All Episodes
Previous Next
Dec. 29, 2022 - Dinesh D'Souza
49:25
Inflation and Recession Dinesh D’Souza Podcast Ep 485
| Copy link to current segment

Time Text
This episode is brought to you by my friend Rebecca Walzer, a financial expert who can help you protect your wealth.
Book your free call with her team by going to friendofdinesh.com.
That's friendofdinesh.com.
Have you ever picked up a towel set because it felt really soft in the store, but then when you go to use it, it's not very absorbent?
It's basically a towel that's leaving you out to dry.
That's why MyPillow has developed the MyPillow towels.
Towels that work. I know, it's mind-blowing.
Towels that actually dry you.
Their six piece towel set includes two bath towels, two hand towels, and two washcloths.
They come in a variety of colors and right now you can receive a six piece set for only $39.98 with promo code Dinesh.
Go to MyPillow.com right now and click on the radio listener special.
MyPillow products come with a 10 year warranty, have their 60 day money back guarantee.
To receive this amazing offer on the six-piece set of MyPillow towels, just go to MyPillow.com, click on the radio listener special, and enter promo code Dinesh.
Or call 1-800-876-0227.
That's MyPillow.com, promo code Dinesh.
You hear me talk about the amazing benefits of taking Balance of Nature every day.
There are so many satisfied customers, Dinesh and Debbie included, who tell stories of how Balance of Nature has been one of the healthiest decisions made this year.
Balance of Nature has decided to do something special for those of you who are ready to get this maximum nutrition that people are talking about.
Their founder, Doc Howard, often talks about the benefits of combining their star product, fruits and veggies in a capsule with their fiber and spice supplement.
So he's giving you a way to get both at a special holiday price.
Right now, as a special holiday offer, get $25 off plus free fiber and spice with your first preferred order of fruits and veggies when you use discount code AMERICA. This offer can end at any time, so don't delay.
Call 1-800-246-8751 or go to balanceofnature.com.
Use discount code AMERICA. Hi, everyone.
I'm your host this week, Danielle D'Souza Gill.
Dinesh is enjoying his week off.
He's reading some great books, which I'm sure he'll tell you all about in a couple days when he's back to the podcast.
I am so happy to be here.
Today, we're going to be talking a little bit about what's been happening with our economy.
These are some scary times and we need someone to come in and make sense of it.
So today we're going to be speaking with the economist Peter Schiff all about what's happening with inflation as well as the recession.
This is the Dinesh D'Souza podcast.
The times are crazy and a time of confusion, division, and lies.
We need a brave voice of reason, understanding, and truth.
This is the Dinesh D'Souza Podcast.
I'm delighted to welcome to the podcast Peter Schiff.
Peter is an economist, financial broker, author, and frequent guest on news programs like Fox Business.
He's also the host of the Peter Schiff Show.
Peter, thanks for joining us.
Oh, thanks for having me on your program.
Oh my gosh, of course.
Well, Peter, you are an expert on our economy, and I know you could talk about this for hours, and you're so smart, but I want you to explain some of what's been happening in layman's terms to us.
Inflation's been at 8%.
Do you see inflation coming down anytime soon?
Do you see it getting worse? Do you see it staying the same for a while?
What's kind of your prediction there?
Well, I think it's going to get a lot worse.
I think we're just seeing the tip of the iceberg.
But this has been building for a long time.
It's not all of a sudden we have inflation.
The Federal Reserve has been deliberately pursuing a policy of inflation for more than a decade.
When they first launched quantitative easing, that is inflation.
The definition of inflation is an expansion of the money supply.
That's what's being literally inflated.
Because when you think about prices, prices don't inflate.
Because inflation means to expand.
You don't expand a price.
Prices can go up, prices can go down.
What's being expanded when there's inflation is the money supply.
And a contraction of the money supply is deflation.
Now, normally, if you inflate the money supply, the value of money goes down because there's more of it.
And now prices respond by going up.
And so when you have inflation, you generally have rising prices.
Now, not always, because let's say prices should have gone down by 10%.
Maybe because of economies of scale and efficiencies, consumers would have received the benefit of a 10% reduction in prices.
But let's say the government creates inflation, and so prices don't fall by 10%.
They go up by 2%.
That's actually a 12% increase in prices over where they would have been.
But it's even possible that prices could go down 2% instead of 10%.
That's still 8% higher.
So even though prices went down, we had inflation.
Because the natural tendency of prices in a free market economy is to go down.
You know, if you look at the CPI in 1900, it's about half of what it was in 1800.
So you had a 100-year period of time where prices were cut in half due to the innovations of a free market.
And given all of the improved technology that we had in the 20th century, we should have actually enjoyed an even bigger decline in prices.
The reason that we saw a dramatic rise in prices instead was because we went off the gold standard and went on a fiat standard and we created massive inflation, printed a lot of money.
The money lost value and prices went up.
Now, the reason that I think we're just seeing the tip of the iceberg here when it comes to price increases is because we have had the most inflationary monetary policy in U.S. history.
It got even worse during COVID. I mean, that just took it to a whole new level of absurdity.
But even before COVID, QE1, 2 and 3, there was a lot of inflation created.
We just created a lot more of it with QE4 following the outbreak of COVID. But as a result, there is tremendous inflation already built into the pipeline.
And as that inflation entered the economy, a lot of the increases originally showed up in financial assets.
So stock prices went up, real estate prices went up, bond prices went up, prices for a lot of things went up, cryptocurrencies, you know, just one category.
But everything kind of went up.
And when inflation is causing asset prices to rise, there's generally not a lot of problems.
People don't push back because they like that.
Oh, I'm getting richer. Now, sure, if you need to buy a house, the house is more expensive.
But if you already own the house, you think, well, I'm richer now.
My house is worth more. I could take out a home equity loan and buy more stuff.
So people like it.
And when interest rates are low, Or asset prices are going up.
People are more willing to spend because they think they have greater wealth.
So it's initially not objected to, but it should have been.
And I was for years warning about the ultimate consequence of this inflation and that we should not be happy just because it starts out in financial assets.
Because it always ends up in consumer goods.
No matter how it enters the economy, it ends up in consumer goods.
And now we're really starting to see that over the last couple of years where we've had a dramatic increase in prices.
It's been about 8% a year over the last couple of years, so 15% over two years.
But that's just using the CPI. The CPI doesn't do a good job of capturing price increases, and that's by design, because the government invented the CPI, and the government did not want the CPI to accurately reveal how much prices were going up.
So they concocted an index, or they changed the methodology for computing it, because we had a far more honest CPI back in the 1970s and early 80s.
But by the 1990s, we rigged it.
But I would guess that whatever the price increases are in the CPI, if you double it, you'll be about right.
And so if the CPI says prices are going up 8%, they're going up 16%.
And those increases, or that really explains a lot about why people are suffering so much in this economy, why you have this huge increase in people now holding down two or three jobs.
Because their paychecks are dwindling relative to double-digit inflation.
And so now many people can no longer survive on just one job, or some people can't even survive on two.
That's why they now have three.
Right. And you mentioned how the Fed has kind of been having this policy for a while.
But one of my questions for you is, some people are blaming them, but I'm wondering about as long as the government is doing such large spending, as long as they're doing that, how can the Fed fight inflation by raising interest rates if we continue to keep on spending so much money?
Well, they can't unless they raise them a lot more than they have.
I mean, interest rates are still much too low.
But the problem is that the Fed enabled the government to continue to spend and run deficits year after year, decade after decade, by monetizing the debt, by helping to keep rates artificially low.
low.
That is part of the problem.
We didn't have a truly independent central bank that forced the government to experience the negative consequences of rising budget deficits, because had the Fed refused to play ball, Interest rates would have been much, much higher, and it would have been far more costly for the government to finance the deficits, but also it would have been more expensive for homeowners, for businesses.
Everybody would have felt the sting of higher interest rates, and so there would have been some political pushback to reduce the deficits to bring down those rates.
But because the Fed made it easy for the government to keep deficit spending by postponing the pain Through the artificial suppression of interest rates, it went on for a lot longer.
But also, in doing that, it really disrupted the economy because we have a massive bubble, because a lot of things were done that should not have been done.
A lot of mistakes were made.
A lot of businesses that never should have been created were created.
Businesses that should have failed were kept afloat.
And so it was a huge misallocation of resources.
And so the nation is a lot poorer as a result of the mistakes the Fed made to continue enabling the U.S. government.
But the Fed is still enabling the government because the government is still running massive deficits.
In fact, look at the $1.7 trillion spending bill that was just passed.
That is highly inflationary.
And since we already have high inflation, you're just throwing gasoline on a burning fire because the money that is being spent, there's no tax revenue that is going to finance it.
They didn't announce new taxes to pay for all the new spending.
So where is the money going to come from to cover this $1.7 trillion?
Well, it's going to come ultimately from the Fed.
The Fed is going to create the money so that the checks that the government mails out don't bounce.
But the problem is that that new money is going to be spent in the circulation and it is going to expand the money supply.
It is going to reduce the value of the money everybody already has.
And so prices are going to respond by rising.
And what a lot of people just don't comprehend about inflation Is that when you get right down to it, inflation is a tax.
The sole source of inflation is the US government.
Now, when the US government claims that inflation is rising prices, which it's not, that's not the definition, but when you kind of take a symptom of inflation and redefine inflation as being that symptom, Well, now you can point to other causes because the government doesn't raise the prices.
Who's raising the prices? Well, greedy businessmen are raising the prices.
They're gouging their customers.
Or it's Putin. It's his fault.
He's causing prices to go up.
Or supply bottlenecks, the COVID-19, right?
But if you define inflation properly as an expansion of the money supply, well, who's expanding the money supply?
It's the government. It's the Federal Reserve.
That's why we have inflation.
And When the government wants to spend money, which it does because that's how it buys votes, it spends money, all of these government programs have a cost.
We don't get any government for free.
Well, a lot of voters like getting stuff from government, but they don't like getting a bill to pay for it.
So if they can get something for nothing, then they're in favor of it.
And so inflation allows the government to provide government services to people without giving them a bill.
Because instead of raising taxes to pay for programs, they just create the money and spend that.
But then there's inflation.
And so when prices go up as a result of deficit spending, those higher prices Effectively become a tax.
So instead of paying higher taxes, we pay higher prices.
But it ends up the same because we end up with less stuff.
So either I buy fewer things because the government took some of my money and so I don't have enough money left over to buy stuff, or I end up with fewer things because the government printed a bunch of money and now the price of everything goes up and because everything is more expensive, I have to cut back and I buy less.
So it's just a tax.
And because the deficits are so enormous, and despite what President Biden is claiming, he is running up the deficits.
He's not bringing them down.
He's increasing them.
We have larger deficits now than at any point in our history when we weren't in the middle of a COVID lockdown, right?
So if you throw out that brief period of time of insanity, Where everybody was getting PPP money and extended unemployment benefits, and we're all sitting at home shopping on Amazon.
Take out that little period.
We've never seen deficits this big, and that means the inflation tax to finance those deficits is going to go up.
Right. And this inflation tax, it really falls on the poor a lot because they're the ones who have to pay for milk and eggs and all those things just like everybody else.
But it really affects them, especially if you're on a fixed income.
But you were mentioning how, you know, this money, it's just continuing to flow out there.
What do you expect the U.S. dollar to be worth as this cycle continues and we keep on devaluing the dollar?
Well, first of all, you're right that inflation is the worst tax you could possibly impose because it falls disproportionately on the people who could least afford to pay it.
It's paid by the middle class, paid by the working poor.
If you're very wealthy and you only spend a small percentage of your income on food and energy and things like that, Inflation is just a nuisance.
I mean, you don't really care about it, but if food represents a big part of your budget and you're spending everything you earn just to make ends meet, when you get the type of inflation tax that we've had, it is life-changing.
A lot of people are forced to really cut back on their standard of living.
Wealthy people just cut back on their investments.
They have less money left over to invest, and that hurts the economy because now you have less economic growth, you have less employment opportunities, so the economy is weakened by inflation.
But the wealthy personally aren't seeing a decline in their standard of living.
But the people that they might have employed will see a decline in their standard of living or the people who might have been employed by businesses that they might have financed, but they use some of that money to pay higher prices.
But it also distorts the economy.
Inflation results in a lot of bad economic decision making that undermines productivity and economic growth.
But as far as the dollar, by definition, when you create inflation and you're expanding the money supply, Every dollar is now less valuable because you have more of them.
Because money itself, when you're talking about fiat money like we have now, we don't have real money.
We're not on a gold standard anymore.
It's just a piece of paper. So the money itself doesn't represent any wealth or any value.
It's simply a claim to value.
I can take money and I can buy something with it.
The more money you have, now the more money you need to buy the same stuff.
If you double the money supply, everybody can't buy twice as much stuff because twice as much stuff doesn't exist.
You can print money, but you can't print the goods that you buy with the money.
So if you double the money supply, all else being equal, prices will double.
So nobody gets anything extra just because they have more money.
Everybody buys the same.
It just costs more.
But what's happened On the foreign exchange markets, ever since the Fed started to pretend that it was fighting inflation by raising rates, we have seen an increase in the dollar's value in relationship to other fiat currencies, like the euro, like the Japanese yen or the British pound.
And so in that respect, the dollar has been less weak compared Well, inflation is everywhere, so you can't blame us.
Yes, inflation is everywhere because all the politicians and all the central bankers are making the same mistake.
They're all printing too much money.
They've all got interest rates too low.
So if every central bank pursues an inflationary monetary policy, it's not an accident that we get inflation.
And it doesn't excuse what the leaders have done in one country by saying, well, we have inflation everywhere.
Yes, everybody has made the same mistake.
And so we should be upset at governments all over the world.
So the people living in the UK should be pissed off at the British government and the Bank of England.
The people in Japan should be upset about the Bank of Japan and the government of Japan for the things that they've done.
But we should be equally as upset, if not more so, at Washington, at U.S. Congress and the Federal Reserve for what they've done.
Right. And it seems like the U.S. economy also affects everyone.
So, you know, like they say, when the U.S. sneezes, the world catches a cold.
But it's like maybe our economy suffering probably affected people because, especially small countries, because a lot of them are less powerful than some large companies like Apple and YouTube and Google.
But do you think the days of the U.S. as the world's sole superpower are ending and we won't really have that kind of influence anymore?
Well, I think so. I think certainly as an economic power, an industrial power, we've been in the decline for decades now.
As a military power, sure.
I mean, we really don't have any rivals there.
But, you know, at some point we'll lose that as well because we simply won't be able to afford to maintain the military anymore.
The reason we can afford it now is because the world is subsidizing us.
We've got the dollar as the primary reserve currency.
And as a result, the United States is able to borrow really over a trillion dollars a year from the rest of the world in order to maintain its lifestyle and to continue these expenditures.
But we are exacting a heavy toll on the world.
It's getting more and more expensive every year for the world to support the United States because Americans, collectively, we all live beyond our means.
We consume far more than we produce.
Now, how is that possible?
Well, the rest of the world makes it possible by consuming less than they produce And allowing us to consume the difference.
So we get to live a much higher standard of living than we would normally be entitled based on our productivity because we're living off the productivity of everybody else.
But everybody else is having to give up some of their standard of living in order to support the excess standard of living in the United States.
And I don't think the world is going to continue doing that, especially since we keep increasing the cost.
And now we're pissing off even more people with the way we're weaponizing the fact that people rely on the dollar, the way we did with the sanctions on Russia, and that's not going over very well in places like China.
And they already hold a large quantity of U.S. dollar-denominated debt instruments.
And so I think that the world is starting to wean itself off of the dollar and When it succeeds in doing that, that is going to be a huge, huge problem here in the United States.
I mean, that's when the chickens really come home to roost.
Yeah. And do you think the inflation we may experience could get as bad as it was in the 1970s when we had stagflation?
Some people are saying, oh, you know, there used to be even worse interest rates and all these things.
This isn't that bad and so on, which I guess is easy to say if you're not in a more difficult spot.
But do you think that it'll get that bad?
Well, I think it's already worse.
I think the inflation we had this year is probably worse than any year from the 70s or early 80s.
The highest the inflation rate got.
Because of how quick it was. No, no, no.
We're just not measuring it the same.
So the highest the inflation rate got in 1981, that was the high for the period of one year, was about 13.5%.
And the highest year-over-year rate that we got was a little over 9%.
But you have to realize that we're not measuring prices the same way.
So if we took the inflation or the CPI that was used back in the 1970s and we use that CPI this year and last year, we would have shown annual increases close to 20%, far in excess of the worst of the 1970s.
Or you can take it the other way around.
If you used our CPI, the one that we have today, and you went back into the 1970s and you recalculated the inflation using the CPI we have today, they wouldn't have had double-digit inflation back then.
The highest it would have got maybe was 7%, which is lower than where we are now.
So we already have higher inflation than we had back then.
But it's going to get much, much higher than it is now because the U.S. economy is Is in far worse shape now than it was, let's say, going into the 1970s.
I mean, you go back to 1970, you know, the national debt was, I don't know, half a trillion, 500 billion or so.
I mean, it got to a trillion in the early 80s.
You know, 1980, 81, it got to a trillion, but it was maybe 500 billion or less, probably less than that.
So we had a small, a tiny debt compared to the almost 32 trillion we have today.
But also in 1970, even through 1980, the United States was the world's richest creditor nation.
Right? So the world owed us a lot of money.
Today we're the world's biggest debtor nation.
In fact, America owes more money than all the other debtor nations of the world combined.
In the 1970s and even into the 80s, we had trade surpluses.
Every year, we sold more than we bought.
So we were earning surpluses.
Today, we have record trade deficits.
So America is a different country.
Back in the 70s, 80s, American families had a lot more savings to fall back on.
You didn't have, you know, all the consumer debt that exists today.
And of course, during the 1970s, most women didn't even have a job.
You know, so you had a guy who was married, even if he didn't have a college degree, even if he dropped out of high school, the job he had was enough to support his wife and his kids.
So there was still a spare laborer.
So if times got tough, the woman could get a job, help out.
And that's kind of what happened during the 70s and 80s.
A lot of women, by necessity, moved into the labor force to help the household make ends meet.
You know, most married couples, you already have both spouses working.
So there is no spare unless the kids are going to drop out of school and start working.
But we don't have that.
So we're in much worse shape economically, financially.
We're the mirror image of what we used to be.
You know, we're a nation well in economic decline, industrial decline.
And when interest rates go up, and I think interest rates ultimately have to go higher than they did in the 1980s if we really want to restore balance and bring down inflation, but we can't afford it.
America was so rich in 1980, we could afford to pay 20% interest rates.
We can't even come close to affording that now.
We're way too broke. Right.
And it seems like, too, back then, you know, we used to have a lot more manufacturing jobs.
You mentioned that we weren't just consuming things, we were making things.
But I want to ask you about recession, because a lot of people are saying we're in a recession now.
Other people are saying the recession's going to get much worse.
We're barely in the recession.
So how bad do you think it's going to be?
And how do you compare that to the recession of 2008?
Right. Yeah, I think we are in recession.
We had two negative quarters of GDP earlier in the year.
And so that technically met the definition.
But, you know, I think the numbers would be a lot worse if they were honest, because, again, just like we overstate or rather just like we understate inflation, the GDP overstates economic growth.
I mean, all of these indexes that measure things were created by the government to make the government look good.
It's like if if we allowed our children to grade their own report cards, We wouldn't be surprised if they came home with straight A's.
So I don't really put much stock in government statistics that are reporting on the success of the economy when the government has a vested interest in pretending that the economy is stronger than it is.
So they always want to understate unemployment, understate inflation, overstate economic growth.
So I think we're in recession.
I think the recession is going to get worse.
Next year, because we've been in recession, even though technically the official unemployment rate has been low.
Now, of course, the unofficial unemployment rate is much higher.
But I think a lot of jobs are going to be lost as the recession continues to unfold.
And I think by the time this recession is over, Whenever that is, because it may be years from now, because I think it's going to be longer and deeper than the Great Recession of, you know, 07, 08.
I think by the time it's done and they go back and they, you know, they write the history of this time period, I don't think they're going to call it a recession.
I think it's going to be more of a depression.
And although since inflation is going to be so high, I think they'll refer to it as an inflationary depression, which I think will be worse than the depression of the 1930s, where at least you had the benefit of falling prices.
This time, people are going to have to suffer the added burden of rapidly rising prices.
Okay, so you think it could be like a Great Depression, except we won't be paying a little.
You're saying we're paying a lot, but it will feel painful.
It will feel, because you're saying the price, it may be high, because, you know, like, people say, oh, this used to be 25 cents.
This used to be cheap, and people made less, but basically you're saying the price is here, but you're living paycheck to paycheck, and...
Yeah, well, let's say during the Great Depression, not everybody lost their job.
Maybe at the worst of the Great Depression, it was 20-25% unemployment.
But of course, they counted it more accurately.
I mean, anybody who didn't have a job was considered unemployed back in the 1930s.
Today, most of the people who don't have jobs don't even show up in the unemployment statistics.
We don't count them. But most people did not lose their jobs during the Great Depression.
But prices were down about 30%.
So if you had your job and your cost of living went way down, I mean, you really had a dramatic increase in your real wages.
So for some people, it wasn't that bad.
Maybe they lost some money in the stock market, but they made up for it because their paychecks went a lot further at the supermarket because prices were going down.
But that's not going to be the case this time.
You're not gonna get the relief.
So even if you don't lose your job, you're gonna lose a good portion of your paycheck because of inflation.
And the reason the Great Depression was so great was because of government intervention trying to stimulate the economy, first with Hoover and then even more so with Roosevelt.
Well, we're gonna make the same mistakes again.
In fact, we're gonna make even bigger mistakes.
So that's why I'm convinced that we'll turn this economic downturn You know, if the politicians had the good sense to do nothing and allow the free market to function, then we would, you know, correct the problems much quicker.
But of course, had the government allowed the free market to function, we never would have created the problem in the first place.
Right. And we're sending billions of dollars to Ukraine.
We've sent them so, so, so much money.
And yet people here are experiencing layoffs, all of these other things.
Eventually, there has to be some kind of pushback on this.
Do you think that this is going to affect our economy in just a really negative way?
Because people here are probably going to be suffering.
Meanwhile, all of this money is going to other countries.
Right. Yeah, it is going to affect our economy negatively for sure.
Number one, the source of the money that we're sending to the Ukraine is additional inflation because we just have to run larger deficits.
So we put more pressure on the Fed to print money to buy the bonds that we have to sell in order to send that money to the Ukraine.
Although a lot of the money, you know, ends up going back to US defense contractors because the Ukraine spends the money on weapons.
But it's still new money that goes into circulation, and so the cost is going to be paid through inflation, again, which is going to hit the middle class and the poor the hardest.
But also, the money that we are sending to the Ukraine is perpetuating this war.
And I think the longer the war goes on, the more problematic it is for everybody.
I mean, America, yes, but even more so for the Ukrainians and the Russians.
I mean, no one seems to care about the Russians, but of course, you know, the average Russian, you know, may not necessarily have preferred this course of action that was taken by Putin.
I mean, I'm not responsible for the bad decisions that Biden makes, so you can't just paint all Russians and say, who gives a damn about Russians?
I think that you have a lot of people that are going to end up dead that might have lived if the United States didn't try to perpetuate this war.
Because I think that if the Ukraine was not getting all this money, and not just from the United States, it's getting money from other countries, but we're the biggest provider.
In fact, we're giving more money We're good to go.
Built around this war.
You have so many people that want that war to continue so that they can keep, you know, selling weapons and making money off of it.
But I think if we weren't supporting The Ukrainian effort, then there would have been peace by now.
You know, and it's not like, you know, people say, oh, you know, we have to stop Putin because he's the next Adolf Hitler.
I don't think he's the next Adolf Hitler.
It doesn't mean he's, you know, he's an angel, but, you know, he's not the devil.
And I do think that these countries would have come to a peaceful resolution of this conflict But for all the money that is coming in.
And even if Ukraine wins this war, And there's no guarantee that they will.
They could still end up losing.
It'll just take a lot longer and cost a lot more money and a lot more people will die.
But even if they win years from now, what will they have won?
I mean, I don't know.
We're trying to make it out like these guys are freedom fighters, that Zelensky is like George Washington, right?
This is not about freedom.
It's more about independence. But if you go back to the Heritage Index of Economic Freedom, before the war started, the Ukraine was 130th on that index.
I mean, that is really low, 130.
It was 13 notches below Russia.
So the Ukrainians were even less free than the Russians.
Now, since the war started, Ukrainians have lost a lot more freedom.
I mean, it's significantly less free now than it was before the war.
And so whenever this ends, I think that the Ukrainians are going to end up less free than they were before the war began.
So they're losing freedom even if they win this war.
And it's not about freedom.
Yes, we want to be ruled by our own corrupt people instead of being ruled by corrupt people in Russia.
But even if the Russians are less corrupt than the Ukrainians, I don't know.
And of course, the whole country wasn't going to disappear.
I'm sure they could have come to A solution to the problem.
And part of the problem too is because of us, because of NATO. I mean, one of the reasons that Putin felt threatened was because of the potential for the Ukraine to be part of NATO. Why does NATO still exist?
NATO was created to counteract the Warsaw Pact.
The Warsaw Pact was the Soviet Union and all of the countries in that sphere.
Well, there is no more Soviet Union.
There is no more Warsaw Pact.
We're fighting an enemy that doesn't even exist.
Why do we have NATO? Why are we wasting all of this money, especially when we're broke and we have to cut back on spending?
I mean, we should be dismantling NATO. And if there was no NATO, then there probably would be no Ukraine war.
Especially when we could be using that money to defend our southern border when there's an invasion happening.
But before we wrap it up, I wanted to ask you, what is your advice to people as we are living through these inflationary times?
Is the recession going to get worse?
Maybe it's going to be a great recession.
What should people be doing?
Should they be buying gold?
Should they be keeping the real estate?
What should they do? Well, it depends on, you know, their financial situation.
But I mean, if you're somebody who's just barely...
Let's say average.
Yeah. Well, as I said, I'll just give, you know, the gamut.
So, but, you know, you're just getting by.
What I've been telling people to do for years is to stock up.
When you go to this market, don't just buy what you need this week.
Buy what you might need for the next several months or maybe even several years when you're talking about buying non-perishables.
Buying stuff that doesn't go bad or that has a long shelf life.
Yes. The price is going to go up, and so why wait to buy it?
It's just going to get more expensive.
If prices are going to go up 10% a year, and I buy something today instead of a year from now, that's a 10% return on my money.
Because if you just put the money in the bank, you're not going to really earn any interest.
Even though rates have gone up, bank deposits are not really paying anything.
But one of the things I am also concerned about is that inflation is going to get so bad in the future I think we're good to go.
They're not going to be there. The shelves will be empty.
And if you want to buy them, then you're going to have to risk going to jail because you'll have to buy them illegally on the black market where they can charge a market price.
But of course, then the market price is really high because the guy selling you the stuff that you need is risking going to jail.
And so he has to build that premium into the price.
So whenever you have a government creating a black market, which they do when they have price controls, prices are much higher than they would have been had they simply allowed the free market to raise prices.
But if you're more affluent, And you have a large amount of money and you want to invest.
You can't just invest all your money in toothpaste and deodorant, right?
There's a limit to how much you're going to need.
Yeah. So then you want to look at investments that will do well in an inflationary time period.
And that's pretty much the opposite of everything that did well in the last 10, 20 years.
So you don't want to own tech stocks, for example, you know, high P.E. stocks.
No crypto. No, crypto, you don't want to own companies that don't have any earnings or that don't have enough earnings to pay a good dividend.
And you don't have a history of increasing their dividend.
So we buy value stocks, dividend paying stocks, pretty much mostly outside the United States.
That's where you get the best value for your money.
That's where you can get lower prices in terms of relation to earnings, higher dividends, but also you can get income coming in currencies that I believe are going to rise sharply against the U.S. dollar.
So you want to have that kind of hedge as well.
I think emerging markets are going to do particularly well over the next decade relative to developed markets and even more so relative to the United States.
Commodities, I think, are going to deliver incredible returns.
Agricultural commodities, metals, energy, all that stuff.
And the companies that are involved in those sectors should do well.
And they should be able to deliver solid earnings and dividend growth to their shareholders.
But also precious metals.
I think nothing will shine brighter in a high inflation environment than gold.
Now, you know, one of the reasons that gold hasn't shined yet is because people don't expect the high inflation to stick around.
Everybody still believes the government is going to bring the rate back down to 2%.
Now, that's not going to happen.
But when the markets come to term with this reality that inflation is here to stay, and in fact, it's going to get worse, not better, then you're going to see a rush out of paper into real things, in particular into gold.
And so people who own gold will do well, and I think people who own mining stocks, gold and silver mining stocks, will do even better.
So if you're somebody who's willing to assume higher risk, I think the upside potential in that sector is phenomenal.
So that's where I'd be investing my risk capital.
And that's where I have a lot of my own money already in that sector.
And a lot of the money that I manage on behalf of clients at Europe Pacific Capital, Europe Pacific Asset Management, rather, is in the mining sector.
In fact, we have a mutual fund.
That, you know, people can pick up on any, you know, discount brokerage platform.
But we also work with it at my firm.
But we have a fund that is exclusively invested in mining stocks.
Wow. And my last question is on homes, because traditionally Americans built their wealth through owning their home, which I guess is going to be more difficult because of the interest rates.
But would you recommend that that still kind of be the American dream, the goal to own a home?
No, I think homes are more money pits.
I own several homes and I can attest to the fact that they are very expensive.
Stuff is constantly going wrong.
You have to pay a lot of money to maintain them.
You have property taxes every year.
You have insurance every year.
You've got to cover utilities.
And by the way, insurance rates have skyrocketed.
Homeowner's insurance in the last year or two.
And so... So between taxes, insurance, maintenance, utilities, those are ongoing expenses that you have to pay.
But, you know, these are depreciating assets.
I mean, they wear down as you live in a house.
Things have to be replaced.
The roof has to be replaced.
The air conditioners blow out.
They've got to be replaced.
Pipes burst. It's not a source of wealth.
You don't get wealthy owning a home and living in it.
You spend your wealth on your home.
You get wealthy by earning money and investing money, but your home is not an investment.
A lot of realtors tried to con people into thinking that they were investing money when they were purchasing a home because they would...
Be willing to spend more money because of that mentality.
They would take a larger percentage of their income and put it into a house if they thought they were also getting an investment.
And for a period of time, there was a housing bubble, and yeah, housing prices went up.
And so it created the illusion that a home was like a ticket to Easy Street.
that you know and the whole idea of The American dream being to own a home It wasn't because you got rich owning a home the American dream was being rich enough to afford a home That was the American dream because homes are expensive. So you don't get rich because you own a home But because you get rich you can afford to own a home Because one way to prevent yourself from getting rich is to buy a home that you can't afford
And now you're sinking all kinds of money into that home.
And of course, you got a mortgage payment.
And now the mortgage payments are a lot bigger with higher interest rates.
So for most people, they're better off renting.
You know, especially young people, single people.
I mean, You have a lot more flexibility when you're a renter.
You can come and go.
I mean, you get a good job in another area.
You can pick up and move and take that job.
You don't have kids. Who cares about the school district?
You're single.
What do you need a whole big house for?
You know, if it's just you, I mean, it's ridiculous people getting out of college and they're just taking on a mortgage.
Some of them still have student loans to pay off, and now they're taking on a mortgage.
So, you know, you rent as long as you can.
And even when people get married, and they don't even get married now, you know, until they're later in life than they used to, so maybe later 20s, early 30s, before you have any kids, you don't need a house.
You know, it's when you're, you know, you settle down, you have some kids, you get a dog, you know, now maybe you need more room, you know, you're worried about the schools and stuff like that, and you're kind of settled down in your job, you know where you're going to be, you know, you're committed to an area.
Okay, you want to buy a home then?
You know, and you get your home, you get your pet, you stock up on your beans and rice and gold, and then you're all set.
Yeah. Great.
Well, thank you so much, Peter.
I really appreciate your thoughts on this, and it's just been very insightful, so thank you.
Oh, my pleasure, Danielle, and my best to your father.
I haven't seen him in a while. I hope he's well, and you're following in big footsteps, so hopefully you can fill it.
Dinesh discovered in the early 1990s that investing in the market makes sense if you're in it for the long term.
Problem is, we're in a very rocky economy with lots of craziness at home and lots of instability abroad.
There's always a risk of a black swan event, a single event that comes out of nowhere and basically cripples your savings.
So how do we take advantage of the upside of the market and protect ourselves against the downside?
We need some really good guidance here.
My friend Rebecca Walser is a tax attorney and wealth strategist with her MBA from the London School of Economics.
She and her team can help protect your wealth during these unprecedented times.
Go to friendofdinesh.com and book your complimentary introductory call today to see if you qualify.
Again, that's friendofdinesh.com.
What some of us would do just to be young again.
The simple things like climbing stairs, getting in and out of bed, and taking a walk aren't that simple.
Too many aches and pains.
But they can be simple because thankfully now there's 100% drug-free solution.
It's called Relief Factor.
Relief Factor supports your body's fight against inflammation.
That's the source of aches and pains.
The majority of the people who try Relief Factor order more because it works for them.
Debbie can finally do the exercises she loves like planks, pushups, and her stationary bike thanks to Relief Factor.
It's been a game changer for her and for so many people.
You too can benefit.
Try it for yourself by ordering the three-week quick start for the discounted price of only $19.95.
Go to relieffactor.com or call 833-690-7246 to find out more about this offer.
That's relieffactor.com or call 833-690-7246.
Feel the difference. Well, that wraps up today's show.
Make sure to follow me on social media at Danielle D'Souza Gill on all the platforms.
I'm on Facebook, Twitter, Instagram, True Social, Rumble, and YouTube.
And make sure to tune in for tomorrow's podcast because I have a very good show coming for you tomorrow.
We're actually going to go through the biggest awards of 2022.
So it's going to be a lot of fun.
We're going to give awards to the biggest losers of 2022.
So make sure to tune in tomorrow.
I'll see you then. Subscribe to the Dinesh D'Souza Podcast on Apple, Google, and Spotify.
▲
Export Selection