting inventory means what means reducing inventory means reducing inventory what does it mean reducing inventory it means increasing remember what i told you when you reduce your ending inventory you increase cost of goods sold what does that mean if you increase cost of goods sold it means you're lowering your profit i hope this makes sense so the reason why we credit inventory by crediting inventory we're deferring profit because by crediting inventory we increase our cost of goods sold and I showed you the formula in the previous slide where I showed you make sure you know the relationship okay so we're basically hitting two birds with one stone or something like this where we reduce inventory to adjust inventory and at the same time we adjust our cost of goods sold now let's talk about cost of goods sold the subsidiary has 60 000 of cost of goods sold the parent company has 50 000 of cost of goods sold what should we report in cost of goods sold on the consolidated financial statement well let's think about this what is the true cost of goods sold the true cost of goods sold is the true inventory that was sold from has a cost of 50 remember the inventory has a cost of 50 000 okay this is the original cost of the inventory and what happened is this we sold of the inventory we sold 60 out of 80 so the subsidiary sold 60 out of 80 so let's see what is 60 out of 80 well what we did is 60 out of 80 is we sold 75 percent of the inventory because 60 000 divided by 80 000 is 75 therefore we need to expense 75 percent of the original cost of the inventory and what is that that's 37 500 that's 37 500 so this is the cost of goods sold that should be on the consolidated financial statement and it's no it's no it's no coincident that 37 500 plus 12 500 equal to the original cost of 50 okay just it's no coincidence that we are dealing with the original 50 000 so if we need to come up with 37 500 we have 50 plus 50 plus 60 equal to 110 of cost of goods sold between the parent and the subsidiary i'm going to put this in a different color the quite let me put it in a different different color purple no okay that's fine let me do it in purple so this way it appears a little bit more okay so this is 110 what entry do we need to make to make cost of goods sold equal to 37 500 we need to credit cost of goods sold by 72 500 so be careful what you are being asked on the exam this is the adjustment right here there's a lot of arrows here okay this is the adjustment they might ask you what is the adjustment you need to make or they might ask you what entries what are the final balances those are the final balances those are the balances that goes on the financial statement the balances on the consolidated financial statement in this column has the adjusting entries let me eliminate everything so we have a clearer picture this is the adjusting entry the elimination entry debit sales 80 000 credit cost of goods sold 72 500 credit inventory 7 500 remember by crediting inventory you are hitting two uh two birds with the same stone now again in some textbook what they do they debit sales and credit cost of goods sold for the total of 80 000 if that happens then you have to make another entry debit cost of goods sold increase your cost of goods sold and you reduce inventory for the the third profit so if you so if your textbook debited sales credited cost of goods sold credited cost of goods sold for 80 000 if that's what they did then they have to defer the intercompany profit but this entry here does this by crediting inventory now are we done yet and the answer is no we have to learn about one more entry at least kind of to make sure you're aware of it assuming 50 in year two so we're going we're going to go to year two and assuming this company uses 50 first and first out and selling their inventory what's going to happen is this you remember from this 20 000 we deferred 7 500 in in profit we deferred in profit now what's going to happen we assume that year two if this was if this happened in year one we deferred the 7 500 we're going to assume in year two we're going to recognize we're going to sell the inventory and recognize the 7 500 so now what we need to do when we start the year when we start the year when we start the year and we sell the inventory we need to make another entry and that entry is to reduce the 7 500 because the consolidated financial statement has 7 500 from the prior year in profit we need to move this profit from year one to year two how do we do so we debit beginning retained earnings we reduce beginning retained earnings and we credit cost of goods sold by reducing inventory by crediting cost of goods sold what you do is you increase your profit for we increase your profit by 7 500 therefore you took the 7 500 that was deferred from the prior year and you recognize that in this year now if you're using the equity method for this downstream sale you will debit investment in subcredit cost of goods sold in case you are dealing with an equity investment method it will deal about the equity investment later on what should you do now you should go to farhatlectures.com and work mcqs true false look at additional resources subscribe it's going to help you it's going to help you understand the material better that's what I do I help you do better that's why you are watching me because you need that additional help I can help you more on farhatlectures.com invest in yourself invest in your career good luck study hard and of course stay safe