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Jan. 29, 2021 - Freedomain Radio - Stefan Molyneux
58:09
GAMESTOP CRISIS! Peter Schiff and Stefan Molyneux Break it Down
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All right. Look at that.
A little pre-show for everyone.
Hi, everybody. This is Stefan Molyneux back with a good friend, Peter Schiff.
Now, Pete, you and I have known each other now.
Gosh. More?
Probably 12, 13, 14 years, something like that, right?
Well, I don't know. I don't really count the years.
They've just become a big blur of history.
But for those of you who don't know, Peter Schiff runs Schiff Gold.
You can get them at SchiffRadio.com.
Fantastic investment advice.
And if you need gold...
And you can't make it yourself in a bathtub.
He's the guy to go to.
Silver is in vogue now.
We'll get to these Wall Street bet guys and their play on silver.
It's just wild, wild.
We haven't chatted in a while.
I haven't been doing a lot of politics, haven't been doing a lot of econ, but man, did I ever get dragged into this thing with these Wall Street bets and this serious shorting that's going on.
I assume you've been tracking the story.
What are your thoughts? When did it first show up on your radar and how has it affected what you think and do?
Well, you know, I've kind of been following it, I think, since the earlier days when these heavily shorted stocks really started to move.
And so I immediately started looking at them, but then it kind of really blew up.
And look, you know, I think that for some people, This was clearly a shrewd maneuver.
I mean, no question about it.
Some people got in, bought these stocks early and were able to really hype them up and take advantage of the fact that there were so many shorts.
And they understood the dynamics of Wall Street because normally when you short a stock, you don't expect it to go up that much.
Because people do a lot of research before they short stocks.
I mean, people are a lot more particular about what they short than what they buy.
I mean, you've got people like Portnoy just grabbing tiles out of a Scrabble bag and just buying stocks.
You know, you wouldn't do that on the short side because on the short side, you know, all you can make is down to zero.
Right. But your risk is unlimited.
And so you do a lot of research before you short a stock.
And I think what happened was some of these hedge funds, they shorted some of these stocks that were already beaten down.
Now, it was pretty obvious that they were probably going bankrupt.
Or at a minimum, they're going to have to do a massive capital raise to loot the stock.
So they saw these stocks that were really kind of like on their deathbed.
And they just said, okay, let's just pile on here.
And they got a little greedy and they just put on too big a short.
And so once these stocks really start to go up, the losses compound.
I mean, you short a stock at two or three dollars a share and you're just looking to make that couple of bucks, but you think it's a freebie because the stock's worth nothing.
And all of a sudden, it goes to 10, 20.
I mean, you're losing so much money relative to, you know, what you could have made.
And then, you know, these things are marked to market.
That's the problem, because then the brokerage house calls them up, you know, margin call.
You know, if you remember that from Trading Places with the Dukes, you know, we don't have all that money.
Then they have to put all their assets up for sale.
And so they were able to squeeze the shorts, which is a classic term for forcing the shorts to have to cover and buy back what they sold.
And in a thin float, and there's not a lot of stock, and now they're competing with all these guys on Reddit and WallStreetBets, and they're all buying up the stock that they need.
It's a buying frenzy.
And then, of course, it fed on itself.
And you've got a lot of people, high-profile people with lots of Twitter followers, just announcing to all their followers, hey, I'm buying GameStop.
I mean, everybody starts buying it.
And everybody's like, oh, it's free money.
Let me just get in on this.
And people just want to buy it.
And no one gives a damn that what they're buying is fundamentally worthless, right?
It's a company that was probably going bankrupt, which is why it's got all these shorts.
But people don't really care about the underlying value.
All they know is it's going up, and I want in on it.
And as long as more people are buying it, the price could keep going up.
Now, the shorts kind of had to go up.
I mean, they had to hold their nose and buy it, even though they know it's ultimately going to zero.
That's where that expression comes from.
Markets can remain irrational longer than you can remain solvent.
They probably hadn't factored in, you know, the Wall Street best guys.
But look, you know, there is risks when you short, right?
I mean, you know, these guys that run these hedge funds, they make a lot of money.
And, you know, so, you know, this is part of the game.
I mean, it happened, right?
I mean, it's not money for free.
I mean, big profits, big risks.
Okay, but hang on.
So some people are saying this is relatively unprecedented, but I have, you know, digging back in my sort of financial memory, I've heard of these kind of short squeezes before, maybe not coordinated on Reddit or something like that, but anytime someone takes an extended short position, they're opening themselves up to just this kind of vulnerability.
This has happened before, maybe not in this particular decaying market, maybe not to this degree, but it's, you know, I'm getting a deja vu about this thing.
It certainly happened.
And I just think what's different is, you know, some of the people that are involved, you know, the chat rooms.
And, you know, we didn't have Robinhood before, where, you know, people were trading, you know, individual shares of stock for free.
I mean, you have so many guys, they don't even buy one share.
You know, you can never do that, you know, when you had to pay a commission.
But you have a lot of people just trading on their apps.
But short squeezes go back probably as long as short selling has gone on.
And I still think as much as everybody wants to say this is the little guy versus the fat cat, I would not be surprised if there were some other fat cats that joined up.
You know that these little guys are the cover, you know, and either they jumped on the bandwagon or they got it started.
But I'm sure there is some big money that got in on this short squeeze.
I don't think it's all the little guys and Robin Hood and the band of men.
I mean, I think there's maybe the sheriff at Nottingham or somebody got some, you know, bigger guns in here.
And I wouldn't be surprised if we find out that some people cleaned up.
But the thing is, those people were smart enough to sell.
What concerns me We're good to go.
And I know there are people saying, oh, we don't care if we lose money.
We're just trying to stick it to the man.
But I don't know about that.
I don't know if everybody who's buying it doesn't care if they lose all their money.
Oh, listen, there is a sort of suicide vest approach to this that's kind of ideological from some of the stuff that I've read.
Like, people are like, hey, man, you guys destroyed my family in 2007, 2008, and we're now paying back because we finally figured out a way to bring you guys down, all that.
They think they found that unguarded part of the Death Star, and they're just going in on some big X-bomb flyby.
And there is an ideological component to it, which is why there's a lot of this, like, hold the line, man, don't sell.
We want to make them pay.
I mean, it's almost like they're kamikaze.
You don't get out.
Keep buying. And to the extent that they're doing it with a small amount of money and they don't mind, it's like entertainment.
It's like money you pay to buy.
You can't go out to a sporting event.
So just get in on this.
And so, but if somebody like, you know, wrecked their retirement account or whatever they're doing, so that would be my concern about it.
But of course, you know, my other fear is that, you know, people are going to lose money and of course the government is going to come in and say, ah, you see?
This is why we need more regulation on the securities industry.
We need tighter controls.
We need to protect the little guy.
And of course, whenever they protect the little guy, they actually end up hurting the little guy a lot more than they protect him.
I mean, you know, one of the reasons that the little guys have to trade on Robinhood all by themselves is because firms like mine The government has made it so expensive to have small accounts that nobody can take them.
So all these rules and regulations that were supposed to prevent the little guy, protect the little guy, they actually protected him from having any professional help because it's too expensive to provide it.
So the minimums are so high that the little guy has no choice but to do it himself.
So for those who don't know, what are the kind of regulatory price increase barriers for firms like yours from being able to deal with smaller accounts?
What is driving the cost up so much?
Well, there's a lot. Well, first of all, you know, you got the normal KYC, you know, know your customer, anti-money laundering that everybody deals with, right?
So there's a lot. When I first got into this business, I could open up a brokerage account, you know, in 15 minutes.
You know, I'd take down a little information.
We've proved the account.
People could start trading. Now it takes, you know, a lot longer, sometimes several days, just to Get all the paperwork done and the paperwork is much more voluminous and it takes a lot more.
The compliance departments are now a lot larger.
So that runs up the costs.
But the government has also made it so easy for brokers to sue if they lose money.
And it's so expensive to defend yourself.
That you can't really take a small investor.
Because let's say you take a small investor, he sends you $10,000 and he loses $3,000.
And then he says, oh, I want my money back.
You pretty much have to give it to him, right?
Because they can file these arbitrations for free.
The lawyers work on contingency.
They know that they can shake down the broker's dealers because it costs you $50,000 to defend a lawsuit.
So a guy says, hey, I lost $3,000.
What are you going to do, go to court? So it's like they all come with a free put.
So what they do is it's like the account has to be large enough.
So that, you know, the amounts are high enough so that you can actually make enough money.
What do you even make on a $10,000 account?
I mean, the amount that we make, and we have to do a lot of compliance along the way, too.
There's so many reviews and ongoing oversight that's required on all these accounts.
And everyone who touches this stuff is hundreds of bucks an hour.
It's not like some secretary doing a filing thing.
Everyone who has to touch this regulatory compliance, like these are all very, very expensive people.
So it does overshadow any profits you can make, right?
Exactly. And from when I first got into the business, the number of brokerage firms has declined dramatically.
So you don't have a lot of choices because the smaller ones just couldn't afford the compliance costs of staying in business.
And they keep raising the minimums of what your account size can be.
So, you know, the little guy, you don't have a lot of firms to choose from.
And then the firms that are left won't even take your account.
Because you're a nuisance.
And it's not because they wouldn't like to help you.
They just can't afford it.
It's just too expensive. They lose too much money.
So now you're just, you know, all by yourself and a lot of these guys end up signing up or following newsletters.
And a lot of these newsletters are just frauds or giving them bad advice.
So, you know, it would be much better if the government just didn't regulate the industry to death so that the industry can actually work with a lot of these guys who end up getting ripped off by the people who are not being regulated.
But that's because they don't have to deal with all the costs, not because, you know, the regulation is what makes you honest.
Look, if there was zero regulation on the security industry, My primary motivation is still going to be to do the best job that I can for my client, just like any other business.
If I run a restaurant, I want to serve good food.
I want to serve healthy food because I want people to come back.
I don't want to serve you one meal and then never see you again.
Right? So I don't need the government to make sure that I don't get my customers sick and all that stuff.
It's my own reputation.
It's my own desire to please my customers so that they come back and so they tell their friends, hey, I was at Schiff's restaurant.
The food was fantastic. You know, if someone went to my restaurant and they went home and they got food poisoning, how many people are they going to send?
So look, you know, you're going to do the best, even if it's not because I'm a good guy and just out of the compassion of my own heart, I want to help my customers.
Even if it's just my own greed, I have to help my customers.
That's how I get more of them.
That's how I retain their business.
So all this regulation is just counterproductive.
The bad guys are going to be bad.
They're going to find their ways around the regulations.
Look, Bernie Madoff complied with all the regulations.
Look at how much money he stole.
In fact, they knew about him for years and years and years before.
They got tons and tons of reports on that guy.
The other thing, too, the whole reputational thing, now that you've got online reviews, now that you've got rating systems all over the place, the idea that someone can be a bad actor and get away with it, I can understand these regulations coming in before these rating systems that are commonly and publicly available.
Now you've got millions of people running their businesses on eBay and stuff that just rely on reputation.
Amazon is just reputational stuff, no regulation, so you don't need it anymore.
And I think, too, with Bernie Madoff, I think there's a false sense of security.
Bernie Madoff probably said, oh, you know, I'm regulated, I'm audited, the SEC has blessed me, FINRA has...
Oh, okay. You know, so, you know, if you didn't have government regulators, then people might be a little bit more responsible and be a little bit more suspicious.
Okay, let me check you out instead of just assuming that they're okay because the government checked them out, right?
Oh, if you were doing anything wrong, the government would have, you know, done something about it.
But, you know... They didn't.
So how do you think it's played out relative to your expectations?
Were you expecting, you know, sales to be suspended on some of these apps and some of these platforms?
I mean, that seemed to me like a – I knew they were going to do something, but I thought it was going to be more like a press release or maybe running for the government.
But suspending these sales and selling people's stocks on margin calls without their permission, man, that seems kind of intense to me, Peter.
Yeah. I've got to tell you, it's straight up intense.
I mean, look, a lot of things. Look, obviously, the fact that the stocks went up so much.
And the other thing, too, is it's not that these stocks were going up, but they were going up as the market was going down.
So think about all these hedge funds.
They're long and short, right?
Very few hedge funds are just short, right?
So they kind of try to balance out their book to take less risk, right?
They try to be more neutral or balanced.
Hence the term hedge fund, right? Yeah.
Yeah, so they got some longs, they got some shorts.
And what they expect is, you know, if the market goes up, their longs will go up more than their shorts.
And if the market goes down, their shorts will go down more than the market.
And over time, they hope their longs go up and their shorts go down.
So instead, everything they own is getting killed and everything they've shorted is going way up.
Also, they had to dump other holdings to cover the shorts.
So that's part of it.
What I also think was happening is some of these hedge funds knew that the other hedge funds were in trouble and they were going to get margin called.
And so they find out what those guys are long because they know that's what they're going to sell and they sell it first.
Right. Right. So I think they sense the opportunity.
One of our own is vulnerable.
So I think there's a lot of that going on.
But yeah, I mean, this is a crazy, crazy week.
But everything about the market is crazy.
I mean, nothing makes sense.
I mean, look at all the IPOs of money losing companies.
Look at the valuations.
Look at this frenzy.
And it all boils down to one thing.
You know, the government wants to come out now and look at this and say, oh, you know, how are we going to regulate this without understanding that none of this would be happening but for their own policy.
If it wasn't for the Federal Reserve and all this cheap money, all this quantitative easing and negative real interest rates, None of this would happen.
You know, a lot of the money that is being used to buy these stocks is coming from stimulus checks that the government put in the mail and sent to people.
They just put it right into the market.
So the government is fueling all this insanity.
And of course, it's the big deficit spending and all the stimulus that is the reason the Fed is monetizing everything.
So they lit this fire.
And now, you know, they're upset that some people are being burned and they're going to put it out.
I mean, all they're going to do is make it bigger.
Yeah, it's actually been far too long since I've had a good Peter Schiff rant against the Fed.
I feel like my life has been hollow and meaningless since the last one.
But of course, man, M1 money supply, it's gone absolutely, completely and totally mental.
Like, I mean, the lines, you've seen them, they've gone straight up.
Over the last couple of months, like, oh my lord above, can you help people understand how this might play out?
Because this, to me, is pretty unprecedented, even in terms of, like, my cynical look at money supply.
I mean, they just completely opened the floodgates.
Well, I mean, it's not unprecedented.
I mean, there's plenty of precedent.
Look at Weimar Republic, Germany.
Oh yeah, in America, in America, yeah.
Yeah, I mean, but we're not the only country.
So, you know, you can look at history, you know, it's world history, not just American history.
But yeah, I mean, we're just following the playbook that has been used by a lot of other countries, but none successfully.
You know, everybody that's tried it, it's ended in disaster.
The hubris is that, well, it'll be different with us because, you know, we're America.
Right. Well, I mean, Argentina was a pretty big country.
I mean, Germany, I mean, you know, Germany, you know, could have won World War One maybe if we didn't get involved.
I mean, they were a strong country.
You know, so, you know, you can be a first world country and destroy your currency.
It happened in revolutionary France in the 18th century.
They completely destroyed their currency.
And you've got, what, 900,000 jobs being lost per month.
You've got massive unemployment.
You've got a huge restructuring of the entire real estate economy as people are bailing out of...
Commercial real estate so they can work at home.
I mean, there's massive paroxysms that are going on in the economy.
Think about all the debt, all the leverage, because as the Fed kept interest rates so low for so long, all of this commercial real estate that nobody needs has all kinds of debt associated with it.
You have all this office space that nobody wants to rent.
And think about the bubble that also happened because what was that real estate company...
That blew up. They were going to go public.
Now I'm blanking on the name of the company.
I'll jump in and help you, but nothing's popping into my brain either.
They were renting all this office space all over New York, Washington, and then they were subleasing it out.
But it was another...
They were going to go public and the whole thing fell apart.
I mean, this is my mile.
You're almost 58. You just forget things.
But you have all this office space that...
Nobody wants anymore.
You have all of this retail space.
Restaurants are going out of business.
Well, what about the landlords that they used to pay rent to?
The gyms, the bars, all of this.
What about all these colleges?
They don't have any kids on campus.
You have an entire community.
Well, and people want to get out of the cities because the whole point, as you know, the whole point of being in a city is to be close to work.
And if you don't need to be close, people are bailing out.
You don't have to commute. There's no benefit.
Yes, and the crime is going up in the cities now because the police are afraid to arrest the criminals because they don't want to be racist or whatever it is.
And the taxes are going up.
So you're paying higher taxes and you've got less police protection.
Look, This is a recipe for disaster, but you have to think about all of these assets that are losing value.
There is debt associated with those assets that cannot be repaid now, that can't be serviced.
So this is just a massive implosion.
The Fed is trying to delay everything.
By just cranking out more money and keeping interest rates artificially low, but there's a limit to how long they can get away with that before the bottom drops out of the dollar.
You just can't keep creating dollars and expect them to keep buying products, especially when the people are no longer working to help produce those products.
Our trade deficits are exploding to record highs because instead of going to work and helping to produce goods and services, Americans are staying home and just spending the money the Federal Reserve prints.
So there's a difference between helping produce goods and services and then getting money for your, you know, productive efforts and producing nothing and then getting money and then going to spend it.
But you didn't add to the production.
And so you're just trying to get the foreigners, the Chinese, to say, well, you know, send us some stuff because we didn't make it.
This is not going to work.
This is going to collapse. It's a currency crisis, which kind of brings me to another point about these Wall Street best guys is now they're doing something smart.
I mean, it was an interesting short squeeze when they were buying a GameStop.
But yesterday, it's almost like they listened to my last podcast.
On Wednesday, I recorded a podcast called The Mother of All Short Squeezes Is Yet to Come.
And I described the short squeeze that I think is coming in gold and silver.
And I said, this is going to be the mother of all short squeezes when it happens.
And sure enough, the very next day, they're out there buying silver stocks.
Because there's way more paper on silver than there is actually silver in the world.
Like they had these shorts on GameStop, 140% of the stock value and there's way more of this kind of stuff going on in silver.
So it seems to be a pretty exquisite vulnerability that they're aiming at.
Yeah, but now they're taking on a much bigger foe.
There's a lot more that they're fighting in suppressing the price of gold and silver.
It's a much bigger market.
There's more at stake here.
It's the entire monetary system that could fall, be exposed by a rise in the price in gold and silver.
But, you know, yes, you know, there's 140% or whatever of the outstanding shares was short, but there's nothing that stops GameStop from issuing new stock.
It can issue all the stock it wants.
It's a whole different story with silver.
The amount of silver that's there, that's what's there.
I mean, you just can't magically create more.
I mean, you've got to build a mine.
You've got to discover it.
I mean, if the price goes up, then a lot of the marginal producers will surge in mines.
You can do it, but it's not the same as printing stock, for sure.
It takes a long time to do that.
Now, of course, obviously, there are people that are holding on to silver that you can induce them to sell.
But it may take a much bigger increase in the price to get a lot of these long-term silver holders to give up their silver.
You know, at the price that it is right now.
So inherently, that can be much bigger.
And especially when you look at how the futures market works for silver, where people are shorting silver, you know, at least when you short stock, in theory, you're supposed to borrow the shares and then sell them.
So you actually have the shares to sell.
But in silver, you just short.
You don't have to borrow anything.
You just go in there and short a contract and you promise to deliver silver in the future even though you have no silver.
And the reason you can make this promise is because you know the guy that's on the other side of the contract doesn't actually want the silver.
He's just gambling on the price going up, and so you're gambling on the price going down.
But what happens if the guy that owns the silver contract, instead of just rolling it over to the next month or settling in cash, what if the guy who bought the silver contract just sends a notice to the COMEX, yeah, I'd like my silver, please, thank you. Now the guy who's short gets a notice saying, hey, you've got to deliver the silver.
He's like, I don't have any silver.
Well, you better go buy some.
Well, where are you going to get it?
That's the problem. If a lot of the people that have shorted silver actually have to go and buy it, it ain't there.
That's the problem.
So these guys know that.
So they're on to something.
But why this is so much better, if they actually start loading up on physical silver and they buy some of these silver stocks, They're actually going to make a lot of money, I think.
I think these stocks are going to go way up.
They're actually buying something of real value rather than overpaying for a fundamentally worthless company that was about to go bankrupt.
Buying real silver that has actual value and then buying stock in these silver companies that I think are going to explode as the price of silver goes up.
Now they're onto something.
They can buy and hold onto these stocks.
This is not just a trade where they have to get in and get out when the shorts are covering.
They can buy these stocks and put them away, and I think they'll make a lot of money.
Well, and there's no go to zero in silver.
There's go to zero in worthless stocks, but there's no go to zero in silver.
If you just buy physical silver, no, it's never going to go to zero.
Not even close.
So, the blowback has been fairly intense just on the GameStop thing, right?
I mean, you've got people complaining to the SEC about these traitors.
Even Elizabeth Warren's supposed lady of the people is like, oh man, we've got to look at it and see if this is even legal.
And I think people are getting kind of cynical.
And I think that's a good thing, frankly, Peter.
I mean, people need to be cynical about this crony capitalism crap that we've been living with since the Federal Reserve of 1913 or even before.
But I think people are seeing the system move to defend itself like it did in 07 and 08 at the expense of, you know, everyone who's supposed to participate.
You can't get a job. You can't get a girlfriend.
You can't go to school.
And now you can't even trade stocks.
Like, what the hell are you supposed to do with your time?
Yeah, well, look, the idea that we need more government, you know, that that is the wrong lesson to be learned from all of this.
You know, the free market will ferret it out.
You know, I mean, and of course, there is a certain amount of, you know, buyer beware when it comes to everything.
I mean, people do need to be suspicious of people on Internet, you know, counting anything.
I mean, you know, I mean, because they could be pumping and dumping it.
I mean, they're like, oh, this is a great stock.
And their idea is they want to sell, right?
I mean, you want to buy low and sell high.
Well, how do you do that? Well, you buy something and then you do and then you try to get the price to go up by telling everybody how great it is.
And then when the price goes up, then you sell it.
You know, it's so different. You know, you go to a used car lot and the guy is like telling you how great this car is.
I mean, you've got to know, like, all right, you know, what's the real story behind this car?
Because I know you're just on commission trying to get me to buy this car.
You know, so a lot of that happens on used cars.
So people know to be a little bit suspicious, you know, of a used car salesman.
Well, you got to be even more suspicious of a guy you don't even know, a faceless guy on the Internet who doesn't even know you.
I mean, just assume that he is who he says he is and his motives are pure.
Now, some people, that may be the case.
But look, all I know is whenever the government tries to protect us from these types of problems, the cost of the protection is more expensive than what you could lose.
I mean, if we had no government involvement whatsoever in the securities industry, Yeah, there'd be some people that got scammed, no question about it.
But people are getting scammed now.
The problem is the cost of protection far exceeds the most money anybody can possibly steal.
So we're guaranteed to lose more because we hired the government to protect us than if we were just on our own.
Right, right. Okay, so let's shift gears for a second.
I do want to come back to this, but I've been curious, you know, since we decided to have this chat, I've been kind of curious what your economic analysis was of the Trump presidency.
Because, you know, it seemed pretty clear to me, I was far from a fiscal conservative, to put it mildly.
So in terms of just the economic effects of the four years of Trump, what are your thoughts on that as a whole?
Well, I think it was, you know, A, a big disappointment, Trump turned out to be.
And, you know, I pretty much nailed what he was going to do from the beginning.
I mean, I voted for him just, you know, well, what the hell, let's give him a shot.
I mean, I didn't know if he was going to surprise me or not.
But, you know, a lot of people expected him to be different, to not be a politician, to be a statesman, to do the things that career politicians didn't have the courage to do, you know, to actually drain the swamp and make America great again.
And of course, he did none of that.
I mean, he was, you know, a major contributor to raising the water level of the swamp.
You know, I mean, the swamp is government spending.
I mean, that's really what it is.
And he spent like crazy.
In fact, You had to go back to 1880 or something like that to find a president who vetoed fewer bills than Trump, where the president served at least one four-year term.
So, I mean, you know, I would veto everything.
There'd be nothing that I would sign if I was the president.
I mean, I would want to dismantle government.
I want to get rid of programs.
I don't want to greenlight more.
I mean, look at how much the deficit went up under Trump.
He increased spending, not just on the military, which I would have liked to have reduced.
And not only did he increase military spending, he created a whole new branch of the armed forces, the Space Force.
Like, we really need the Space Force?
I mean, we could have barely afford the force we got, you know, on Earth, let alone building one for outer space.
But he spent more on defense, but then he spent more on welfare.
And no reforms whatsoever to Social Security or Medicare.
In fact, he pretty much went all in on Obamacare because as much as he said he didn't like Obamacare, he really loves Obamacare.
He just doesn't like the name because he wants people who are sick to be able to get insurance for the same price as people who are healthy.
He doesn't really want health insurance.
He wants socialized medicine.
He just doesn't want to call that.
It's all about names. He hated NAFTA. Only because he didn't like the name.
As soon as it became the USMCA, he loved it.
Just because that was his trade deal.
But the trade deficits under Trump were bigger than any trade deficits we ever had under Obama.
So how is it a victory on trade?
Budget deficits bigger. But I think the biggest problem for me is so many conservatives got fooled by Trump and think he was a great president.
They think he is the new epitome of what we're looking for.
And it's really allowed the Democrats to move so far to the left so that now the socialists look like it's mainstream.
Because what are the Republicans?
The Republicans want big government, big deficits, protectionism, and massive money printing.
When Trump ran for office, he was a big critic of the Fed because they were too loose, because they were too easy.
As president, he criticized them for the opposite reason, being too tight.
He said rates weren't low enough.
You need to go negative.
You're not printing enough money.
He was going to fire Powell because Powell wasn't printing enough money.
I mean, think about the dichotomy, a complete 180 from the candidate to the president.
So look, I just think that this is a disaster because now we think this is the best we can be.
This was our one shot at free market capitalism.
And the Republicans now have basically, you know, proven that they don't care about the deficit.
So how is the Tea Party ever going to resurrect to the point where it's going to stop Biden?
They were able to slow down the spending of Obama.
But how are they going to say, oh, we can't have this government because the deficits are too big?
I mean, they already proved that they don't care about the deficits.
So it's like, oh, you only care about the deficits when it's money for the people.
But when it's tax cuts for the rich, you don't care about the deficits.
When it's more military spending, you don't care about the deficits.
But when we have to give money to teachers and first responders and now all of a sudden the deficits matter.
So look, they put themselves in a situation where everything is going to have a green light as far as spending.
And so we're just headed for a monetary crisis.
And, you know, then where do we go from there?
I mean, you know, we talked about the Weimar Republic.
When they destroyed the Reichmark, they were left with Adolf Hitler.
So, you know... Yeah, and it wasn't like things got really great in France after the revolution and they destroyed the currency.
I mean, it's kind of tough, right?
So you always want people to listen to reason and history and evidence and basic freaking math would be nice as well, right?
Mathematically, something that can't continue won't continue.
But part of me is like, brakes or gas?
Brakes or gas? Well, I think Trump was like the brakes.
He tried to put the brakes on, tried to make me back this thing up a little bit, and he just kind of hit the gas on a whole bunch of stuff.
And now part of me is like, okay, so if the system is not going to be reformed, then shouldn't it be crashed?
I mean, I know that that's risky and it's unpleasant and it's dangerous.
I think a lot of the people who are shorting these stocks...
You know, for like AMC because theaters aren't doing well and the airlines because airlines aren't doing well and GameStop because malls and digital downloads of games and all of that.
I think part of them are saying, you know what, this thing's going to not make it.
The system is not going to make it.
And it's the old saying that used to be about war.
If there's going to be war, let it come in my time so that my children will know peace.
If there's going to be a crash...
Shouldn't it at least hit while the people who voted for it all are still around so it's not the next generation to pay for it?
I've been saying for a long time, I want to get the crash out of the way, the sooner the better, because the longer we wait, the worse it's going to be.
So yeah, because it's like, why dig the hole deeper?
That's the first rule of holes.
So the crash is what's going to stop us from digging.
But as long as we can delay the inevitable, kick that can down the road, that's what we're going to do.
And part of what bothers me about Trump, too, is he pretended that he actually succeeded and made America great.
He pretended that what he helped build was the greatest economy in the history of the world.
But all it was was a bigger bubble than the one he inherited from Obama.
You know, it was more government spending.
But now the people think that, oh, OK, well, that's, you know, how we get a great economy.
We don't need to actually sacrifice.
We don't actually need to cut any government spending.
You know, that's what Trump needed to do.
I mean, Trump had an opportunity that he squandered.
He was the president of the United States for four years.
For two years, they also had the House and the Senate, the Republicans.
They could have done a lot. What he should have done on day one is said, you know, I'm sorry to be the bearer of bad news, but the country is in even worse shape than I thought.
Now that I took a closer look at the books.
So you know what? Here's what we got to do, guys.
This is what we're doing, and it's not going to be popular because a lot of people are going to lose their government checks.
A lot of people are going to lose jobs.
Asset prices are going to go down.
Some people are going to go bankrupt.
But we've got to bite the bullet.
It's like a restructuring.
We've got to restructure this country on a sounder foundation because I inherited a gigantic bubble.
And I'm going to break from precedent.
Rather than just trying to blow the bubble bigger and kick the can down the road so I can get out of dodge and then hand over an even bigger problem to my successor, the buck stops with me.
Because you know what? I don't care if I get reelected.
I'm just here to do a good job for the country.
That's my legacy. You know, he could have done that and he could have gotten some of the Republicans.
All he needed was maybe one-third of the House to sustain his vetoes.
And he could have stopped everything.
He could have stopped all the deficits.
He could have instituted major reform.
You know, I personally, I would have restructured the national debt.
Look, I would have gone to our creditors and I'd have said, look, we borrowed all this money.
We ain't going to pay you back because we don't have it.
So here's the deal, right?
You got a U.S. Treasury, you know, I'll give you get 30 cents on the dollar, something like that.
I mean, we could have done, you know, because we have to cut money for everybody.
We got to tell everybody you're not going to get government pensions.
Sorry. You know, we got a means test Social Security.
All right, not everybody is going to get it because we're broke.
So let's try to protect the people who unfortunately really need it.
But look, we got to end this, you know, this Ponzi scheme.
There are a lot of things that he could have done.
He could have explained it to the country.
You know, at least try.
I mean, even if he didn't succeed, go down swinging.
Take a chance, you know?
Well, okay, but so I don't know, of course, what happened there, but my guess, Peter, would be something like this, that he's like, you know, I'd really want to do this kind of stuff.
And, you know, people like you and I If we've had our setbacks in life, I got deplatformed this summer, so you find something else and you work in other areas and you just adapt, right?
And you've had your setbacks and you just find some way around it.
So we're like, okay, well, something's changed in my life for the negative.
I'll just find some other way to know.
Water going down a mountainside, you just find some way to get to the bottom, right?
But I think that there's quite a significant proportion of people out there in America who's like, my check's not coming.
I'm burning this city to the ground.
And I think he kind of got that message.
It's like, if you want to see the skies over America, black with smoke from end to end, then you cut some of this spending and you see what happens.
Oh, and by the way, the FBI, CIA, Homeland Security, they're all so compromised, they're going to side with the rioters.
And it's all going to be Seattle.
It's all going to be the Seattle Antifa zone from coast to coast.
But if you also eliminate the income tax, eliminate the IRS, get rid of all these regulations on small business, capitalism is very dynamic if you unleash it.
And Americans are creative.
There's a lot of ingenuity and know-how.
And I think when people have to deal with the problems, they will rise to the occasion.
And so, you know, I think we had an opportunity.
But yeah, I get it. I mean, it would have been like all of his advisors, you can't possibly do that.
No, no, no, we can't.
We can't take a chance on doing the right thing.
But the problem is, eventually that crisis is coming.
And it's just going to be worse because we never dealt with it on our terms.
See, you have a choice.
You can deal with the crisis on your own terms or on your creditors' terms.
And so if we're in the driver's seat and we decide we're going to bring this crisis about on our own in an organized, controlled matter, and then we're going to have a plan versus waiting until it's spiraling out of control, which is where we're going to go.
And then when it comes out of left field, Because see, if Trump could have said, look, we're going to take actions and it's not going to be good in the short run, right?
It's going to be painful in the short run.
But said he would prepare people for that.
But if it comes out of left field and it's like the politicians didn't know and nobody knew, and then they say, well, you see, this is the problem with capitalism.
Capitalism stinks. This is what happens when you have greedy corporations and people just caring about the bottom line.
So they use the crisis as a justification to have even bigger government.
Where I would rather come out in front and say, you know what, we're going to have a crisis because government was so big, but don't worry, I'm going to dismantle it.
We're going to get rid of that big government.
Now we're going to have to deal with decades of problems that big government caused, but we're okay because the free market is going to be able to build this economy better.
That's the build back better with a free market, not what Biden wants to do.
They're not going to build back better with government programs.
So, I mean, gosh, I can't believe it's like, what, a week and a half or a week and a bit into the Biden presidency.
It's like, dude, you've got four years to destroy the country.
You don't have to do it in one week.
But he feels that this is the way it's going to go.
One week, you know, and I've got to do it in one week.
How do you think it's going to play out from here?
And, you know, feel free to drop a few bombs of economic advice to our loyal listeners.
Well, first of all, you know, one of the things they're leading with is $15 minimum wage.
I mean, you would think, you know, when you got a massive unemployment problem, you wouldn't want to go there, you know, because it's just going to exacerbate, you know, one of your big problems.
Now, maybe that's their goal. Maybe they just want more unemployment so they can justify more government.
But one of the worst things I think Biden has already done is he, you know, signed this executive order or something.
Because he wants to make sure that people who are unemployed, who are offered their jobs back, can still turn down their jobs and continue to collect the unemployment benefits, especially the new enhanced benefits.
So it's like, why would anybody go back to work?
You know, when they can make more money not working.
And, you know, not working for most people is a lot more pleasurable than actually working.
I mean, you're trying to weigh your options.
Okay, wake up seven in the morning, you know, get ready for work, drive in traffic, get to work, you know, work all day at a crappy job, you know, the boss I don't like, then, you know, drive home in traffic,
get home exhausted, you know, and make, you know, $800 for the week, or sleep in, go to the beach, hang out with my buddies, play with my kids, whatever, and don't have to drive anywhere and make $1,000.
Oh, well, it's not a tough decision.
And I don't blame people for choosing to retire rather than work.
You're a rational actress, man.
I'm not saying that the people are bad.
They're rational.
See, the Democrats forget about that.
They don't understand human nature.
If you incentivize somebody not to work, they will follow that incentive.
Well, okay. So let me just jump in here for a sec because this is like the intellectuals, the smart people, the ambitious people, the high IQ people, whatever.
Like, you know, you could have retired years ago, right?
I mean, you've got some good coin in the pocket, but you love what you do and you care about your clients and you love the economy and this is your… This is what you want to do, though you don't have to do it.
They platform me all the time.
I can be reduced. I'm telling you, Peter, there's one pigeon on the balcony.
I'm talking philosophy to that one pigeon on the balcony because that's what I get out of bed for, man, is to talk philosophy with people.
So we love what we do, and then a lot of people are like, well, I'm sure that's everyone.
It's like, no, it's not.
It's really – most people, at the very best, they work to live.
They'll work so they can do something more fun when they're not working, and if you give them a chance to not work – They will immediately take that chance.
They don't love their jobs.
They may hate their jobs. You and I love our jobs.
We'll do it for free, so to speak.
But most people don't.
And I think people just mistake everyone else.
Or they look at some factory work and say, oh, man, if I had to do that, I'd blow my brains out.
It's like, it's fine for him.
If they had to do what we do, they'd blow their brains out.
They're different. And they just mistake themselves for other people all the time.
It's a huge problem. I mean, for most people, a job is a means to an end.
I mean, it's something they tolerate because the alternative is intolerable, right?
You got to eat. You need a place to live.
You need a car. You know, you want to do things.
Well, you need money. How are you going to get money?
Well, I got to go out and get a job.
And, you know, yeah, there are certain jobs that are very, you know, emotionally rewarding and that are enjoyable.
And that's great. I mean, and that's, you know, one of the most important things in life is, you know, try to find out what you enjoy and try to do that.
I mean, and if you can make money doing something that you enjoy, well, that's great.
But a lot of people, you know, they don't get much enjoyment from their work at all.
I mean, that's why, you know, they look forward to the weekend, right?
No one is like, thank God it's Monday.
I am, but yeah.
And people work their whole life and they look forward to retiring.
That's the reward after a lifetime of work.
You get to retire.
Well, the government is going to let you accelerate that retirement.
You don't have to wait until you're old.
Retire while you're still young and you can actually enjoy it.
So most people, especially the lower jobs, right?
I mean, obviously, guys that are making bigger bucks, there's a better chance that they're enjoying their job.
But if you're making $500, $600, $700, $800 a week, right?
What is it? $12, $15, $20 an hour.
Chances are, you don't like that job.
You just need the $20 an hour.
If you can get the $20 an hour without showing up, Then that's what you're going to do.
And I don't blame anybody for choosing that option.
I blame the government for making that choice possible.
No, somebody here is just saying $650 a week roofing.
Dang, I wish I had more skills.
Yeah, of course. Now, of course, you can go out and add your skills.
It's a lot of extra labor, but it can be a lot of fun.
And the other thing, too, is that, you know, you talk about bad bosses, man.
I remember when I got my first jobs as a teenager.
Man, the bosses were pretty terrible.
And the reason for that... Is that if you're a really good boss, you don't end up dealing with minimum wage teenagers.
They move you up so that you deal with more skilled people.
So generally, there's this big barrier of terrible bosses you have to get through in the economy to get to the reasonable, decent bosses you can negotiate with.
So you and I work for ourselves and we don't have particular bosses and so we don't have to deal with that.
But for most people, they get up and they just deal with someone who if they stub their toe on the couch that morning, they're going to make your day hell.
And, you know, Biden said it's not fair.
Somebody shouldn't have to choose between going to work and getting sick.
But we make that choice all the time.
I mean, during a regular flu season, you have a greater chance of getting flu if you go to work.
And if you just stay home, you know, and don't interact.
I mean, you can get into a car accident going back and forth to work.
Right. There are a lot of risks you take, but it's a trade off.
But if the government lets you out of that trade off, Then that's what you're going to do.
And you know, there are a lot of costs.
People forget, when you have a job, there are a lot of work-related expenses that the IRS doesn't even let you deduct, and you're not being paid for.
So when you don't have to work, you save all that money.
And especially childcare.
Hey, I don't have a job. I don't have to worry about hiring somebody to watch my kids.
I can watch my own kids. I save all that money.
There's all this. And then there's another thing that people forget, and that is the resentment.
Because let's say you decide to take the moral high road.
All right, I'm not going to take that big payday.
I'm actually going to go to work.
But your co-worker is sitting at home making more money than you.
And now you're actually being asked to work extra hard because you've got to pick up the slack because that guy's on the beach and you were dumb enough to show up.
Now you're like, you know, this is ridiculous.
Or, sorry, even if you have a lot of client-facing stuff, like maybe your co-worker is working from home, but you've got to have maybe some face-to-face with clients.
You've got to go visit job sites.
You've got to go do presentations somewhere.
So you're able to travel.
He's not. I mean, yeah, it can really pile up.
Sorry, I've got a question here.
Please ask Peter about broker fiduciary duty and brokers selling their clients GME AMC without them saying anything.
Now, I think some of those are judgment margin calls.
I'm not sure how much the brokerage apps like Robinhood are actually selling people's shares without their consent.
But do you know anything about – I'm sure you do.
Like are you allowed to just reach in and sell stuff?
Well, first of all, I don't think there's probably any brokers out there that are recommending, like full-service brokers that are calling up their clients and saying, hey, I got a great stock for you.
You know, GameStop, I think you should buy a thousand shares.
I don't think there's solicitations going on of that stock.
I think it's all unsolicited, right?
People are just going on an app and buying it.
So there is no fiduciary responsibility there.
The broker-dealer is just...
No, no, but it's the place...
So some people are saying that their shares are being sold from their accounts by the broker-dealer.
Yeah, I don't know about that.
I mean, I can understand if you're on margin.
So if you buy a stock on margin, And, you know, they can sell you out if there's a call, right?
That's part of your agreement if you don't have enough margin.
But if you own a stock for cash and you just bought it and you're sitting there and the broker-dealer just comes in and sells your stock, I mean, they can't do that.
I mean, you got, you know, a claim there.
They just can't go into your account for no reason.
And sell a stock. Now, if the brokerage firm wants to say, we're not going to allow trading in a certain stock, that's their prerogative, right?
I mean, because, you know, you don't like that brokerage firm, go someplace else.
So, I have no problem.
No, no, sorry to interrupt.
People's complaints is not that the stock trading wasn't allowed, but you were only allowed to sell.
And that seems to me straight up market manipulation.
Saying you can't trade is one thing.
Saying you can only sell is to drive the price down, obviously.
No, no, no. Here's the difference there.
Let's say I tell you, you can't buy this stock.
We're not going to accept any more buys.
Okay, you can't buy it.
Go buy it someplace else.
But I can't tell somebody who owns it they can't sell it because that's a loss.
It's like, hey, you got a stock.
I'm not going to let you out.
That would be illegal to tell somebody that they can't sell what you allowed them to buy.
But if they're just going to say, hey, we're not going to let you buy it, That's a different story because that's not forcing you to lose money.
And if you want to buy it, you know, you could go buy someplace else.
And, you know, but yeah, so I think there is a difference between telling somebody you can't buy something that you don't now own and then saying, hey, we won't let you sell what you own.
And now the price is crashing and you're just watching it go down and you're like you're you're unable to sell.
I think people have been able to sell because there was such a hunger from the hedge funds for, in particular, the GameStop stock.
Sorry, go ahead.
Yeah, the question would be, why did they impose these restraints?
Did it really have something to do with their own risk and their own balance sheet?
Were these buy orders somehow causing a problem for Robinhood?
Or were they doing the bidding of some of these big hedge funds that take a lot of their order flow?
They're real big customers.
Because the reason you can trade For free on Robinhood, right?
You don't get anything for nothing or there's no free lunch.
So where is the cost coming from?
They're selling these orders to these hedge funds that are trading against them and making money.
So if some of these hedge funds said, hey, help us out here.
We're going out of business and we're your best customers.
So you better put a stop to this, you know, to protect us.
If that's why they did it, I mean, I think that's a whole different ballgame.
But, you know, the question is, what was the motivating factor behind these decisions?
And again, would that be illegal?
I don't think so. But I think people should know that because, you know, if they're Robin Hood, right?
Hey, we're Robin Hood, right? We're the little guy, right?
We're taking from the rich and giving to the poor.
If it turns out that, no, no, no, they're protecting the rich from the poor, or not necessarily poor, but the little guy, and they're really just stooges for the big guys, that really does a lot to their brand.
Oh, yeah. No, it's the same thing with deplatforming.
You know, if they say, well, if you talk about science that we don't like, we'll deplatform you.
Okay, that's one thing. But if you claim to be a free speech platform and then don't allow for free speech that's legal, that's a problem.
All right. I know you've got a break for your own cast.
If I could just beg you to give a minute or two of upcoming Biden or increasing leftist policies, defensive financial postures that people should be thinking about in the year to come.
Well, you know, I think you should be thinking about the dollar and what it's likely to be worth or how little it's likely to be worth.
All of this is going to end badly.
And inflation is going to be the big problem.
And when you really strip it down to its basics, inflation is a tax.
That's all it is. It's a way that the government raises money.
The result of that tax is prices go up, and that's how the tax is paid.
Instead of the government taking your money, they take your purchasing power.
And the result of that is everything that you want to buy costs more.
And it's the same thing as a tax, that higher price, because the government is just taking this new money that it's printing and sending it to people who didn't earn it.
When they tax you, they take your money and they give it to somebody else.
But when they create inflation, they just print money and give it to somebody else.
But all that does is make the money you have worth less.
And so the good news about the inflation tax, to the extent that there's any good news, is that once you understand it, you can avoid it, at least on the money you have, right?
You can't avoid it on necessarily the wages that you're going to earn.
But on the savings that you already have, you know that they're going to be taxed.
So if you get rid of your dollars, then you avoid that tax.
So that's what I'm helping people do.
Invest abroad. Get into foreign assets, foreign stocks, foreign bonds, good quality investments.
Get into gold and silver.
The government can't print that, so they can't tax that.
Get into these mining stocks.
I think there's a lot of things that you can do now to avoid this inflation tax.
Because government spending is going to go through the roof under Biden.
As bad as it was under Trump, it'll be even worse under Biden.
And the tax revenue is not going to be there.
Even if they raise taxes on the rich, the extra revenue will pale in comparison to the higher expenditures.
So it's all going to be financed by printing money, which is an inflation tax, and so you've got to do something about it.
That's what we're doing at Europe Pacific Capital, Europe Pacific Asset Management, SHIFT Gold, is trying to protect as many Americans as possible from having to pay this tax.
Alright, so can you just toss out your websites?
And I really recommend Peter's podcast.
I'll put a link to it in the show notes, his newsletter as well.
But if you can bomb out your websites to close off, I want to make sure people get access to what you can do.
Yeah, well, my podcast is on shiftradio.com and also on my YouTube channel, Shift Report.
They haven't deplatformed me yet, so I'm still up there.
Then you can access my companies through our websites.
Europe Pacific Capital is europac.com.
Europe Pacific Asset Management is epacfunds.com.
And ShiftGold is ShiftGold.com.
So you got a gold company, asset management company, broker dealer, and my mutual funds.
You could buy my mutual funds anywhere, any of these discount brokers.
You can't buy them on the Robinhood app.
Unfortunately, they don't have any mutual funds on that app.
But you can buy them at Schwab and Fidelity.
We have a gold fund, an emerging market fund, a dividend payer fund, a value fund, and a foreign bond fund.
So you can buy them directly or you can work with the representatives at my company and we can build a portfolio where I manage an account in my mutual funds.
We also have separately managed accounts where we manage portfolios of individual stocks.
Fantastic. Well, Peter, it was a great chance to chat.
I really, really appreciate the feedback.
Let's not leave it so long again.
Until next time, have a wonderful afternoon, and thanks so much for your time today.
Oh, my pleasure, Stefan, and have a great weekend.
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