All Episodes
Previous Next
March 13, 2020 - Freedomain Radio - Stefan Molyneux
38:53
"Trump's Bubble Economy" Peter Schiff and Stefan Molyneux
| Copy link to current segment

Time Text
Hi everybody here with Peter Schiff.
Now, for those of you who don't know, he is an economic prognosticator of the First Order, president and CEO of Schiff Gold.
I put all the links below, and we're going to talk all things economics on today, of all days, when the Dow appears to be auguring in pretty much to the center of the earth.
Peter, thank you so much for taking the time today.
Oh, my pleasure, Stefan. Happy to be here with you and your audience that you've done such a good job of building up over the years.
They're coming along.
They're being well cultivated.
So, okay, let's get a big picture thing.
For those who don't know the history of your, I guess, unerring Austrian economy-based capacity to predict bubbles and pops, because a lot of people get lost in the immediacy of the everyday, oh, coronavirus and so on.
But let's talk about the case, the big case, as to why the American economy at the moment is a big butt-cheek bubble ready to pop.
Absolutely. And you know, most people are focusing on the pin, which is the coronavirus.
And because they're focusing on the pin, they can't see the bubble.
Because it's the bubble that's the problem, not the pin.
Because all bubbles eventually pop, they find a pin.
And if it wasn't the coronavirus, it would have been something else.
You know, I made a name for myself by forecasting the 2008 financial crisis.
And the pin that popped the bubble that led to that crisis was actually a drop in real estate prices, which was something that I had been forecasting would happen for years.
I recognized the bubble that we have, and I knew what was going to happen when the bubble popped because of all the debt, because of all the money that had been borrowed to buy houses, and all the money that was borrowed using a house as collateral.
We had built an economy based on spending borrowed money and everybody was levered up and everybody assumed that real estate prices would always rise, including the lenders, which is why they were letting people buy houses with nothing down and why they were giving loans to subprime borrowers because nobody cared if the borrowers could pay because the house would always go up.
And so even if the borrower didn't pay, you'd just sell the house and you'd get your money back.
But once housing prices started to fall, a lot of these borrowers had no incentive to keep making mortgage payments.
They were stretching to make them anyway.
But once they had negative equity, what was the point of giving their money to the bank?
So they mailed in their keys instead of their checks.
And then the dominoes started to fall.
And I said at the beginning, there were a lot of people, including The chairman of the Fed, Ben Bernanke, Janet Yellen, who was at the Fed at the time, they said it's nothing to worry about.
It's just subprime.
It's contained. And the point I was making at the time, and nobody believed me, is I said, look, that's just the tip of the iceberg.
This is a giant credit bubble, and it's going to affect a lot more than just the subprime mortgage market.
I talked about the banks.
I talked about prime mortgages and how we were going to have this crisis and how we were going to have the worst recession since the Great Depression.
And all those forecasts that I made turned out to have been accurate.
Now, here is the bigger problem.
In the aftermath of that crisis, rather than the Fed learning from its mistake, having inflated not one but two bubbles, first in the dot-coms and the NASDAQ and then in housing, instead of recognizing its culpability in inflating these bubbles and accepting blame for the financial crisis and doing the right thing, they just doubled down on that failed policy.
And instead of taking rates to 1%, they took them to zero.
And they did all this quantitative easing.
And we had 0% rates for seven or eight years.
And the Fed never normalized rates.
At least Greenspan normalized rates.
And he only kept them at 1% for about a year, year and a half, and then got back up to normal.
But Bernanke, Yellen, and Powell never did that.
And now we're headed back to zero and we're doing more QE. But the problem is this bubble is far greater than the last bubble.
We have a lot more debt.
And so, again, it's not the pin.
The coronavirus is a health problem.
The bubble is a financial problem.
And if the coronavirus tricks the bubble, the problem is all the debt that we have.
Because if the coronavirus disrupts economic activity long enough, even if it's not that deadly a virus, even if the virus ultimately passes, the financial damage is not.
Because now that the air is coming out of this bubble, that's it.
Because all these stocks are collapsing because they have debt.
See, if you don't have your revenue because your customers aren't spending for whatever reason, but you still have to service all of your debt, you don't have the revenue to do that.
The whole economy is imploding.
Thanks to the Federal Reserve, everybody is leveraged to the hilt.
Individuals have record debt and they're living paycheck to paycheck, record auto debt, student loans, credit card debt.
Corporations are levered up.
They borrowed all sorts of money to overpay for their stock.
The governments are levered up, record budget deficits, record trade deficits, municipality, states.
Everybody has been gorging on debt because the Fed made it so cheap to borrow.
And we have nothing saved for a rainy day.
And so now it's raining. And maybe it'll pour.
Who knows? But the problem is, we can't even afford a drizzle, let alone a torrential downpour.
So it's the vulnerability.
It's all the stimulus of the past that's why we're so vulnerable now.
And everybody, again, is calling for more of the same.
Wall Street says more rate cuts.
Donald Trump, who was critical of the Fed as a candidate for cutting rates and artificially inflating a bubble, he is demanding more rate cuts, more stimulus, negative interest rates, bigger QE. Nobody wants the air to come out of this bubble.
But you know what? It's coming out.
Okay, so there's a lot in what you said, and let's just sort of package it for people who may not have quite the financial knowledge that you have.
It's kind of like some guy, he's over-leveraged, he's borrowed like crazy on his credit cards, and then his car breaks down, and that pushes him into bankruptcy.
And he says, well, the problem is, if only my car hadn't broken down.
But of course, things happen all the time.
You know, you're going to have economic shocks.
There's going to be some new disruptive technology.
There's going to be some illness.
There's going to be something that is going to happen.
And there's no cushion.
We've got a global money supply of $81 trillion, which is completely insane.
Central banks are injecting more than $150 billion a month into a heavily doped-up economy.
And there's nothing left in the chamber, so to speak, to deal with any of these variables or any of these crises that inevitably occur.
Yeah, you know, just like in 08, they said, well, nobody could have possibly seen this coming.
They're going to say the same thing about this.
Nobody could have seen the coronavirus coming.
And, you know, maybe that's true this time.
I mean, the housing bubble was more obvious.
This thing came out of left field.
But again, it's not the coronavirus.
It's the fact that we were so susceptible to anything going wrong.
And, you know, there's an old law that Murphy made up.
Anything that can go wrong will.
As I said, all bubbles find a pin.
It doesn't matter what the pin is.
It's out there. And so this is what should have been obvious.
We were priced for perfection.
We were running an economy as if nothing can go wrong.
We have just-in-time inventory.
Everybody is levered up borrowing.
And yes, if you are an individual and you're doing the right thing and you're saving your money, And then you lose your job.
It's not a crisis because you have enough savings to tide you over until you find another job.
But if you've been living on credit and you have no savings and then you lose your job, it is a disaster.
But it's not the job loss that is the problem.
It's that you didn't prepare for it.
You just assumed that you would never lose your job, and so you spent money like the paychecks would never stop coming.
That's the mistake that we've made.
I've been worrying about this for years.
People have been laughing at me because, you know what, nothing bad had happened, and the stock market kept going up.
But you know what? Now the stock market is imploding.
And the declines have just begun.
And all these paper profits are about to turn into real losses.
And politically, it couldn't be worse.
I've been warning about this because it's all going to be blamed on Trump, on tax cuts, on deregulation.
Donald Trump made the mistake of claiming ownership of this bubble, claiming that he has created the greatest economy in the history of the world.
And when it turns out it was just the greatest bubble in the history of the world, He's going to get the blame.
And Joe Biden is going to be the next president of the United States.
And he is going to be way to the left of Obama.
Guys like Bernie Sanders are going to push him to the left.
And this is going to be a complete, unmitigated disaster this time.
It is going to be a sovereign debt crisis.
It's going to be a dollar crisis.
Much, much worse than the financial crisis.
No bailouts this time.
We're going to have to deal with this pain.
And it's going to be much more agonizing than had we dealt with it in 2008.
Okay, so let's deep dive into one of the issues that I think is kind of underreported on, which is not just the amount of corporate debt, but the risk of that corporate debt.
So Moody says 87% of all leveraged loans, this is one of the riskiest types of corporate debt, are issued with covenant light clauses, which means almost no protection for investors.
Let's talk about the amount of corporate debt and just how flimsy a lot of it is.
Oh, yeah. First of all, Moody's and S&P were asleep at the switch during the subprime bubble.
They were putting investment grades on bonds that were clearly worthless.
I mean, that's why I was shorting them and a few other people recognized this.
But Wall Street was just believing the ratings on bonds without actually looking beneath the surface to see that bonds that had investment grade should have been rated F if they have a rating of F and that they were going to fail.
Well, they've been doing the same thing again during this credit bubble.
I think a lot of bonds that should have been rated junk were given investment grades, and I think we're very close to a massive downgrade.
In this recession, I think a record percentage of corporate debt is going to be downgraded to junk status, and a record amount of debt is going to go into default.
And this is going to set off a spiral of bankruptcies and defaults.
I mean, look at how rapidly these bank stocks are falling right now.
They're falling because the loans that they made are going to go bad.
And the collateral behind those loans isn't going to be there.
Like the price of oil coming down.
That's not the problem. The problem is the oil companies borrowed a lot of money.
And now they can't pay it back.
That's the problem. And so we're actually going to need a bigger bailout this time than the one we had in 2008.
The banks need to be bailed out again.
Now, they might say, we're going to bail out the oil companies.
We're going to bail out the airlines.
We're going to bail out the hotel industry.
But they're really bailing out the banks Who loaned them the money?
Because if these companies weren't levered up, it would be fine.
It would be okay if their customers stopped coming for a few months while they were waiting out the coronavirus because they would have the savings to go through.
But if you're living with all this debt and you need that revenue to service your debt, even if the interest rates are low, if the revenue stops, the debt payments don't.
Well, and it also troubles me how these big corporations are soaking up all of the available capital because of these ridiculously low rates.
And I think that's creating kind of a capital drought for the smaller and more nimble and creative companies to get a hold of the resources they need to build in a new economy.
Well, that's been the problem.
All this cheap money has been made available to major companies through the bond market, but since nobody was depositing money at their local savings and loan because there were no interest rates there, there was no savings available for local entrepreneurs to borrow money to invest in capital and expand their business.
They can't tap into the bond market.
It doesn't matter to your corner business that Yields on treasury bonds are at 2%.
They can't issue treasury bonds, and they can't issue corporate debt.
They can't tap that market.
They need to go to the bank and borrow money.
But the bank doesn't have any money to lend because nobody is making deposits, and whatever money they have, The banks are using it to buy treasuries.
They don't want to take the risk and make a loan to a small business.
They're just going to take a risk-free loan by buying treasuries.
All that investment was crowded out, and all we did is spend borrowed money.
It was the consumers who had access to credit, not the entrepreneurs.
Instead of building an economy, we just bought consumer goods.
You know, we went out and bought overpriced college degrees or depreciating, you know, TVs or automobiles or cell phones and people took vacations and did all sorts of stuff.
But now all the bills are coming due and we have no way of paying them pay back.
Well, and this is the frustrating thing as well because of the economic illiteracy of the general population coming out of crappy government schools, Peter.
What's so frustrating is everyone thinks that the Fed is sitting there with this big kind of big Star Trek dial of complex levers and it's just massaging things and it's like, no, all it can do is print money and create inflation.
That's its sole capacity to deal with things and the printing of money changes.
It doesn't create new goods and services.
It doesn't magically create a cure for the coronavirus.
It doesn't deal with any of these issues.
All it does is pump more and more cocaine into an already depleted system.
Yeah, and you know, it's no wonder that our young kids have turned to Bernie Sanders and why socialism is so appealing, because we've given capitalism such a bad name by preaching it, but not practicing it.
And we've really done our young generation a disservice.
First of all, we brainwashed them with government schools.
But number two, government, because of all of the money that went to college aid, guaranteed loans, direct loans, we inflated the cost of a college tuition.
If it wasn't for government, college would be, you know, much less expensive.
But the government inflated that bubble.
And then we told all our kids, you have to go to college or your life is ruined.
So even if you're not that smart and you didn't even get good grades in high school, you still got to go to college anyway, because if you don't get a degree, you'll never get a job.
And it doesn't matter what it costs because we'll loan you the money.
And so because of the government, all of our kids are loaded up with debt.
Then we hit them with huge taxes to pay their grandparents through Social Security, because they're the ones on the losing end of the Social Security chain letter.
They're having to pay these heavy payroll taxes so that the older generation can get a Social Security check.
And then we really socked it to them with Obamacare, where we said, hey, we're going to make young, healthy people subsidize older, sick people who don't buy insurance.
So we really stacked the deck against the younger generation It's no wonder that they're now embracing socialism, but they don't understand.
It's socialism. That's the reason they're in so much trouble.
If we had a free market economy, they would be in much better shape.
Oh, no, absolutely.
And they wouldn't be forced into, well, not forced, but lied and defrauded into massive debt to be indoctrinated in socialist principles that will be the downfall of their potential future.
So let's talk a little bit about how the Fed pumping money in, lowering interest rates and all of that, how that is affecting the stock price.
You kind of touched on that earlier, saying that companies are borrowing money to drive up the price of their stocks, but that's something that people, I don't think, quite understand.
Because, you know, as you point out, we've seen the tech crash in the 90s.
We saw the real estate crash in the noughties.
And now if this is going to be a stock issue, can you just give people the breadcrumbs back to sort of Fed policy, interest rate policy and the price of the stocks?
Yeah. Well, the thing is, the stock market was not going up because corporations were increasing their actual value.
It wasn't that the value of their tangible assets, their property, their plant and equipment was going up.
It wasn't like their earnings were really going up.
What was causing the price of stocks to go up was the Fed.
It was all the cheap money.
It was inflation.
You see, when the Fed inflates the money supply, which is where the word inflation comes from, it's to expand the money supply.
But when the Fed creates inflation, prices go up.
Now, sometimes the price of financial assets, like real estate or stocks or bonds, they can go up more than the price of consumer goods.
And when inflation affects financial assets, nobody seems to worry about it.
In fact, people like it. Because it makes people feel richer.
It's not until it starts driving up the price of consumer goods that people really feel poorer.
But all inflation, no matter how it enters the economy, even if it starts out in financial assets, is going to end up in consumer goods.
And so we're going to feel...
When it's not stock prices that are going up, but prices in the supermarket rather than the stock market.
But now this bubble is bursting, like all bubbles that have burst.
And the stock market's coming down.
The Fed, of course, is trying to prevent it.
And had the Fed not slashed interest rates, remember, the air started coming out of this bubble In the fourth quarter of 2018, we had the worst December since the Great Depression in the stock market, and we would be a lot lower now but for the Fed.
The Fed came to the rescue and slashed interest rates and put some more air back in the bubble.
But I argued at that time that it didn't matter, that the bubble already had a hole in it, And whatever air the Fed was able to pump in was going to come out.
And that's exactly what's happening now.
And so the Fed is slowing down the decline by providing more money, but it's not going to stop the decline.
And it's simply throwing gasoline on a fire.
So everything the Fed is doing now is simply exacerbating the damage that we're ultimately going to have to deal with in the economy.
Well, and when consumers and businesses are thinking about borrowing money, A change in short-term rates isn't going to fundamentally alter that decision matrix, and that's really the major lever that the threat is pumping at the moment, and I don't see how that's going to change people's long-term decisions in these areas.
Yeah, well, and the bigger issue is, you know, people should be saving money right now, not borrowing money.
I mean, we have a shortage of savings thanks to the Fed.
What the Fed really should be doing is allowing interest rates to rise so that we have more savings and contracting the money supply.
Because what is the coronavirus likely to do, right?
The worst case scenario for the coronavirus, other than the health issues, But the worst case beyond that is that it affects the supply of goods.
If factories shut down because their workers are home sick or trying to avoid getting sick, and now the whole supply chain kind of grinds to a halt, even if your workers can come to work, if they don't have the parts because the plant that manufactures those parts is shut down, then all of a sudden the supply of goods goes down.
The correct response to that would be to contract the money supply so the money supply goes down along with the supply of goods.
But what the Fed and other central banks want to do is increase the money supply as the supply of goods is going down, which means prices are going to go through the roof.
When they first established the Federal Reserve, it was supposed to provide an elastic money supply.
And that meant that the money supply would go up as the economy improved or expanded, and it would contract as the economy contracted.
It was supposed to move up and down with the business cycle.
Jack up the money supply as the economy is decelerating.
It's just an engine for inflation.
More money chasing fewer goods.
So it's the worst monetary policy.
And everybody assumes that there's no inflation, right?
Just because it's been MIA for so long.
And one of the reasons that no one has seen it is because the government hides it pretty well with its official measures like the CPI, which really understate the degree to which consumer prices are rising.
But they're about to go through the roof You know, from this next round of money printing and QE that we're going to get in combination with the coronavirus.
Well, okay, let me throw an anti-free market argument that I've heard at you.
Let me know what you think. It goes something like this.
Well, you see, the problem with America and the West at the moment is because they had free market relations with China and were able to buy things from China and China...
The wage prices are lower, regulation is lower, so all of the manufacturing, particularly of medications, moved out to China, and now we're seeing what a disastrous policy that free trade with China is, because now we're dependent upon a collapsed economy in China, and we're going to run out of medicine, something like that.
Yeah, well, actually, they're missing the most important part of it.
And it's the reason that American manufacturing became so uncompetitive.
And the reason we ended up turning to China really out of desperation is because regulation and taxation made the US economy uncompetitive.
We used to manufacture all the things that China manufactures now.
We dominated the world.
We were the lowest cost producer of manufactured goods, even though we paid the highest wages in the world.
And the reason we were able to do that was because we had no income tax.
We had no payroll tax.
We had a tiny government that didn't tax and didn't regulate very much.
So we had a free market economy, and it was extremely prosperous.
But as we layered US businesses with more regulation and more taxes, The only way that they can survive was to start outsourcing and to start to import the stuff that we used to produce.
That is the problem.
But yes, I've been warning about this for a long time, how vulnerable we are because everything is imported and foreigners have been willing to accept our dollars in exchange for their real stuff.
But what happens when that crashes?
What happens if there really is a pandemic and the Chinese decide that they need all the medicine that they manufacture?
They need all the antibiotics.
I mean, everything is all made over there.
If they don't want to ship it over here, what are we going to do?
I mean, everything that we rely on is imported.
Our whole economy is based on importing stuff that other people make and paying for it with IOUs.
I mean, yes, we have a big service economy, but you take out all the manufacturing goods and the service economy implodes because it's built on the foundation of those manufacturing goods.
Take the goods out, there's nothing to service.
And then everything implodes and all that's left is the debt.
So we're talking here about a supply-side shock, an interruption in the global supply chain.
And of course, because the Fed can't solve that, it tries to create these demand-side policies by lowering interest rates and by jacking up the production of money.
But as you point out, you can't solve a supply shock with demand-side policies.
Right. You just create more demand for items that are in even more scarce supply.
That's the worst thing you could do.
What we need is more production.
Well, how do we get more production?
We have to actually deregulate, and we have to make government smaller.
We need massive cuts to government spending so that we have more resources available for the private sector to start producing more of the things that are in short supply.
But all the stimulus policies, even the fiscal stimulus, They're talking about a payroll tax holiday.
That's not gonna produce any extra goods.
That's just gonna produce more demand for the goods that aren't there.
People are gonna take their windfall and go try to buy something on Amazon that was made in China.
That's not gonna help our economy.
Well, yeah, because I mean, in my mind, I just kind of divide things into two parts.
Like there's the essential economy, which actually is like food and medicine and shelter and roads and like the economy that actually you need in order to survive.
And then there's like, hey, you can get a 65 inch television instead of a 45 inch television, which is kind of like a nice to have.
And it seems like so much of the essential economy has been outsourced and is subject to disruption that people can live without upgrading their television, but a lot of the essentials are going to be pretty short in supply, I think, over the next little while.
Well, the televisions will too, because those things are all imported.
We don't make any of those ourselves either.
Look, you know, this whole phony bubble economy is in the process of imploding.
And yes, the Fed is going to do everything it can to try to slow down the process and keep the air from coming out.
But it's impossible this time.
I mean, I've been saying this since the beginning, that they can't inflate a bigger bubble than the one that just popped, because that's the biggest bubble ever.
And so it's impossible that we're now going to overdose on stimulus.
Instead of having another high, we're just going to collapse.
We're going to kill the dollar, and then we're going to have runaway inflation and Interest rates are going to go way up as the bond market vigilantes finally wake up.
And we're going to have something much worse than just a Great Recession.
We're going to have a greater depression.
And instead of being relieved with falling consumer prices, which is what happened in the 1930s when we were on a gold standard, this time the unemployed are going to have the added pain of watching the cost of living skyrocket as their paychecks stop coming.
Yeah. Well, and, you know, a lot of people got radicalized by the 07-08 crisis and the resulting bailout, which was staggering amounts of money.
And I'm really concerned, of course, that naturally what's going to happen, as you pointed out earlier, people say, oh, the free market has been tried and it's failed, it's too unstable.
And then they're going to look at the The fire hose of money that's going to land on these big corporations, these big financial institutions and so on, the banks and the investment companies that are all hanging by a thread.
People are going to look at the fire hose of money spraying out there and saying, ah, capitalism, it's so corrupt, and it's going to further radicalize people into the arms of far leftists.
Yeah, and that's why this time they're going to have to make sure to spread a lot of money around the general population with things like payroll tax holidays or direct checks being bailed out to individuals so they feel that they're participating in the bailouts.
But, you know, the world's biggest debtor nation can't bail anybody out.
Who's going to bail us out?
How is the United States going to bail anybody out when it's broke?
How is the US going to guarantee the debts of third parties when its own debts are unpayable?
So that's what nobody understands.
And that's why it's going to be a currency crisis, not just a financial crisis.
And people need to do something about it.
I mean, if you have wealth, you have to understand that you will be wiped out.
If you have dollars, treasuries, You have CDs.
You have cash value in an insurance policy.
You are going to get wiped out, right?
Because none of the debt can be repaid.
That means it's all going to be inflated away.
And so if you don't want to watch your life savings evaporate, you've got to protect it before it happens.
That's why I've been so insistent that people own gold, that people own gold stocks, that people get their money into good dividend-paying stocks in Singapore, in New Zealand, In Switzerland or Norway or Hong Kong or other places that I think will ultimately be ports in a storm that have viable economies with ample savings and balanced budgets and trade surpluses and currencies that will retain more of their value.
And of course, all these currencies are going to be backed by gold.
I mean, we are headed back to the gold standard We're going to abandon this ridiculous dollar standard where the dollar is the primary reserve for other fiat currencies.
That's been the pillar upon which our whole phony standard of living has rested.
And when that goes, the whole thing implodes.
But gold is going to get re-monetized, and central banks will once again back their IOUs with real money, gold.
But if you buy it now, you'll be able to get it at a much lower price than what a lot of these central banks are going to be paying.
Okay, so there's two more questions that I wanted to run past you.
I guess one is a scenario, one is a question.
So for the average person on the ground, sort of middle class, low middle class, how is it going to play out?
What could they expect to see over the next year or so if these predictions, which obviously have a lot of theoretical and empirical basis to them, if these predictions play out, what are the on-the-ground effects that people are going to see that they need to be aware of?
Well, we're going to see recession.
We're going to see a lot of unemployment.
It's going to spike up as a lot of companies that no longer have revenue and can't pay their debts start doing everything they can to reduce their overhead.
And a lot of people are going to be unemployed.
You know, a lot of the jobs that we've created under Trump have been in the hotel, leisure and hospitality industry, a lot of waiters, a lot of bartenders, a lot of people in hotels.
So these jobs are going to be among the first to go because they're most impacted by the reduction in travel.
So a lot of people are going to be unemployed.
So that's going to be a problem.
But what's going to be a bigger problem, too, is as consumer prices really start to rise for a lot of items that many people view as being essential.
And then we could end up with price controls.
I mean, we had them in the 1970s.
I wouldn't be surprised if they were resurrected.
Of course, they didn't work back then, but that's not going to stop them.
I mean, QE didn't work and we kept doing that.
So we may end up with price controls, which means shortages, which means long lines.
So what I would recommend is that people stock up now on things that you think you're going to need.
Just buy them. If you have room in your house to have a few years worth of stuff, buy it now because the money is only going to lose value.
and the stuff that you buy is probably going to give, you know, deliver a much better return than buying stocks.
But in the meantime, in a year or two, you may need that stuff.
And you know what, if you have some excess that you don't need, there'll be a big black market for it.
You'll be able to sell it for a profit.
Right.
Okay.
Now let's talk about, and you touched on this earlier, the fact that people think the economy is super healthy under Trump and the fact that, as you point out, Trump has owned the increase in the Dow and other positive economic indicators and low Again, you know, he's taken that, beaten his chest in pride with regards to economic performance.
But how's that going to play out going forward if the economy really hits the skids?
You say it's going to be identified with Trump, it's going to swing people further to the left and doddering Biden and whoever he chooses as his running mate are going to be in the White House potentially.
Yeah, and it's not just Trump.
It's all the other Republicans who wrapped themselves in the Trump flag.
I mean, he wasn't the only one counting this phony economy.
Just about every other Republican followed in lockstep, as well as the financial media.
And they were doing the same thing.
I remember when I used to be a regular on CNBC, in particular Larry Kudlow's program, I used to come on with Kudlow and a lot of his guests, Art Laffer and Stephen Moore and a lot of these Republicans.
And these guys, in many cases, I agree with these guys on a lot of things.
But what I disagreed with during the Bush era was that we had a good economy.
I said we had a housing bubble that was going to crash.
And they kept saying, like Kudlow was saying, it's the greatest story you've never told.
It's the Goldilocks economy.
The recessionistas are wrong.
Everything is great. Art Laffer was like, there's no problems anywhere in sight.
We have tax cuts. Everything is fantastic.
And I kept telling these guys, wake up and look at reality.
This is a gigantic bubble.
We're headed for a market crash, a real estate crash, a financial crisis.
And because you guys are cheerleading this bubble, when it pops, you're going to have no credibility.
And all you're doing is making the case to elect a Democrat.
And that's exactly what happened.
And they all made the same mistake.
All these guys, you know, now they don't even have to deal with me.
They won't even let me on CNBC anymore.
They stopped having me on years ago.
They didn't want to deal with the stuff that I was saying.
So they wanted to pretend that nobody was saying it.
So they kept me off their air.
But I was still warning, you know, I do have my podcast.
I am on my YouTube channel.
I'm telling everybody, hey, this is the same problem.
The same people have blown an even bigger bubble.
And now you have the Republicans cheerleading again, except now Larry Kudlow is not You know, from the sidelines, he's actually in the game.
He's the chief economic advisor to the president, and he's just the same cheerleader he was when Bush was president.
He had a TV show on cable news.
But so this is going to take down the whole party.
The Republican Party is going to get the blame, and everything that it supposedly stands for, like smaller government, less regulation, lower taxes.
And so what are we going to get?
More regulation. Higher taxes, bigger government, right?
The last thing we need, but that's exactly what we're going to get.
And I actually blame the Republicans more than I blame the Democrats.
I mean, most of these guys are too dumb to know any better.
But the Republicans, these guys should have known this.
I mean, what I was hoping Trump would do when I voted for the guy is that he would actually drain the swamp instead of making it deeper.
that he would actually make America great again by getting to the root of the problems that were the reason it wasn't great, by cutting government, by making government smaller, by abolishing agencies and departments and tackling the entitlement problem and dealing with the Fed and really helping to swallow the bitter tasting by abolishing agencies and departments and tackling the entitlement problem and dealing with the Fed and really helping to swallow the bitter tasting medicine that we have avoided for so long because
I thought Trump could rise above politics, that he could be a statesman, that he could actually do what was right for the country and not just what was expedient for his political career.
But instead, he disappointed me and he acted just like every other politician, just with a little bit of a different style.
But maybe the form was different, but the substance was exactly the same.
Well, and that, you know, we kind of needed Churchill to to tackle.
But the amount of education that the public would need to be able to swallow these bitter pills and feel like they're not being punished is enormous.
You know, trying to backfill all of the leftist propaganda that comes out of the media and the schools and so on is a pretty big job.
Okay, so last thing, if you could...
Yeah, but you know... Yeah, Trump had the bully pulpit.
He could have had a fireside chat like Roosevelt that just laid it out.
Hey, I've been elected.
You know what? Let me give it to you straight.
Let me tell you how screwed up this country is after years and years of Democrats and Republicans and central banking, and here is the problem, and here is what we need to do to deal with it.
We can either deal with it now or deal with a much bigger problem later.
But now, because he didn't do that, we're going to deal with a much bigger problem later, and we're going to deal with it by embracing socialism.
Well, I think that probably the plan was, if there was a plan at all, was let's squeak our way into our second term and then I can deal with the difficult issues without having to worry about re-election.
But that, of course, is falling into the whole swamp problem to begin with.
Yeah. A bird in the hand is worth the second term in the bush.
You know, he should have seized his opportunity initially when the Republicans had the House and the Senate.
He had two years to do something and he did nothing.
All right. So let's close off.
And I really do appreciate your time here.
Let's close off with...
The speech to the young and the young at heart, of course, the people who've grown up without even our sort of middle-aged guy attachment to prior free market principles that kind of dribbled down through the greatest generation.
A lot of the youngest people really have no clue about the real reasons behind the incipient potential disaster in the economy.
What is it that you would most like for them to understand?
What sort of course of knowledge would you most like for them to pursue so they don't end up with a remedy worse than the disease?
Well, they've got to educate themselves because they've been brainwashed by government.
And, you know, when we had the financial crisis of 08 and you had the Occupy Wall Street protests in New York and Zuccotti Park, you know, I went down there and Reason TV came down with me and we got millions and millions of views for about a two-hour video when I was talking to the people at Zuccotti Park.
And if you haven't seen the video, you know, it's up on my YouTube channel.
That's one place you can see it.
A lot of other sites have it, but it's on my channel.
But the reason I went down there was because I sympathized with the occupiers and their disgust for what was going on.
But I thought they were focusing their anger in the wrong direction.
They were upset at the bailouts and they blamed Wall Street for taking the bailouts.
I blamed the government for making the bailouts available.
I wanted those banks to fail.
And it was only because of the government that they did it.
So the government was the problem, not capitalism.
Had we had capitalism, nobody would have been bailed out.
So the young people need to know that the problems are government.
The solution is the free market, is the individual, is the rugged individual.
That's what built America, not this collectivist society by, you know, trying to get something for nothing, right?
That's what Bernie Sanders appeals to, envy and greed and the idea that you get something for nothing.
What you have to cherish is freedom, freedom from government.
To be all that you can be, to succeed and to achieve and then to help others voluntarily.
It's not about having the government steal from somebody and give the money to somebody else.
It's about people voluntarily sharing the fruits of their own labor.
And in a free market, When you pursue your own wealth, according to the invisible hand, you automatically increase the wealth of everybody who voluntarily interacts with you.
So people have to understand the power of free market capitalism and the destructive nature of government.
They should listen to my podcast.
I do them now almost every day at shiftradio.com on my YouTube channel.
I have so much content.
I have books that are out there that people can read.
Probably the most relevant now, The Real Crash, America's Coming to Bankruptcy, You know, how an economy grows and why it crashes.
There's a lot of books out there. My first book was Crash Proof.
These were all New York Times bestsellers, but they're probably more timely now even than when I wrote them.
And more importantly, too, for people who are older, who have built up a net worth, before you lose it, before you go broke with everybody else, do something to save yourself.
I can help you. You can see my company.
It's Europe Pacific Capital. We're good to go.
Well, I will put the links to all of your books and websites below.
I really, really do appreciate your time today, Peter.
It's been too long. Let's do it again soon.
▲
Export Selection