All Episodes
Previous Next
Sept. 4, 2020 - Ron Paul Liberty Report
29:41
What To Do When The Bubble Bursts - With Porter Stansberry

What is happening as the massive bubble is bursting in the US economy? Is there any hope to survive - or even prosper - in the age of Fed bubbles, Covid-19 hysteria, and riots in the street? Financial publisher and author Porter Stansberry joins the Ron Paul Liberty Report with his views on what's wrong and what we can do about it. Website: https://www.2020Warning.com

|

Time Text
From Agora's Letters 00:09:58
Hello, everybody, and thank you for tuning into this special Liberty Report.
Today, I have a special guest, and we will be talking about libertarian philosophy and investments, and just what's going on in the world.
The guest I have today is Porter Stansbury.
He's well known.
He has a lot of people following what he's doing.
He has a big operation, a lot of people doing a lot of research for him.
And he has been very accurate in many of the predictions that he has made.
I came across Porter back in 2015 because I was invited to attend one of his conferences.
And since then, we've had an association and we've worked together.
But I remember back at that time that when I was invited to join Porter, is that I had a call from Doug Casey.
And I thought, well, this guy must be okay if he knows Doug Casey and he knew the other thing.
So I've gotten to know Porter a lot more since then.
But today, we're going to be talking about anything he wants to talk about.
It'll be current events and finances and whatever.
Porter, welcome to our program today.
Well, it's certainly an honor and a pleasure, Dr. Paul.
Thanks for having me.
Well, wonderful.
You know, and I'm sure you recall back in 2015, you had a conference up in Tennessee, and that's when we got to know each other.
But usually the questions I probably had for you then and I have now, and I think our viewers would be interested, is a little bit about your background.
I mean, you have a big operation and you're well known and you have so many subscribers.
But how did you get started?
Did you know what was going on in the world when you were 15 years old?
Or did you become knowledgeable later on?
And how did you finally get around to doing this advisory letter?
Well, I think like a lot of libertarians, you know, I was just a bookworm.
And I found the ideas of Henry Hazlitt.
And then I went on to read things like Eat the Rich by our mutual friend P.J. O'Rourke.
And then I stumbled onto Agora's letters.
Bill Bonner is a big publisher, and he introduced me to Doug Casey.
And I got a job working for them out of college.
And from there, you know, really just one thing led to another.
I have a, you know, in college, I went to University of Florida and I learned all the things that mainstream teaches you about political science and about how the republic is supposed to work and how democracy is supposed to work as opposed to, of course, how it really does.
And I was just very impressed when I met Doug and Bill and started traveling around the world with them.
I was just very impressed about how the Austrian economics really described the world as it was and how much better that was as a forecasting tool because it really revolves around human incentives and human action, human decisions.
And I just don't see any of our mainstream political leaders or thinking or thinkers talking about the realities of how the public makes decisions and how they respond to incentives.
Well, of course, that's what the Austrians focus on.
So you officially started your letter and your advisory service in 1999.
But were you doing exactly the same thing immediately?
Or did you start off with a small little newsletter that just grew?
Or was it always the same theme of being advising people and giving them information to help them make their investment decisions?
Yeah, definitely.
I have had a passion my entire career for helping individuals level the playing field with the folks on Wall Street.
And I started in 1996 working as an associate at Agora for Bill, for Bill Bonner, and went from there.
And then in 1999, I left and I started my own publication because I was quite a bit younger than they were, and I could really see in ways I don't think they understood yet how the internet was going to change the economy and change our way of life.
And so my first independent publication was all about the internet and how it was going to change things.
And you might have remembered seeing the advertisement that I launched my business with.
The headline was: There's a new railroad across America, and it's making some people very rich.
And it was just all about how, you know, things like Amazon and Qualcomm and the growth of bandwidth and Moore's Law was going to really change the way that we do things, everything from, for example, digital photography to retail.
And so that having some insight into that, because I had a background in computer programming as well, really gave me a big advantage in the markets for a number of years.
But the real advantage that I think we have at Stansbury Research is we are very well grounded in Austrian economics.
And we, you know, I think we have a much better idea of what the numbers mean than what the mainstream media and other financial advisors would say.
Right.
And you've had some successes.
I know you were on top of it when the housing bubble was building and warning people and getting prepared for that.
But you also have to keep up with all current events.
And I can't think of more challenging times than what we're going through right now.
You know about the business cycle, you know about the Fed and the distortions there, and you can't anticipate financial bubbles.
But then right now, we have thrown in the mix here: we have the coronavirus, the overreaction on coronavirus, we have Black Lives Matter, and almost not too much concentration on the Federal Reserve and the financial bubble.
And I've contended that they're putting too much concentration, and it's very important, the lockdown, you know, and what's happening in the streets, but they're not talking about the real source of how the financial bubbles develop.
So, how do you handle that?
Do you just put it all together?
Do you talk about the lockdown and the damaging and tell people some of the things that they have to do and how to invest because of that?
And of course, the Black Lives Matter is significant.
We can't ignore that.
But I think that unless they're reading your advisories and a few others, not too many people concentrate on basic monetary policy.
Yeah, we're definitely on the same page there.
But if I may, let me just bifurcate a little bit.
I have a large research company, Stansbury Research, and there are a lot of good analysts and writers there.
And they have different areas of specialty.
For example, I think the two things that my business does the best is biotech research and, ironically enough, property and casualty research.
And they're not really related, but we have just staffs with decades of experience in those fields.
So we produce very insightful industry work in those categories.
I'm probably the one person at my company who cares the most about these ideas about the overall impact of monetary policy.
And I've probably written more about it than any other writer.
So I just want to be careful that I'm speaking for myself here and not necessarily for all the writers or all the thinkers at Stansbury Research.
They all are entitled to their own opinions.
But Dr. Paul, I will tell you that I wrote something as far back as 2010 when I saw how the Fed was responding to the mortgage crisis.
And what I know about history and what I know about monetary policy and theory is that once democracies begin to print money to pay for the government's bills, they never stop.
And that has a corrosive effect on society.
And the thing that I wrote was called The End of America.
And of course, a lot of the people in the mainstream media snickered when I said that this would lead to violence in the streets.
It would lead to a breakdown of societal norms.
It would lead to more and more and more printing and a total devaluation of the dollar and the loss of our world reserve currency status.
And everyone made fun of me.
But virtually everything I wrote in that, and that was over a decade ago now, has come to pass.
And what I see is that both the response to COVID and the rise of the Black Lives Matter movement are nothing more than what happens in every historical situation where you have a government that begins to behave like ours with its monetary policy.
It leads to a tremendous centralization of power and it leads to a degradation of civil society.
And in both cases, that's what you have here.
You have a government that's well overstepped its constitutional authority to tell people to remain in their homes.
And of course, you have a societal breakdown where people genuinely believe now that they can't get ahead in American society because of the color of their skin.
And this is apparently, you're not allowed to say this anymore, but I find those ideas absurd and genuinely bad for people.
When you tell a whole segment of your society that their own initiative and efforts aren't going to count, you're lying to them.
But more importantly, you're giving whole swaths of them this limitless excuse to not try their best, to not participate in society in a normal way.
And that's why you see the rioting and all the other things that have happened.
So even though the micro causes of all these things may be due to specifics, but the reality is that this entire genre that we're living through is completely a part of and a normal part of what we have done with the monetary base.
You know, with all the news and activity and the markets being so rocky, when you think about this, the political situation, the economic situation, the runaway deficits and all, where do you come down emotionally in a sense?
Optimism Amid Uncertainty 00:06:34
Do you end up with a bit of optimism because we can correct these things?
Or are you saying, hey, do you have, do part of your investor or your writers, do they talk about why you have to move out and go overseas?
I mean, there's all types of reactions to this.
But I always work hard at it.
And some days it's more difficult.
I like to think that if we did the right things, we should be optimistic.
But where do you come down on this side of optimism and pessimism?
Well, given that my two mentors in business were Doug Casey and Bill Bonner, I have to say that compared to them, I'm a wild-eyed optimist.
I'd like to believe that I'm a steely-eyed realist.
And what I would tell you, Dr. Paul, is once you understand what is behind the collapse in civil society, once you understand what's behind the soaring valuations in the stock market, the soaring price of gold, et cetera, it actually becomes pretty easy to make a lot of money.
And if you look at the track record of our advisories, we've done incredibly well over this 10-year period because we had a very good sense of what was going to happen in the markets.
Our primary financial strategist is Dr. Steve Sugarud, and he has been calling uniformly for, originally he called it the Bernanke bubble, and then he predicted what he's calling the melt-up.
But what he's saying is that the primary recipient of all of this excess liquidity would end up being the stock market.
And if you have followed that advice and you followed our recommendations over the last decade, you have made a tremendous, a tremendous amount of money.
Now, of course, we both know that that money is going to buy you less and less.
And as that destruction in value accelerates, at some point, the markets will, of course, turn.
There will eventually be a panic sell-off.
And if I knew when that would happen, then it would be a lot easier to do our job.
So while we're telling people to enjoy the fruits of this inflation, we're also, of course, warning people that you're going to be a whole lot better off if you put some of your savings in gold.
If you have some real estate offshore, I think that's a sensible precaution.
We've also recommended things like farmland and timber that have historically provided wealthy people and wealthy families with refuge in times of domestic crisis.
So I just think what you have to do is do the best you can to make hay while the sun is shining, but be aware that the storm clouds that are building right now are the most serious our country has ever seen.
I'll bet you watch the polls to some degree.
How much weight do you place on that?
Because, you know, a lot of people anticipate which side wins.
And I know you've talked a little bit about this, but do you, on purpose, keep an eye on this?
And are some of your arguments or recommendations?
Are they based on who you think will win the election?
I know that probably makes sense to a lot of people, but honestly, you know, Dr. Paul, as libertarians, I have serious objections to both of the major parties.
I personally wouldn't be interested in voting for either of the major candidates right now.
And I don't think no matter which candidate wins, that the economic fortunes of our country are going to change very much.
When you look at the unfunded liabilities that we already have that are cooked into our whole legal structure, there isn't anything anyone's going to be able to do to stop the inflation.
So I really don't pay that much attention to it.
I will tell you, though, that looking at the futures markets around volatility, this is the most expensive election that we have ever seen in the entire history of the financial markets.
And by that, I mean that buying protection around the volatility of the stock market will cost you more than it ever has before because of the anticipated uncertainties of this election.
So for sure, a lot of major investors are very concerned about a contested election or how long it may determine to take who won.
For me, that's just not, I would be more likely to sell that.
I would rather sell that volatility, sell insurance around that volatility than buy it at this point because I think it's too expensive.
You know, I have frequently made over the years that this desire for more bipartisanship won't make much difference.
I argue that we have way too much bipartisanship, and I assume that you might lean in that direction because, you know, they're the same.
They fight like cats and dogs over the power.
But, you know, we wouldn't expect one side to be more likely to bring about sound monetary policy.
Which side is going to really cut spending?
Which side is really going to shrink the size of government?
Which side will likely bring the troops home?
You know, it seems to me like philosophically, there's a lot of bipartisanship.
And unfortunately, I think we as libertarians would like to challenge that and give them another option.
Yeah, I contend that the best metaphor for the relationship between Republicans and Democrats is to look at the infighting that goes on in academic circles, right?
Never has so much blood been spilt over something of so little consequence as when you get into an academic department and you've got people warring like they're fighting a religious battle over some minor theory or question of history.
And of course, it's not going to make a wit of difference in the real world whatsoever.
And I feel the same way when we look at whether we're talking about Trump's tax plan or Biden's tax plan.
I mean, the numbers are not inconsequential, but they're not material.
They're not going to change the course of our country's future.
And as I'm sure you're very well aware, and as all your listeners are, there isn't a choice for us.
I mean, can you imagine if there was a major party out there who said, look, we're going to cut taxes to no more than 10%, and then we're going to decide what we can afford to spend after that.
You know, that would just be so revolutionary that it'll just never happen, at least not until the complete collapse.
And some people narrow it down.
Well, we need more good members in Congress.
But actually, government's on autopilot.
People Upset About Libertarian Solutions 00:02:18
You know, if they're not in session or anything, they spend the money, their executive orders, the Fed, how much money was spent during the collapse of the housing bubble?
A lot by the Federal Reserve into the trillions of dollars.
So it's totally out of control.
But I did have one question.
You have so many different advisories and different letters.
Do you deal with, or is there somebody in your organization that talks a lot about overseas investment and actually going overseas?
And that's been something that has been with the libertarians for a long time.
I happen never to get too excited.
I guess I sort of enjoyed where I lived and I had a large family, so it wasn't attractive to me.
But a lot of people think about that.
Do you deal with that subject at all?
Yeah, we do.
We have a fantastic researcher.
His name is Kim Iskin.
He actually lives in Singapore.
And prior to his time with us, he was a leading investment researcher in Moscow, actually, working for some investment banks there during the original rise of capitalism in Russia in the late 1990s.
And his wife, interestingly enough, is a World Bank employee and has been stationed all over the world.
So he has seen just 50, 60, 70 different countries, and he's invested in three or four dozen of them.
And so he writes a very good global perspective investment advisory for our clients.
And of course, just me personally, I've owned real estate overseas now since the mid-2000s, so for about 15 years.
And I really do like having a toehold in a foreign jurisdiction, not because I want to leave the United States or because I anticipate that someday I will.
I just like having an asset somewhere that's a little bit more difficult to seize than my bank account or my farm here in Maryland.
You know, frequently when I try to figure this out and I get a lot of questions, what do you do here and there?
And I've made the statement so often that, you know, the solution comes from understanding what liberty is about and understanding what the purpose of government is.
And, you know, in a libertarian society, we have such little government.
We don't have to decide this.
Why Pay for Health Care? 00:03:52
But people get upset.
And I'm sure you've come across this.
People get upset because libertarians are cold and callous and they don't care.
But it just seems to me that our argument that people do better.
They're happier.
They're richer.
They have more security and all these stuff in a free society.
So I think if, and I always talk about this in my speeches, I say, you know, if we have such a great philosophy, why is it that we can't convince people, you know, of this?
And of course, I think it's the freebies that help take care of that.
But I'm convinced that liberty can solve so many of these problems.
And the problems come, just look at the complications from lockdown.
This has to be, you know, a major contributing factor to the problems that your clients right now are facing.
How do I handle all this?
We don't even know what's going to happen tomorrow.
So I think that should certainly be on our goal because, yes, we can sort of protect ourselves and worry about elections.
Some people run for Congress for whatever that's worth, but in reality, you know, it's, and you, I think you did mention about the education ideas and people.
That probably makes the difference.
And that's where I think we're starved.
Yeah.
You know, Dr. Paul, we could talk all day about what is in human nature that seeks to be dominated and that seeks to be ruled.
Even if you go back and read the Bible, the Israelites, when they're wandering around the desert, they beg God to let them elect the king.
And he says, no, you don't want to do that.
He'll end up enslaving your children and you'll end up being his servants.
And they said, no, no, no, we really want to have a king.
And so they found that I think Saul was the tallest guy in the tribe.
So they made him the king.
And it just must be something inside human beings that's part of our herd-like mentality.
I mean, I see her behavior in the markets all the time.
And I have no idea why people don't realize that the government cannot give them anything that it doesn't first take from them.
That's just the most elemental economic truth.
And yet, when you tell people that, they'll argue with you.
I remember Doug Casey was on the Donahue show.
Do you remember the Donahue show from the 1970s?
Yeah, sure, do.
It was like the forerunner of Oprah.
And Donahue was talking to Doug Casey about medical policy.
This is how long the Americans have wanted free health care, right?
And Doug was explaining that somebody has to pay for health care.
You know, the audience, one member of the audience stood up and said, well, I think the government should pay for health care.
And everyone scared.
And, you know, you can see Doug up on the stage just knowing how completely lost he was.
We're not going to solve this problem.
My biggest fear is not elections.
And it's not, believe it or not, the collapse of the monetary system, because I think that's just inevitable.
And when something's inevitable, you can hedge for it.
My biggest concern is the way that special interest groups have not only now been able to capture elements of Congress and elements of the administration, but they're now able to actually affect significantly very powerful civil agencies.
The corruption of the FBI in particular just really scares me.
I mean, I have, as you probably know, I was involved in a civil lawsuit with the SEC for almost 10 years.
And when you get involved in a regulatory battle like that, you realize it's scary.
These bureaucrats, they don't care at all about what actually happened.
Bureaucrats and Regulatory Battles 00:06:44
They care about winning.
And it becomes like a turf wheel.
And the idea that they're serving the public is absurd.
They're out there to advance their regulatory goals, whether that's good for the country or good for people or not.
And seeing that a law enforcement agency was behaving that way was really frightening to me.
Yeah, you know, I think that is so true when we talk about the bureaucrats and Justice Department and the others.
But when I looked at the members of Congress that I visited with each day, some of them, you know, decent people and they talk and pretend nothing's wrong.
But I think they're in many ways almost infected with sociopathy.
They're sociopaths.
They don't seem to have a conscience at all or sometimes or a brain, you know, and they just go on and on.
But I think that it's still worthwhile to do it because someday we may have to, you know, I think when things get worse, I think there's an opportunity because I had favorable responses from college kids that I thought were very liberal campuses.
And I talked about how uncomplicated this was and how important it was for them to own their life and to run their life as they see fit and then still have a better financial living by doing this.
And as far as I'm concerned, I think the libertarian message of non-aggression is a powerful message.
And I think it's a fact in a way, freedom and prosperity backfires on us because it just invites the bureaucrats and the government to distribute.
Everybody thinks this is the government, but then they use it and then they destroy it.
And we're in the process of that.
So we might have to come down with a fundamental reform on what our beliefs are.
And I think that's what the founders did.
They were pretty well pretty well informed.
And they too read the Old Testament about the danger of that.
So I think that we'll have that opportunity.
So I see this as an opportunity.
I think there should be some enjoyment on this because talking about dire things.
And if you are able to follow your advice and do well in the market, that's another reason.
But I still am just fascinated with the need for people to accept the principle of just giving up on aggression, that people should just take care of themselves.
And it's so wonderful.
And that's why I was delighted to join with you in your investment advisory because I knew you had those same beliefs.
But go ahead.
Oh, I agree with you just completely, Dr. Paul.
And, you know, Harry Brown was a very big influence on me as well.
And I had the good fortune to get to know him personally in the early 2000s.
His book, How I Found Freedom in an Unfree World, has been kind of one of the guideposts for me.
And I admire so much your efforts to inform the public and to try to save the country from itself.
And as you know, I'm a big supporter of you and of those efforts.
I just never believed I had the capacity to do that.
So what I've tried to do is teach individuals how to have this protection and this freedom and this wonderful life that's available to them.
And I think that our message is very, very similar, but just I'm directing it to one individual at a time.
And you had a very large platform and a big stage to tell millions of people this message.
And if I'm not mistaken, you are by far the most successful libertarian presidential candidate we've ever had.
So you're very, very good at it.
But I don't think I'm cut out for public service, Dr. Paul.
Well, you know, I have an answer for that because a lot of people come up.
After I give a talk, I can get them a little bit excited and they'll come up and these are a lot of college kids.
Okay, what do you want me to do?
And I say, whatever you want to do, you know, because you're qualified to give good advice.
It just may be that the people that you deal with, your clients, are going to be like-minded.
And I'll bet you a lot of them are contributors to the cause of liberty as well.
Of course, I think there's nothing wrong with taking care of yourself and protecting because the more people, this is one reason why I like to be involved and promote the investment that will protect more and more people.
Because if there's only 10 of us, you know, it won't take much to take over.
So what you're reaching out to a lot of people, I think that's beneficial.
And I think that would be helpful to all.
So I want to thank you, Porter, for being with us today.
And if you want to close out with a statement, that would be fine.
Yeah, sure.
I appreciate very much the opportunity to speak to your followers.
And I'm really flattered to be invited just to spend time with you anytime.
The one thing that I would tell you, Dr. Paul, about finance that I don't think we cover here today.
And that is just that over many years, I've had a lot of success at identifying companies that were being run so poorly that it was truly inevitable that they would fail, that there was no possible way they could succeed.
And I would point to the work I did at General Motors between 2005 and 2008, in addition, of course, to Fannie and Freddie.
And there's been maybe a dozen other names that we've keyed upon since then.
And I think that this trend towards investing in indexes and buying big baskets of stocks is mostly a very good thing and good in general for people.
But I think that you're really exposing yourself to some of the worst aspects of capitalism when you do that.
Because unfortunately, there are still a lot of businesses that are being run for the benefit of the insiders and not at all benefit of the shareholders.
And firms like mine, that's really what we specialize in doing is helping you sort that out.
So if you are an investor and you'd like to have some access to great independent research, I hope that you'll check out Stansbury Research.
And if you just want to buy gold and protect yourself and your family, I know that'll work too.
But either way, I hope you will invest wisely and take care for yourself and your family.
Very good, Porter, and thank you for being with us today.
Also, if our viewers want to follow up on this, if they check out the website that's on the bottom of this page, you can get more information as well.
But thanks again, Porter.
And I want to thank the viewers today for tuning in.
Export Selection