Part Of The Problem - Dave Smith - The Last Recession with Peter Schiff
Aired: 2020-01-09
Duration: 01:20:17


=== Heshy Socks Review (01:25) ===

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[00:01:13]  We need to roll back the state.
[00:01:15]  We spy on all of our own citizens.
[00:01:17]  Our prisons are flooded with nonviolent drug offenders.
[00:01:20]  If you want to know who America's next enemy is, look at who we're funding right now.

=== Trump's Economic BS (09:53) ===

[00:01:26]  Every single one of these problems are a result of government being way too big.
[00:01:31]  You're a single department on the Gas Digital Network.
[00:01:35]  Here's your host, James Smith.
[00:01:38]  Hey, what's up, everybody?
[00:01:39]  Welcome to a brand new episode of Part of the Problem.
[00:01:43]  I am, of course, Dave Smith.
[00:01:44]  This is our Wednesday one-on-one series continued.
[00:01:47]  I'm thrilled to have the guest we have today in studio.
[00:01:50]  He was on the podcast once before, Skyped in.
[00:01:53]  But now we have the great Peter Schiff here in studio.
[00:01:56]  Thanks for coming in.
[00:01:57]  Good to see you, sir.
[00:01:57]  Nice to meet you officially.
[00:01:59]  Yes, nice to be here in New York in the wintertime.
[00:02:03]  I'll be back in Puerto Rico on Friday.
[00:02:06]  And I think we got the water back.
[00:02:08]  Still waiting for the power.
[00:02:10]  Oh, my God.
[00:02:10]  All this time later, really?
[00:02:11]  No, no, from the earthquake.
[00:02:13]  Oh, the earthquake.
[00:02:14]  I'm sorry.
[00:02:15]  Yeah, we're not talking about the hurricane.
[00:02:17]  That was a while ago.
[00:02:18]  We just got hit by a couple of earthquakes.
[00:02:20]  Yeah.
[00:02:21]  But, you know, earthquakes, hurricanes, that's a small price to pay to avoid the IRS.
[00:02:25]  Yeah, I mean, your tan looks nice.
[00:02:27]  You look happy that you're down there, but I just really like the income tax.
[00:02:32]  I just can't leave it.
[00:02:33]  My tan has faded a bit because I've been here since before Christmas.
[00:02:36]  Oh, okay.
[00:02:37]  We've been spending the holidays at my home in Connecticut, which is where I escaped from.
[00:02:42]  That's right.
[00:02:42]  You know, I relocated down to Puerto Rico.
[00:02:45]  I got my asset management company down there.
[00:02:47]  I have a bank down there.
[00:02:49]  And yeah, it's a great place to live.
[00:02:51]  I highly recommend it.
[00:02:53]  But here, if you're in New York City, not only do we not avoid the federal income tax, but we get to get hit with the biggest state income tax as well.
[00:03:02]  And they're going to all rob us.
[00:03:03]  Well, they're going to raise that too.
[00:03:04]  They're already talking about trying to compete with California to be the highest tax spot in the country.
[00:03:10]  But, you know, not only are taxes going to go up, right?
[00:03:13]  Because government is getting bigger, right?
[00:03:16]  Despite what Donald Trump wants to talk about, these big tax cuts, right?
[00:03:20]  Government is much bigger now than it was when Trump was elected.
[00:03:23]  It's spending a lot more money.
[00:03:24]  No, he's bragging about the trillions of dollars that he spent on building up the military.
[00:03:29]  Well, where'd that money come from?
[00:03:31]  It's been borrowed.
[00:03:32]  We still have to pay for that.
[00:03:33]  You have to pay for it.
[00:03:34]  I'm in Puerto Rico.
[00:03:36]  But, you know, so in the future, taxes have to go up to pay for everything we just put on a credit card, right?
[00:03:43]  When you borrow to buy something, you don't get it for free.
[00:03:46]  So government is a lot more expensive now.
[00:03:48]  They're going to have to raise income taxes.
[00:03:51]  I don't even care if Donald Trump gets re-elected.
[00:03:53]  Taxes are going up under a Republican president in 2021.
[00:03:58]  But obviously they're going to go up a lot more if we have a Democratic president.
[00:04:02]  But the other tax that's going to eviscerate people is the inflation tax.
[00:04:07]  And in order to avoid that, you know, then you got to get out of the dollar.
[00:04:10]  You got to get out of the dollar.
[00:04:10]  You have to own gold or other assets like that that are hedges against inflation.
[00:04:14]  But all those taxes are just going to decimate a lot of people.
[00:04:19]  Yeah, it's more important, I think, to pay attention to government spending and the increase in the money supply because direct taxes, I mean, it's, you know, that's what you see.
[00:04:29]  But all of that stuff is basically a tax or it's the inflation is a tax that builds slowly.
[00:04:37]  And the spending is just a promise for future taxes.
[00:04:39]  So basically.
[00:04:40]  Right.
[00:04:40]  But the real cost of government is what it spends.
[00:04:45]  So if you have a politician trying to pretend that they're reducing taxes, they're not actually reducing your taxes if they're making government more expensive.
[00:04:55]  If government spending is going up, then it costs more to pay for government.
[00:04:59]  And you have to pay for it one way or another.
[00:05:02]  The Republicans are good at pointing out when it comes to Democratic social programs that there's no such thing as a free lunch.
[00:05:09]  But they're not very good about that when it comes to their own tax cuts where they increase government spending while they are reducing the revenues to finance that spending.
[00:05:20]  So if you're not paying through one pocket, you're paying through the other one.
[00:05:23]  And it's through debt and through inflation and a diminished standard of living.
[00:05:28]  And so Trump is being disingenuous when he talks about, hey, I've cut your taxes.
[00:05:32]  He hasn't.
[00:05:32]  He's just changed the nature of the way we're being taxed to finance an even bigger government than the one that he inherited from Obama.
[00:05:41]  So if Trump really wanted to reduce the cost of government, he would be cutting government spending.
[00:05:47]  But he's doing the opposite of that.
[00:05:49]  And I remember the first, when he signed the first omnibus huge spending bill, the trillion plus bill, he said, he gave this speech like he was like, I would veto this.
[00:06:01]  Next time I'm going to veto this, I don't want to do this big spending.
[00:06:05]  And there's been two more since then.
[00:06:07]  He's signed on to both of them.
[00:06:08]  Yeah, I called out that BS the first time he signed it.
[00:06:11]  I said, look, if he's going to not sign one, this is the one not to sign.
[00:06:15]  Veto the first one.
[00:06:17]  Why like sign this one and then send the message that you're going to sign something like that?
[00:06:21]  I mean, if I were president, I would have vetoed it for sure.
[00:06:24]  I mean, in fact, if I were president, none of these spending bills would pass unless they could do it over my veto.
[00:06:30]  But, you know, then all you need is a few key senators that really want small government that would stand behind you.
[00:06:37]  And I wouldn't even let the national debt go up.
[00:06:41]  I mean, that was when I ran for Senate in 2010.
[00:06:43]  Unfortunately, I guess fortunately for me, I didn't win, but fortunately for the country, because I think I would have been a great senator.
[00:06:51]  But my real purpose was to try to be the one guy that stopped the debt ceiling from going up.
[00:06:58]  I just wanted to filibuster it because every time they have a big circus around raising the debt ceiling, they come out and they say, we need to raise the debt ceiling because America always pays its bills, which is kind of laughable.
[00:07:13]  Because if we paid our bills, we wouldn't have any debt.
[00:07:16]  There would be no ceiling to worry about.
[00:07:18]  The reason we want to raise this debt ceiling is so we can continue to not pay our bills and allow the bills to pile up unpaid.
[00:07:25]  Well, I wanted to be the guy that says, that's it.
[00:07:27]  We're not doing it anymore.
[00:07:29]  So let's shut down the government until you cut spending.
[00:07:32]  Because this is a real crisis that is building.
[00:07:36]  Everybody wants to ignore it.
[00:07:38]  They look at the stock market.
[00:07:39]  Oh, the stock market's at a record high.
[00:07:41]  The reason the stock market's at a record high is because the Fed is monetizing all this debt.
[00:07:45]  The Fed is buying all these government bonds to keep interest rates artificially low so that we don't have to cut spending.
[00:07:52]  But all of this is laying the foundation for a complete economic catastrophe.
[00:07:57]  I mean, far worse than the dress rehearsal that we went through in 2008, because the real thing is going to be a much bigger crisis.
[00:08:04]  Yeah.
[00:08:05]  And of course, tax policy pushes people into the stock market as well, because if you don't want to get taxed on everything and you want to retire when you have low interest rates like this, there's no way to just save money honestly.
[00:08:16]  Oh, how are you going to save money?
[00:08:18]  Everyone's gambling.
[00:08:19]  It's going to be worth less every year.
[00:08:21]  And the irony, too, is that when Donald Trump was a candidate, when he was running for office, he did a good job of calling out the BS economy.
[00:08:31]  He said it was a big, fat, ugly bubble, that Janet Yellen was doing political things and she was keeping interest rates artificially low to make Obama look good and to help him get reelected.
[00:08:42]  And that, oh, I'm going to do it different when I'm president.
[00:08:45]  We're going to have a real economy.
[00:08:46]  I'm going to drain the swamp and all that nonsense.
[00:08:49]  But of course, now that he's in office, he wants the Fed to do the exact same thing.
[00:08:53]  He's like, more QE, cut rates, right?
[00:08:56]  He wants the same artificial stimulus because the economy is the same.
[00:09:00]  For all the talk about how we have this great economy, it is the same economy that we had under Obama.
[00:09:06]  Well, and he's saying, you know, it's just so hilarious.
[00:09:08]  And I don't even think Donald Trump realizes how ridiculous it is.
[00:09:11]  But he goes, this is the strongest economy that we've ever had.
[00:09:14]  And also, why won't the Fed bring interest rates back down to 0%?
[00:09:18]  And you're like, well, you can have one or the other, but you can't have both of those arguments.
[00:09:22]  Well, I don't think I think Trump knows.
[00:09:24]  Look, did you remember Trump's stakes?
[00:09:27]  No, that was a business of it.
[00:09:29]  Yeah, it's a business he had.
[00:09:30]  And he marketed them as the greatest stakes in the world.
[00:09:32]  Now, what's the odds that those were the greatest stakes in the world?
[00:09:35]  That says marketing.
[00:09:36]  Trump is a marketing guy.
[00:09:38]  That's really what he does.
[00:09:39]  He's a branded, right?
[00:09:40]  His whole idea behind his name was luxury, high-end.
[00:09:44]  He did all kinds of stuff.
[00:09:46]  He did the apprentice.
[00:09:47]  It's all make-believe.
[00:09:48]  Really, that's what he's great at.
[00:09:50]  That's all he's ever done.
[00:09:50]  And that's what he's doing.
[00:09:52]  Because he's the president and he wants to sell himself and he wants to get reelected.
[00:09:56]  He has to say, this is the greatest economy ever because I'm the president and therefore the economy is the greatest ever.
[00:10:03]  And therefore, you have to re-elect me because, you know, if you want to keep this great economy.
[00:10:08]  But the greatest economy ever is not much different from the worst economy since the Great Recession because the numbers are pretty similar.
[00:10:15]  The GDP is growing no faster under Trump really than it did under Obama, maybe a little bit more.
[00:10:21]  But think about all the debt because the debt is going up faster now.
[00:10:27]  The budget deficits are bigger.
[00:10:29]  And the Fed is actually printing money faster now than it was when they were officially doing QE.
[00:10:35]  So we have record fiscal and monetary stimulus, but we don't have that much extra GDP growth to show for it.
[00:10:41]  Yes, the unemployment rate is lower, but it was falling the whole time Obama was president.
[00:10:46]  And when Trump was running for office and the unemployment rate was 5% or whatever it was, Trump said, don't believe that 5%.
[00:10:55]  It's a lie.
[00:10:55]  It's a fraud.
[00:10:57]  The real rate is 20%, 30%, 40%.
[00:11:00]  I mean, every time he said it, it got higher, what the real rate was, right?
[00:11:03]  Now, all of a sudden, when the unemployment rate is under 4%, now we have to believe it.
[00:11:08]  Right.
[00:11:08]  Right.
[00:11:08]  But what happened to the 20, 30%?
[00:11:11]  It's the same metric.
[00:11:12]  Yes.
[00:11:12]  Yeah.
[00:11:12]  They measure it.
[00:11:13]  And by the way, he was, Trump the candidate was absolutely right that so many of these government numbers are just complete bullshit.

=== UBDI Data Verification (03:11) ===

[00:11:20]  I mean, of course, these numbers, it's like they don't count people who give up and stop looking for work.
[00:11:25]  So of course that's going to make your unemployment rate look better.
[00:11:27]  It's like the CPI when energy or housing goes up.
[00:11:30]  They just go, oh, well, we're not going to count that anymore in the basket of goods.
[00:11:34]  And they also don't count people who are working part-time while they're looking for a full-time job.
[00:11:38]  Right.
[00:11:38]  Right.
[00:11:39]  So if let's say you had a good job and you were, I don't know, maybe you were making $70,000, $100,000 a year and you lost your job.
[00:11:47]  And so while you're looking for a job, you're, you know, you're working part-time, you know, at McDonald's.
[00:11:51]  Now all of a sudden, you're employed.
[00:11:53]  Oh, you're not.
[00:11:54]  So the employment number would show no change in that economic change right there.
[00:11:58]  It's like, oh, yeah, same thing.
[00:11:59]  You have a job.
[00:12:00]  Yeah.
[00:12:00]  And then another problem that's really skewing the numbers is all the people in the gig economy that can never be unemployed because they're self-employed.
[00:12:08]  Right.
[00:12:08]  So you don't, if you can't lose your job, if you're working for yourself, driving an Uber, even if you're barely driving it, you're not unemployed because you can't lose your job because you're working for yourself.
[00:12:22]  So there's so many people now that are kind of totally out of that official system, which is why when they go back and they say, hey, this is the lowest unemployment rate in 50 years, that's a lie because 50 years ago, they counted the people who were disgruntled.
[00:12:37]  They counted the people who were working part-time, who wanted to work full-time.
[00:12:42]  So it was a much more honest number than what we have now.
[00:12:46]  Yeah, no, absolutely.
[00:12:47]  All right, guys, let's take a quick second.
[00:12:48]  I want to thank our sponsor for today's show.
[00:12:51]  It's a great company that's built on libertarian principles from a fan of the show.
[00:12:56]  The company is called UBDI.
[00:12:58]  We're very excited to have them on board.
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[00:13:08]  UBDI removes the incentives for brands that track you online, creating a platform where consumers can group together and sell their data directly to companies all while remaining completely anonymous.
[00:13:20]  Here's how it works.
[00:13:21]  Companies are already tracking you online and grouping you with other people to sell your data.
[00:13:26]  UBDI allows you to reclaim millions of data points and securely store them in an encrypted data vault only you can access.
[00:13:34]  By answering targeted survey questions like why you switch from Uber to Lyft and grouping these with other members, your data becomes even more valuable than what tech companies can offer.
[00:13:44]  With UBDI, the data also verifies you're a real person, not a bot, which is why brands and even pollsters would rather buy it from you.
[00:13:51]  As more users join the UBDI platform, the incentives for companies to track us online will be removed from the marketplace.
[00:13:58]  The best part is that with UBDI, you will make 80% of the profit when you consent to share your data with companies.
[00:14:04]  This means you can make as much as $1,000 a year in passive income in your pocket.
[00:14:08]  And considering this is your data, you might as well profit from it.
[00:14:12]  So right now, you can click the link in the episode description to download the UBDI app.
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[00:14:26]  Check them out, UBDI.
[00:14:28]  And if you want to take that survey, the custom tag is P-O-T-P.

=== Profit From Your Data (06:30) ===

[00:14:32]  All right, let's get back into the show.
[00:14:33]  So I wanted to talk a little bit about, because I recorded a podcast yesterday, but a lot of things have happened with the Iran situation since then.
[00:14:42]  I was listening to your show.
[00:14:44]  I think you recorded yesterday.
[00:14:46]  Yeah, on my podcast, on your podcast talking about the Iran situation.
[00:14:50]  I thought you made some really great points.
[00:14:51]  I will say, because we're being harsh on Trump, and I've been very harsh on Trump through this whole Iran escalation, I thought he did a good, reasonably good job this morning for what you can expect out of a president.
[00:15:04]  I thought the statement he made about blaming Obama for the Iran deal, I don't like that.
[00:15:10]  Blaming Iran for the situation in Yemen was just insane.
[00:15:14]  I mean, this is Saudi Arabia and the Obama administration's fault and Trump's fault for continuing it.
[00:15:19]  That being said, I appreciated that he at least said, we're still open to talk with Iran.
[00:15:25]  We want a good future together.
[00:15:27]  It could have been worse.
[00:15:28]  Oh, I agree with you.
[00:15:29]  I mean, it could have been a lot worse and it still might get worse.
[00:15:32]  Yes.
[00:15:32]  I mean, I wouldn't jump to any conclusions.
[00:15:35]  But, you know, again, this is another inconsistency between candidate Trump and President Trump.
[00:15:41]  I mean, he was, oh, we never should have gotten into Iraq.
[00:15:44]  I was against that war.
[00:15:45]  Let's get all our troops home.
[00:15:47]  Well, okay, they're still there.
[00:15:49]  And in fact, then the Iraqis vote to kick us out.
[00:15:52]  And he's like, we all want to leave.
[00:15:54]  Well, there's a perfect excuse.
[00:15:56]  They're saying leave.
[00:15:57]  He's like, well, we're not going to leave until you pay us back for these Air Force bases.
[00:16:01]  No, that's right.
[00:16:02]  Which is like, how they, I mean, it's not like, you know, they asked us to build those bases.
[00:16:07]  But, you know, we're spending all this money.
[00:16:09]  I mean, I kind of feel like he's trigger happy, though, because he keeps talking about the trillions that we borrowed to build up a military that was already pretty good.
[00:16:17]  I mean, he acts like we had no military before he was president.
[00:16:20]  He says that it was a complete disgrace.
[00:16:23]  We had nothing.
[00:16:24]  And now we have this great military.
[00:16:25]  But three years ago, we didn't.
[00:16:27]  I thought the military was pretty good three years ago.
[00:16:29]  It was probably already bigger than we needed and certainly bigger than we could afford because we're broke.
[00:16:35]  We're borrowing the money from China and other countries in order to do it.
[00:16:38]  And the Fed is printing money in order to pay for all this.
[00:16:42]  So why not just cut back on government spending?
[00:16:44]  But instead, it seems like we're getting more entrenched in the Middle East.
[00:16:49]  He's got more troops going over there.
[00:16:50]  They're not coming back.
[00:16:51]  They're going the other way.
[00:16:52]  No, and what you just said, I mean, is just such an important point.
[00:16:56]  I mean, if Donald Trump really has some desire to leave, the Iraqi parliament just voted us to leave.
[00:17:03]  This is the opportunity to go, hey, guys, you know, kill, you know, try to save face somehow, killed this terrorist guy.
[00:17:10]  Okay, now we're getting out of there.
[00:17:11]  Job complete.
[00:17:12]  If ever he was going to do it, this is the chance to do it.
[00:17:15]  And of course, Donald Trump, what he'll do over and over again is he'll have some rhetoric that indicates that he doesn't want to fight these wars.
[00:17:24]  He'll say we're leaving, but we never do.
[00:17:27]  It always continues.
[00:17:28]  And the argument that, oh, my God, the Republicans would make under Barack Obama that we need to rebuild the military.
[00:17:35]  I've said it's the Republican version is the military and the Democrats version is like public education.
[00:17:42]  They always claim they're underfunded.
[00:17:44]  No matter what the numbers demonstrate.
[00:17:46]  And you'll be like, but funding is through the roof.
[00:17:49]  It's more funded than any public education sector in the world.
[00:17:52]  The military is more funded than any military that's ever existed, but it's still underfunded.
[00:17:56]  The problem isn't that we're not spending enough.
[00:17:59]  The problem is that we're spending too much.
[00:18:01]  Oh, my God.
[00:18:01]  I mean, because the best thing that would happen to education is the government spent no money on it if we just privatized it.
[00:18:08]  And so we would actually have efficient quality education where the schools cared about the kids instead of just about the bureaucracy.
[00:18:17]  I mean, they're just perpetuating a bureaucracy.
[00:18:19]  No one gives a damn about the kids.
[00:18:21]  Really?
[00:18:21]  Right.
[00:18:21]  And so everybody is overpaid and the government wastes a fortune.
[00:18:25]  But the problem is with Republicans, since they want to spend so much on the military, they're willing to spend a lot on the welfare programs to get the spending that they want.
[00:18:36]  And so when everybody talks about how bipartisanship is good, that's a disaster.
[00:18:41]  When these guys work together, nobody is safe because everything gets spent.
[00:18:45]  And that's what Trump has been doing.
[00:18:47]  He's been working with the Democrats.
[00:18:49]  I mean, we're getting more military spending, which we don't even need.
[00:18:52]  But in order to get more military spending, we have to agree to more welfare spending.
[00:18:57]  Yeah, it's not a good thing.
[00:18:58]  And there's no cuts to entitlements.
[00:19:00]  Entitlements are just going like cancer.
[00:19:02]  Look, I was trying to make this point on my last podcast, but it's not, these things are so related.
[00:19:07]  It's not a coincidence that Ron Paul, the only Republican who was good on monetary policy and good on tax policy, was also against these wars.
[00:19:17]  It's not a coincidence because the truth is, for all these other Republicans who might say really good things about domestic government policy, but then want to fight every single war.
[00:19:25]  Well, guess what?
[00:19:26]  You're never going to abolish the income tax if we're the world police and we're the empire of the world.
[00:19:31]  You're never going to have honest monetary policy if we have to go official wars.
[00:19:35]  If in order to get more military spending, you have to sign on to more welfare and other programs.
[00:19:41]  I mean, you have to be against government spending.
[00:19:44]  And the problem is, too, if you try to tell the Democrats, oh, we can't have this new program because we can't afford it.
[00:19:49]  Well, what do you mean we can't afford it?
[00:19:51]  You know, we have all this military spending.
[00:19:55]  How do we afford that?
[00:19:56]  I mean, so, you know, we're running up the bill.
[00:19:58]  We might as well run it up some more.
[00:19:59]  So you don't have the ability to be against government when you're for more government in one aspect.
[00:20:07]  But if we just simply said, look, we're going to have a lot less government.
[00:20:10]  We're going to have a smaller government.
[00:20:11]  I mean, I personally believe that the single most important expenditure for the federal government should be defense.
[00:20:19]  I mean, I think defense should be more than 50% of the budget, but I think it should be more than 50% of a tiny budget.
[00:20:25]  It's a very small budget.
[00:20:27]  In fact, maybe it should be 90%.
[00:20:30]  I mean, even when it was 50%, I don't think it was enough.
[00:20:34]  But I don't want to grow defense.
[00:20:36]  I want to shrink everything else more than defense so that we can return most of these domestic functions to the states or they shouldn't be done at all.
[00:20:47]  I mean, that was the vision of America was a federal government that was predominantly focused on external matters, on war and national defense, and everything else was left to the states or local.

=== Defense Spending Debate (14:54) ===

[00:21:02]  I mean, we still call it the United States of America, but that's almost become a meaningless term.
[00:21:07]  I mean, it's just USA.
[00:21:09]  It's just, you know, it's this one federal government that's bigger than any government that's ever existed.
[00:21:14]  I know.
[00:21:15]  And it's unfortunate because the reason that we became so wealthy was because we were a free society with limited government.
[00:21:23]  That was the secret of America's success.
[00:21:26]  And, you know, we have not been nearly as successful with a lot of government.
[00:21:31]  And of course, the government's going to get bigger and bigger.
[00:21:33]  Yeah, that is the scary part.
[00:21:36]  And I will say that a lot of people are counting the possibility out, but there's been more and more articles about Bernie Sanders having a real shot at this thing.
[00:21:46]  Oh, he's going.
[00:21:47]  I mean, he's, you know, if the DNC doesn't, you know, mess around with him like they did last time, he's got a real shot.
[00:21:53]  Well, I said this, you know, the real story, and I was saying this, you know, back then, the real story of the 2016 election was not that Trump won, but the rise of the popularity in Bernie Sanders and the fact that he almost beat Hillary.
[00:22:08]  Yeah.
[00:22:09]  And that shift to the left of the Democratic Party is significant.
[00:22:15]  And, you know, obviously the Republican Party has shifted massively to the left too, because Donald Trump is now considered a conservative when he's closer to a Democrat really than a Republican as far as his policies.
[00:22:27]  So the whole nation has moved left.
[00:22:29]  The Republican Party has moved left.
[00:22:31]  The Democratic Party has moved left.
[00:22:33]  So we now have a Democratic Party and a socialist party.
[00:22:36]  But you go back to even 2012.
[00:22:39]  I talked about this on my podcast yesterday because I was telling people about the YouTube video that I shot back in 2012.
[00:22:45]  I don't know if you saw this one, but I was at the Democratic National Convention that year.
[00:22:50]  I was at both.
[00:22:51]  And so for kicks, I decided to pose as a liberal.
[00:22:56]  Oh, yeah.
[00:22:56]  So I went undercover as an idiot, right?
[00:22:59]  And so basically, I said the stupidest things I could think of.
[00:23:03]  And people were saying that, hey, you're the smartest guy here, which ironically was the case, right?
[00:23:07]  But so I was going around and I was asking people if they would sign on to my amendment to the Democratic platform.
[00:23:13]  I wanted a new amendment.
[00:23:15]  And my idea was to ban corporate profits, to make it illegal for a corporation to have a profit.
[00:23:20]  And it was like so many people are like, yeah, that's a great idea.
[00:23:22]  How do we do that?
[00:23:23]  That sounds great.
[00:23:24]  And, you know, there were some people that didn't quite agree with me until I persuaded them that I was right by saying really dumb things that they agreed to.
[00:23:33]  But I put that video up.
[00:23:35]  You can see it on my, it's got over a million views.
[00:23:38]  But If the DNC, the delegates back in 2012 were basically in the closet socialists, imagine how much worse it's going to be now.
[00:23:48]  Imagine the 2020 convention.
[00:23:50]  Because back then there was no Sanders or Warren.
[00:23:55]  So as left as they were in 2012, they're farther.
[00:23:59]  Oh, I mean, it's pretty drastic.
[00:24:01]  I mean, if you ran on Obama's 2008 platform at this point in the DNC, you'd be considered a right-winger.
[00:24:08]  I mean, and he was the most progressive presidential candidate at the time.
[00:24:11]  Oh, look at the left.
[00:24:12]  I mean, they look at this guy, Pete Bootiges, who's pretty far left, and they think this guy is like a sellout.
[00:24:17]  Like, you might as well be a Republican as far as the.
[00:24:20]  No, the guy is arguing for reparations for illegal immigrants who come into the country.
[00:24:28]  And he's considered the moderate in the field.
[00:24:31]  I mean, you know, like Nancy Pelosi is now considered a moderate when she butts heads with AOC.
[00:24:36]  It's like, oh, this moderate gatekeeper, Nancy Pelosi.
[00:24:39]  I mean, like, I'm not that old.
[00:24:39]  And I remember Nancy Pelosi is the San Francisco liberal.
[00:24:42]  Like, she was far left.
[00:24:44]  No, we've never had, I mean, we had guys back in the 70s when we had, you know, when Nixon was a pretty liberal Republican.
[00:24:50]  And then we had guys like, you know, Hubert Humphrey that came up or McGovern, these guys.
[00:24:56]  And they were pretty left wings.
[00:24:57]  And they lost because the country wasn't ready for people, you know, that liberal.
[00:25:04]  They're ready now, unfortunately.
[00:25:05]  And these guys are to the left of McGovern and Humphrey.
[00:25:09]  And unfortunately, see, because what happened was the reason that Trump won, and I was one of the few people that thought Trump had a real shot at winning.
[00:25:16]  I didn't think it was a sure thing, but I thought he had a better chance than everybody said, right?
[00:25:23]  Because I thought the polls weren't really going to do it justice because I knew that the economy was not nearly as good as everybody was pretending.
[00:25:32]  And I knew there was a disgruntled voter that Trump was tapping into as an outsider who's going to drain the swamp and make America great again.
[00:25:41]  Well, I don't think that's going to play again because after four years, if you're in the heartland and you were like a Reagan Democrat that voted for Trump, and maybe you're kind of in the middle or a union guy, but here it is four years later and you're really not better off.
[00:25:58]  You don't have a better job.
[00:26:00]  You have less savings.
[00:26:01]  Your cost of living has gone up.
[00:26:03]  Trump seems like he's just made the swamp deeper.
[00:26:07]  I don't think that a lot of people are going to feel to take a chance, but then you've got a Democratic socialist promising to make your life better with free stuff.
[00:26:19]  I think that that message unfortunately is going to sell.
[00:26:23]  Especially we talked earlier about the education system, which put education in quotes, but we've basically dumbed down the electorate to the extent that people actually believe this nonsense.
[00:26:34]  And they actually think that they can get something for nothing from government.
[00:26:39]  But these policies too, that Trump has championed, cheap money, big deficits, yeah, people that are rich on paper have gotten richer.
[00:26:50]  And so, but to the average guy, it's more of the same.
[00:26:52]  Hey, you're not, you know, you ran against the stock market in 2016.
[00:26:57]  Now you're saying we should vote for you because the Dow's at a record high?
[00:27:00]  Yeah.
[00:27:00]  No, and he's falling into the same, it is the same problem that the Democrats had, is that Obama was bragging about this recovery.
[00:27:08]  And so many people, particularly in the middle of the country, were like, we did not participate in this recovery.
[00:27:14]  And that's why people like Trump and Bernie Sanders had a lot of crossover appeal because a lot of those same people were kind of like, yeah, I mean, I don't know.
[00:27:21]  You're telling me there's some huge recovery, but I'm not feeling this at all.
[00:27:25]  And of course, when you have a recovery built on record high government spending and artificially low interest rates, like really artificially low interest rates, where do the profits go?
[00:27:34]  I mean, where do the spoils go?
[00:27:36]  They go to the politically connected and to the Wall Street casino.
[00:27:40]  And then people kind of blame this on capitalism.
[00:27:42]  Of course.
[00:27:43]  And they go, oh, well, this is the capitalist system.
[00:27:45]  Yeah, it's another phony recovery.
[00:27:47]  And, you know, when people say, yes, we, yeah, capitalism isn't working.
[00:27:51]  It's not working because we don't have it.
[00:27:53]  If we had capitalism, it would work.
[00:27:55]  But we have government that infuses itself into the capitalist system.
[00:27:59]  And, you know, there's actually a name for that, fascism, is really what we have, which is ironic because like the AOC is the world, they want to accuse the Republicans of being fascists.
[00:28:09]  But in reality, AOC is a fascist.
[00:28:12]  Bernie Sanders is a fascist.
[00:28:14]  Fascism is a form of socialism.
[00:28:18]  Communism is one form.
[00:28:19]  Fascism is another form.
[00:28:21]  But that's what they're espousing.
[00:28:22]  Now, they're not Nazis.
[00:28:24]  They're not espousing racism.
[00:28:26]  But Mussolini didn't have any of that.
[00:28:27]  I mean, they're like Mussolini, Italian fascists, is what they want.
[00:28:31]  That's the type of socialism that they believe in.
[00:28:36]  But the reason that we have these problems, though, is because of that fascist attitude where we've turned over so much of the economy to the government.
[00:28:44]  The government is getting involved in the banking system and everything that we do.
[00:28:49]  And then they screwed up, especially like look at healthcare.
[00:28:52]  Healthcare and education are the two biggest disasters where the prices keep going up and the quality goes down.
[00:28:58]  And that's thanks to government.
[00:29:00]  And the left says, well, the solution is we need even more government because they blame capitalism for the problems that they create.
[00:29:08]  But if you look at the areas where the government has minimal involvement, like technology, no one's complaining about the high cost of a cell phone or a television set.
[00:29:21]  The stuff that the free market comes up with gets better and gets cheaper.
[00:29:25]  Yeah, this was one of the arguments.
[00:29:26]  I remember hearing you making this point years ago.
[00:29:28]  This was one of the arguments that really converted me from being kind of a left-leaning Democrat to a fanatic libertarian.
[00:29:36]  That you just, you know, it's like, well, why is that?
[00:29:38]  Why is it that?
[00:29:39]  Because you can so easily see, like, there are things that are way more important than healthcare or education that we don't even think about.
[00:29:46]  I mean, like, shoes.
[00:29:47]  You know, like shoes are way more important.
[00:29:50]  Try going through life without health insurance and then try going through life without shoes.
[00:29:53]  You know, like one's going to be way harder than the other one.
[00:29:56]  But nobody is going, oh, how come these poor people don't have shoes?
[00:30:00]  We got poor kids walking around in like $130 Jordans.
[00:30:04]  And it's like, oh, because the market is just taking care of it so we don't think about it.
[00:30:08]  But you could easily see a scenario where if the price of shoes were very high, you could have some Bernie Sanders being like, we should have nationalized shoe care or whatever.
[00:30:18]  All that would have to happen is like some Democrats said, look, you know, shoes are a human right.
[00:30:23]  Nobody should have to walk around barefooted.
[00:30:26]  Why should the rich people have all the nice shoes?
[00:30:28]  We need the government to be in charge of providing everybody with shoes.
[00:30:32]  If they did that, then shoes would cost a fortune, right?
[00:30:34]  Right.
[00:30:35]  I mean, and they would suck.
[00:30:36]  I mean, because the best example of that, and I laugh when I, you know, I watch these Democratic debates because everybody now is so pissed off about the student debt, right?
[00:30:46]  All the Democrats are, this is a terrible students have all this debt, right?
[00:30:51]  But they never reflect on why they have all that debt.
[00:30:55]  It's because of their programs.
[00:30:58]  Because these are government loans, either government insured loans or direct government loans.
[00:31:03]  I think now they're all government loans.
[00:31:04]  Well, Obama changed that.
[00:31:06]  Yeah.
[00:31:06]  But the whole idea about the government funding education, that didn't exist.
[00:31:11]  I mean, it started with the GI Bill, but that was just for the soldiers.
[00:31:15]  But by the time it became mainstream, kind of in the 1960s, this is what the government did, right?
[00:31:21]  Young people were able to vote because we lowered the voting age, unfortunately, down to 18, right, during the Vietnam era, right?
[00:31:27]  So now you have a bunch of 18-year-olds voting.
[00:31:30]  So how do you get 18-year-olds to vote for you?
[00:31:32]  Well, they're going to college.
[00:31:34]  Let's give them something free associated with college.
[00:31:36]  So prior to the government getting involved in the 60s, the way people went to college, either your parents paid for it, because it wasn't that expensive.
[00:31:44]  Even Harvard or Yale were not that expensive.
[00:31:47]  But if your parents were middle class, lower middle class, or upper, lower class, you know, my dad's parents didn't have much money.
[00:31:54]  So if you didn't have a lot of money, you worked your way through college.
[00:31:57]  You know, you didn't get a loan.
[00:31:58]  You had a job.
[00:31:59]  My dad waited tables over the summers.
[00:32:02]  And that's all he did.
[00:32:04]  But that was enough for a room and board and tuition to get out of UConn in four years.
[00:32:08]  And so he had a summer job.
[00:32:10]  So what the politicians back then said is, hey, why are you working your butts off over the summer, right?
[00:32:17]  At a low-wage job, right?
[00:32:19]  You're not a college grad.
[00:32:20]  How about if you borrow the money instead, right?
[00:32:23]  And then after you graduate, when you have a degree and now you can earn more money, well, then you'll just pay back your loan.
[00:32:30]  And so you won't have to work as hard because, you know, you'll be getting paid higher.
[00:32:34]  And so in the meantime, you can have fun.
[00:32:36]  You can have a vacation in the summer, right?
[00:32:40]  And the 18-year-olds were like, yeah, that's great.
[00:32:42]  We'll just borrow the money and pay it back later.
[00:32:46]  And so the minute that happened, the colleges were like, whoa, this is like a gravy trade.
[00:32:52]  We can keep raising the prices because the kids are just getting the money for free from the government.
[00:32:56]  And of course, without these government guarantees, none of the banks would have made the loans because they would have been too risky.
[00:33:03]  But the government said, if this person doesn't pay, the government will guarantee it.
[00:33:08]  So now it was like loaning money to some guy, you know, with a C average in high school who had some liberal arts degree.
[00:33:16]  It was like buying a treasury, only with a little bit more.
[00:33:19]  So all of a sudden, every idiot can go to any school he can get into.
[00:33:23]  And the schools were like, yeah, this is a gravy train.
[00:33:26]  And so what happened over the years is the college bureaucracy kept growing and growing and growing.
[00:33:31]  And then instead of the free market pushing some pressure on colleges to cut costs, they just kept increasing the amount of the loans.
[00:33:40]  That's right.
[00:33:40]  And so the government created this monster.
[00:33:43]  Without the government, college would still be inexpensive.
[00:33:46]  Well, and here's how easy it is to just run the thought experiment in your head.
[00:33:50]  All you have to do is just imagine some 18-year-old who goes, hey, I want to start a business and I'd like a loan of $200,000.
[00:33:59]  And they walk into a bank and they go, hey, I'm 18.
[00:34:02]  I have no income, no job experience.
[00:34:05]  They go, well, what do you want to do?
[00:34:06]  They go, I don't really know what I want to do.
[00:34:08]  I just, you know, I'll kind of figure it out.
[00:34:10]  I'm going to drink a lot of beer.
[00:34:11]  I'm going to try to get laid.
[00:34:12]  You know, I'm going to hang out, but I'd like $200,000.
[00:34:14]  And you tell me what financial institution would not laugh them out of the door?
[00:34:19]  And that's the exact same thing that they're asking.
[00:34:22]  Under capitalism, none of these students would have been able to borrow money.
[00:34:24]  And that's a good thing.
[00:34:26]  Yes, it would have been amazing.
[00:34:27]  Because the money would have been available to fund entrepreneurs to start businesses that could actually hire these kids when they got a degree.
[00:34:34]  Instead, we blow all our savings on overpriced degrees and then there's no jobs.
[00:34:38]  And here's the irony, because not only did the government succeed in dramatically increasing the cost of a college degree, but at the same time, they destroyed its value.
[00:34:48]  Because before the government started subsidizing everybody to go to college, if you got a college degree, it actually meant something.
[00:34:55]  It means nothing now because everybody gets them.
[00:34:57]  That's why the AOCs, they want to fund it.
[00:35:00]  They want to make it instead of K through 12, K through college.
[00:35:04]  So, you know, they, because a college degree isn't even worth what a high school degree used to be worth.
[00:35:08]  You know, another video that I did, I was talking about on my podcast the other day.
[00:35:12]  I don't know if you saw the one I did in New Orleans, right?
[00:35:15]  Yes.
[00:35:16]  I went down, I went down Bourbon Street one night with a microphone and a camera and asking everybody, you know, did they go to college?
[00:35:24]  What did they major in?
[00:35:25]  When they graduate, what do they owe?
[00:35:27]  And every single person that was working had at least one degree.
[00:35:31]  Some of them had multiple degrees, but these are bartenders, pedicab drivers, bouncers at strip clubs, the strippers.
[00:35:38]  I mean, everybody went to college for what?
[00:35:42]  What's the point?
[00:35:43]  So now they have debt.
[00:35:44]  Now they're working.
[00:35:44]  It's like they used to say, you know, you need a college degree because otherwise you're going to end up working at McDonald's.
[00:35:50]  Well, now you get a college degree and you still work at McDonald's, except now you have to pay back your loans.
[00:35:55]  Yeah, it's really, and it is.

=== Fed Rate Hikes (15:39) ===

[00:35:57]  And people are crushed under the debt.
[00:35:58]  It's one of the worst types of debt that you can carry around.
[00:36:01]  And it's just such a crazy thing.
[00:36:03]  And the government crushed them.
[00:36:04]  You know, that's the government, right?
[00:36:05]  The government breaks your leg and then takes credit for giving you a crutch and claiming that, oh, see, without me, you couldn't walk.
[00:36:12]  But that's the irony of these Democrats.
[00:36:14]  And their solution to the student debt problem is to make college free.
[00:36:19]  And if you think it's expensive now, wait till you see how much more it's going to cost when it's free.
[00:36:24]  Yeah.
[00:36:24]  I mean, I have a lot of sympathy for, you know, forgiving the debt, but I recognize there's a big cost there to forgiving the debt.
[00:36:33]  But you can't forgive the debt unless you completely abolish forever government student loans.
[00:36:38]  Because if you forgive the debt, but you continue to make these loans available, well, then the moral hazard is crazy.
[00:36:43]  Then it's like, well, we know we're not going to have to pay the money back.
[00:36:46]  Right.
[00:36:46]  Right.
[00:36:46]  Because once the students know that they're never going to have to repay their loans, I mean, college will come with like a free car.
[00:36:53]  You know, they'll throw in all kinds of stuff.
[00:36:55]  Well, let me ask you more about the idea of forgiving the debt.
[00:36:58]  Like even if we theoretically were to get rid of the programs, because I do struggle with this one a little bit because I get the argument for it.
[00:37:03]  But isn't the other side of that that at this point, the way these debts are securitized and then chopped up and sold off to like, isn't it, aren't there going to be big economic ramifications for forgiving debt?
[00:37:15]  Unless the government wants to bail out the entities, the price.
[00:37:18]  Now, the government itself owns a lot of the debt now.
[00:37:22]  So it's the taxpayers that take that hit directly when the money isn't paid back.
[00:37:26]  But, you know, I do, you know, have sympathy for young kids who are duped by the system into taking out these loans.
[00:37:35]  Because when you're 18 years old, I mean, what do you know?
[00:37:37]  And you're told that, hey, if you don't go to college, you're nothing.
[00:37:39]  Your life is over.
[00:37:40]  Right.
[00:37:41]  And so you feel like you got to go.
[00:37:42]  You got no choice.
[00:37:44]  And then it costs a fortune.
[00:37:46]  And then you get out and you discover that you've been lied to and you have this overpriced degree.
[00:37:52]  And so, but this is the unintended consequence of this bad policy.
[00:37:56]  Now, unfortunately, or fortunately, depending on how you want your perspective, inflation is going to wipe out the debt anyway.
[00:38:01]  I mean, we're going to have massive inflation.
[00:38:04]  And so paying back your debt is not going to be that big a deal.
[00:38:08]  But when inflation wipes out the debt, it also wipes out everybody's financial assets because one person's liability is somebody else's retirement.
[00:38:16]  And so there's going to be a lot of problems when the value of the money collapses.
[00:38:21]  And that's where we're headed.
[00:38:23]  Yeah, it certainly looks like that's inevitable.
[00:38:25]  The question seems to be more or less when we're going to feel the impact of that, not if, because there's just no way that the government really doesn't have any option other than to print their, I shouldn't say this.
[00:38:39]  Not that there's not any option, there's no politically feasible option other than to print their way out of this disaster because no one's going to have the like, you know, the balls to just be like, hey, sorry.
[00:38:53]  And even Trump doesn't have the balls.
[00:38:55]  Right.
[00:38:55]  Right.
[00:38:56]  Because people think, oh, Trump is so courageous and he's doing all this stuff.
[00:38:59]  He hasn't touched Social Security.
[00:39:02]  He hasn't touched the debt.
[00:39:03]  I mean, if a guy like Trump, right, an outsider who says, I'm not a Republican Democrat, I'm going to make the country great again.
[00:39:10]  If even Trump can't touch the third rail, right?
[00:39:14]  What hope does any other normal politician have if with the political capital he might have had to just stand up and do the right thing?
[00:39:22]  Nobody is ever going to do the right thing until there's a crisis, right?
[00:39:26]  Because politicians, to them, the crisis is the next election.
[00:39:29]  And I don't want to jeopardize my winning that election by being the messenger that people want to shoot, by telling people, hey, you know, we got a big problem here.
[00:39:38]  I'd rather say we got the greatest economy in the history of the world and the deficits don't matter.
[00:39:43]  So let's crank up the printing presses and just keep on partying and look at how high the DAO is and keep jacking up consumer spending.
[00:39:51]  Let's just keep buying stuff.
[00:39:53]  You know, meanwhile, remember, Trump ran against the trade deficit.
[00:39:56]  Trade deficits are bigger than ever.
[00:39:58]  Right.
[00:39:58]  You know, it's not just the budget deficits going up, the trade deficit.
[00:40:01]  Trump said we were losing on trade.
[00:40:03]  Well, now we're losing more on trade.
[00:40:06]  Now, you know, in a way, though, we're not losing because we're living off of a subsidy, but it's all phony because we get to import all this stuff that we don't pay for.
[00:40:15]  We just run up the bill.
[00:40:17]  But this is going to come to an end.
[00:40:18]  I mean, the dollar can't hold this value.
[00:40:22]  It has so far.
[00:40:23]  We've kicked a can down the road for so long, we just assume we could do it indefinitely.
[00:40:27]  Yeah, I mean, I got to say, I'm personally shocked by how long they've been able to kick it down the road.
[00:40:33]  I would have thought that by, you know, by at least five, six years ago, we would have already been feeling the ramifications of this.
[00:40:40]  You and me both.
[00:40:41]  I mean, when I was doing all the TV shows in 2004 and five and six, and I was on every week and I was on all, and they were calling me Dr. Doom, and I was talking about the housing bubble and the coming financial crisis.
[00:40:53]  And I knew exactly what was going to happen.
[00:40:56]  I didn't think that we would make it this far without a bigger crisis.
[00:41:00]  I mean, because I thought the financial crisis before it happened and the bursting of the stock market bubble was going to set in motion a currency crisis and a debt crisis.
[00:41:10]  Because what I knew was going to happen, I knew we were going to go into this horrible recession, the worst since the Great Depression.
[00:41:15]  I predicted, you know, trillion dollar deficits and 10% unemployment.
[00:41:19]  All those predictions came true.
[00:41:20]  And I said, you know, the real estate market will lose 30% of its value.
[00:41:23]  Fannie Mae and Freddie Mac are going to go bankrupt.
[00:41:25]  I mean, all this stuff happened.
[00:41:27]  And then I also said that after it happens, we're going to print all this money.
[00:41:31]  We're going to slash interest rates.
[00:41:32]  The Fed's going to try to blow up the bubble and it's going to cause a dollar crash.
[00:41:37]  But it didn't happen.
[00:41:38]  Instead, the dollar went up.
[00:41:42]  And so they were able to blow up an even bigger bubble, which surprises me that they got away with it for a third time.
[00:41:47]  Well, in hindsight, what do you think it is that you got wrong about that aspect of it?
[00:41:52]  And I give you all the credit in the world because you precisely predicted the 2008 financial crisis.
[00:41:58]  But what is it?
[00:41:58]  Do you think that why people rallied to the dollar?
[00:42:01]  Was it the instability in Europe?
[00:42:03]  Yeah, a lot of that was QE in Europe and negative interest rates.
[00:42:09]  And it was kind of like on a relative basis, we were doing foolish things, but then everybody else started doing foolish things too that created a bid for the dollar.
[00:42:17]  And so that enabled us to take on a lot more debt than I thought we could.
[00:42:22]  But because that happened, that doesn't mean that we've just escaped the consequences.
[00:42:27]  It just means that there's more consequences.
[00:42:29]  That means that when the day of reckoning finally arrives, it's much worse.
[00:42:34]  There's a lot more to reckon with.
[00:42:36]  But a lot of people think, well, then it's never going to happen.
[00:42:39]  But, you know, people had the same attitude.
[00:42:41]  When I used to argue with people that housing prices were going to go down, they were so that's impossible.
[00:42:45]  Housing prices are never going to go down.
[00:42:47]  Why not?
[00:42:48]  Well, they've never gone down before.
[00:42:49]  Well, okay.
[00:42:50]  Well, that doesn't mean they're not going to go down.
[00:42:52]  Look at how high they are.
[00:42:52]  Look at how ridiculous.
[00:42:53]  I love that.
[00:42:54]  I forget what video because I've watched so many of your things, but I forget which one it was where you were.
[00:42:58]  I think it was the one where you were talking to the mortgage bankers, that video that you have on your channel where you were basically predicting it all.
[00:43:05]  And you go, well, housing prices are going to go down.
[00:43:07]  And they were like, well, they've never gone down before.
[00:43:08]  And you look at a chart and the prices are like this.
[00:43:11]  And you're like, well, they've never gone down before.
[00:43:12]  He's like, yeah, but they've never done this before either.
[00:43:14]  So maybe like the possibility of them going down is greater now than it was, you know, before this obvious bubble was built up.
[00:43:23]  But it does, I agree with you.
[00:43:25]  And I think there are some signs.
[00:43:28]  Like to me, one of the major signs was the Fed going back on their supposed tightening, which they know, you know, they almost took like a baby step toward tightening and then immediately pulled back on it, which seems to be an indication that they know they can't tighten, that this is not an option at this point.
[00:43:44]  Yeah, look, I mean, people still don't appreciate the significance of the Fed's about face.
[00:43:50]  And, you know, the whole time, right?
[00:43:52]  Because when they finally raised interest rates for the first time, it was December of 2015.
[00:43:59]  But they started talking about the hikes at the end of 2014.
[00:44:03]  And so the markets expected three to four rate hikes in 2015.
[00:44:07]  Instead, we only got one.
[00:44:08]  In the last meeting, I was saying we weren't going to have any.
[00:44:12]  And I was almost right until we had one.
[00:44:15]  But I thought, okay, we had one because the Fed felt embarrassed.
[00:44:19]  It was like they almost felt, okay, we're going to do one and be one and done.
[00:44:22]  But then as soon as they raised rates once, everybody said, okay, three or four more hikes.
[00:44:26]  And then they didn't raise rates again for a full year.
[00:44:29]  And it wasn't until Trump won the election and Obama was already a lame duck on the way out.
[00:44:34]  I believe that had Hillary Clinton won, the Fed never would have raised rates for a second time.
[00:44:38]  That one rate hike would have been all we did.
[00:44:41]  But because Trump won and everybody got excited about more fiscal stimulus and the stock market went up, that gave the Fed the ability and the leeway and maybe the confidence to slip a few more rate hikes in.
[00:44:53]  But then I could see in the fourth quarter of 2018, I started doing a lot of podcasts about how the Fed was done hiking.
[00:45:01]  And in fact, I was on Fox business two days before the last hike, this December hike.
[00:45:07]  And I said, this is it.
[00:45:08]  There's no more hikes.
[00:45:09]  This is the last one.
[00:45:10]  The next move the Fed's going to make is going to be a cut.
[00:45:14]  And I said, and then they're going to go back to QE.
[00:45:16]  Nobody believed that.
[00:45:17]  Everybody was saying, no, three or four more hikes in 2019.
[00:45:21]  They were all wrong.
[00:45:22]  In fact, I'm going to a conference in Vancouver in about one or two weeks.
[00:45:27]  And I'm going to collect on a bet that I made because I was on a panel in January.
[00:45:31]  And they were all saying the Fed's going to hike rates.
[00:45:34]  And I said, no, the next thing they're going to do is get a cut.
[00:45:36]  And so this guy wanted to bet me.
[00:45:37]  So we bet a gold coin.
[00:45:39]  I bet the next move would be a cut.
[00:45:41]  He met it would be a hike.
[00:45:42]  And he probably thought that was money in the bag because nobody thought there'd be a cut.
[00:45:47]  And of course, there was a cut.
[00:45:49]  And now that we've had three cuts, we had three cuts and we're back to QE.
[00:45:53]  Now, the Fed is pretending that it's not doing QE, but it's exactly what QE was, except they just don't call it that.
[00:46:00]  But if you look at the rate at which the Fed's balance sheet is growing, it's growing faster when they're not doing QE than when they were doing QE.
[00:46:08]  But the reason they're doing that is because they tried to take the heroin away from the drug addict, right, by raising rates and shrinking the balance sheet.
[00:46:17]  And then the addict went into withdrawal.
[00:46:19]  The stock market started to collapse.
[00:46:21]  We had the worst fourth quarter, the worst December since the Great Depression.
[00:46:25]  Real estate was going down.
[00:46:26]  Autos, everything that was interest rate sensitive was in floating.
[00:46:31]  And then the Fed turned on a dime and went back to QE because they needed more drugs.
[00:46:37]  And that's why the market's going up.
[00:46:38]  It's not because we have this great economy.
[00:46:40]  It's because the economy is so bad that the Fed had to rescue it with more of the same toxic medicine that caused the last crisis.
[00:46:47]  And now Trump gets to take credit for the stock market going up, but it's only up because the economy sucks.
[00:46:53]  Right.
[00:46:53]  And because the Fed is doing political things all over again.
[00:46:57]  Well, I like to think of it like this, just for like a thought experiment, just to back up the point that the economy sucks while Trump's bragging about how great this is the greatest economy we've ever had.
[00:47:07]  You just go, well, just imagine that the Fed came out and said that the Fed fund rate next year will be 7%.
[00:47:17]  Let's just say they said, just imagine 7%, which is not that high historically of a number.
[00:47:22]  Like it's kind of medium historically.
[00:47:25]  If they were to say that, the economy tanks.
[00:47:28]  And we all know that.
[00:47:29]  So it's like, how great can this economy be?
[00:47:31]  They don't even have to say 7%.
[00:47:33]  No, I'm just as a thought experiment.
[00:47:34]  Like, imagine.
[00:47:35]  But what if the Fed just said this?
[00:47:37]  We're just going to sit back and let the market recurring rates.
[00:47:41]  Like, we're just not going to, we're just not going to get involved, right?
[00:47:44]  We're just going to let the market set interest rates.
[00:47:47]  And if it's 5%, it's 5%, if it's 10%, wherever it goes to.
[00:47:50]  We're just going to sit back and let it happen, right?
[00:47:53]  Well, everything would implode.
[00:47:55]  Because the Fed is artificially manipulating interest rates to suppress them.
[00:48:01]  But the thing is, you have all these people that say they believe in the free market.
[00:48:04]  Well, that's not the free market.
[00:48:06]  That's government price fixing.
[00:48:07]  I mean, most people would say, yes, it's a bad idea for the government to fix prices, right?
[00:48:12]  We shouldn't let the government say this is the price of bread, this is the price of oil.
[00:48:17]  Let the market discover it because we don't want shortages.
[00:48:19]  We don't want surpluses.
[00:48:20]  But then they think the Fed should set the price of money or the price of interest.
[00:48:24]  No, of course not.
[00:48:25]  That's a very important thing.
[00:48:27]  It's the most important.
[00:48:29]  I mean, like, it's, you know, 50% of just about every transaction is some good for money.
[00:48:34]  And it's funny, as you mentioned, because so many of these like kind of Republicans, the Fox News types, and, you know, I like some of them, but they're so good on the minimum wage.
[00:48:45]  Like if you break, they will break down why the minimum wage is price fixing and you can't have that.
[00:48:50]  But the price of money is infinitely more important than what the minimum wage is.
[00:48:55]  I mean, it's only like 3% or 4% of workers who even make the minimum wage.
[00:48:59]  But what's the price of, you know, money affects everybody.
[00:49:02]  Of course, if you look at the numbers, right, we have record debt, right?
[00:49:06]  We have all the student loans, credit card debt, auto debt, everybody's loaded up with debt, the government, the federal government, the state governments, corporations, and nobody's saving any money.
[00:49:15]  Why is that?
[00:49:16]  Well, because interest rates are artificially low.
[00:49:19]  What would normally happen if the government went away, rates would start to go up because there's not enough savings and everybody wants to borrow.
[00:49:26]  And then higher interest rates would discourage borrowing, particularly consumer type borrowing.
[00:49:31]  We'd have more borrowing to finance capital investment.
[00:49:35]  We'd have a lot more savings because people would want to earn those higher interest rates.
[00:49:38]  And so the free market would work, but it's not being allowed to work.
[00:49:41]  And so we have this gigantic bubble.
[00:49:43]  But, you know, one of the reasons that the dollar didn't collapse, you know, and gold, you know, didn't go through the roof back then is because people did believe the Fed.
[00:49:53]  You know, when the Fed was saying this is temporary, this is, we're not monetizing the debt, we're going to shrink our balance sheet back to normal.
[00:50:01]  We're going to normalize interest rates.
[00:50:03]  Everybody kind of believed them.
[00:50:05]  But I don't think the markets are going to be fooled again because once the Fed is back at zero, which is where it's going, and once the balance sheet is $5 trillion, $6 trillion, right?
[00:50:15]  And it's just growing and the deficits are in the multiples of trillions, the Fed is not going to be able to pretend that it has an exit strategy.
[00:50:22]  It's going to be, okay, this is it, right?
[00:50:25]  We're never going to normalize rates.
[00:50:27]  The balance sheet is going to grow forever, right?
[00:50:29]  Inflation is going to be whatever it is.
[00:50:31]  I mean, forget about saying we're going to fight inflation.
[00:50:33]  They can't fight inflation.
[00:50:36]  They're saying that, okay, 2% is where we want inflation.
[00:50:41]  Well, initially, the Fed said we want price stability, which is prices are stable, right?
[00:50:46]  They don't go up.
[00:50:46]  They don't go down.
[00:50:47]  They're stable.
[00:50:48]  And the reason they did that is because before the Fed, prices went down every year.
[00:50:54]  And the Fed convinced us that that was a bad thing.
[00:50:57]  Why is that a bad thing?
[00:50:58]  Makes no sense.
[00:50:59]  Everybody wants the cost of living to go down.
[00:51:01]  No one's going to be upset if stuff is cheaper this year than it was last year.
[00:51:06]  But they make up this nonsense like, well, well, if prices go down, nobody will buy, which we know is nonsense because people buy computers and cell phones and TVs knowing that if they just wait, they can get it cheaper.
[00:51:18]  They don't want to wait.
[00:51:19]  They want it now.
[00:51:20]  Of course, it's so absurd that anyone could even argue.
[00:51:24]  You think about like, you remember like when flat screen TVs first came out and they were crazy expensive and it would be kind of a cool thing if you were at a house that had like a nice flat screen TV.
[00:51:32]  And now everybody has them because they're so affordable.

=== Next Recession Warning (15:08) ===

[00:51:36]  Right.
[00:51:36]  If the price, if the first flat screen TV was the cheapest and they went up every year, nobody would own one.
[00:51:41]  Of course.
[00:51:42]  It would just be the rich people.
[00:51:43]  It's because prices went down.
[00:51:45]  So they sold us on this bill of goods that the worst thing that can happen in an economy is that the cost of living goes down.
[00:51:51]  And so to make sure that the cost of living stays stable, we're going to have the Fed, right?
[00:51:55]  Well, the minute they did that, right, prices started to go up.
[00:51:59]  So then they redefined price stability as prices going up 2% every year, which is not stability.
[00:52:06]  But they said 2% is going to be the ceiling.
[00:52:08]  So we'll make sure that they don't go up more than 2%.
[00:52:11]  Then it became a target.
[00:52:13]  Oh, no, we need 2%.
[00:52:14]  Now it's like the floor.
[00:52:16]  Now, if it doesn't go up by 2%, that's a problem.
[00:52:18]  Well, they're going to go up by 3%, 4%.
[00:52:20]  And of course, the numbers aren't even honest.
[00:52:22]  They're rigged just like the unemployment numbers.
[00:52:24]  But let's say the official inflation rate got to 4%, right?
[00:52:28]  Which is 4% is what the official rate was when Nixon imposed wage and price controls.
[00:52:32]  That's how bad 4% was.
[00:52:34]  And we're not that far from that.
[00:52:36]  But what would the Fed do?
[00:52:37]  Because if inflation is 4%, you got to make interest rates 6%, 7%.
[00:52:43]  Well, you can't do that when you've got, we have a $23 trillion national debt now.
[00:52:48]  Maybe it'll be $25 trillion by the time that happens.
[00:52:51]  How do you raise interest rates when there's so much debt?
[00:52:54]  Everybody would default.
[00:52:55]  So they're in a situation where they can't fight inflation.
[00:52:59]  They just have to surrender to it.
[00:53:00]  They have to pretend, but the pretense is going to be dropped.
[00:53:03]  So when people realize that there's massive inflation coming, that the dollar is a bottomless pit, well, then that's it.
[00:53:09]  Then we're going to have a currency crisis.
[00:53:10]  Then we're going to have a sovereign debt crisis.
[00:53:12]  And then, you know, unfortunately, it's going to be very fertile ground for the socialists to blame it all on capitalism.
[00:53:18]  No, and they will.
[00:53:19]  And you can already see that.
[00:53:20]  I mean, they've already started with that.
[00:53:21]  They did it after the financial crisis.
[00:53:24]  And, you know, it's weird is that even if you're not like, even if you're not a hardcore free market, you know, economics type, if you're not an Austrian economist or something like that, but even just like if you're a mainstream economist who's looking at this, even a Keynesian, you know, mainstream, I repeat myself, but if you're looking at this and going, okay, well, even you guys would have to acknowledge we're about due for another recession.
[00:53:46]  I mean, in the next, what, five, six years, something like that, the odds are, even according to you guys, we're going to have another recession.
[00:53:52]  So what are we going to do when this next recession hits?
[00:53:55]  Like, what's the plan?
[00:53:58]  We have record high government spending and these crazy low interest rates.
[00:54:01]  So what's the stimulus that you guys are going to advocate for?
[00:54:04]  Like, how does this work?
[00:54:05]  Yeah, I mean, it's just so bad.
[00:54:07]  I mean, that's why the Fed wants to do whatever it can to delay that recession from happening because it's already shot all its bullets as if those bullets actually did anything.
[00:54:16]  I mean, all they did is postpone the pain by making the problem worse.
[00:54:20]  But yeah, people don't realize if you look at this so-called recovery, we have more debt now than before.
[00:54:27]  I mean, normally in a recovery, the budget deficits are coming down, right?
[00:54:31]  This is the longest recovery, yet the deficits are the biggest they've been of the recovery.
[00:54:36]  So if we're running these huge deficits during good times, what the hell is going to happen during bad times, right?
[00:54:41]  If consumers are loaded up with debt, I mean, that's the other irony of it.
[00:54:45]  I mean, during a good economy, you should be paying down your debt, right?
[00:54:50]  I mean, you should have more savings.
[00:54:53]  You shouldn't be maxed out on all your credit cards in a good economy.
[00:54:57]  Even by Keynesian logic, even by the standard Keynesian economic models, which are flawed to begin with, that you need stimulus in a downturn, but when the economy is good is when you should be pulling back and tightening.
[00:55:10]  I mean, if Keynes had argued for perpetual deficits, they would have laughed him out of town.
[00:55:15]  I mean, his idea was when times are bad, the government runs deficits, and then we pay them off when times are good so that over the whole business cycle, there was no net increase in debt.
[00:55:27]  Now, I don't believe that government spending helps.
[00:55:29]  I think it hurts, but at least Keynes understood that over the long term, you can't just run deficits forever.
[00:55:36]  You got to pay off the debt in good times.
[00:55:38]  Well, now in bad times, we run big deficits.
[00:55:42]  And then in good times, we run deficits too, just not quite as big.
[00:55:44]  And then when it gets bad, then we make them even bigger.
[00:55:47]  But at this point, the next recession is the last one.
[00:55:50]  I've been talking about it like an overdose.
[00:55:52]  We're going to finally overdose on the stimulus and we're going to die of it.
[00:55:56]  We're going to destroy the currency.
[00:55:57]  That's what's going to happen in the next recession.
[00:55:59]  And this economic expansion, if you want to call it that, has required more artificial stimulus than any previous expansion, yet it's the weakest on record.
[00:56:09]  I mean, it's lasted a long time, but it's a very weak recovery.
[00:56:15]  But imagine the severity of the next downturn because the Great Recession that we had in 2007 through nine, which was the worst downturn since the Great Depression, that was caused by the malinvestments and the misallocations of resources that happened during the years of the housing bubble.
[00:56:37]  And so that was fueled by 1% interest rates that lasted for one and a half years.
[00:56:42]  And then a artificially low pace to go back from 1% to 5%.
[00:56:48]  The Fed moved a quarter point every meeting.
[00:56:51]  And so it took another year and a half.
[00:56:53]  So you had like these three to four years where we had artificially low interest rates, no quantitative easing at all.
[00:56:59]  But during that, we built up enough imbalances that the recession was the worst since the Great Depression.
[00:57:06]  Imagine what's in store for us now.
[00:57:10]  We've had artificially low interest rates for way over a decade, including 0% for seven or eight years.
[00:57:15]  The Fed has moved its balance sheet up to $4 trillion.
[00:57:20]  So we've never had this much artificial stimulus.
[00:57:23]  So we've never had this many imbalances.
[00:57:25]  The problems have never been this great.
[00:57:27]  So when Trump talks about the greatest economy ever, it's the greatest bubble ever.
[00:57:31]  We've made the most economic mistakes ever.
[00:57:34]  This whole thing is an artificial high.
[00:57:37]  So when we go through this next bust, it's going to be that much worse because we've taken that many more drugs.
[00:57:44]  And so the withdrawal is much more severe.
[00:57:48]  So how does if it's like I definitely see where if so if interest rates are rise are raised in any meaningful way, I think it's easy for me to see how the economy tanks.
[00:58:00]  I mean, first off, there's a ton of adjustable rate debt that's still out there.
[00:58:04]  I mean, mortgages, credit cards, things that they could be the first ones to fall, the federal debt, all this stuff.
[00:58:11]  The other side, which I think is what you're suggesting is more politically likely to happen, is that we're just going to keep rates down at zero.
[00:58:19]  As long as we can.
[00:58:20]  But we already know.
[00:58:21]  So what happens then?
[00:58:22]  Like, what happens if they just go, you know, we've done this for 10 years.
[00:58:25]  Let's say we're going to do another 10 years or try at 0% interest rates.
[00:58:28]  Yeah, we know the breaking point was two and a quarter, right?
[00:58:31]  Two and a half, because that's how high they got last time.
[00:58:34]  Now we know that that breaking point is now lower because we have a lot more debt now than we had in the fourth quarter of 2018.
[00:58:42]  So we can't even get up that high.
[00:58:44]  So I don't know where the ceiling is now, right?
[00:58:46]  Right now we're at about one and a half.
[00:58:48]  I don't think we're going to be able to even maintain that level that much longer.
[00:58:52]  And it's, you know, the federal government is basically on an adjustable rate too, because all the debt is financed with de-bills.
[00:58:59]  But ultimately, what has to happen is that the dollar falls enough to the point where nobody is going to buy these bonds but the Federal Reserve.
[00:59:10]  I mean, when the Federal Reserve is the only buyer, not just a buyer of last resort, and then the dollar really collapses and inflation runs out of control.
[00:59:18]  I mean, that is coming.
[00:59:19]  I mean, most people think that, you know, hey, the debt's not a problem and we're never going to have to pay it back, right?
[00:59:24]  Which, of course, you know, I was going to laugh.
[00:59:27]  I mean, we're never going to have to pay it back.
[00:59:28]  Well, then, you know, we're not really borrowing it.
[00:59:30]  Then we're stealing.
[00:59:32]  What do the creditors think about this?
[00:59:34]  You know, they realize they're never going to get it back.
[00:59:37]  But the idea is, well, no, no, no, we'll pay them back by borrowing more from other people, right?
[00:59:41]  We're just going to run this perpetual Ponzi scheme.
[00:59:44]  But even if we don't have to pay back the principal, we have to pay the interest.
[00:59:49]  And, well, we could borrow the money to pay that.
[00:59:51]  But then, you know, if the confidence collapses in the dollar, then it doesn't matter if we can borrow money if you can't buy anything with it because the value has collapsed.
[01:00:01]  And, you know, if people start to worry about inflation, right?
[01:00:04]  If you've got a 10-year government bond and you're getting 1.5%, 2% on it, and inflation is 4% or 5% a year, what are you going to do?
[01:00:13]  You're going to hold that bond until it matures or you're going to try to get out.
[01:00:16]  So nobody's going to want to buy.
[01:00:18]  In a higher inflation environment, nobody is going to loan money to the U.S. government but the Federal Reserve.
[01:00:24]  But that's just, now you're talking Zimbabwe, the Weimar Republic.
[01:00:28]  I mean, that is where we're going.
[01:00:29]  The only way to stop hyperinflation, a collapse of the currency, is to swallow the medicine.
[01:00:37]  But the longer you wait, the bitter it's going to taste and the less likely it is.
[01:00:41]  But there is no easy way out of this.
[01:00:43]  Because if the Federal Reserve finally does the right thing, because it has no more choice, right?
[01:00:48]  It lets interest rates go way up, like Paul Volcker did.
[01:00:51]  Paul Volcker let interest rates go up to 20%.
[01:00:54]  Imagine what would happen if they went to 20% now.
[01:00:57]  They should actually go higher now.
[01:00:58]  We have a lot more debt now than we had back then.
[01:01:01]  And so the economy is far more screwed up than it was in 1980.
[01:01:05]  But if the Fed did the right thing, the stock market would crash.
[01:01:10]  I mean, it would go to 90%.
[01:01:13]  Real estate would crash.
[01:01:14]  Banks would fail.
[01:01:16]  All these banks that they think are solvent would fail.
[01:01:19]  But not only would the stockholders of the banks lose money, not only would the bondholders, but the depositors.
[01:01:25]  There's no money in the FDIC, not unless the Fed provides it.
[01:01:29]  But if the Fed is raising rates and fighting inflation, the bank accounts get wiped out.
[01:01:34]  I mean, and then the government has to tell people on Social Security, we can't send you a check.
[01:01:40]  We don't have the money.
[01:01:41]  It's gone.
[01:01:43]  We can't pay our retired workers, government pensions, all this stuff.
[01:01:47]  All these chickens are going to have to come home to roost.
[01:01:49]  And that's if we do the right thing.
[01:01:52]  But if we just say, oh, forget it, we're just going to keep printing money.
[01:01:54]  Well, then we're going to destroy the value of the money.
[01:01:56]  And everybody, yeah, you're going to go to the bank and you'll have your money and you'll get your social security check, but then take it to the supermarket and try to buy something.
[01:02:03]  That's going to be the problem.
[01:02:05]  Yeah.
[01:02:05]  And of course, any country could just print a ton of money.
[01:02:08]  That's not going to solve any problems.
[01:02:10]  I mean, you could go to a third world country tomorrow and just turn on the bank.
[01:02:12]  Yeah, and these idiots, you know, they call it modern monetary theory now.
[01:02:16]  They just think that, you know, I mean, it's not modern.
[01:02:18]  You know, it's not money and it's not even a theory.
[01:02:21]  It's complete nonsense.
[01:02:23]  But they think, yeah, there's no limit.
[01:02:24]  We could just print as much money as we want until nobody wants that money.
[01:02:28]  There's no intrinsic value there.
[01:02:30]  And so the MMT argument, and I will say that they're somewhat sophisticated in the way they present this argument sometimes, but it's really so flawed.
[01:02:37]  And they'll basically say like, so their example they'll use is they'll say something like, well, hey, if I were to just print a piece of paper and give it to you, it's completely useless, right?
[01:02:45]  But let's say I print a piece of paper and give it to you, and there's a guy waiting outside with a gun who will kill you if you don't have this piece of paper.
[01:02:52]  Now all of a sudden this piece of paper is worth a lot to you.
[01:02:55]  And you're like, well, yes, in some theory, the government can force you into wanting something, but that's not making anybody wealthier.
[01:03:02]  That's not, it doesn't matter.
[01:03:03]  Again, if modern monetary policy was true, you should be able to go to sub-Saharan Africa tomorrow and go, guys, I've solved all your problems.
[01:03:12]  Just print a whole bunch of money, and now you're going to be a wealthy country.
[01:03:16]  I mean, what you're talking about is, you know, what gives value to the dollar is the fact that you need dollars to pay your taxes.
[01:03:26]  And so if you don't want to go to jail or whatever, you have to have these dollars at the end of the year.
[01:03:32]  And so people are trying to accumulate dollars.
[01:03:35]  But that doesn't mean that people are going to want to hold those dollars.
[01:03:39]  They can always get them back later.
[01:03:45]  But if tax receipts denominated in your currency put a floor, I mean, why do we have hyperinflation in places like Argentina or Venezuela or we have it in Germany or Zimbabwe?
[01:03:58]  I mean, just being a legal tender and being the currency that you have to pay your taxes in, you still have to have confidence in the long-term value of the purchasing power.
[01:04:08]  And once the confidence is lost, well, it's not going to matter that you need it to pay your taxes.
[01:04:13]  And isn't the other aspect of this that very, very rarely comes up in the corporate press or in any, like that the dollar is the world reserve currency.
[01:04:24]  And there's nothing written in stone that says we always have to be the world reserve currency.
[01:04:30]  No, I mean, and if some of these signs start to become evident, the dollar could be abandoned, in which case, I mean, I don't even know what the ramifications of that would be at this point.
[01:04:40]  Well, for America, it would be cataclysmic in the short run because we benefit from the dollar being the reserve currency.
[01:04:46]  It enables us to live beyond our means.
[01:04:47]  It's what enables us to consume what we don't produce and borrow what we don't save.
[01:04:52]  But for the rest of the world, it's going to be a big win because they're having to subsidize us now.
[01:04:56]  They're losing from this system.
[01:04:58]  And we're going to lose the reserve currency status, but it's not going to be picked up by somebody else.
[01:05:03]  I don't think we're going to pass the torch to Europe or China.
[01:05:07]  Before the dollar was the reserve currency, there was no real reserve currency.
[01:05:11]  The reserve was money, gold.
[01:05:13]  Gold was the reserve.
[01:05:14]  Gold backed up all the currencies.
[01:05:16]  And so they were legitimate, not fiat currencies.
[01:05:19]  They were backed by gold.
[01:05:20]  What happened was after the Second World War, we did Bretton Woods.
[01:05:23]  America had all the gold.
[01:05:24]  We had the strongest economy.
[01:05:26]  We had all the gold.
[01:05:27]  And we basically convinced the world, hey, instead of backing the Deutsche Mark or the yen with gold, back it with dollars.
[01:05:35]  We got your gold here.
[01:05:37]  We got it in Fort Knox.
[01:05:38]  And the dollars were convertible.
[01:05:39]  Yeah, you can get your gold whatever you want.
[01:05:41]  It will store it for you.
[01:05:42]  You could trust us.
[01:05:43]  I mean, we've never defaulted before.
[01:05:44]  We're in the United States.
[01:05:46]  Just take $35 over to the Fed and we'll give you an ounce of gold.
[01:05:50]  And so you don't have to worry about storage fees.
[01:05:53]  We'll store it for free.
[01:05:55]  You can get interest because you can invest those dollars in treasury bills and you'll earn some interest, right?
[01:05:59]  You don't earn any interest on your gold.
[01:06:01]  So it seemed like a great deal until we screwed everybody over in 1971.
[01:06:05]  Because the minute we had the ability to print money, we just started running to big deficits in the 60s.
[01:06:13]  Guns and butter.
[01:06:14]  We went to the moon.
[01:06:15]  We fought the war on poverty.
[01:06:17]  We fought the war in Vietnam.
[01:06:20]  We did all kinds of stuff.
[01:06:21]  And we ran these deficits.
[01:06:23]  And so.
[01:06:24]  So this is when the Europeans started looking at, I think it was France and England.
[01:06:27]  Yeah, de Gaulle and France.
[01:06:29]  And they started looking at America fighting the war in Vietnam, having this war on poverty, having the space program, and they kind of called bullshit.
[01:06:37]  I don't think you actually are putting away gold for all these dollars.
[01:06:40]  Yeah, so de Gaulle started to say, I want my gold.
[01:06:43]  And so we were having this big gold drain.

=== European Deficit Lessons (08:36) ===

[01:06:45]  And then Nixon devalued the dollar twice, but it didn't stop because what they should have done is cut government spending and gotten rid of the deficits.
[01:06:53]  But they didn't want to do that.
[01:06:54]  So they devalued a couple of times and then they defaulted.
[01:06:57]  And we said, okay, that's it.
[01:06:58]  You can't get any, the dollar is just a piece of paper.
[01:07:01]  And we were able to paint them as being predatory.
[01:07:03]  Yeah.
[01:07:03]  Like they're trying to rob us of all our gold.
[01:07:05]  But then if you go back to the 1970s and we had all prices went up, why did that happen?
[01:07:10]  I mean, oil went from $3 a barrel to $30 a barrel, right?
[01:07:14]  You had gold went from $35 to $800.
[01:07:17]  The reason that prices went up is because the dollar, which used to be backed by gold, was then backed by nothing.
[01:07:22]  And so the dollar lost all this value.
[01:07:24]  And then the price of everything in terms of depreciating dollars went up.
[01:07:27]  And that was why we had a big cost of living increase in the 70s.
[01:07:30]  That's why so many women had to go work because their husbands' paycheck had been so diminished by inflation that they had to go get a job.
[01:07:37]  And so we had a big decline in our standard of living.
[01:07:40]  But the dollar still has been functioning as a reserve, even though it's backed by nothing.
[01:07:46]  And so that's enabled these massive deficits.
[01:07:48]  This is what's going to come to an end.
[01:07:50]  The world's going to go back to gold, right?
[01:07:53]  And everybody's going to have to produce if they want to consume.
[01:07:55]  They're going to have to save if they want to borrow.
[01:07:58]  And this whole phony economy that is predicated on the dollar being the reserve currency on having a half a trillion dollar trade deficit every year, you know, we're not going to be able to have this economy.
[01:08:09]  We have a GDP that's 70% consumer spending.
[01:08:12]  How are we going to have that GDP when we can't import when all the products that are on the shelves in Walmart aren't there anymore?
[01:08:18]  What's the price of gold has been doing pretty good for the last five years or so, right?
[01:08:23]  So what's the, where is it at now?
[01:08:25]  Well, you know, it bottomed out four years ago.
[01:08:28]  Right.
[01:08:29]  And since then, it's up over 50%.
[01:08:31]  Right.
[01:08:31]  Nobody's really paying attention.
[01:08:32]  Yeah, it's very quiet.
[01:08:34]  They're paying attention to the fact that over the last four years, the stock market's up 70%.
[01:08:39]  But in terms of gold, it's only up 20% in terms of real money.
[01:08:44]  And I think that's going to keep happening.
[01:08:46]  In fact, gold stocks, I talked about this on Fox News today or Fox Business.
[01:08:50]  Over the last four years, gold stocks are up about 120%.
[01:08:53]  So people are making more money in gold stocks than in the SP 500.
[01:08:57]  And I think that's going to continue and, in fact, accelerate because the U.S. stock market's a big bubble.
[01:09:02]  The only thing that's fueling it is the Fed.
[01:09:05]  But this type of monetary policy is much more bullish for gold than the U.S. stock market.
[01:09:10]  If people really understood what was going on, that's what they'd be buying, where they'd be buying gold stocks, which is what I'm buying personally.
[01:09:16]  I got my clients.
[01:09:17]  We have a lot of gold stocks.
[01:09:18]  I manage a gold fund.
[01:09:20]  I also manage stock portfolios that are in conventional type stocks, although I'm buying stocks outside the United States predominantly because I'm really worried about what's going to happen to this economy when this bubble pops.
[01:09:32]  And I think the investors are underestimating the probability that Trump's a one-termer, which I think is very interesting because before Trump won, nobody thought he could win.
[01:09:43]  Now no one thinks he could lose.
[01:09:45]  Well, you know, things happen that you don't expect.
[01:09:48]  And what would happen that would shock people is if Bernie Sanders was the next president, which could happen.
[01:09:56]  That's not going to be good for business.
[01:09:58]  It's not going to be good for anybody.
[01:09:59]  It's not even, especially the people who he thinks he's going to help.
[01:10:01]  I mean, the people who suffer the most under socialism are the poor, the middle class.
[01:10:06]  They get eviscerated.
[01:10:09]  I mean, just like who suffers the most from these student loans?
[01:10:12]  The students that got stuck with the bill.
[01:10:14]  The colleges make out like a bandit, right?
[01:10:16]  But the students suffer.
[01:10:18]  So whenever the government comes in and promises to help you, well, you know, you better run the other way because you're going to suffer.
[01:10:24]  It's not going to be the rich.
[01:10:25]  I mean, the rich will find a way to minimize the impact.
[01:10:30]  But, you know, the jobs will go away.
[01:10:32]  The prosperity will go away.
[01:10:35]  Do you think there's some like, and I'm just trying to find almost a silver lining to this, but one of the things that I almost think the silver lining to if Bernie Sanders were to get the nomination, we'll wrap up in a second.
[01:10:49]  I know I've kept you over time here, but Bernie Sanders getting the nomination is at least in some ways then will be forced into a national conversation about socialism.
[01:11:00]  You know what I mean?
[01:11:01]  Like if he's running that at least like we're going to have to have this debate for once now, it's not really as clear as capitalism versus socialism.
[01:11:08]  I mean, none of the Republicans are as capitalist as me or you would like them to be.
[01:11:13]  I mean, even the stuff with Medicare, it's really funny that they go, well, Bernie Sanders wants Medicare for all.
[01:11:18]  That's socialism.
[01:11:19]  And it's like, so what's the Republican position?
[01:11:21]  We want Medicare for old and poor.
[01:11:25]  It's not that different, but it's definitely worse what Bernie Sanders wants.
[01:11:29]  But it's not going to be really capitalism versus socialism.
[01:11:34]  It's how much socialism do we want.
[01:11:37]  And all Sanders is saying, we're already socialists.
[01:11:39]  We'll just have a little bit more of it.
[01:11:41]  Because if it's good to have Medicare for some, then why can't we have it for everybody?
[01:11:45]  I mean, if it's good that we provide government school for free until high school, why can't we provide it for free through college?
[01:11:52]  I mean, because Trump is not going to be able to say, well, we don't have the money.
[01:11:55]  Well, so what?
[01:11:56]  I mean, we'll just borrow it, just like we're borrowing it now.
[01:11:59]  I mean, you can't say that it'll run up the deficit.
[01:12:02]  And I don't know.
[01:12:03]  You know, when you argue, like if somebody says we should raise the minimum wage, the minute you're in favor of the minimum wage, because the Republicans don't come out and say, let's get rid of the minimum wage.
[01:12:13]  They say, well, we don't want to raise it.
[01:12:15]  Well, why not?
[01:12:16]  If it's good, if $7.25 is good, why isn't $10 better?
[01:12:21]  Because once you've accepted the principle that the government should set the wage and that there's no negative consequences of the government doing it, well, then you've lost the argument.
[01:12:30]  That's right.
[01:12:30]  So it's going to be hard if we're just going to argue because a Republican is never going to out-promise a Democrat.
[01:12:37]  So if you have Trump with his version of socialism, well, Bernie Sanders is going to sound like a much better deal because he's going to promise even more free stuff without consequences.
[01:12:50]  So it's not going to be like, hey, we should stop being a so-called capitalist country.
[01:12:56]  It's just we need to make capitalism work is what he's going to be saying with democratic socialism, just like Sweden or whatever he's going to come up with, even though Sweden is very different than he has a perception.
[01:13:08]  And in fact, Sweden became rich before it moved to the left.
[01:13:12]  And then once it realized it was bankrupting itself, it moved the other way.
[01:13:16]  And so a lot of the reforms that have taken place in Sweden over the last decade or two, Bernie Sanders would be very much against.
[01:13:22]  No, that's right.
[01:13:22]  And the other aspect that Bernie Sanders will never talk about with these, you know, like Sweden or Denmark or any of the Scandinavian countries is that it's like all their social programs, they ain't paid for by the billionaires.
[01:13:33]  No, they're paid for by every working person.
[01:13:36]  Like, I mean, if you looked the American people in the eyes and said, what do you think about paying a 25% consumption tax?
[01:13:43]  And then when you make $60,000 a year, like a 65% income tax, they'd be like, I want no part of these social programs.
[01:13:51]  But Bernie Sanders sells it as the billionaires.
[01:13:54]  They'll pay for it.
[01:13:55]  Yeah, well, look, I mean, look, you remember when the income tax first started in 1916, right?
[01:14:02]  Before that, the government collected taxes from the middle class through tariffs.
[01:14:06]  That was pretty much how the government functioned.
[01:14:08]  And what the politicians said was, hey, why don't we just make the rich pay?
[01:14:12]  We'll get rid of the tariffs.
[01:14:14]  We'll have an income tax on the 1%, right?
[01:14:16]  For Rockefeller and Carnegie and Vanderbilt.
[01:14:19]  Just a tiny tax, right?
[01:14:20]  Just the very rich people are going to pay it.
[01:14:23]  And then you won't have to pay any more tariffs.
[01:14:24]  And you'll get the government for free.
[01:14:27]  Not like there was that much government back then anyway.
[01:14:29]  But hey, let's get rid of these tariffs.
[01:14:33]  And so as soon as they did that, they just started jacking the income tax rate up.
[01:14:37]  And pretty soon, it went up to, by World War I, just not that many years later.
[01:14:41]  It was up at what, 70%?
[01:14:43]  And of course, now middle class are paying rates that are much higher than anybody ever imagined for Rockefeller.
[01:14:50]  Now they're doing the same thing with a wealth tax.
[01:14:52]  Oh, we'll just have this wealth tax for the billionaires.
[01:14:55]  Yeah.
[01:14:56]  How long will it take before the rate goes all the way down?
[01:14:59]  Now, at least the income tax was unconstitutional.
[01:15:02]  And then they amended the Constitution to allow it.
[01:15:05]  The wealth tax is also unconstitutional.
[01:15:07]  But they probably won't even bother.
[01:15:09]  They'll just put it in there.
[01:15:10]  And there's also, of course, lots of, you know, there's lots of really strong legal arguments that the income tax was unconstitutionally passed, wasn't ratified correctly by the states, that it's that there's no law in the books and all that stuff.

=== Protecting Net Worth (04:56) ===

[01:15:21]  Yeah, well, but you know, they're going to enforce it.
[01:15:24]  But at least, you know, people knew they amended the Constitution because they knew that.
[01:15:28]  you know, inherently the government had no authority to tax income.
[01:15:32]  Well, they have no authority to tax wealth.
[01:15:34]  Wealth is not the same as income.
[01:15:35]  Well, that's absolutely right.
[01:15:36]  And it also, I mean, it reminds you of, it reminds me of, you know, like the fact that even when they had prohibition of alcohol, they did have an amendment to the Constitution.
[01:15:44]  But this whole war on drugs, I mean, they never even bothered to, I mean, if we needed an amendment.
[01:15:49]  Well, look, they just raised the you can't buy cigarettes until you're 21.
[01:15:52]  Yeah, like we're.
[01:15:54]  Why is it that we needed an amendment to the Constitution to prohibit alcohol, but we don't need an amendment to the Constitution to prohibit all of these things?
[01:16:00]  Well, because back then the Constitution mattered.
[01:16:02]  People believe it.
[01:16:03]  People actually respected it.
[01:16:04]  It was the law.
[01:16:05]  And that shows you it has nothing to do with what's written down on a piece of paper.
[01:16:07]  It's a matter of what.
[01:16:08]  Yeah, look, the government does whatever the hell it wants.
[01:16:10]  I mean, it's a corrupt government.
[01:16:12]  And, you know, we're no longer a real constitutional republic.
[01:16:15]  We're not a nation of laws.
[01:16:16]  We're a nation of men.
[01:16:17]  And, you know, unfortunately, bad men.
[01:16:20]  And, you know, we're a democracy, you know, where people could vote for any idiotic thing they want.
[01:16:25]  Right.
[01:16:25]  And that's why, you know, the Democrats, they want to lower the voting age to 16.
[01:16:29]  Of course.
[01:16:29]  Of course, they probably, they want it to lower it to six.
[01:16:31]  Yeah, they want convicted felons.
[01:16:33]  They want anybody who's going to vote for it.
[01:16:34]  They want to get rid of the Electoral College.
[01:16:36]  They want to make Puerto Rico a state, D.C. a state.
[01:16:39]  I mean, all this crazy stuff.
[01:16:40]  They're going to end up scaring you back into Connecticut if they make it a state.
[01:16:43]  Listen, I've kept you over the time we said, but I really do appreciate so much you coming on.
[01:16:48]  Why don't you let people know where they can find your stuff, where they can listen to your excellent show, where they can go invest their money if they want to protect themselves against the coming crash?
[01:16:56]  Yeah, so I do my podcast, you know, usually a couple a week, the Peter Schiff Show podcast.
[01:17:02]  You could listen to it at shiftradio.com, you know, iTunes, you know, the stitcher of these places.
[01:17:08]  I have a YouTube channel where I post all my podcasts, so you can check them out on YouTube.
[01:17:13]  Also on my YouTube channel, I have a lot of those interesting videos, a couple that we discussed.
[01:17:17]  You know, there's hundreds and hundreds of them going back almost 10 years.
[01:17:21]  So you could, you know, you could spend a lot of time on that.
[01:17:23]  I have a number of books you can get on Amazon, some of them even on ShiftBooks.
[01:17:27]  Some of my dad's old books I have.
[01:17:29]  But my most recent one is The Real Crash, America's Coming Bankruptcy.
[01:17:34]  So you can read that one.
[01:17:36]  But for people who want to protect their wealth or their life savings, which I would strongly advise that people do, ShiftGold is my gold company where we sell physical gold and silver, the website, shiftgold.com.
[01:17:50]  If you have a more substantial net worth and you have retirement money and you want to invest globally, I help people manage money in foreign stocks and bonds and gold stocks and things like that.
[01:18:05]  And you can get a hold of me through our website.
[01:18:07]  It's EuroPacific Capital.
[01:18:09]  It's a company.
[01:18:10]  It's Europac.com, E-U-R-O-P-A-C dot com.
[01:18:14]  And you could fill out a form online or talk to one of my representatives about funding up an account or transferring an account over.
[01:18:21]  I think a lot of people, they think they've made a lot of money in the U.S. stock market, but they're going to find out that they haven't.
[01:18:29]  We've had two stock market bubbles in the last 20 years.
[01:18:33]  And both times the market got cut in half.
[01:18:35]  And in terms of the NASDAQ, in 2000, the NASDAQ was down 80%, went from 5,000 to almost 1,000.
[01:18:42]  But each time the Fed was able to blow up a bigger bubble and bail everybody out.
[01:18:47]  It's not going to happen this time.
[01:18:48]  When they try, they're going to destroy the dollar and they're going to wipe everybody out.
[01:18:52]  And so before that happens, people need to divest of U.S. dollar assets, U.S. stocks and bonds, and set up an account with some foreign assets because that's the tax.
[01:19:03]  We talked about it earlier on the show.
[01:19:05]  It's not just the income tax that's going to kill everybody.
[01:19:07]  It's the inflation tax.
[01:19:09]  And it's going to push everybody into much higher tax brackets, including the wealth tax, right?
[01:19:14]  Because all of a sudden prices go up 10 times, 20 times, and maybe your paycheck goes up five or 10 times, right?
[01:19:20]  You're all of a sudden, you know, in a higher bracket or, you know, you had a net worth of 5 million, but all of a sudden your net worth is 50 million, but it feels like 2 million.
[01:19:32]  But all of a sudden, oh, you're in this, you know, these higher taxes.
[01:19:35]  So people are going to need to take measures now to protect themselves.
[01:19:38]  And that's what I'm helping people do through my brokerage firm, my asset management company.
[01:19:43]  All right.
[01:19:43]  Well, absolutely.
[01:19:44]  Go check all that stuff out and be smart with protecting yourself because this is whether it's next year, two years, or five years from now, some craziness is coming.
[01:19:55]  The roosters are coming home.
[01:19:57]  So anyway, thank you so much.
[01:19:58]  I really appreciate it.
[01:20:00]  I've learned a ton from you over the years.
[01:20:01]  So it's really, it's a thrill for me to have you in studio.
[01:20:04]  And let's do this again next time you're out there.
[01:20:06]  I'm happy I can influence the younger people.
[01:20:08]  There you go.
[01:20:09]  The baby boom has some value.
[01:20:11]  So there you go.
[01:20:13]  All right.
[01:20:13]  Thanks for listening, guys.
[01:20:14]  We'll be back on Friday with a brand new episode.
[01:20:16]  Goodbye.
[01:20:17]  All right.