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June 21, 2019 - Freedomain Radio - Stefan Molyneux
52:42
Death of the Dollar! Lynette Zang and Stefan Molyneux
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Hi everybody, Stefan Molyneux from Freedom Inn.
Hope you're doing well.
So I'm here with Lynette Zhang from itmtrading.com.
We're going to talk about the economy, which for some of my newer listeners is a topic we haven't dipped into for a while.
But I respect Lynette's perspectives on this issue.
So thanks so much for taking the time today.
Oh, thank you for having me here.
It's really important.
This is a very important topic these days.
It seems to me, just focusing on the American economy, that it's kind of like a sandwich with no middle, in that there are some people who are exceedingly pessimistic, some people who are exceedingly optimistic, and not a lot of people in the middle.
Where do you think that the state of the American economy is these days?
Well, look, I've been in this industry on some level since I was 10 years old, so 1964.
I've been a banker, I've been a stockbroker, I've been here at ITM trading, Since 2002, because I am also an artist and I see patterns.
So when you talk about people being optimistic or pessimistic, I think everybody would probably agree that history has a tendency to repeat itself.
And so, you know, as far as
I'm the eternal optimist, but I look at what the guys that are driving this bus, so the International Monetary Fund, the Bank for International Settlements, those are the two top banking institutions in the world, and the Federal Reserve in this country, and I look at what everybody is saying, and then, more importantly, and in my work, this is what I do a lot, I look underneath at what they're doing.
Because my daddy always said, do what I say and not what I do, and that never made any sense to me.
So regardless of what my opinion is with central banks globally, Pushing down interest rates near zero and even in Europe negative rates and in Japan and all of this money printing and all of the support that they have to give the global economy.
What that's really telling us at the same time That the central banks globally are buying more gold than they ever have in their history with a broader base of central banks buying a lot of gold.
What that's really telling us is that we are headed for a reset, a financial system reset where they revalue the currency so they can pay off all of this Huge levels of debt with currencies, whether it's dollars or euros or yen, it doesn't really matter, but with currencies that have zero value.
So, you know, I don't know that that's either optimistic or frankly pessimistic.
It's more based upon the hard data.
That's what I'm seeing and anybody can see it.
You know, and actually on our YouTube channel, I put all the links to my research, to all of the guys that are driving this bus, and other research that I do to support what I'm talking about, so that people can actually, don't take my word for it, who am I?
I have a minimum level of influence, but the guys that are driving this bus, what are they saying?
I think people need to start doing their own due diligence, and I try and make it easy by giving everybody the links.
Well, no, it's funny, too, because, of course, a lot of people focus on the national debt, which obviously is important and significant.
The unfunded liabilities, which are many multiples of the national debt, are hugely significant.
We've got consumer debt that is, it rose to $10.3 billion in March.
So it rose to $10.3 billion.
So it's just over $4 trillion of consumer debt.
We've got over $15 trillion of business debt.
And so they have to keep these interest rates low, which was supposed to be a temporary measure, of course, after the last 07, 08 crash.
Don't worry, just a little bit of morphine for your pain is like, no, no, we just got addicted.
So now there's like crushingly low interest rates.
They can't raise them.
When Americans are making payments on $4 trillion of consumer debt, if you raise that interest rates, you're going to have, I think, a repeat, if not worse, than what happened in 07-08.
Well, it's not just the consumer debt, it's also the government debt, because the intention with the government debt is never to pay it off, but just assume more and more debt, so that they're just rolling the debt over.
And, you know, I think it's been made pretty clear that while the consumer is critically important, because it's 70% of the economy, that the banks are more important than anybody because they're the ones that have got that got bailed out in 2008.
And they've also consolidated and those that were too big to fail are even bigger.
But you're 100% right.
And in fact, Sweden was the first country to go to negative rates in 2009.
So they tested that.
And then obviously, they thought that it I can't say that word because you're absolutely right.
It's a morphine drug.
And the more drugs that you take, the more that you need just to kind of feel normal.
So just to make the markets look normal, they had to do this more and more.
And yeah, they can't raise rates.
Every single country that has attempted to raise rates into this environment since 2009 has ultimately been forced to lower them again.
And the U.S.
is no different.
And look, Mario Draghi, whatever it takes.
But this is inflation.
And they're saying what a success it is?
Well, then you should be able to stop these temporary measures, which then ultimately always become permanent, because they don't have any choice, really, if they want to keep the illusion going anyway.
Well, I mean, everyone thinks that this is a dip from the normal range of interest rates.
And as you point out, yeah, if you've got this temporary measure that then turns into a permanent policy and the Fed has all but said, you know, we're going to hold on to these bonds, we're going to keep interest rates low ad infinitum.
They still claim that this temporary policy was a success.
Well, of course, up here in Canada, income tax was a temporary measure introduced in 1917 for World War I. Nothing, it seems, is more permanent than a temporary government program.
So let's talk a little bit about, because people say, well, low interest rates.
That's fantastic.
I can get a low mortgage.
I can get a low car payment.
And so people look at the positives of low interest rates, but I think we've got to lift that lid and look at the dark side of low interest rates.
What are the problems with it that people aren't seeing?
Well, a lot of it is what the whole system is about.
I find that people don't really understand money.
So if I could kind of backtrack here for a minute and give your listeners a foundation, because originally we needed a tool to value labor.
And then the goal, original goal, was something that could maintain its value so that if you saved money for future use, you were still being fairly paid for your labor.
And they tried lots and lots of things, lots of things over the years, but the only thing that actually met all the criteria to be good money was gold.
And, you know, I can say that it's because to be a good money, you have to be divisible without loss of value.
Right.
You slice a diamond in half, it loses a huge amount of value, but you take two half ounces of gold.
This is Aristotle's sort of four laws of good currency.
Yeah, fungibility is essential.
Exactly.
And so fiat money, and fiat means by decree, so it's government money, mimics good money.
Because not only does it have to be fungible, but you want something that will maintain, be a stable store of value, which is what gold is.
It's the opposite of fiat money and also a medium of exchange.
Gold is accepted globally.
If I go to Canada or I go to Japan or anywhere that I might go with even gold jewelry on and I need to convert that into any currency, any good or any service.
Well, there's huge high trust for gold.
And part of the reason is because it's also indestructible.
So regardless of its form, it's monetary at its base.
And here's the other kicker.
And this is my personal bugaboo.
Because if you listen to somebody like Warren Buffett or his sidekick, Charlie Munger, You know, these are some well-known names.
And they say, well, gold.
What is gold?
It's just an old relic.
Except what they don't say is that it is used in every single avenue of the economy.
Whether it's manufacturing, or it's jewelry, or it's the financial system, or it's medicine, or, you know, recently I was fortunate enough to eat at a Michelin star restaurant, and guess what?
There was gold on my dessert!
So, there is always demand for gold.
It has the broad, this is so key, it has the broadest base of buyer.
When you look at government-based money, or the stock market, or the bond market, or the derivatives, which are big bets that Wall Street creates, all of these creative products that they then sell you as an investment, which is another topic, and maybe we can get into that a little bit.
But you have to understand, it has use in one area.
That's it!
It's only good in the financial system.
It's created from dollars.
In this country, it's created from fiat money.
It can only be converted back into fiat money.
So therefore, it only has value as long as the money has value.
And people have been taught to put value in these digits in their checking account or these bills That they're given, but hey, anybody that's lived at all heard of inflation?
Does that $20 bill or that $20 Canadian dollar bill buy you the same thing today as it did 10 years ago, 5 years ago, a year ago?
No, and that's by design.
It's a funny thing, because people have become so used to money losing value.
It's like setting out gold and having it evaporate in the air.
It is a hidden form of theft, and of course it's a brutal tax on the poor and those on fixed incomes, which is one of the things that is so hideous about it.
Yeah, and the interest rates too.
Yeah, but if you look at gold, it's really, really fascinating looking at it back throughout history.
There's kind of two metrics that stick in my head.
Maybe you've heard of them too, of course.
The first is that an ounce of silver will buy you a nice steak dinner all the way back through human history.
And that's been pretty constant.
And an ounce of gold will buy you a really nice suit all throughout human history, like all the way back through time, because gold has this wonderful balancing act.
I actually worked as a gold panner in my teens, so I know a little bit about this.
And so when the price of gold goes down, people stop digging for it because it's not worth it as much.
And therefore that's going to equalize the price.
If the price of gold goes up, people start digging for more, which means that they'll produce more, which will bring the price back down.
There's a curious evenness to the relationship between gold and fixed services or goods all throughout history that's kind of weird when you think about, you know, the average life of a fiat currency is usually just a couple decades.
Correct.
Well, it's really interesting because the fiat money goes through a pattern, but you're absolutely right about the gold.
And again, it's because of that huge amount of base of buyer that they use everywhere in the economy.
And that's why it's so constant.
And by the way, and I don't have this graphic, but Megan, I can send you The link to this graphic.
The Bank for International Settlements is considered the central bank or central bank.
And they have what they call a money flower, where they put all the different kinds of money.
So, fiat money as well as cryptocurrencies, everything is set up in this flower.
And it has a whole bunch of interchangeable areas that the central banks can control.
Commodity money, so physical gold and physical silver, is the largest area that is truly peer-to-peer and universally accepted, but outside of the central bank and the government control.
It's the largest area.
And I think that's really telling, because what are they telling you?
They're telling you, we want you to end the money that we can control.
Not in, you know, not in what we can't see.
Once you hold physical gold in your possession, guess what?
You have it, but it's invisible to everybody other than you.
Well, I remember as a kid reading, I had a book called like the 10 Great Disasters of the 20th Century.
And one of them, of course, was the hyperinflation in the Weimar Republic.
And seeing people shoveling bills into a furnace in order to heat their homes or into a stove in order to cook their food.
It's like, well, that's the base value of... It's barely even worth the money that it's... It's barely even worth the paper that it's printed on.
And the best sometimes you can do with sort of the Zimbabwe inflated to the moon and beyond kind of currency is keep it around as a joke and a brutal reminder or shovel it into a stove to heat your food.
Exactly.
Because you see, with gold money, if a government wants to tax you, you know about it.
And you might not want to cooperate.
Plus, of course, corporations always want you to work for less so their profits can go higher.
So what the fiat money system does is it, by design, creates inflation.
And inflation creates what's called nominal confusion.
And that means that people get enamored of the numbers.
So going back to that $20 bill, You know, I mean really it is about value.
You know that it buys less and less.
Hey, I'm 64.
So I remember when inflation was a bad word.
Now they're using it as it will save you.
But if you go on the, in this country, it's called FRED, F-R-E-D, which is the Federal Reserve Education Department.
If you go in there and you just put in, type in, purchasing power of the consumer dollar, what you'll see is that there is officially Less than four cents.
I think it's 3.91 cents in terms of purchasing power value out of the original dollar since the Federal Reserve took over, the central banks took over.
Let's just pause on that for a second because that is an astonishing number for people who haven't heard of it.
I've heard it as high as 98% but let's sort of pause for that for a second.
So that means in just over a century More than 19 parts of the 20 have been ripped off, have been stolen, have been evaporated and have coalesced in the pockets of the super-rich.
And this is one of the great tragedies, you know, as people say, well, let's give government more control over the economy, let's give them control over interest rates and the printing of currency.
And the buying of bonds in many cases.
Let's give the government all this power so we can help the poor.
And of course, as you know as well as I do, what's happened over the last couple of decades is super rich have gotten richer and the poor have stagnated or gotten poorer.
And that's because if you take this fast forward and you see 96, 97, 98 percent of the value of the dollar has evaporated.
Well, it hasn't vanished.
The value has simply been transferred.
Transferred.
Exactly.
That is the greatest pillaging.
That is the greatest single theft in the history of the world.
And put this on top of it.
Everybody's cooperating.
Everybody thinks they have no choice.
You do have a choice.
You can become your own central banker and protect your purchasing power by simply owning physical silver and physical gold.
You know, And you need to do that because the reason why they're going to negative rates is because there's no value left in the currency.
It only exists, it only has any value at all because the public still perceives that it has value and is willing to work for it, use it as the tool of barter, and dare I say, attempt to save it.
But you brought up a huge, huge point.
And that is for corporations, right?
People look at numbers.
So, for example, in 1971, the average salary was about $9,600.
And one worker could support a family of four on that.
Now, I'm not saying that you're living high on the hog, but It was comfortable.
Usually the wife stayed home and took care of the family and the husband went out to work and they could live comfortably, reasonably comfortably, on $9,600.
I believe in this country the average wage right now is $56,000.
So you go, well, wow, I'd much rather have 56,000 than I would 9,600.
But it takes two people generating that and they're still living paycheck to paycheck.
And in most cases, as you said earlier, to try and maintain their standard of living, they've taken on a tremendous amount of debt because the whole system is based upon people shopping, consumerism and creating debt.
That's how money is created in this system.
You borrow it.
Into existence, whether you're a government, a corporation or an individual.
That's how the system works.
And ultimately, when you have debt, you have to pay interest on this debt.
And so what happens when the interest payments eat up all of your income?
I did a study in 2009 because I said, well, wait a minute.
Since the crisis, we're now running a deficit in this, in the United States, we're running a deficit of about a trillion, which was tremendous.
I mean, it all happened during the, or most of it, not all of it, but most of it happened during the crisis.
And I said to myself, gosh, if we're running a trillion dollar deficit, why are we servicing at that time, 13 trillion in debt?
Well, all of this information is publicly available.
You just have to pull up the spreadsheets.
And I did that.
And what I discovered, and I sent it to a friend of mine who's an accountant, because I am not an accountant, and I wanted to just make sure that my thought process and the way I approached it would give an accurate description.
At that time, 2009, 77% of the debt that the U.S.
was servicing was compounding interest.
If that were you, would you ever get out of debt?
No.
Well, no, you would get out of debt.
You'd just be lowered into your debt exit strategy in a coffin six feet under the ground.
That's the only way you get out of that kind of debt.
Or bankruptcy, right?
So hyperinflation is the government, an evolved, okay, whatever.
It's the government's form of declaring bankruptcy without actually declaring bankruptcy.
Now, let's talk a little bit about, it's not just the consumer's perception of the value of, say, the U.S.
dollar.
It's also, of course, the international community's recognition or belief, or rather being held hostage by the dollar as a reserve currency.
And of course there are some countries who recognize that the U.S.
has weaponized the dollar, particularly with regards to foreign policy, right?
They're threatening China if they don't take sanctions against North Korea.
And so the Russians are looking to develop, they have developed an alternative payment system.
You've got the China launching a one-denominated oil futures contract.
Russians are also considering, which I consider a gold standard, so to speak, a gold-backed cryptocurrency because I think people are like, wow, this US house of cards, there's a wind coming.
It's shaking at the foundations.
And I think they're looking to get out of dependence on the hegemony of the U.S.
dollar and help people understand how that might play out and what the effects could be.
Well, there's a couple of things in here.
Number one, I don't think that generally people understand the advantage of a world reserve currency.
But so in a nutshell, what it means is that you are, this is not completely accurate today, but you are the only country in the world that can actually create from debt the money you need to repay your global bills.
OK, that's a huge advantage.
And no country, you know, that typically lasts in a currency roughly 100 years was the British pound before the US dollar.
The other point that I would make on that is that also means that if you are going outside of your border, if you don't live in the U.S., you're going outside of your border to buy lumber or steel or medicine or anything at all, then you have no other option but to use U.S.
dollars, thereby creating an artificial demand globally for dollars.
But keep in mind that this isn't just a U.S.
issue.
This is a global issue.
It's a global issue and no currency is immune from this.
And you're absolutely right.
The U.S.
has weaponized the currency.
And anyone can.
I mean, I love it when you hear President Trump say that Well, he said it this morning that it's not fair that the eurozone really wanted to lower their value, the value of the euro dollar against the US dollar.
They're just trying to survive or keep this game going a little bit longer, but they all manipulate the currencies.
It's easy to do in a fiat system, in a government declared system.
Because there's an unlimited amount of easy and cheap money.
Of course, that also diminishes its value.
And so you made a great point in that people are tired of it.
We're at the end of it.
We are abusing our title.
But the transition away from dollars as the world reserve currency actually began in 2005, when Russia, as the first country, came out and said, I believe it was April,
2005 we will no longer value any of our assets in terms of dollars from here forward it will be euros rubles and gold and look at how much accumulation of gold Russia and everybody else but you know us and sorry you you guys to up in Canada you got rid of all your gold reserves that is like I
There is no words, honestly, for that because he who holds the gold when this house of cards cannot can no longer be supported, that's who's going to make the rules.
And that's why you see the power shifting from the West.
Well, I also will say this, that for Putin to say, well, we're moving away from the US dollar is historically rather a risky thing to do, because I've heard these rumors, I've actually verified them, maybe you've heard differently, but I've heard that some of the reasons behind destroying Libya and destroying Iraq was because, you know, Gaddafi and Hussein were looking at creating some gold-backed currency, were looking at moving away from the U.S.
dollar, and the weapon of mass destruction was not so much anything military as it was economic.
That if they created a viable petro-currency that didn't involve the U.S.
dollar, that would be kind of it for the U.S.
economy in many ways.
Exactly.
But they were too small to actually do it, so we just went in and annihilated them.
China and Russia, that's a different story.
They do actually have weapons of mass destruction, so that's how you know.
The only countries that America ever attacks these days are countries that don't have it, that's how you know.
But anyway, sorry, go ahead.
Yeah, I would agree with that.
We could get into a whole other ball of wax with that.
But yeah, absolutely.
And we did it in Vietnam.
We were in jeopardy of losing our status as the world reserve currency then.
But then we created the petrodollar.
But that's shifting.
And even Saudi Arabia is looking to diminish that role.
And the petrodollar was really simple.
I mean, really, we were pretty smart at that level back in the 60s and the 70s to see that oil was presumably the new gold, so to speak.
There are some other things about that, but just keep that for a moment.
And so when Kissinger went to Saudi Arabia and created the petrodollar in exchange for the U.S.
protection and weapons for the House of Saudi, then they would only agree to sell their oil in terms of dollars and convert I mean to tell you, sometimes I read this stuff and I just have to shake my head and agree to convert any excess that they generate in terms of dollars for their oil into U.S.
Treasuries.
Right.
So when you're talking about the weapons of mass destruction, really what that is, it's the U.S.
Treasury market, because that's the foundation as scary as that is to me.
Because I understand it, but it's the foundation of the global markets.
And if China really were put, and who knows what's going to happen?
There are so many of what's called black swans flying around, events that you can't even imagine.
The Middle East is a hotbed again with Iran and going around, even Europe, even our allies.
Going around and creating a system where they can continue to trade with Iran but avoid the US systems.
I mean, yes, I mean, without any doubt at all, the only reason why we still officially hold that title is because there's still a lot of dollars out there and I don't think that they have quite And when I say they, I'm referring to the International Monetary Fund, the IMF.
And I should probably back up here.
The IMF has been around since the 40s.
Founded by a communist, I might add.
There you go.
But it's also every member there is every treasuries, almost every treasury.
There's there's 206 countries in the world.
189 of them belong to the IMF.
So that's every treasury secretary and every central bank chief.
So when they're shocked about something, or they pretend to be shocked about something, it's garbage because they're sitting there having conversation.
Remember the global coordinated, you know, growth scenario that we listen to?
It's kind of garbage for anybody to be really shocked.
But when it happens, that can jeopardize confidence.
And confidence is the biggest key in this game.
We have to continue to have confidence in the leaders and in the money and in the financial system.
Or we'd make different choices, like I have.
I've made way different choices.
Well, it's also challenging if you're hanging on to the hood of a car.
If it's going slowly, you can jump off and you'll probably be okay.
You know, just bounce and roll and you'll walk away.
But when the car is going too fast, you've kind of got to hang on because the alternative is perhaps even worse.
And I think that what's happened is America, with its terribly low interest rates, has so much discouraged savings.
And savings is one of these planning for winter things.
It's not fun in the short run, but man, if you don't do it, your economy dies in the long run because you don't upgrade your capital equipment and, you know, capital efficiency, worker per hour productivity is very much the basis of the growth of an economy.
So you really are eating the future to feed the present.
You're eating your seed crop.
And because so many other countries are doing America saving for it, right?
They say, why is America able to sell bonds to China and have foreign banksters monetize their debt?
Well, because China's saving money.
And so, of course, if China then says, well, the American economy is doomed, they have to write down an enormous amount of the value, I would assume, of those U.S.
bonds, and they don't really want to do that.
But I think at some point, if you see that the car's going to head off a cliff, you'll just jump and pray.
Right.
Or if you want to push the car off the cliff, you can do it that way as well.
I'm not absolutely convinced that it's that China or Russia or anybody, any other government buying U.S.
bonds is about saving money because they know, they know the dollar's losing value and they know that it's going to lose its, it's officially will lose its status as the world reserve currency as well.
I think it's more about keeping the illusion alive.
And because if you look at their reserves, they've been getting rid of treasuries.
OK, but it's the speed you brought up the speed and oh my God, that's so accurate.
Because we think nothing has happened.
I mean, I hear people, I've been doing this for a very long time, and people will say, oh, nothing has changed.
Well, maybe when you look at the surface for a minute, it doesn't look like it's changed, but if you've watched the evolution and the change, and if you're looking beneath the surface at how addicted the whole world is to free money,
And even though that kind of, ooh, money for free, that sounds so great, I want everybody to think about what has proven to have value for them personally.
Has it been something that's been cheap and easy to accumulate?
Or has it taken some effort and sweat?
When you hear somebody like a Harry Dent, who's an economist, say something about gold going down to 700 an ounce, Well, the average cost to mine an ounce of gold is over $1,200.
But what are they looking at?
They're looking at the spot price, which is simply a derivative of gold, meant to represent gold, but it doesn't represent physical gold.
In those cases, like if you're a central bank, Literally, I am not exaggerating.
Anybody can go on the CME website and see this.
But it costs $110 to control 500 ounces of gold.
$110, and right now we're somewhere around $1,350 in this country.
rolled 500 ounces of gold, $110.
And right now we're somewhere around $1,350 in this country.
So what's 500 ounces?
Many hundreds of thousands of dollars.
And it costs $110 that they don't even have to go out and earn.
They can push a button and just create it!
You and I have to earn it!
Right.
You know, and somehow this $1 piece of paper and this $20 or $100 piece of paper, this has, you have to work a hundred times more for this than you do for this, but guess what?
They cost the same amount to print, and they cost virtually nothing to push a button.
So, it loses its value.
It does not have as much value when it's cheap and easy as when you really have to put effort.
I think one mistake that people made is to compare one fiat currency to another fiat currency, which is a complete error because it's like ten people jump out of an airplane without a parachute and as they fall to the ground to create a wet stain of death on the grass, they're Raising and lowering themselves a little bit relative to each other, and everyone's like, well, you know, we're not really falling because they're just looking at each other and they're not actually looking at the ground.
And if you have that illusion that you can measure fiat currency relative to fiat currency, I think you're missing the whole point of what real value is, which is where something is limited, as it is in cryptos, or limited as in the production of gold and silver.
That's where you want to measure things to.
And even if you toss gold out the window and measure, Federal Reserve notes relative to Bitcoin, you can see that they've, it's not so much you could say that Bitcoin has gained value, it's that it's a way of measuring the lack of faith that people have long-term in Federal Reserve notes.
Well, yes, I would agree with that, where I've looked at this a lot, I am not an engineer, I'm going to tell you that right up front, but if something is super complicated to understand that you can't understand it, there's probably a reason And what the governments want is they want a cyber currency that they can control.
They want everything held digitally online because then we can go to global taxes.
And if you read their information, I mean, I read this stuff that these guys publish.
And by the way, the Bank of Canada does an absolutely wonderful report every year on government debt that's gone belly up.
They do it every year.
You can Google it.
Bank of Canada.
And it's really quite an interesting read.
And I love your analogy with the plane and the skydivers going down, because that is the best analogy that I've heard.
And I hope you don't buy it, but probably going to use it.
Because it gives people the right visual that they should be thinking about.
Yeah, it's pretty amazing that We continue to hold on to what we've been taught, even in the face of the lie.
Inflation is the lie.
It's not necessary, it's not part of a monetary system, but it is the most important function of a fiat money system.
Well, I've said to people for many years that as an entrepreneur myself, Lynette, for many years before I started doing this whole philosophy show, but imagine how easy or how much easier it would be to be an entrepreneur if you had reasonable certainty Of the future value of your dollar.
Because how much of people's decisions financially are made based upon needing to protect their money from two things?
Inflation and the tax man, which are sort of two sides of the same levels of government predation.
It is.
Imagine if you could invest knowing that a dollar today would be worth pretty much the same five years now or ten years from now, which is how things more or less worked with obviously some hiccups and bumps when there was a gold-backed currency.
There was this evening out.
Right.
It was in a band.
Yeah, it was within a band.
Can you imagine?
Because so much of people's money, like, why are so many people in the stock market?
I call it the supercharged stock market.
Why?
Because they're being chased.
They're being chased into the stock market because there's inflation.
So you've got to do something with your money or it's going to lose value.
And of course you get tax benefits for putting money into the stock market if it's for a retirement savings plan or there's other ways in which you can Well, that's deferring.
That's not really a benefit.
That's a deferral.
People look at it.
But there's so many people who are kind of forced or herded or chased by government predation into the stock market that what it does of course is it artificially drives up the value of stocks.
It turns CEOs into these hair-triggered jackrabbits just looking at the latest bit of financial number and there's so much money sloshing around looking for so little value with so many uninformed people putting their life savings into the stock market that to me the stock market has become this churning sea of chaos and predation that is doing less and less every year to reflect the real value of future opportunities.
Oh, that is absolutely true.
And you know, that goes back to what we were taught.
We were taught that if the stock market goes up, it reflects the underlying economy because the assumption was that a corporation Would do an IPO, an initial public offering to raise money to maybe expand their business, hire more people, buy more Equipment or land or what have you and then they would generate more money.
But if you go on to the SEC website and you look at any of these IPOs, now I haven't looked at every single one, but I've looked at an awful lot of them.
And most of the time they're saying, well, we don't really need the money.
It's just giving our early investors access to the capital markets.
So what it really is, is an exit strategy of a severely overvalued instrument.
Even though our perception is, well, now we own a little bit of that company.
But that's been degraded for so long.
And when people say, well, where's all the inflation?
Well, number one, I'd like everybody to kind of think back to their cost of a gallon of gas in 2006.
And today, or their food, or their medicine, or their education, or any of their day-to-day living costs, right?
It is a whole lot more.
So we have had some level of inflation that have shown up in the economy, clearly.
But most of that has gone into those stocks and the stock market.
So that is one of the frustrating things, is that I was generally taught don't invest in things that you don't understand, but because people are fleeing the jackals of inflation and taxes, they end up handing their money over to people, crossing their fingers that those people know what's going on, when often they're not particularly informed about the dangers of fiat currency and central banking and the Austrian business cycle and all the other good things that can be kind of important in keeping your money safe.
Well, yes, and you know, that's absolutely true.
People have confidence.
So that's why it's so important that the stock markets go up, because that's what people are looking for.
And if they if they open up their statement and everything looks OK, then they assume that everything must be OK.
But going back to the interest rates a little bit.
Once they push the interest rates near zero or below, what we've actually created is the rise of the zombies.
The zombie companies.
And a zombie company is a company, and a lot of them are actually quite well known, so people wouldn't even think that they would be a zombie company, but it's actually a company that should be bankrupt.
Because they don't even earn enough to cover the interest payments on the debt so they're actually borrowing more money just to cover the interest payments.
They haven't made enough to cover those interest payments for three years and looking into the future they do not see a point in time when they will be earning enough even just to cover the interest payments on the debt that they've accumulated.
But since the banks don't want to take those big bankruptcies and interest rates are this low They just keep these corporations going.
Like, you know, Deutsche Bank is a great example of it.
And Deutsche Bank is classified as the most dangerous bank in the world because it's interconnected with every single other financial institution on some level.
in the world, because it's classified as global universal.
Well, there's some good numbers.
There's some good numbers to back up what you're saying.
So the business debt of $15.2 trillion-- I mean, that's bad-ish, but there's good legitimate reasons for businesses to go into debt.
But there's almost $1.1 trillion in outstanding leveraged loans, right?
So that's kind of like subprime loans for corporations.
These are loans that institutions are making to corporations that are already deeply in debt.
And as you point out, a lot of times it's just used to service the escalating interest.
And the amount of these outstanding leveraged loans grew by, in 2018, over 20%.
And the total leverage loan market has doubled since 2008, so it's sort of like we're turning everyone into Japan, like this zombie economy where companies can't come to life and they can't die.
Exactly.
And Japan is the one that ushered it in, you know, back in the 90s.
I mean, they've been stuck in a deflationary environment for all these years since the early 90s.
But, so yeah, that's huge.
And as people have been forced, savers have been forced to go out on what they call the risk spectrum, which means taking on more risk.
What they've actually been doing in these leveraged loan markets is removing investor protections.
Actually, that's true in all the markets.
I just did a piece on the recent changes in the laws that remove investor protections.
So, People are thinking they're doing something great and, hey, look, I'm getting 5% interest on this instead of 2% interest on this.
And all of it has a huge level of risk.
But you don't have as much protections on those leveraged loans.
There's so many time bombs that could go off at any moment that what people need to really think about doing is creating, here's my personal motto, Food, water, energy, security, shelter, barterability, wealth preservation, and community.
The barterability, anything physical or any talent that you possess is barterable.
But silver is universally barterable no matter where you go.
So having some silver for that function makes a whole lot of sense.
And I mean, you know, big deal.
It's so far below its true value for its most important function, why it's even a secondary monetary metal, that it's ridiculous that, what, 14, 15 bucks an ounce?
It's like a, it's a gift.
It's a gift.
And for gold, its most important function, since the first coin was created in 506 BC by King Croesus, was to hold its purchasing power intact.
Its true value, if the governments of the world chose to do the reset today, if the globe went into hyperinflation and they reset the currency today, which is what they're talking about and what they will do, Then, in terms of dollars in this country, gold is worth a minimum of $10,000.
And that's not an arbitrary number.
That's based on the level of money that's been printed globally, which is an infinite amount until all confidence is lost, and based upon the finite amount of gold.
So, gosh, at $1,360 or $1,400 or $5,000 or even $8,000, it's a bargain!
So, when people say they want to buy low to sell high, they have to discover where the long-term positive trend is.
And you know you're in a positive trend When you see a series of higher and higher lows, forget the highs, that's not going to matter.
Because if you keep getting higher and higher lows, at some point you will get higher highs.
And you know, to identify the true underlying trend, whether that's positive or negative, and then positioning your wealth appropriately.
The stock market won't do it because it's created from fiat money and can only pay you back in fiat money.
And you know that's in a negative trend because the central bankers keep telling you, we need more inflation.
So if you interpret that, what they're actually telling you is that the currency is overvalued and they're taking it down.
So nominally it looks like the stock market's going up.
Look at Venezuela.
They've reset their currency a number of times or devalued the currency a number of times.
Their stock market is one of the best in the world as far as nominally, but what it's made of has no value.
So what are you going to convert it into?
So, it's like, did that make sense to you, Stephan?
It certainly did.
It certainly did.
So, the website, I really, really appreciate your time today, Lynette.
I just wanted to remind people the website is ITM Trading.
If you'd like to go to ITMTrading.com, of course, I'll put a link to it below.
If you want to check out more of Lynette's work, it's very, very interesting stuff.
And I genuinely believe, I like having people on the show who, of course, know economics, but also who understand gold, fiat currency, the origins of money, and the effect Exactly.
I mean, here's my favorite question.
government that can type basically what it wants into its own bank account.
Because if you don't have that knowledge, I think it's really hard to make sense of the modern economy.
Exactly.
I mean, here's my favorite question.
How many times can you be lied to when you don't know the truth?
I guess infinity is what they're banking on.
Well, and that's what happens with 99% of the people.
Look at Venezuela.
They're just a little ahead of us.
And they have the highest oil reserves.
They should be quite affluent.
And, you know, it's all the corruption.
It's all the wealth transfer.
But to add to it, because I do research reports twice a week.
And so you can find that, excuse me, But you can find that on YouTube.
So if you just put my name in Lynette Zhang ITM Trading on YouTube it will come up and there's really I mean I don't even know how many videos there are on that because I work all the time but twice a week and it's all about helping the normal person understand this stuff.
That's what my work is all about.
Translating financial noise into understandable language so that you can make An educated choice!
You know, and the other thing, and this is unique, and probably just because of my background as a stockbroker and a banker, and an artist, seeing those repeatable patterns.
Because my feeling is, if something's happened 100% of the time based upon some kind of behavior, and you're doing the same thing again, the most likely outcome is that you're going to get the same results.
So before I even came to ITM Trading, I created a strategy for myself because my personal goal is to create what's called dynastic wealth for my family.
So I can leave a legacy and protect them from what the sharing economy, what the powers that be have in mind for most people.
And when I came to ITM Trading in 2002, I formalize that more.
So all of the strategy specialists that are here have been trained with it, trained in it.
And you know, I think planning to or failing to plan is planning to fail.
So this is a customized strategy for each person that takes all those food, water, energy, security, particularly barter ability and wealth preservation, which is what you can do with gold and silver.
It takes it all into account based upon an individual's goals, circumstances, what they have to work with, so that going through this, and, dare I say, after the global reset that they have in mind, that you come out, you can survive what we're going through, so you're not living like, I'm sorry, middle class Venezuelans that are dumpster diving because they're starving, and you can survive that,
And even, dare I say it, thrive through it so you're better off on the other side of this mess than you are going into it.
If you don't do anything, I can't guarantee this, but I'm like 99.999% sure that you will be in the masses that Absolutely, and thank you so much for having me.
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