One guys says he saw this coming, but nobody listened to him. And now he says we're nowhere near the end of the economic mess. Patrick Byrne is CEO of Overstock.com, a Web site that offers all sorts of merchandise at deep discounts. Good to see you, Patrick.

PATRICK BYRNE, CEO, OVERSTOCK.COM: Kyra, thanks for having me on.

PHILLIPS: Well, a number of quotes I'd love to get you to respond to. You're quite the character, and it seems a lot of people have quite interesting things to say about you.

You've been quoted as saying, "I've had a great sleeper -- or I've been a great sleeper all my life. The last three years I've averaged about three hours of sleep a night. I've been sick to my stomach, trying to tell people there is a train coming."

How did you know the train was coming?

BYRNE: Well, boy, you do your homework. Yes, if you go on YouTube and YouTube my name, you'll see all these videos where I've been saying that.

Basically, every drinking binge I've ever seen ends in a hangover. Well, every expansion, every boom that's fueled by cheap credit ends in a collapse like this. So it's been sort of four or five years, it's been pretty clear this is coming, coupled with there's rampant stock manipulation on Wall Street that's just made the system more brittle.

PHILLIPS: Let's talk about that, because you wrote the president, you wrote leaders of Congress, about this practice of naked short-selling. I know that's illegal. If you could just explain quickly what that is and what is your solution.

BYRNE: Well, I'll explain with no -- with no jargon. If you buy stock from me, you give me money, and I give you stock. That's called settlement. Believe it or not, there are loopholes in the system where I can give you IOUs for stock. You and I can't do this, but big hedge funds can do it and the big banks can.

Turns out there are billions of basically fake stock or counterfeit stock circulating in the system. A couple of years ago, Wall Street was denying this. They started being destroyed by it. This summer, it's exacerbated the problems, and now, they're running around demanding special protection from this crime that two or three years ago they were denying even existed.

PHILLIPS: So you're blaming Wall Street, but not necessarily greed. Isn't it the same thing?

BYRNE: Well, it's -- what it is, is it's called regulatory capture is the economic jargon for it. And it just means our regulators in D.C. have come under -- they're supposed to protect us from Wall Street. They've come under the thumb of Wall Street. They can't even pass very ordinary, commonsensical regulations to protect Main Street. They can't do, if it threatens the interests of the people, that they're hoping to go get jobs with next year. PHILLIPS: All right, now, and I know you filed a number of lawsuits, which levied you this quote by "The New York Times" that called you "the conspiracy-mongering, trash-talking, lawsuit-filing chief executive of Overstock.com." Is that fair?

BYRNE: No. In fact, that reporter, Joe Nocera, we have outed in a blog on my site, "Deep Capture." We have outed him basically being -- taking, more or less, instructions from some dirty players. And if you go to DeepCapture.com and look for Joe Nocera, you'll -- you'll see that.

By the way, the -- the conspiracy thing he was talking about, most of the themes of that speech have come true. They're referring to a speech I gave three years ago that said there's a bunch of bad guys on Wall Street. Hedge funds are doing this manipulation. And it's all going to end in a collapse. And most of those things have come true. So the people who were calling me crazy three years ago kind of got laryngitis these days.

PHILLIPS: It's pretty interesting. I have seen a number of your critics come forward and say, "Well, maybe we should have listened to him."

Now, you were mentored by Warren Buffett, right, at the age -- starting at the age of 13?

BYRNE: Knock on wood. Boy, you do do your homework. Yes. I've -- he was my -- one of my great heroes. He's been one of my great heroes and teachers.

PHILLIPS: And it seems that's he's added a lot of humor to your relationship. What was it he told you about Wall Street and Christmas parties this year?

BYRNE: Oh, yes. He said we're going to cancel all the Christmas parties on Wall Street, because he can't find three wise men or a virgin.

PHILLIPS: All right. You know what's interesting, too, is you talk about you go all the way back to the days of Herbert Hoover when he was president and basically saying, "Look, we're going through what he experienced when he didn't listen to his treasury secretary." And I was so glad you brought this up, because it's one of my favorite quotes that I've been using for weeks now. And I want to get your response.

You know, it was back when Andrew Mellon said to Herbert Hoover, quote, "You've got to use a shock treatment when it comes to something like this. Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. That will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."

So, my question to you: has our love for money condemned us to repeat history?

BYRNE: Well, I'm not sure I'd call it love for money. I think what's happened is some -- what used to be called, back in Hoover's time, the money trust, we have a bunch of banksters, as Roosevelt called them, banksters like gangster, who have captured D.C.

And so the left wants to look at this all and say, "Gee, look, isn't capitalism and free markets bad?"

The right looks at it and says, "Look at these bums in D.C. who have let this happen."

And I guess the answer is, there's definitely a grain of truth in -- well, both of them have a good point.

PHILLIPS: So how's business?

BYRNE: Business was rocking for us. It has compressed some in this malaise. We're not down like other -- brick-and-mortar retail is actually shrinking. We're doing OK that way, but since all this got started a month or two ago, we've seen a -- basically, a halving in our growth rate.

PHILLIPS: Patrick Byrne, CEO, Overstock.com. It's always interesting to talk to you. Thanks, Patrick.

BYRNE: Thank you, Kyra.