WEBVTT - Fed Insider Reveals The Feds End Game | Danielle DiMartino Booth 0:00:13.640 --> 0:00:17.239 Hey, everyone, welcome to another episode of the Market Disruptors Show. Today, 0:00:17.239 --> 0:00:20.759 I'm sitting down with Danielle di Martino Booth. She is 0:00:20.800 --> 0:00:24.880 the CEO and founder of quil Intelligence, former Federal Reserve insider, 0:00:24.960 --> 0:00:29.000 and the author of the book Fed Up Now. Of course, 0:00:29.040 --> 0:00:30.880 if you're watching this channel, you know I talked about 0:00:30.920 --> 0:00:33.560 the FED policy a lot and what it's doing. Of course, 0:00:33.640 --> 0:00:36.360 I'm not an insider. I make a lot of assumptions accusations. 0:00:36.360 --> 0:00:37.920 Of course, we try to look at the facts and data. 0:00:38.320 --> 0:00:40.160 But today we get to sit down with an insider. 0:00:40.200 --> 0:00:43.120 And I'm so excited for this interview. So Danielle, welcome 0:00:43.120 --> 0:00:47.040 and thank you for joining us. All Right, so I've 0:00:47.080 --> 0:00:50.400 watched you and countless interviews and have a good idea 0:00:50.440 --> 0:00:51.920 of questions I want to ask, but just for the 0:00:51.960 --> 0:00:54.000 people that are watching, just give us a quick background 0:00:54.040 --> 0:00:56.080 on on maybe kind of who you are and what 0:00:56.120 --> 0:00:59.360 you're doing. So I graduated from business school and being 0:00:59.520 --> 0:01:02.600 finance bright Light Big Cities, started off on Wall Street 0:01:02.640 --> 0:01:06.800 in New York. Uh, never thought i'd leave. Nine eleven 0:01:06.880 --> 0:01:09.080 came and went and the firm that I worked for 0:01:09.160 --> 0:01:11.760 got about out by a Swiss investment bank which was 0:01:11.880 --> 0:01:16.440 very quiet and boring. Uh So, after eleven I met 0:01:16.440 --> 0:01:19.200 the man of my dreams, moved down to Texas. I 0:01:19.240 --> 0:01:22.840 had gotten my second masters in journalism at Columbia when 0:01:22.880 --> 0:01:25.800 I was working on Wall Street. I retired, sold my 0:01:25.800 --> 0:01:29.080 book of business back to the firm, signed a noncompete 0:01:29.240 --> 0:01:32.000 and um, and just decided to write for a living 0:01:32.440 --> 0:01:34.559 and thought that my career was going to be over 0:01:34.600 --> 0:01:36.920 at that point. And at some point Warren Buffett called, 0:01:36.920 --> 0:01:38.920 and off I went to Omaha, and you're writing really 0:01:39.040 --> 0:01:41.800 crazy things and controversial and blah blah blah. And Richard 0:01:41.800 --> 0:01:45.880 Fisher called from the Federal Reserve. I ended up working 0:01:45.920 --> 0:01:48.040 for him for nine years of the Dallas Fed as 0:01:48.040 --> 0:01:51.200 an advisor. And I'm anything but a FED bureaucrats. It 0:01:51.240 --> 0:01:54.640 was an interesting fit and I enjoyed myself so much. 0:01:54.680 --> 0:01:56.480 I came out of the Fed and wrote a book 0:01:56.560 --> 0:01:58.120 for two and a half years called fed Up, An 0:01:58.120 --> 0:02:01.000 Insider Stake on why the Federal Reserve is Act for America. 0:02:01.320 --> 0:02:03.520 So I suppose you could call that my exit interview. 0:02:04.080 --> 0:02:07.880 And since then I have started a research firm, Quill Intelligence. 0:02:07.920 --> 0:02:10.120 We published daily, we published weekly. We've got retail and 0:02:10.200 --> 0:02:14.120 institutional subscribers. And I talk a lot. You do talk 0:02:14.160 --> 0:02:16.079 a lot, and we love hearing it. The public, the 0:02:16.440 --> 0:02:18.800 market has decided they like, they like what you have 0:02:18.880 --> 0:02:22.840 to say. Now I'm curious, um, the dig into the FED. Now, 0:02:22.880 --> 0:02:24.600 I saw in another interview, I think it was with 0:02:25.080 --> 0:02:29.560 Patrick that David and you said that you're fiscally conservative, um, 0:02:29.600 --> 0:02:32.960 and you believe in bringing down the debt in America. UM. 0:02:33.000 --> 0:02:36.400 And maybe I'm just curious, is that maybe what happened 0:02:36.400 --> 0:02:38.600 at the FED. Right you're fiscally conservative. You weren't a 0:02:38.639 --> 0:02:41.560 green with their just inflate away till no infinity or 0:02:41.600 --> 0:02:44.320 into infinity. I I was. I was never a fan 0:02:45.480 --> 0:02:49.800 of the Fed enabling Congress to borrow as much as 0:02:49.800 --> 0:02:55.000 it wants. I've yeah, I listened to the conventional wisdom 0:02:55.040 --> 0:02:57.640 as always, well, you can afford it as long as 0:02:57.720 --> 0:03:01.280 you can service the debt. I don't. I don't buy 0:03:01.320 --> 0:03:04.240 that for a minute. But that is what's happened in 0:03:04.280 --> 0:03:07.440 the extreme with Uncle Sam. And that is, if the 0:03:07.480 --> 0:03:10.200 FED brings interest rates down to the lowest level in 0:03:10.280 --> 0:03:13.840 five thousand years, will low and behold, the government's going 0:03:13.880 --> 0:03:16.800 to start running up deficits and debts that it cannot 0:03:16.960 --> 0:03:21.840 in the end afford and look at where we are today. Yeah, exactly, 0:03:21.880 --> 0:03:24.639 great point. And uh, for everybody that's listening right now, 0:03:24.680 --> 0:03:26.440 make sure you stick around to the end because I 0:03:26.480 --> 0:03:29.399 am going to ask Daniel what that end game looks 0:03:29.440 --> 0:03:31.800 like and we're gonna try and just make some stabs 0:03:31.800 --> 0:03:33.360 in the dark edits. So make sure you stick around 0:03:33.360 --> 0:03:35.800 for that. But back to that point, So, being physically 0:03:35.840 --> 0:03:39.119 conservative and seeing them spend to infinity, I could understand 0:03:39.160 --> 0:03:42.360 that stress. I'm curious just what's your viewpoint is, just 0:03:42.520 --> 0:03:45.720 maybe generally on the FED itself. I mean, from my viewpoint, 0:03:45.760 --> 0:03:50.440 it seems that, um, they're they're kind of responsible for 0:03:50.480 --> 0:03:52.839 a lot of the problems that we have. UM through 0:03:52.840 --> 0:03:56.960 this endless money, inflation, debasement, etcetera. Right, purchasing power has 0:03:57.000 --> 0:04:00.880 gone down, that levels of quality. The list goes on. Yeah, 0:04:01.480 --> 0:04:05.960 so back so so specifically about income inequality. I believe 0:04:06.040 --> 0:04:09.320 that the FED policy has been a major factor in 0:04:09.400 --> 0:04:14.400 the income inequality. UM do you would you see that? Yeah? 0:04:14.440 --> 0:04:18.880 I do. And it's not, Um, it's not only about 0:04:19.640 --> 0:04:24.360 quantitative easing and injecting liquidity into the system. It's also 0:04:24.480 --> 0:04:29.920 about indexing and the whole idea of the FED putting 0:04:29.920 --> 0:04:33.479 a floor under markets, which started with Alan Greenspan in seven. 0:04:34.160 --> 0:04:37.520 In the weeks and months that followed the Black Monday, 0:04:37.560 --> 0:04:40.520 the Crash of seven, he went so far as to 0:04:40.760 --> 0:04:44.080 allow the New York Fed Markets Desk to inform Wall 0:04:44.120 --> 0:04:47.919 Street bond traders ahead of FED moves to inject liquidating 0:04:48.040 --> 0:04:50.400 the system. So that was kind of when moral hazard 0:04:50.480 --> 0:04:52.640 was born, when the FED put was born, and it's 0:04:52.680 --> 0:04:54.360 just gotten to be bigger and bigger and bigger over 0:04:54.400 --> 0:04:56.960 the years. But what's come out of this is this 0:04:57.040 --> 0:04:59.920 idea of don't fight the FED. And what don't fin 0:05:00.200 --> 0:05:04.520 the FED has done is it's fed this huge indexing 0:05:04.640 --> 0:05:07.840 industry because you don't need to pay for active managements. 0:05:07.839 --> 0:05:11.200 When a monkey or port Dave Portnoy, take your choice, 0:05:11.400 --> 0:05:14.080 can simply the row darts at a wall and make 0:05:14.160 --> 0:05:17.760 tons of money because they own anything and everything, and 0:05:17.800 --> 0:05:21.640 it all goes up. But what's actually happened in the background. 0:05:21.760 --> 0:05:23.600 You know, the SMP five hundred recently hit an all 0:05:23.640 --> 0:05:26.159 time high and we exited from the bear market, and 0:05:26.200 --> 0:05:29.279 there were fireworks going off. If you took out the 0:05:29.440 --> 0:05:33.320 SMP five then the stock market was down about three 0:05:34.680 --> 0:05:39.000 So but to the point of the Fed and income 0:05:39.000 --> 0:05:43.159 inequality and don't fight the FED and indexing. If you 0:05:43.200 --> 0:05:45.039 don't fight the FED and you put your money in 0:05:45.160 --> 0:05:48.359 the Vanguard SMP index fund, then you're just going to 0:05:48.400 --> 0:05:52.120 make sure that the biggest companies get bigger. And when 0:05:52.160 --> 0:05:55.040 big companies get bigger, what they do in competition comes 0:05:55.040 --> 0:05:59.000 along is they eat it. And anytime there's an innovator, 0:05:59.520 --> 0:06:02.600 you can to the people who sold um I think 0:06:02.640 --> 0:06:06.360 it's Instagram. Uh, and they they they thought they were 0:06:06.360 --> 0:06:08.479 really wealthy when they sold it to one of the 0:06:08.600 --> 0:06:11.280 big five, but they realized a few years later that 0:06:11.400 --> 0:06:14.200 instead of multi millionaires, they could have been millionaires. But 0:06:14.279 --> 0:06:17.279 they didn't. But but what's happened Because the FED makes 0:06:17.279 --> 0:06:21.000 the biggest companies bigger, and because the FED foster's monopolization 0:06:21.120 --> 0:06:25.880 of the US economy, it ends up stifling innovation. It 0:06:25.960 --> 0:06:29.080 ends up killing the ability to be an entrepreneur. And 0:06:29.480 --> 0:06:33.520 you you take the wind out of the American dream 0:06:33.640 --> 0:06:38.120 of anybody being able to to start a business and 0:06:38.160 --> 0:06:41.240 become successful because it's much harder to do if you 0:06:41.279 --> 0:06:44.000 live in a monopolized economy, which is something that the 0:06:44.040 --> 0:06:47.920 FED has fed. Yeah, that's such a great point. And 0:06:48.279 --> 0:06:50.120 to be honest, it's something that's it's a little bit 0:06:50.120 --> 0:06:52.159 of a different twist than I've actually looked at. Obviously, 0:06:52.200 --> 0:06:55.880 I see government policy going into a lot of the monopolization, 0:06:55.960 --> 0:06:58.640 but I haven't really thought and of course the easy 0:06:58.960 --> 0:07:01.479 flowing money go is into that as well. Letting these 0:07:01.480 --> 0:07:06.400 big companies running running massive losses, right Like, Uh, that's 0:07:06.440 --> 0:07:08.360 one reason why I think like Warren Buffetts maybe kind 0:07:08.360 --> 0:07:10.600 of lost it because he's still looking for that value investor. 0:07:10.680 --> 0:07:13.360 But today companies aren't about making money. They're just about 0:07:13.440 --> 0:07:16.920 growing um. And that's the thing, you know, if the 0:07:17.040 --> 0:07:20.880 FED and its current policies and people people people think 0:07:20.920 --> 0:07:23.720 that zombie corporations are something new. You know, prior to 0:07:23.760 --> 0:07:27.680 the pandemic, four of companies in America were zombie corporations. 0:07:27.680 --> 0:07:31.640 So the FED has been fostering keeping deadwood alive, keeping 0:07:31.680 --> 0:07:34.040 non productive entities in the in the economy. The fetes 0:07:34.200 --> 0:07:36.200 had a great track record of doing that for years. 0:07:36.920 --> 0:07:40.400 Post COVID, it's popped up to of companies because the 0:07:40.400 --> 0:07:44.560 Fed's been so aggressive at keeping companies that should go 0:07:44.600 --> 0:07:48.200 out of business alive by putting more debt on their 0:07:48.200 --> 0:07:53.120 balance sheet. Yet, but there's something beyond the zombie uh, 0:07:54.000 --> 0:07:57.080 the danger of creating all these zombies and the fact 0:07:57.080 --> 0:07:59.640 that it's going to suck productivity out of future growth 0:07:59.720 --> 0:08:02.640 and hold back the ability to create jobs because you're 0:08:02.760 --> 0:08:06.360 keeping companies in the industry when if they came out, 0:08:06.480 --> 0:08:09.920 innovators could enter. But there's there there's something that even 0:08:10.000 --> 0:08:14.840 goes um beyond that when when it comes to zombie corporations, 0:08:14.920 --> 0:08:18.320 and that's that if you pile on so much more 0:08:18.400 --> 0:08:22.200 debt onto these companies, pay attention when you read Chapter 0:08:22.240 --> 0:08:26.800 eleven headlines. Pay attention when you see bankruptcy filings. Today, 0:08:26.840 --> 0:08:29.560 more often than not, you're seeing companies go straight from 0:08:29.600 --> 0:08:35.120 filing to liquidation. And that's the difference that having way 0:08:35.120 --> 0:08:37.079 too much debt sets that you need to file Chapter 0:08:37.120 --> 0:08:40.079 eleven and having so much debt that there's no value 0:08:40.280 --> 0:08:42.800 that you can carve out in the end that saves jobs. 0:08:43.240 --> 0:08:47.160 And that is what this current generation, this last iteration 0:08:47.280 --> 0:08:50.880 of the Feds hurah is doing. Yeah, So just to 0:08:50.960 --> 0:08:52.920 dig into that just for a second. So typically you 0:08:52.960 --> 0:08:55.840 would file see a company file for Chapter eleven, which 0:08:55.840 --> 0:08:58.680 would give them protection to reorganize. But you're saying they're 0:08:58.679 --> 0:09:01.200 not bothering, they're just going straight to liquidation because there's 0:09:01.200 --> 0:09:04.440 just no hope. There's no hope, and because there's so 0:09:04.520 --> 0:09:07.360 much more debt than there would have been otherwise had 0:09:07.400 --> 0:09:10.320 the junk bond market not been kept wide open by 0:09:10.360 --> 0:09:13.360 the FED to keep them alive when they otherwise would 0:09:13.400 --> 0:09:17.640 have had to restructure. The more pot the more debt 0:09:17.640 --> 0:09:19.719 you pile on, the less value you can extract in 0:09:19.760 --> 0:09:23.200 the end. Yeah, and that's been my argument creditors. Yeah, 0:09:23.200 --> 0:09:25.160 that's been my argument, you know, with with this whole 0:09:25.240 --> 0:09:27.880 you know, just picking out Airlines for example, which I 0:09:27.920 --> 0:09:29.640 know you have used on the airlines, but you know, 0:09:29.800 --> 0:09:31.720 everyone's like, oh, we can't let them go bankrupt. And 0:09:31.720 --> 0:09:33.960 it's like, well, we you know, we need to protect 0:09:33.960 --> 0:09:35.319 the jobs and this and that, and it's like, well, 0:09:35.360 --> 0:09:37.880 just because they go bankrupt doesn't mean the jobs go away. 0:09:37.960 --> 0:09:39.640 They just get re orged, right, and they get rid 0:09:39.679 --> 0:09:42.160 of the debt and now they're a lean, mean company 0:09:42.160 --> 0:09:44.720 that can grow again. But instead you're saddling them with 0:09:44.840 --> 0:09:48.000 more debt. That's not like a good thing. But like 0:09:48.360 --> 0:09:52.880 I mean, American Airlines had in one press release that 0:09:52.920 --> 0:09:55.959 they were going to be issuing one to trillion dollars 0:09:55.960 --> 0:09:58.360 of debt and oh, By the way, on September thirty, 0:09:58.520 --> 0:10:01.480 when the bailout expiration ends, they're gonna be upping their 0:10:01.559 --> 0:10:04.240 layoffs from twenty five thousand people. Who puts that in 0:10:04.280 --> 0:10:08.319 the same press release. Yeah, the nerve of these people 0:10:09.000 --> 0:10:11.680 so um. It seems like, you know, I'm not the 0:10:11.679 --> 0:10:14.360 brightest guy. I didn't. I don't have your pedigree, but 0:10:14.559 --> 0:10:17.040 it just seems like so obvious to me. And I 0:10:17.240 --> 0:10:20.079 see comments. I mean I see five ten comments a 0:10:20.080 --> 0:10:23.360 week on my videos, and it seems like people get this. Um. 0:10:23.520 --> 0:10:26.760 Would you say that the FED policy to do this 0:10:27.440 --> 0:10:30.800 is they're completely just missing the picture, or they know 0:10:30.840 --> 0:10:33.679 what they're doing, but they're doing it anyway. I think 0:10:33.720 --> 0:10:37.680 it's the ladder. I think that I think that that J. 0:10:38.000 --> 0:10:41.079 Powell has seen the whites of the eyes of how 0:10:41.200 --> 0:10:45.319 big of a monster this credit is, and he's scared. Um. 0:10:46.280 --> 0:10:49.199 You know, I tell this story all the time. General 0:10:49.240 --> 0:10:53.920 Electric debt was downgraded Halloween two thousand and eighteen, fourteen 0:10:53.960 --> 0:10:55.880 days later junk bond issue and shut down in the 0:10:55.920 --> 0:10:59.600 United States for forty one days. The collateral backing exchange 0:10:59.640 --> 0:11:03.199 traded bond funds was trading by appointment only, and there 0:11:03.240 --> 0:11:06.240 was a huge liquidity issue, and there was the risk 0:11:06.320 --> 0:11:09.760 that that systemic risk was going to be unleashed. And 0:11:09.920 --> 0:11:12.679 that was what brought out the Powell pivot, when he 0:11:12.720 --> 0:11:16.359 realized that so much debt has been created that this 0:11:16.360 --> 0:11:19.760 this is possibly worse than the subprime crisis would be. 0:11:19.760 --> 0:11:23.920 Because in the aftermath of the subprime crisis, everybody decided 0:11:23.960 --> 0:11:26.520 that quantitative easing was the way to go. Everybody was 0:11:26.559 --> 0:11:30.640 lower for longer, whether it became a global phenomena, and 0:11:30.679 --> 0:11:35.559 now you have pushing three trillion dollars of debt worldwide 0:11:35.679 --> 0:11:38.520 and a beast that central bankers simply don't feel like 0:11:38.760 --> 0:11:42.240 they contain. Yeah, I really want to dig into that 0:11:42.240 --> 0:11:45.160 three hundred trillion dollar debt balloon that constantly has this 0:11:45.160 --> 0:11:47.160 big hole in it. But before we do, I just 0:11:47.160 --> 0:11:49.000 want to jump back into the FED policy a little bit. 0:11:49.000 --> 0:11:53.559 So recently UM FED FED chair Jerome Powell came out 0:11:53.600 --> 0:11:57.160 and said that he he did not believe the FED 0:11:57.320 --> 0:12:01.480 policy created inequality, and my right, I mean he said that, 0:12:01.559 --> 0:12:05.160 And then and then we have Senator Elizabeth Warren introduced 0:12:05.160 --> 0:12:07.640 a bill with a few other people UM, a bill 0:12:08.000 --> 0:12:13.360 to specifically have the FED fight inequality. So currently, a 0:12:13.400 --> 0:12:17.359 FED policy should be to maintain stable inflation and maximize employment. 0:12:17.720 --> 0:12:19.520 But apparently it's not good enough. Now. Now the Fed's 0:12:19.559 --> 0:12:24.599 going to fight the inequality that they create. Um, the 0:12:24.760 --> 0:12:27.840 deference to Senator Warren, I couldn't think of a worst 0:12:28.040 --> 0:12:31.359 way of trying to approach the issue of incomm inequality. 0:12:31.559 --> 0:12:34.599 If you want to stop the FED from from widening 0:12:34.920 --> 0:12:37.320 the income inequality divide, then just tell them to quit 0:12:37.320 --> 0:12:40.640 supporting Wall Street in you know, with Main with Main 0:12:40.679 --> 0:12:45.680 Street as the loser curio. Yeah, okay, yeah, I just 0:12:45.880 --> 0:12:47.800 hand again Like I said, it's like, it's just seems 0:12:47.840 --> 0:12:50.760 so obvious to me. And in the comments that I see, 0:12:51.200 --> 0:12:55.640 UM to see Senators Maxine Waters and whatever going behind this. 0:12:55.760 --> 0:12:58.200 I I guess it goes back to that previous question 0:12:58.240 --> 0:13:00.920 do they not know? And maybe Acine Waters and Elizabeth 0:13:00.920 --> 0:13:06.320 Warren don't. I would venture to say that Elizabeth Warren 0:13:06.679 --> 0:13:10.000 completely understands what the FETE is doing, and that in 0:13:10.040 --> 0:13:14.720 a post COVID world, you know, because of the programs 0:13:14.760 --> 0:13:16.880 that that the FETE is laid out, that that and 0:13:17.120 --> 0:13:19.800 and this is her thing. She didn't like the big banks, 0:13:20.120 --> 0:13:23.760 and yet when the FED prize opened the credit markets 0:13:24.080 --> 0:13:27.680 and all these companies are rushing to do record levels 0:13:27.679 --> 0:13:31.760 of bond issuance. Sorry, but that is a great pop 0:13:31.800 --> 0:13:34.720 to the revenue line of these biggest banks. And that 0:13:34.880 --> 0:13:38.160 is what this policy, this post pandemic policy, has done, 0:13:38.480 --> 0:13:41.960 along with quantitative easing. I mean, somebody's got to sell 0:13:42.040 --> 0:13:45.160 the bond, sell the bonds to the fet somebody's gonna 0:13:45.200 --> 0:13:48.160 make money on that. Somebody's gonna help these these companies 0:13:48.200 --> 0:13:50.920 issue record levels of debt. They're gonna make big fat 0:13:50.960 --> 0:13:54.199 investment banking fees on that. We wonder with all these 0:13:54.200 --> 0:13:56.840 credit lost provisions, why the banks aren't doing worse. Well, 0:13:56.840 --> 0:13:59.720 it's because the ft is effectively subsidizing them with policy. 0:14:00.080 --> 0:14:03.280 That's what Elizabeth Warren should be concerned with, right, Yeah, 0:14:03.520 --> 0:14:06.040 So yeah, it just seems so obvious that they're missing it. 0:14:06.080 --> 0:14:08.080 So it seems like they have to know and and 0:14:08.240 --> 0:14:10.920 intentionally be doing that. I know you've talked to quite 0:14:10.960 --> 0:14:13.600 a bit of good, good politics, good optics, all that 0:14:13.640 --> 0:14:19.200 good b s. Yeah. Um, yeah, I mean it's apparent, well, 0:14:19.280 --> 0:14:21.680 it seems apparent that they're really trying to help out 0:14:21.680 --> 0:14:25.000 the buddies, right and not not main street Joe. But um, 0:14:25.040 --> 0:14:26.760 I've seen you know, you've talked quite a bit about 0:14:26.760 --> 0:14:28.320 the pandemic, and you just mentioned it as well. I 0:14:28.360 --> 0:14:31.360 don't want to dig into, uh, the pandemic per se, 0:14:31.360 --> 0:14:34.520 but but the economy post pandemic or or during pandemic 0:14:34.600 --> 0:14:38.320 or post pandemic, and um, what's your view. I know 0:14:38.480 --> 0:14:41.480 we seem to have a V shaped recovery in the markets, 0:14:41.720 --> 0:14:44.720 but the economy ain't have a no vcaped recovery, right, Uh. 0:14:44.920 --> 0:14:47.560 I've seen you recently say maybe a W maybe it's 0:14:47.600 --> 0:14:49.200 an L. I don't know. But what do you see 0:14:49.240 --> 0:14:51.600 about the economy kind of moving forward in this post 0:14:51.640 --> 0:14:55.960 pandemic world? Well, I think that uh, And and I 0:14:56.480 --> 0:14:58.560 don't mind being a little bit controversial about this. I 0:14:58.560 --> 0:15:02.120 think had we had a uniform national mask policy, that 0:15:02.200 --> 0:15:04.320 we the economy will be in a lot better place. 0:15:04.880 --> 0:15:07.280 It was finally forced on the state of Texas where 0:15:07.320 --> 0:15:10.440 I live, and lo and behold, we've got the hospitalization 0:15:10.560 --> 0:15:14.280 right down. Smaller businesses or reopening, people feel safe for 0:15:14.360 --> 0:15:17.720 going out. It makes a huge difference. And the fact 0:15:17.760 --> 0:15:20.920 that we had a patchwork approach meant that the biggest 0:15:21.120 --> 0:15:24.000 spenders in the economy were too frightened to come out 0:15:24.040 --> 0:15:26.800 of their house. And that's just flat out gallop polling, 0:15:26.880 --> 0:15:30.360 non biased polling. So well, they weren't just scared to 0:15:30.360 --> 0:15:32.120 come out of their house. I live in California and 0:15:32.160 --> 0:15:34.200 we were mandated. I mean the businesses were forced to 0:15:34.200 --> 0:15:36.640 shut down. It wasn't a matter of being scared business well, no, 0:15:36.720 --> 0:15:40.600 I'm talking about states that reopened and when businesses were 0:15:40.640 --> 0:15:44.280 wide open and come on in. There was there was 0:15:45.040 --> 0:15:49.320 there was two little follow through economically speaking. Something was missing. 0:15:49.600 --> 0:15:52.040 And the something that was missing was that the people 0:15:52.040 --> 0:15:54.400 who have the most money to spend still weren't coming 0:15:54.400 --> 0:15:57.440 out of their houses because there was no policy mandating 0:15:57.520 --> 0:16:01.320 that that you wear a mask. I just the thing 0:16:01.440 --> 0:16:04.000 that gets me about masks the most is that it 0:16:04.200 --> 0:16:06.200 has nothing to do with science. It has to do 0:16:06.240 --> 0:16:11.680 with economics and the top of earners in America, the 0:16:11.720 --> 0:16:15.480 top two quintiles of earners account for sixty one of consumption. 0:16:16.560 --> 0:16:18.200 If you're not going to convince them to come out, 0:16:18.480 --> 0:16:21.080 you're dead in the water with trying to reopen an economy. 0:16:21.160 --> 0:16:23.440 It's just not gonna happen. And lo and behold, it 0:16:23.480 --> 0:16:27.320 didn't happen. And when you look at spending by zip codes, 0:16:27.720 --> 0:16:30.520 the highest income zip codes have had the highest degree 0:16:30.520 --> 0:16:34.240 of small businesses closing, and that's a shame because again, 0:16:34.520 --> 0:16:37.240 had they felt safe going out, maybe their dry cleaner 0:16:37.240 --> 0:16:39.280 wouldn't be out of business, maybe the restaurant down at 0:16:39.280 --> 0:16:41.920 the corner wouldn't be out of business. But nobody had 0:16:42.000 --> 0:16:45.600 any continuity. I mean, Angela Merkel don't. I don't agree 0:16:45.600 --> 0:16:48.480 with all of her policies, but she was like, fine, fine, 0:16:49.200 --> 0:16:53.440 literally you you were fined and Germany opened back up. 0:16:54.160 --> 0:16:59.280 So I think that the to answer your question, the 0:16:59.400 --> 0:17:02.080 long term damage to the economy because so many small 0:17:02.120 --> 0:17:06.320 businesses have been sacrificed because we haven't had strong leadership. 0:17:06.760 --> 0:17:09.119 It's going to stay with us for a generation. You 0:17:09.160 --> 0:17:13.560 can't bring back small businesses overnight. So this is actually 0:17:13.560 --> 0:17:17.439 going to increase the divide between the oligopolies and the 0:17:17.440 --> 0:17:20.639 monopolies and the biggest companies and the smallest companies. And 0:17:20.680 --> 0:17:23.760 it was a policy error that occurred in Washington, d C. 0:17:24.040 --> 0:17:27.600 And it's a shame. Yeah, you know, I know, as 0:17:27.640 --> 0:17:30.120 you said, it's controversial, and a lot of times talking 0:17:30.119 --> 0:17:32.320 about politics is because there's opinion in there. But you 0:17:32.359 --> 0:17:36.440 can't understand finance without talking about politics because they're so intertwined. Right, 0:17:36.480 --> 0:17:40.680 So I get that I'm curious though, because it seems like, um, 0:17:40.720 --> 0:17:43.280 we've seen the middle class be hollowed out in the 0:17:43.359 --> 0:17:47.040 United States and and and through policy after policy after policy, 0:17:47.080 --> 0:17:49.360 whatever you wanna call it. That a combination of as 0:17:49.359 --> 0:17:52.320 we've as you've already said, right, indexing and giving free 0:17:52.359 --> 0:17:56.640 money away and uh, you know, chrony capitalism, regulations, outsourcing, 0:17:56.720 --> 0:18:00.280 all those things. But it almost seems to me, again 0:18:00.320 --> 0:18:02.640 if you would look at it from politically, like there 0:18:02.840 --> 0:18:05.520 is a reason why they want the middle class hollowed out, 0:18:05.880 --> 0:18:08.560 and this almost seemed like a continuation of that, because 0:18:08.560 --> 0:18:11.480 it's it's the mom and pops. I can't go to 0:18:11.640 --> 0:18:15.000 my local store, but I can go to Walmart. I 0:18:15.080 --> 0:18:17.520 can't go to my local hardware store, but I can 0:18:17.520 --> 0:18:20.800 go to home depot. Like it's like purposely targeting the 0:18:20.840 --> 0:18:25.560 middle class. Almost it is. And and again, had there 0:18:25.640 --> 0:18:30.159 been a cohesive leadership structure that said we're going to 0:18:30.280 --> 0:18:32.639 open up all businesses and we're gonna open up all 0:18:32.680 --> 0:18:36.760 businesses safely, then you wouldn't have seen such destruction in 0:18:36.760 --> 0:18:39.879 the small business sector. Had the paycheck Protection program not 0:18:40.000 --> 0:18:43.880 just been for W two employees, had there been ten 0:18:45.240 --> 0:18:47.280 that were able to be included. Had they accounted for 0:18:47.320 --> 0:18:49.920 the fact that if you're a restaurant and you're being 0:18:49.960 --> 0:18:52.119 told that you can only reopen with twenty five or 0:18:52.160 --> 0:18:55.440 fifty percent capacity, you might want to bend the rules 0:18:55.520 --> 0:18:58.920 someway somehow to allow the small business to stay both 0:18:59.000 --> 0:19:02.960 in compliance with regulations in terms of social distancing and 0:19:03.200 --> 0:19:06.840 not have them lose the loan ability because they're not 0:19:06.880 --> 0:19:09.840 covering seventy of the loan proceeds with employment when you're 0:19:09.880 --> 0:19:13.960 not allowing them to employ their employees. So Washington, in 0:19:13.960 --> 0:19:18.040 my opinion, has completely failed the middle class yet again. 0:19:18.600 --> 0:19:22.000 And at the same time, they've you know, they've effectively 0:19:22.040 --> 0:19:25.880 introduced socialism into the U. S. Economy with the stimulus Bill, 0:19:26.040 --> 0:19:29.240 and now that now that workers in the economy have 0:19:29.320 --> 0:19:32.119 gotten a flavor for what twenty four extra hundred dollars 0:19:32.119 --> 0:19:34.600 a month, feels like they're like, I like this universal 0:19:34.640 --> 0:19:38.040 basic income, Let's get some more of it. So it's 0:19:38.040 --> 0:19:40.760 a dangerous path we've gone down to have signed in 0:19:40.880 --> 0:19:44.800 legislation without really thinking about it, legislation that helped people 0:19:44.840 --> 0:19:47.640 not work, and legislation that put hard working small businesses 0:19:47.680 --> 0:19:51.439 out of business. Yeah, So, um, I agree with what 0:19:51.480 --> 0:19:54.159 you're saying, I mean you're talking about multigenerations or a 0:19:54.160 --> 0:19:56.760 decade to come back. I think maybe multigenerations because we've 0:19:56.760 --> 0:19:59.240 seen like restaurant chains that have been passed down through 0:19:59.280 --> 0:20:02.639 multigenerations are gone now. Um, and so a lot of 0:20:02.680 --> 0:20:07.880 that that's not coming back at all. And also like, uh, 0:20:08.160 --> 0:20:10.440 you know, um, I I grew up racing dirt bikes, 0:20:10.520 --> 0:20:15.200 super dangerous. I've metal in every limb of my body. Uh, 0:20:15.280 --> 0:20:17.040 it's one of the three boys. I'm happy they didn't 0:20:17.040 --> 0:20:20.160 take that up, even though one of them flies planes. Anyways, Yeah, 0:20:20.280 --> 0:20:21.680 I mean it's one That's one thing that's helped me 0:20:21.720 --> 0:20:23.440 with investing because I'm not afraid of the risk. But 0:20:23.480 --> 0:20:25.240 it's also I've made a lot of money, I've lost 0:20:25.240 --> 0:20:27.439 a lot of money. But my point is is my 0:20:27.560 --> 0:20:30.439 doctor would always tell me stay off of it. So 0:20:30.480 --> 0:20:32.080 I go there, I'm like, hey, doc, you know my 0:20:32.080 --> 0:20:34.720 ankle gun herds all stay off of it. But like, hey, 0:20:34.760 --> 0:20:36.439 I gotta go to work. I can't just stay off 0:20:36.520 --> 0:20:38.760 of it. So I thank thank you for your opinion. 0:20:39.400 --> 0:20:41.879 But I understand there's a bigger picture that I have 0:20:41.920 --> 0:20:43.240 to look at. I can't just look at the medical 0:20:43.280 --> 0:20:47.119 and we it kind of look at the medical but 0:20:47.240 --> 0:20:51.480 we didn't take in all the other ramifications of that, right, 0:20:51.760 --> 0:20:54.119 And so like you're talking about business shutdown, Well that 0:20:54.200 --> 0:20:59.560 changes the trajectory of of of multigenerations. And even today, 0:20:59.640 --> 0:21:01.399 right kids can't go back to school, parents are quitting 0:21:01.400 --> 0:21:03.480 their job. You take two or three years off in 0:21:03.520 --> 0:21:05.639 the middle of your career, you're not getting back onto 0:21:05.640 --> 0:21:07.640 that same trajectory you're on, and then your kids aren't 0:21:07.640 --> 0:21:09.439 going to be on the same trajectory. Right right, It 0:21:09.480 --> 0:21:13.159 trickles down and it's a real crying, dying shame. It truly, 0:21:13.200 --> 0:21:16.720 truly is. Again, I there was a way to safely 0:21:16.800 --> 0:21:19.480 reopen the economy. If you look at certain countries in 0:21:19.520 --> 0:21:23.280 Asia that have been scarred by prior pandemics, they never 0:21:23.280 --> 0:21:27.159 shut down the restaurants just said, oh god, look at 0:21:27.200 --> 0:21:29.879 another pandemic. They got rid of half the restaurants. Excuse 0:21:30.000 --> 0:21:32.120 that they go at a half the tables inside the restaurant, 0:21:32.240 --> 0:21:34.800 they just put them in the back. They socially distanced, 0:21:34.800 --> 0:21:37.080 they put their masks on. They did not close their 0:21:37.119 --> 0:21:41.320 economies down, and they haven't had this massive loss to 0:21:41.359 --> 0:21:45.160 their small business economies that we have. But yet nobody 0:21:45.320 --> 0:21:47.640