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April 25, 2022 - Health Ranger - Mike Adams
01:03:11
John Rubino warns that a total collapse of the dollar is inevitable
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Welcome everybody to another important episode of Brighton Conversations where we interview people who I think are some of the most intriguing and important voices of our time, usually with dissenting views, you know, dissenting from the establishment.
And today, we have a very special guest, John Rubino, from dollarcollapse.com.
He's the author of five different books on finance, and he has what I think is a very important message for our time.
His most recent book is called The Money Bubble.
And yes, he's going to explain what that means here today.
He joins us to talk about the Federal Reserve, the stock market collapse and recovery, V-shaped recovery, or is it what I've called an FU-shaped recovery?
Because that's actually what the central bank seems to be rolling out.
But anyway, he's coming up right now.
John Rubino, thank you for joining me.
It's great to have you on.
Thanks, Mike.
It's nice to meet you.
I'm a fan of your work.
Well, I'm a fan of your work.
I actually watch your videos all the time, by the way.
So maybe I never mentioned that before.
But look, you are our special guest today.
What do you want to start with?
Because everything's so insane with the bailout money, the trillions that have been printed, the stock market 30% crash or so, and then a sudden recovery.
But you've got people on Robinhood trading in worthless stock and thinking they're going to be billionaires.
Where do you even begin?
Well, you know, that's one of the problems with talking about this stuff now, because there are so many topics that we got to cover, right?
So much crazy stuff going on, that it's hard to decide what order to put them in and what to leave out.
But, you know, it might be good for your listeners to kind of start at the very beginning.
Like, how did we get here?
You know, how did we screw up our world?
In the way that it's screwed up, because, you know, it doesn't look like you could do it if you weren't intending to do it.
It's that bad.
So let's go all the way back to 1971.
Richard Nixon, yeah.
Prior to that time, gold was considered money, and then the currencies that were linked to gold were clearly understood to be based on a real form of money.
But in 1971, Richard Nixon took us off the last vestiges of the gold standard.
In other words, at that point, none of the big currencies in the world, including the dollar, were linked to something that controlled the increase in their supply anymore.
So at that point, every big government in the world had, in effect, an unlimited credit card.
And if you give an unlimited credit card to politicians and their bureaucrats, of course they're going to abuse that privilege, right?
And they're going to create too much money to buy elections and to fight wars and do all the other things that governments love to do when they can afford it.
So that's what we've been doing ever since.
Governments have been borrowing way too much money.
Then they've been encouraging individuals and businesses to borrow way too much money as a way to generate taxable income and finance government deficits.
And so we ended up with a world where basically everybody is over indebted.
You know, no matter where you look, whether it's governments, they have insanely high official sovereign debt now.
Individuals, student loans, car loans, credit card loans, mortgages, they're all extremely high and we're all deeply in debt.
Same thing with corporations.
Corporations have been borrowing like crazy and now they've got record levels of debt.
So the whole world But John, sorry to interrupt, but according to the establishment and the MMT theorists, there's nothing wrong with debt.
So they can just always create more debt.
Why is that not the case?
I mean, because the evidence that everybody has seen who's living today is just that debt doesn't matter.
Why are they wrong?
Well, debt works the same way for a country as it does for individuals, right?
If you borrow too much money personally, your life eventually spins out of control.
But you can get away with borrowing money for a long time.
You know, as long as there's a pre-approved credit card application in your mailbox or some bank that's willing to lend you money against a car or against a house, you can borrow lots of money and get very deeply in debt before it comes back to bite you.
It's even more true for governments because they have unlimited monetary printing presses that allow them to finance increasing debt for a long time.
It doesn't work forever.
If you look back through history, you can find...
Dozens, if not hundreds, of examples of countries that borrowed too much money and then they had to devalue their currencies and they had a hyperinflation.
Just Google list of hyperinflations and you'll get this huge long list of countries that have made the same mistakes we're making right now and paid for it by having their currency just evaporate.
Modern monetary theory is kind of, it's like a rationalization for bad behavior.
You know how when you're behaving badly, you look for reasons that it's not so bad after all and reasons that it can continue forever.
And modern monetary theory is one of those things in the financial realm where they say, well, you know what?
Governments, since they've got printing presses, can just make as much new currency as they need and finance themselves that way, and it can go on forever.
Now, the key phrase in that explanation is, as much money as they need, because that's a squishy concept.
And if you let governments...
Define how much they need.
They need infinite amounts of money, right?
They've always got to buy the next election.
They've always got to fight the next war.
So it goes on forever.
And the modern monetary guys are right about one thing.
They can control the supply of money, right?
Because they do have printing presses.
They can just type in a number, hit send, and that money is created somewhere out in the world.
But what they can't control is the value of the currency that they're creating.
They can make 20 trillion dollars this week if they want to, but they can't convince us to take those dollars and treat them like they're valuable after we lose faith in them.
That's the end game for countries that are screwing up their currency, is that eventually a critical mass of people figure out that it's the explicit government policy To make that currency worth less and less year after year, and they don't want to hold it anymore.
The minute they get paid, they convert their currency into real stuff that governments can't make more of.
But you say it's really a faith-based issue, you know, faith in the currency, faith in the value of the dollar, and yet I would guess If I asked you two years ago, can the government print $10 trillion without losing faith?
You might have said, well, that might be too much.
But now they're doing it, you know?
So they're going to go to probably $20 trillion next.
I mean, who knows what's going to happen with this virus and the economy and the bailouts and so on.
But this idea that everything can be free Is creeping into the culture where everybody is now demanding, you know, pay me free unemployment benefits, give me free this, you know, even free reparations, give me free everything, because money can be created from nothing.
Like, the idea of the central bank is becoming the idea of the people.
So why would people lose faith?
I guess this is my question.
Why would they lose faith when they don't understand how money works?
In other words...
Well, the way it usually works is they start to see prices of things going up in a noticeable way.
We've had raging inflation defined as prices going up over the last 20 years, but it's been confined to the financial markets.
The government creates new money, it flows into stocks and bonds, they go up in value, but not much else goes up in price.
And that is inflation because, you know, if you are an investor, if you're trying to save money, then the cost of stocks and bonds is a cost of living.
But we don't count it that way.
We don't include that in the consumer price index.
But what happens next is that the price of stuff starts to go up.
The things we buy start to get more and more expensive.
And then we figure out, oh, okay, that means the dollar is getting less and less valuable.
Because it takes more and more dollars to buy the same amount of stuff.
And that's the point when you get this phase change in people's perception of the currency.
But, you know, what you said about fiat currencies being face paid.
Fiat, by the way, means they exist by government decree rather than by any link to something that doesn't exist by government decree.
And really, all that a currency has in this world is our faith in the ability and the willingness to the guys running that currency to do it right.
And as we lose faith in government, which you see that happening all over the world right now, that's a big part of what the civil unrest that we're seeing now indicates, is that people really don't trust their governments anymore.
So the biggest thing a government does is run the currency.
So when we don't trust the government, by implication, we will stop trusting the currency.
So that's all coming.
But you're also right that we can't know when it's going to happen or what the number is in terms of money supply or interest rates or rising prices for consumer stuff.
We don't know what among those things will tip us over.
Into completely losing faith in the government.
But based on history, because this has happened, you know, dozens if not hundreds of times in the past, we know it's out there somewhere.
We know that brick wall is there and we're going to slam into it.
And because we can't know the timing, that makes investing for it and managing your finances in anticipation of it a little bit tricky.
Because if you're way too early, you end up losing money.
And personally, I thought 2005 or so was the end of this road.
Gold Money's James Turk and I co-wrote a book called The Money Bubble that you mentioned.
And we were worried that we wouldn't get it out in time.
Oh, I'm sorry.
We co-wrote a book called The Coming Collapse of the Dollar and How to Profit from It in the early 2000s.
And our biggest worry was that the system was going to collapse before we could get that book out.
And because of that, you know, because the system almost collapsed in 2008, 2009, but it didn't.
They were able to create a lot of new currency and push interest rates down to crazy low levels and bring us back.
My credibility when it comes to the timing of this stuff isn't so great, you know, because I thought it should have been over already.
But that doesn't mean that the premise is flawed.
It just means the timing is really hard to predict.
Well, it also, I mean, to your credit...
If the world behaved in anything resembling rationality, the whole system would have cratered in 1997 with long-term capital management, right?
So that was a big, too big to fail bailout.
And then another too big to fail subprime mortgage collapse, you know, 2008 timeframe.
Well, not to mention .com collapse, you know, 2000, 2001.
And then, but now we seem to be going into not just too big to fail, but too big to bail.
Because at what point does the central bank become unable to bail out the collapse, the cascading domino collapse of the system?
And with your website being dollarcollapse.com, it's a very bold statement, I want to help plug that website as well.
People should check that out.
But you've long believed that the dollar will absolutely collapse.
It's just difficult to know the day because we don't know how insane the central banks are going to be in trying to save it, right?
Yeah.
See, this is an unprecedented place that we're in right now where all the big central banks of the world have these unlimited electronic printing presses.
See, previous currency crises...
Happened in basically a sound money world where most people, you know, counted gold as their money and because of that their currencies were solid.
But one country among all those countries would screw up.
You know, they'd borrow too much money, try to inflate away their debts and crash their currency.
So those previous hyperinflations happened in the context of the sound money world.
Well now, there is no sound money world.
Everybody's doing basically the same thing.
We're all making the same mistakes.
And that obviously allows us to get away with it a little bit longer.
But it also makes the crisis, when it happens, global instead of local.
It won't just be one country.
It'll be basically everybody.
So, yeah, you can't know when it's going to happen.
But the fact that these basic laws of finance and economics, they're real things.
You know, when your debts exceed a certain level relative to your income, you've got a very serious problem that you've got to deal with somehow.
Right, right.
And we basically have two choices now.
We can do a 1930s style depression again where all that debt is wiped out by default.
In other words, everybody goes bankrupt.
They can't pay their debts.
The debt goes away.
Or we can try and inflate it away like all these other countries have done in the past at the cost of ruining their currency.
And that's what we're going to try to do.
So we will see how long it takes and exactly what form the crisis takes.
But we basically are heading in that direction.
And if we can engineer it, you know, if we can avoid the 1930s style deflationary crash, then we will give ourselves a Weimar Germany or, you know, name the hyperinflation that you think is most interesting kind of currency crisis out there somewhere in the future.
Well, so my question is, what do you think that's going to look like?
Is it going to be a Weimar Germany sort of a parabolic acceleration of the devaluation of money where eventually shops have to change their prices every three hours?
I mean, the shops that haven't been burned down yet, I should add.
Or is it going to be sort of all of a sudden you wake up, kind of like Jim Rickards describes the ICE 9 scenario.
The banks are frozen.
All your accounts are frozen.
The dollar has been frozen.
No one can access dollars.
I mean...
What's your take of what this looks like, experiencing it?
Because I think it's going to happen in our lifetimes.
We're going to experience it.
What can we anticipate?
Well, there are a lot of ways it could happen.
Jim Rickards' idea of everything being frozen.
It would end up being a 1930s-style deflationary collapse, because once all our bank accounts are frozen, we're broke.
We're not paying our debts, are we?
And so the debt is wiped out via a mass default.
But he has another scenario, which is probably related in some way to the ICE 9 scenario, where...
You know, some Sunday night, the governments of the world just announced that, henceforth, we're back on the gold standard and our currencies are just names for certain weights of gold.
That's by far the most painless...
It's not painless at all, but it's way better than the civil unrest that would come from a hyperinflation or a deflationary crash.
But it does hurt the people who trusted the government and held a lot of the government's currency, because those currencies become worth a lot less.
Let's say we...
Redefine the dollar as one ten-thousandth of an ounce of gold.
That means the dollar has to go down in value by about 70% to make that happen.
So your bank account is now worth 70% less.
A gallon of milk is worth 12 bucks.
A loaf of bread is worth 15 bucks.
And you have a lot less wealth than you thought you did.
So those people who trust the system are the ones who are hurt by that.
Again, that's by far the best scenario.
All the other scenarios, you know, an out of control hyperinflation.
Just to interject there, just for clarity.
But under that first scenario, you mentioned people will still get their pension checks.
The money just won't be, you know, it'll be 70% less value.
So you'll still get your checks.
Your bank account hasn't been, quote, looted.
It's just not worth as much.
Yeah, the financial system is functioning.
The money is still flowing.
It's just that the price of everything is way up because we've devalued the currency.
And we're seeing that in food already.
Food prices spiking across the country.
Well, you know, look at, for instance, Venezuela today.
They had a hyperinflation-ish kind of crisis.
And the grocery stores are, in a lot of cases, empty, and what's available is very expensive in terms of local currencies.
Although, if you kept dollars or gold, you can buy anything you want to down there.
Globally, we're headed for something like that.
And there's no way to know ahead of time, you know, exactly how the details play out because we've never done it all at the same time.
But we are now doing it at the same time.
Maybe Switzerland gets through this.
Maybe Russia gets through this because they're not making the same egregious mistakes that everybody else is.
But most of the rest of us are in this boat where...
We're screwing up our finances.
We have to pay this price somehow.
And it's not clear how.
But it also is unstoppable.
There's nothing you and I can do by voting or by marching in the streets or anything to stop the financial system from running right off the cliff that it's headed for.
Indeed.
And I want to ask you just some other personal things that we might experience.
Do you anticipate bail-ins like we saw in Greece where the banks seize the accounts of their customers?
What do you anticipate happening with taxes?
Will we see taxes go back up to 80%?
You know, confiscatory tax rates, you know, old French European Union tax rates.
What do you think is going to happen in terms of personal bank accounts and finance?
Well, see, that's the thing.
Lots of things could happen, and the decisions in those areas are going to be made by guys who don't understand the system, who are sitting around a conference table under extreme pressure with flawed models that don't really tell them anything about what's going to happen.
So they're going to make stupid mistakes, or they're going to make random decisions, put it that way.
Some of them will be stupid mistakes, some of them will be pretty good, but it'll be random because they really didn't know what they were doing.
So, yeah, everything you mentioned is possible and has happened in the past.
That's why we know it's totally possible because we've done it before.
You know, we've raised taxes to insane levels.
We've confiscated wealth.
You know, in the U.S., we made gold illegal from 1934 to 1971 for individuals to own.
So all kinds of, and there are things called capital controls where they won't let you take the money out of the country if you have some, which is, they're highly likely, some variation of that when things really get going.
But the specific details of the kind of crisis that happens when you screw up your currency, they're unpredictable because we have a nice wide range of crazy things to do.
And which of those crazy things that we choose will depend on the pressures that a given president or premier or prime minister is under at a given amount of time or point in time.
And there's no way to know.
But...
We do know that for the people living through a process like that, it's a nightmare.
Unless you're really prepared for something like this, your life spins out of control because you might lose your job.
There might be rioting near you.
Your bank account might evaporate.
Money you have overseas might not be able to be brought back.
All kinds of things can happen that change your sense of well-being in a really negative way.
I think the only thing we can do as individuals is try to structure our lives in the most probable way that protects us from what's coming.
We've got a lot of historical examples.
Of things people did that did work and didn't work in the past.
So one of the things that worked best in literally every financial crisis since the days of the Roman Empire was precious metals.
You know, if you own gold and silver, At a time when they're screwing up the paper currencies that you've been using for most of your life, money flows into precious metals like gold and silver because that's where people hide out in times of stress.
And so the value of your gold and silver will go up to offset the plunge in the value of your paper currency.
That's one thing that has worked always and everywhere during financial crisis.
So that's probably the only thing you can say with certainty will work out.
And that's probably the first thing people should do.
That and pay off debts.
You know, you want to be debt free and loaded up with gold and silver, if at all possible, when things really hit the fan here.
Okay, owning gold.
Let me ask you just for clarification for our audience.
Are you talking about gold mining stocks?
Are you talking about ETFs?
Are you talking about gold in a vault in Switzerland?
Or are you talking about physical gold in your hands, in a vault in your house?
Or some people say Bitcoin is digital gold.
These days when we talk about gold, we have to actually really clarify.
You know what I mean?
So go ahead.
Bitcoin is a new wildcard that we've never had before in a financial crisis.
And it's possible that it ends up being a safe haven asset as well.
But it's a very different animal from precious metals.
Precious metals exist, as you said, in a lot of different ways and a lot of different forms.
The safest and most certain way is actual physical gold and silver in your possession.
Because those things, and this is a really important concept, they have no counterparty risk.
Right, right.
I love it.
Yeah, for almost everything else that exists in the financial world, somebody else has to keep a promise for you to be able to have a profitable investment.
Like, if you've got money in the bank, the bank has to stay around, right?
It has to stay open and it has to make that money available to you when the time comes.
If you've got stocks that trade on an exchange and you have a brokerage account, the brokerage account has to survive.
So you can't have Charles Schwab go out of business And then still be certain that your stocks are accessible and you can still get the money out of them that you hope to.
And again, if you own stock in a company, that company has to behave well.
Maybe the business that they're in survives and thrives, but what if their CEO is embezzling and they go bankrupt because of that?
So they have to behave.
But with gold and silver, If it's in your hand, you own it and nobody has to keep a promise.
Nobody has to do anything for it to hold its value.
So that should be the bedrock.
In a safe haven crisis investing portfolio.
In other words, if you think really bad things are coming and you want assets that will survive something like that, so gold and silver coins are the place you start.
You get some of those, you put them in a very safe place.
Of course, that's a whole separate issue.
How do you store gold and silver coins?
So that's Worthy of an entire show.
You know, we could talk about all the different ways that you can store safely gold and silver and make sure it's accessible when the time comes.
Going a little bit further out on the risk spectrum, but also on the potential profit spectrum, you've got gold mining stocks, like you mentioned.
There's a saying in the gold mining industry that gold miners are leveraged bets on gold.
In other words, if gold goes up, the value of your gold mining stock might go up a lot more because they've got lots of gold in the ground and all of that gold gets valuable or gets more valuable as gold gets more valuable.
Which takes the stock along for a nice ride in a bull market for precious metals.
They have counterparty risk, gold miners, but they're also in the right business if what's going to happen or what I think is going to happen is going to happen.
So gold mining stocks are great things to own in place of other stocks.
Your gold and silver coins Replace the dollars that you would have saved otherwise.
So they're money that you're holding in place of other kinds of money.
Gold and silver mining stocks are equities that you hold in place of just general equities like bank stocks and tech stocks and things like that.
You could hold investments in JPMorgan Chase and Goldman Sachs and Google and Facebook.
But those things are at risk in a big financial crisis in a way that gold mining stocks are not.
So you can replace some of those stocks with gold mining stocks as part of this process.
And then beyond that, and I mentioned payoff debt because what you really want to be is debt free when things get really crazy because then there are no loans that can come back to bite you and there are no repo men that can come to take your stuff away if you lose your job or anything else happens.
So beyond that, there are other real assets that you'll want to look at if and when you have more capital to invest.
And those would be like farmland or a well-chosen piece of rental property or something like that.
You know, a rental house in a college town where the economy is pretty stable.
Those things tend to do well even when Things are getting really crazy around you just because you're in a kind of a stable environment with something everybody needs, right?
If the housing market, like if a lot of people get thrown out of their houses because they can't pay their mortgages, they still got to live somewhere, so they rent.
So if you've got a rental house, the system is kind of working for you instead of against you.
So things like that.
Are great ways to protect yourself from the kind of crisis that might happen.
And then beyond that, you look at self-sufficiency.
All of a sudden, because of the pandemic, everybody wants to buy farmland now.
And rural properties where you can put a homestead, they're really hot right now.
And that's a great trend because people should be looking into...
Being able to supply some of their own food.
So you should have a garden if you can, wherever you live.
And if you have the ability to actually buy land that can be turned into a small working farm, that's awesome.
You know, that gives you the ability to weather something like this really well.
And it gives you the ability to protect your friends and family as well, who might not be as wise as you in their investment.
Really great tips, really good information, and I think consistent with what a lot of really rational, well-informed people have been suggesting.
Just as an interlude here, can you just tell people at dollarcollapse.com what's on your website?
What are people going to find there?
And what do you do?
Do you manage Money for people?
Or do you just consult with people?
Or exactly what do you do at dollarcollapse.com?
That's a news aggregation slash blog site.
So I post my own thoughts on there.
And then I also run a links page where I put the headlines in a lot of different categories up so that you can show up and spend an hour there and basically be up to speed on the dark side of the financial world.
And it's just ad-driven, so it's free and everything.
And you can sign on to our mailing list, and then I'll send you an email with a link to whatever I write and post.
Are you working on any new books?
I should be now, but it's harder for me to write when stuff like this is actually happening.
It's much easier to write a book When the things that the book predicts have yet to happen.
And now I find that everything I predicted in previous books is coming true in one way or another.
And people are talking about it and writing about it, so I'm not sure how much I have to add at this point.
Because, you know, this would be a good time to write a book, right?
It would be a really marketable book.
If somebody who wrote a couple of books on the subject and turned out to be right, writes another book, you know, but I just don't have it in me right now.
It's also tough.
I mean, the book publishing cycle is at least a year, and so much is going to change now.
In the year, your book might be obsolete a year from now.
Yeah, and that's always true, but more so now than ever before, because things are moving so fast.
That's right.
We were in pretty good shape.
Donald Trump was saying this is the best economy ever.
We had one of the lowest unemployment rates ever.
The stock market was at record levels.
And then boom, everything changes.
So somebody who wrote a book based on the world four months ago would basically have a paperweight, right?
There wouldn't be much important information in that book because the world would change so much.
And that is the risk that you run when you do a long lead time thing like a book.
Alright, and I did a podcast like six months ago where I was warning Trump, you know, don't make the entire economy about one number, the Dow Jones Industrial Average, because that is not the economy, right?
That's just one number, and it can be pumped up.
But let me ask you, of the many things that you suggested, which are really good things, very important things, you know, gold and land and paying off debt and things like that.
Let me hit you with some of the problems that people have raised when I've been in conversations with them about these things and ask you to answer these things.
Okay.
So they are for gold mining stocks.
How, what if the collapse is so bad that the entire infrastructure of buying and selling stocks collapses, then your gold mining stocks are worthless.
But on the other hand, if you own physical gold, what if there's renewed government gold confiscation?
What do you do in those cases?
So can you maybe answer those two concerns?
Sure.
Well, just conceptually, every one of these things has an issue like that.
And that's the reason why you diversify into several of them, because you really don't know what crazy thing is going to happen to that specific thing that you're banking on.
And having three or four widely dispersed kinds of strategies, but they'd all relate to safe haven investing.
In other words, you know, protecting yourself.
That's the way to do it.
Because yes, governments Or at least the US government made gold earnership illegal in 1934.
They could do it again.
It's less likely this time because gold was money back then.
So what they were doing was they were adjusting their money supply by doing that.
And, you know, gold doesn't really impact the global money supply this time around yet.
So it's less likely that they're going to bother with people owning gold bullion.
But they might.
So that's still an issue.
Now, there are two ways you can deal with that.
One is you can buy coins that are considered collectible.
Instead of bullion.
And nobody messes with collectible coins because it's impossible to figure out all the details and decide anything about them.
So there are certain gold coins that are common enough that they're not super expensive compared to just pure bullion coins that are just the gold, not legal tender or anything.
You can buy some of those and they almost certainly won't be confiscated.
And you can also focus on silver, which trades in a lot of times, in crazy times, the same way that gold does.
Silver will actually go up more than gold in the extreme part of a crisis.
So you can own a lot of silver, and that's an industrial metal.
They can't confiscate something that is needed in solar panels and microchips and literally a hundred other things.
So your silver will be okay.
It'll be safe from confiscation.
Now, if you've got stocks, you are dependent on the continued functioning of the financial markets and the continued solvency of the brokers that hold your stocks in the street name.
You know, if you've got something at Charles Schwab in an account, those stocks are actually in Charles Schwab's name.
And that is a very tricky problem in a world where the financial markets are in turmoil.
One solution for that is to get your stock certificates sent to you and put them in your name.
And that's complicated, but it moves the stock certificate kind of into the same category as your gold and silver coins.
You have fewer issues with counterparty risk.
You can also have two or three different brokerage accounts with different companies so that if one gets into trouble for some company specific thing, you're still safe in the other ones.
You can have overseas bank accounts and brokerage accounts that aren't subject to just US problems.
All of these things are a little bit complicated and a little bit scary to average people.
They're scary to me, actually, to do some of these things.
They're ways of diversifying.
And if you've got a fair bit of money at risk, it's worth it.
Maybe to hire an expert, have them do it.
Pay them a few thousand bucks and let them do all this restructuring of your finances.
Does that...
Can you complete that question, or is there more?
No, that helps a lot, but I've got two more questions for you.
The audience loves this, because your thoughts are very valuable on this.
Some people are buying rental properties, as you mentioned, but the concern is that Like during the pandemic, we saw that various states and regions banned evictions.
So if you own rental properties and you think it's a great investment, it could turn on you where you can't evict people who are not paying rent, you know, because everything's collapsing.
And the second one is land, which I think is a great purchase.
I own a ranch in Texas.
But with what's happening with maybe the risk of secession, or now we've seen this new autonomous zone thing spring up in Seattle, what if you buy land in an area, and then suddenly that area is no longer part of the United States of America?
You're in like the Republic of whatever, right?
I mean, these are risks too, right?
Those are real risks in this world.
You know, one of the things that flows from financial crises is civil unrest.
That's just kind of the natural outgrowth of screwing up the currency, no longer being able to take care of people.
And when people see inequality expand the way it is now, they naturally get frustrated.
And if they can't vote to fix it, then the next step is to take to the streets.
And that has happened historically during currency and financial crises.
Over and over again.
So yeah, all of that is possible.
And those are risks that are associated with real estate because one of the downsides of real estate is that it's not very mobile.
You can't pick it up and carry it somewhere.
So wherever your house is or wherever your farmland is, you are subject to the situation in that area.
Well, this is...
I'm sorry.
Oh no, go ahead.
This is one of the advantages that people state about Bitcoin.
And by the way, I'm not a cryptocurrency cultist.
I've been critical of many aspects of it.
But one of the advantages of Bitcoin, for example, people in Venezuela, if they had a lot of assets in Bitcoin, they could leave the country And just have their Bitcoin wallet either online or on an encrypted thumb drive in their pocket.
They could evade the confiscation that might happen if they tried to carry physical gold out of the airport, let's say.
And then they could relocate to another country.
And as long as Bitcoin was still functioning, which is always a question, they could sell the Bitcoin, get local currency, and restart their life.
So it's an interesting advantage for crypto as long as the system's functioning.
Well, see, that's one of the real attractions of cryptos in general, and Bitcoin in particular, is that it's money that is not subject to the regulations of any one government, and it can be moved around with no friction.
One transaction can send all your Bitcoin to another country.
That's all great.
And I love the concept of cryptos.
Because of that.
The downside is that they're online.
They don't have a physical existence.
So if the internet goes down, you can't get into your Bitcoin account, right?
And when it comes back up, you'll still have your Bitcoin, presumably.
But for a while, you're left without them.
And Bitcoin exchanges are hackable.
You see them, you know, Mt.
Gox is one where people have some serious Bitcoin value in there, and it got hacked.
It all got sucked out.
So those people lost some or all of their Bitcoin accounts.
So you can't think of Bitcoin As digital gold in the sense that there's no counterparty risk and because of that it's largely risk-free because there are counterparty risks.
The internet has to continue to work for Bitcoin to do its job.
Right.
And your wallet can be stolen, too.
You know, I've heard people say, well, your physical gold can be stolen.
Well, you know what?
Your Bitcoin wallet can be stolen.
I used to have a Bitcoin wallet on a PC, and I was using solar power to mine Bitcoin, and I sold the Bitcoin to buy gold.
That's what I did years ago.
That's why I've been out ever since.
But at that time, I realized, you know, if this computer crashes and I don't have a backup, or my backup is out of date, or somebody comes in and steals this system, my Bitcoin's gone.
Right.
And another thing you see, which applies to both Bitcoin and gold, is you become kind of a kidnapping target where somebody can just identify you and then threaten you in some way.
And extort that stuff away from you.
So, see, none of this stuff is risk-free.
There's nothing you can own that doesn't have some risk associated with it.
And that's crucial to understand because nothing is guaranteed in life.
Nothing is risk-free.
But what you want to do is structure your finances in the way that works best for you, given what you expect the world to be five or ten years hence.
And you can't eliminate risk, but you can diversify some of it away.
So yes, have some Bitcoin.
Have some gold stored here.
Have some stored in a vault in Switzerland, let's say.
Have some equities in several different brokerage accounts, including a foreign brokerage account.
If you do all of those things, you're diversifying away risk.
You're not lowering it to zero.
But you're limiting it.
And that's all you can do.
You know, in an extreme scenario, which I think we're going to live through over the next decade at some point, not everything you have is going to survive.
But your hope has to be that 70% of it or 80% comes through unscathed, and that's enough for you to live a good life.
Right.
This is a crucial mindset.
I'm really glad you brought this up, because until now, the mindset of most people has been, what's the return on investment?
How do I make more money?
And even I've been urging people to say, no.
The mindset now is, how do you not lose what you have?
How do you preserve it?
Well, yeah, in scary times, the focus shifts from return on capital to return of capital.
In other words, are you going to get this back?
And if not, what are you going to do?
And yes, that's an alien idea because we've had this long stretch.
It may not have seemed placid while we were going through it, but we haven't been in a big war since the Vietnam War.
We really haven't had any gigantic national crises before the coronavirus.
So an entire generation of people, really two generations of people, have lived most of their adult lives without the sense that chaos is possible.
And now we're discovering that, oh yeah, it's possible.
It could totally happen here.
And that's changing mindsets in investing, if not everywhere else.
Because all of a sudden, we want to protect ourselves.
We want to be safe more than we want a 30% return on our growth stock portfolio in the next year.
You're exactly right, and yet there is a segment of society which is now becoming known as the Robin Hood investors, who tend to be younger investors who haven't lived through even the subprime crash or anything like that.
As I understand it, many of them are unemployed, but they're collecting government checks, the payout checks for the virus, lockdowns.
Since they're not working, but they're collecting money, they've been staying at home and downloading the Robin Hood app And then they've been trading in stocks without really any understanding that maybe you shouldn't buy bankrupt company bonds and things like that.
And some of them have been trading on margin and they end up with so much margin debt they end up committing suicide because they wake up one day and they're $800,000 in debt and can't figure out how that happened.
But what's your comments on the Robin Hood phenomenon that's happening right now?
Well, several things.
One is, you know what, when you're young, you're a millennial age person, you're going to make stupid mistakes in the stock market because that's how you spend your first 10 years of investing is by doing things you don't understand and learning painful lessons that later in life, when you have bigger money to invest, saves you a lot, right?
Now, this...
This latest generation of people doing what you're talking about are mostly young kids who've played video games their whole lives.
So they're very comfortable with doing things online, with quick twitch muscles where you go in and out of something and you get instant gratification right away because you see the score and everything.
So they basically got put on house arrest during the coronavirus.
And like you said, we gave them money But instead of playing video games, they discovered day trading.
And so they're out there just trading up a storm on Robinhood because there's no transaction costs on Robinhood.
Robinhood sells your trading information to Wall Street so they don't have to charge you for trading.
And...
So you've got all these guys out there doing stuff that is like playing a video game without really understanding a lot of the underlying issues.
Now Hertz, the rental car company, is a great example of this because Hertz went bankrupt, which isn't a surprise in the coronavirus pandemic where everybody stopped renting cars.
And they're bankrupt now.
Now normally when a company is bankrupt, they work it out somehow where they total up their assets and they give some to their senior bondholders and some to their junior bondholders.
In other words, the guys who lent the money get paid back to an extent.
But the people who invested in them via equity get nothing back.
The equity of a bankrupt company is worthless usually.
But day traders today aren't completely clear on that concept.
So they just see a really cheap stock of a company whose name they recognize, and they're trading it really aggressively, and they made the price go way up.
So now Hertz looked at this and said, you know what, we could sell some stock to the public, couldn't we, if our stock has actual value on the exchanges, even though it has no intrinsic value, you know, it's not actually worth anything.
So they're doing a stock offering now.
Where in the documentation for the stock offering, they say, this stock is worthless.
But, you know, we're going to sell it to you for 50 cents a share or a buck a share or whatever the price is going to be because people are willing to pay that on Robinhood and elsewhere.
So this is going to be one of those...
Peak cycle things where we look back on it and go, oh yeah, when that happened, we should have known that this whole thing was coming to an end.
Right.
But it's one of the few things that we can kind of laugh at now because so much of what else is going on is not funny at all.
These riots and things are...
There are amusing aspects to some of the really silly stuff that's being done, but by and large, this is not funny.
There are people who are...
I'm traumatized.
And that's why they're out in the streets.
And a lot of the stuff that's happening is traumatic for the people who are victims of it.
And now, you know, and so it's not funny at all.
And financial crises are not funny and pandemics aren't funny.
But day trading millennials are kind of funny.
They are endlessly entertaining.
It's going to be fun to watch.
But I think it's also indicative of this idea, especially among millennials and younger generations, that in their minds, nothing is real unless they say it's real.
We've seen this expressed through culture.
We're not going to get into politics here, but this autonomous zone where they say none of the laws of the United States are real anymore.
We're going to create our own utopia society and have our own laws because we say so.
Or, you know, just across so many issues, people say that's not real.
You know, the laws of economics don't count.
What counts is how we feel about our mutual community investment in Hertz.
We're driving up the stock together.
It's a community achievement.
We will all win.
And they don't realize, no, you're all going to lose.
You're all going to lose badly.
It's going to be worthless.
But there's this mindset that if a delusion is shared widely enough that they can make it real.
Yeah.
Well, that's what happens when good times go on too long.
You basically think you're bulletproof because you've never experienced the result of extreme risk.
And this has been just such a long time for us that we've got a lot of delusions now.
And see, life dispels delusions eventually, one way or another.
And we're heading into a time when a lot of delusions, I mean, they're on display for everybody to see right now.
And the results of those delusions are also going to be on display.
So we're going to see what happens.
See, the business cycle normally takes care of this.
Because every six or seven or eight years, people get too cocky about their investments and about the success of their business and about the success of their job and the raises they're getting.
And they do stupid stuff with their money.
And then the cycle turns down.
Everybody gets laid off.
Businesses go out of business.
And you see, as a famous investor named Warren Buffett likes to say, it's only when the tide goes out that you see who's been swimming naked.
And so the business cycle dispels a lot of delusions.
But what we've done with the unlimited monetary printing press is we've kind of suspended the business cycle in a lot of ways.
Even the Great Recession, which was a really serious downturn, We bailed everybody out.
So a lot of people didn't suffer from their mistakes in 2009, 2010.
And we're doing the same thing again.
You know, we've got a financial crisis, but we're going around and we're identifying everybody who's hurt by it and we're giving them money so that it's possible that nobody learns the lesson of, oh, don't buy the biggest house possible with an adjustable-rate mortgage.
Just don't do that, you know?
So it's possible that we're extending a lot of delusions beyond where they should have expired.
They should have lasted three years and then been dispelled by a recession.
But now, who knows?
Who knows what kind of really, really strange ideas are still going to be current at the end of the pandemic and at the end of the bailouts because we didn't allow people To experience the consequences of their actions.
So yeah, we're messing things up in a big way, but it just makes the eventual dispelling of all those delusions that much bigger when the time comes.
I mean, it's a fundamental principle of a functioning market economy is that you have to allow bad ideas to fail.
And if you don't allow bad ideas to fail and you bail out everything, including horrible ideas, what do you do?
You're basically incentivizing the creation of more and more insane ideas, which tend to be these unicorn companies that a lot of millennials invest in, companies that have no income, I mean, no profits.
They often have no real assets.
You know, even companies like Uber and Lyft, for example, or Bird, I think, which is already bankrupt.
I mean, they never had a business model that made any sense, you know, ever.
And then at the first exposure, they fail, but then there's so many bailouts just bailing everybody out.
It's just...
Everybody says, well, we should come up with some crazy idea and then get the payroll protection program money, and that's our business model.
You know?
That's it.
See, capitalism, which is really the only way of organizing a society that's consistent with human freedom, It requires two things.
It requires failure, first of all.
That's the big one.
You've got to have people go bankrupt when they push the envelope and they end up pushing it too far because that tells everybody else what not to do.
That's a huge lesson if you're a capitalist, you're an entrepreneur, you're trying to decide how to invest the money you have to invest.
You've got to see what doesn't work.
So one big bankruptcy saves 20 big bankruptcies down the road by telling everybody else, oh yeah, okay, don't do that particular thing.
And what we've done is short-circuit that process by bailing everybody in sight out, right?
So you can be a big bank and you can make absolutely crazy mistakes.
And the government just steps in and bails you out.
You still get your, you know, if you're the CEO, you still get a big bonus at the end of the year.
Your stock is still valuable.
So you didn't learn anything.
Well, actually, you learned the opposite of what you should have learned.
You learned that you can take all the risk you want to take, reap all the rewards from the success of it.
But if it fails, the government's bailing you out.
And the other thing capitalism needs that we don't have now is upward mobility.
Because you've got to have a populace where basically everybody sees the next rung on the economic ladder and has a reasonable chance of getting it.
With three or four years of following the rules and working hard and behaving yourself, right?
And if you don't have that, then the system spins out of control because nobody believes that the system is working for them anymore.
And that's what we have now.
We've got this tiny group of people who get richer no matter what happens.
Like, you know, the 1% got richer during the pandemic.
They made hundreds of billions of dollars because the government bailed out the stock market.
The government didn't bail out everybody else on that scale, and so most other people got even poorer, and they were already frustrated by the way things were going.
So that's 50% of the impetus for the riots that we're seeing now.
The government is police brutality on video, and the other part is that everybody is so frustrated with the way things are going, and they don't think elections are a way to fix things.
Right, right.
Well, and I want to introduce the term currency brutality, because the biggest looting of all in America is being done by the central banks.
That's who's looting poor, impoverished Americans.
I mean, if the people figured out, if they did the math and realized that the poor people are bailing out the wealthy elite in Wall Street, then we'd really have riots nationwide, and it wouldn't just be one group.
It'd be, you know, every earner, basically, everybody with a job.
Well, see, I think we're headed that way because, remember, Donald Trump's presidency was a reaction to the idea that globalization and unlimited immigration, et cetera, et cetera, is disadvantaging most people and enriching a handful of people.
You know, Trump ran explicitly against that.
And so a lot of people voted for him and he became president.
But then these things didn't get fixed.
So now a lot of the people who voted for that kind of change, in other words, for populism, are wondering what else they can do.
You know, if electing somebody from as far out of the mainstream as Donald Trump didn't save us, what else can we do?
And so that's why a lot of people are in the streets right now, I think.
It's all they've got left.
There's a trends forecaster named Gerald Salente who has a saying that when people lose everything, they lose it.
Right.
And that's our situation now.
And, you know, that's just begun.
If we don't fix this, the whole upward mobility thing, if we don't set things up in a way that allows people to work hard and progress and to move their family up the economic ladder in a really understandable, doable way, then what we're seeing now is nothing compared to what we're going to see.
You're exactly right.
And last question for you today.
We're coming up on the hour.
And again, I want to thank you for joining us and encourage everybody to visit your website, dollarcollapse.com.
But here's the last question for you.
We hear the media talking about a second wave of infections and now the CDC claiming, well, we might have to have a second round of lockdowns, which I'm convinced that America is sick and tired of lockdowns.
They're just not going to do it.
But The question to you from an economic perspective is, what would be the impact if we had to go through a second wave of lockdowns like we did the first wave?
How devastating would that be or not?
What's your view?
Well, I think it would be catastrophic because let's say we did another lockdown But we gave everybody money, right?
We bailed out pretty much everybody to make the lockdown politically possible.
Well then, let's say we get back to normal two years after that.
Well, it's not actually normal because we'll be carrying another $20 trillion or $30 trillion of debt on our backs globally, and we were already hopelessly over-indebted.
So that just brings the eventual financial crisis that much closer.
But yeah, I don't think we could, like you said, I don't think we could have another lockdown because I think we found out just how long people are willing to live like that, and it's two months.
That's it.
At the end of two months, we're going outside and so be it, whatever happens.
So I think the idea of another lockdown, I mean, maybe there's scientific validity for it from an epidemiological point of view.
And I'm not a scientist, so I have no opinion about this stuff.
But I don't think there's a political way to make it happen.
So I think we're just going to get through whatever we have to get through as far as the virus goes from here on out.
Well, and we don't even have to be scientists to point out an interesting hypocrisy in the media, which was that, you know, when the anti-lockdown protesters in Michigan were protesting, we were all told, oh, you're horrible, you're going to get millions of people killed, you're going to spread the virus.
But then now, when the more left-wing protesters are out, The media says, oh, there's no worry.
You're not going to spread the virus.
It's fine.
So I didn't know this, but the virus apparently decides who to infect based on politics.
That's amazing.
And now they're saying, oh, you know, they're telling Trump, you can't have big rallies because that's too many people close together, you know.
Which takes us to something else that's related to finance, but is also a really big problem in the U.S. at least.
And that is a lack of moral consistency.
Across the political spectrum.
Basically, right now, we're tribal.
We're willing to accept anything from our guy, and we're not willing to accept anything from the other side's guy.
So what you see on the news is basically just people talking their philosophical books or telling lies in order to further the interest of their tribe.
So you can't trust anybody now.
Whenever you go to Fox News or MSNBC, you're basically seeing an entertainment show that is designed to reinforce the preconceptions of a certain segment of the audience.
They're serving different parts of the populace.
But they're doing it in the same way, by just saying, yeah, you're right, and here's a political story that shows that what you thought coming in is exactly right.
So you watch it and you feel good, but you don't learn anything.
And that is going to be disastrous politically for us when we basically hate each other.
When 49% of the population hates the other 49% and with just a handful of other people in the middle who are completely irrelevant because they don't share the extreme views of the right and the left here.
And that's terrifying because that means you can't work out any deals I think we've got to do something about it.
And the censorship on top of that, you know, the viewpoint discrimination, how truth is decided by Google and Facebook and Twitter, and there's no due process for anyone who's deplatformed and so on.
Those are huge issues as well.
And, you know, I think there's a political bias in that as well.
And, by the way, as a reminder, you are welcome to post your videos on Brighteon.com.
We built that platform, you know.
That's where this video is going to be posted.
And it's taken off.
It's exploding because everybody's getting censored over on YouTube.
Feel free to use the platform.
The whole censorship online is part of the whole tribal thing.
If you're running a social media company, then you allow extreme stuff from people who are part of your tribe, but you ban it from people who are not part of your tribe.
And yes, it's a catastrophe if it goes on much longer.
We really have to, and what's happening to fix it?
You know, there's a corrective process here where sites like yours will be more open.
To differing points of view.
And you know who Joe Rogan is?
Of course, yeah.
He's the biggest podcaster in the world.
And he got frustrated with the mainstream venues for his stuff.
So he just went to Spotify.
He just bailed on the traditional social media.
And now he's over there doing anything he wants to.
And nobody's censoring him.
Nobody can tell him what to say and what not to say.
So that's a model for a system that might work better.
And maybe we get there just for technological reasons.
Yeah, with all these alternative platforms springing up, I see a lot of success with Parler.com, and of course there's Gab, and there's AllSocial, and yeah, some of the comments on some of those platforms are pretty crazy, but guess what?
Free speech doesn't look like monoculture obedience.
Free speech looks pretty crazy.
Freedom isn't organized sometimes, right?
Yeah.
Yeah.
Well, see, the downside of free speech is sometimes pretty stressful arguments, but that's necessary.
The First Amendment was designed to protect unpopular speech.
You don't need to protect popular speech.
You need to protect the stuff that may be out of the mainstream, but might turn out to be right in the long run.
So you've got to have it out there.
Exactly.
Well, thank you, John.
You've offered just a wealth of really valuable information today.
I really appreciate you joining us, and I want to remind our readers to check out your website, dollarcollapse.com.
So thank you for joining us today.
Thanks, Mike.
Enjoyed it.
Alright, thank you.
Well, that's John Rubino, folks.
Just a wealth of information.
Share this video everywhere you can, and definitely look into his advice and find out what's appropriate for you.
Diversify, or you probably will be wiped out when bad things happen in the years ahead.
So take action now and you'll be happy you did.
Thanks for watching.
This is Mike Adams, the founder of brighteon.com.
This video was made possible by brighteon.com.
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