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Speaker 1: Now here's a highlight from Coast to Coast AM on

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Speaker 1: iHeart Radio and welcome back to Coast to Coast. George

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Speaker 1: nor You with you, Jim Rickards with us. His new

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Speaker 1: book is called The New Great Depression. We're going to

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Speaker 1: take calls with Jim next hour here on Coast to Coast. Jim,

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Speaker 1: your reaction to the stimulus money going to individuals? Initially

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Speaker 1: now six hundred dollars, maybe soon another fourteen hundred dollars,

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Speaker 1: two thousand dollars total. Every penny counts, I think, But

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Speaker 1: is that really going to help people? It's not. Well,

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Speaker 1: it may help people, but it's not going to stimulate

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Speaker 1: the economy. Let me kind of break that down to

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Speaker 1: yours and explain. So the money's going out to do

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Speaker 1: other people are going to get it now. Wall Street,

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Speaker 1: by the way, which usually gets these things wrong. You know,

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Speaker 1: the stock market did not see the dot com crash,

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Speaker 1: did not see the two thousand and eight financial crisis coming,

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Speaker 1: did not see this financial crisis coming. So the idea

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Speaker 1: that Wall Street looks ahead and gets the right is nonsense.

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Speaker 1: That the data does not bear that out. But Wall

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Speaker 1: Street is saying, Okay, these fourteen hundred dollar checks plus

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Speaker 1: the other six times to call it two thousand dollars.

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Speaker 1: Checks are going out the door. People are going to

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Speaker 1: get them. They're going to run right out, you know,

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Speaker 1: buy a new car, a new refrigerator, carpet the house,

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Speaker 1: whatever that's going to stimulate the economy. That will actually

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Speaker 1: cause a little inflation, you know, et cetera. That's not true.

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Speaker 1: The checks are going out, the money is going to

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Speaker 1: get to the people. What they're going to do what

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Speaker 1: they did the last time. They're going to pay down

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Speaker 1: debt or save it. They're either you know, if they

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Speaker 1: owe some debt or have you owe your rent. You're

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Speaker 1: going to obviously pay your rent. We're sticking in the bank. Now.

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Speaker 1: If you're unemployed, you're definitely going to save it. You're

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Speaker 1: not going out to dinner and you know, taking your friends.

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Speaker 1: You're putting the money in the bank. But even if

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Speaker 1: you have a job, you're saying, well, do you maybe

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Speaker 1: my spouse lost to a job, or maybe my neighbor

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Speaker 1: lost is jump, or maybe I'm next You know, I

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Speaker 1: have my job, but I'm going to get fired next week,

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Speaker 1: so you put it in the bank. They actually called

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Speaker 1: that precautionary savings you know, saving for a rainy day.

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Speaker 1: So the money is going to go out. People are

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Speaker 1: going to get it, but they're not going to spend it.

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Speaker 1: They're going to save it, or we're paid down debt.

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Speaker 1: That doesn't stimulate the economy. I'm not saying the savings

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Speaker 1: is a bad idea. For individuals is probably a good idea.

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Speaker 1: But when you apply that to the economy as a whole,

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Speaker 1: three hundred and thirty million people, if they're sticking in

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Speaker 1: the bank, they're not spending it. Our economy is driven

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Speaker 1: by consumption and not by saving. So if you don't

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Speaker 1: spend it and you save it, again, good for you

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Speaker 1: as an individual, but bare for the economy. So but

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Speaker 1: the spending is real, the deficits real, and the money

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Speaker 1: is going out, but it's not going to stimulate the

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Speaker 1: economy because people are not going to spend it. And

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Speaker 1: that's just one more example of how you know people

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Speaker 1: in Congress, in Washington and Wall Street, they think they

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Speaker 1: have these grand plans, but they don't think about real people.

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Speaker 1: They don't think about real behavior. It's not going to work. No,

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Speaker 1: it's not going to work at all. H. G. Wells

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Speaker 1: published The Wore the World's back in eighteen ninety eight,

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Speaker 1: and you have somehow tied this incredible science fiction story

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Speaker 1: into the new Great Depression. Tell me about that. Well,

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Speaker 1: there are two ways. And you know, I know the

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Speaker 1: story from a little kid, but I reread the novel

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Speaker 1: recently and a boy as it's striking and up to date. Well,

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Speaker 1: the first thing is, um, you know, the Martians landed.

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Speaker 1: They had had a good giant cannon and they fired

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Speaker 1: it from Mars and landed. They came out and they

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Speaker 1: had these war machines, these heat raised and the tripod

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Speaker 1: machines and heat raised, and nothing could stop them, all

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Speaker 1: the British military, you know, they landed outside of London.

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Speaker 1: The British military couldn't stop them, and people were getting

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Speaker 1: killed left and right, and you know, they were taking

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Speaker 1: over London and it looked like they were going to

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Speaker 1: take over the world. And then suddenly the Martians died.

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Speaker 1: They found them. The machines had crumbled and the Martians

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Speaker 1: were blobs. They were they were dead inside the machines.

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Speaker 1: What killed them It wasn't the British military. It was

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Speaker 1: a bacteria. It was a virus bacteria exactly. They died

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Speaker 1: of a disease that where they did not have the immunities.

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Speaker 1: So first of all, there's this coronavirus came in as

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Speaker 1: COVID nineteen uh we you know, the humans did not

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Speaker 1: have any immunity to it. It had never jumped to

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Speaker 1: humans before, it had never been in, never infected humans.

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Speaker 1: We did not have the immunity. So then many people

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Speaker 1: got infected, many people. You know, some cases were mild,

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Speaker 1: some cases were severe. You know Johnson, Prime Minister of

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Speaker 1: the UK, he almost died of it and sadly they're

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Speaker 1: having quite a few fatality So we didn't have this

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Speaker 1: immunity to it. So that's the first parallel, which is,

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Speaker 1: you know, the Martians died because they didn't have immunity.

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Speaker 1: But there's another parallel, a little deeper, a little more

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Speaker 1: interesting than HG. Well set up because as you're reading

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Speaker 1: the novel, you say, well, gee, they're outside of London.

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Speaker 1: They're coming. But people in London life was going on

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Speaker 1: as usual. They didn't believe it. There was this denial

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Speaker 1: of technic cognitive dissonances the technical name. But hey, the

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Speaker 1: Martians are coming, why aren't you running for your LIFELD

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Speaker 1: They didn't believe it. So there was this gap between

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Speaker 1: the perception and the reality. The reality was the Martians

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Speaker 1: were coming and they were killing everything in their path.

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Speaker 1: The perception was, I don't know, it sounds like a rumor.

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Speaker 1: They're kind of far away, they're not here yet, etc.

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Speaker 1: And of course, in the end, reality always wins, and

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Speaker 1: London was destroyed in the novel, So apply that to today.

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Speaker 1: So the stock market said an all time high. I

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Speaker 1: mean it is. It recovered the losses from the pandemic

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Speaker 1: crash in the February March got back, and now I said,

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Speaker 1: and all time high. And yet half the economy is

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Speaker 1: being crushed, and people look down their nose at small businesses,

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Speaker 1: you know, restaurants, bars nel, Salon's boutique, shopping, gas stations,

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Speaker 1: et cetera. They go, oh, we want Apple, Netflix, Amazon,

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Speaker 1: you know. And those stocks are going up and they

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Speaker 1: read and all time high. But the gap between the

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Speaker 1: Wall Street perception or even the everyday American perception that

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Speaker 1: my four one K is back and the reality of

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Speaker 1: a lockdown crushing half the economy that is as wide

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Speaker 1: as I've ever seen it. The reality is going to win,

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Speaker 1: it always does, but the gap can last for a while.

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Speaker 1: So I thought, h two Wells did a really good

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Speaker 1: job portraying that the perception that everything was fine versus

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Speaker 1: the reality that you know, death is coming your way.

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Speaker 1: To today in the stock market, this is perception that

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Speaker 1: everything's fine, but it's not. The economy's in terrible shape.

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Speaker 1: Why hasn't gold and silver taken off like a rocket ship? Well,

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Speaker 1: this is a great question. I mean gold has almost

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Speaker 1: doubled in the last five years. So the trend is up,

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Speaker 1: but it's kind of what we were talking about before

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Speaker 1: with the Great Depression, where the stock market the trend

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Speaker 1: was down, but it was jagged. There were these little

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Speaker 1: peak same thing with gold. The trend is up and

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Speaker 1: it's going to go a lot higher. But yeah, you

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Speaker 1: have these occasional dips and we're in one right now,

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Speaker 1: but each peak gets higher than the one before. That's

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Speaker 1: the thing to wash out right now. Okay, So why

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Speaker 1: is the gold price kind of stalled out? It's not crashing,

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Speaker 1: but it's it's below the all times. Well, the reason

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Speaker 1: is that interest rates are going up. You look at

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Speaker 1: the ten year Treasury note, that's a benchmark that traders

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Speaker 1: and investors use. That's going up from ninety point nine

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Speaker 1: percent to about one point one percent, So that's that's

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Speaker 1: a pretty steep increase. So gold doesn't have a yield.

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Speaker 1: I mean, gold is gold, but it doesn't pay you

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Speaker 1: any interest. So the trenches trates are going up. Institutional

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Speaker 1: investors say, well, give me some of those ten year notes.

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Speaker 1: I don't want the gold because you know, I want

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Speaker 1: to get that higher interest. So then if you want

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Speaker 1: to predict the goal price shift to say well, what's

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Speaker 1: going to happen with interest rates, and the answer is

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Speaker 1: they'll probably go up a little bit more, and then

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Speaker 1: they're going to come down very sharply because the economy

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Speaker 1: is slowing. So again here's here's another case where, again

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Speaker 1: back to H. G. Wells, Wall Street says, you know,

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Speaker 1: the checks are going out, people are going to spend

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Speaker 1: the money inflaces on the way, so we need higher

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Speaker 1: interest rates. The reality is the checks are going out,

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Speaker 1: people are not going to spend the money. The economy

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Speaker 1: is going to go back. We're in a new recession

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Speaker 1: right now in the first quarter of twenty twenty one.

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Speaker 1: And then eventually that Wall Street will wake up, interest

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Speaker 1: rates will come down and gold will go up. So

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Speaker 1: right now it's kind of flat ash. It's trading in range.

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Speaker 1: That's because of higher interest rates. But the interest rates

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Speaker 1: are going to turn around because the reality is we're

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Speaker 1: crushing half the economy of the lockdowns. By the way,

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Speaker 1: lockdowns don't work. There's and that's not just an opinion,

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Speaker 1: there's very good science behind that. They don't work to

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Speaker 1: stop the spread of the virus, but they do crush

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Speaker 1: the economy, and that's exactly what the governors and merits

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Speaker 1: are doing. Jim, let's talk about China. They seem to

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Speaker 1: be steam rolling, but they've got some internal problems to financially,

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Speaker 1: don't they. That's right, George and I remember during during

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Speaker 1: the Cold War, we used to discuss nuclear war fighting

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Speaker 1: strategies and military strategies, and you know, there'd always be

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Speaker 1: some generals saying, you know, well the Russians are doing

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Speaker 1: this with the Soviets. You know, but the essentially the

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Speaker 1: Russians they're doing this and doing that, and if you

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Speaker 1: want to show up them down and he would say,

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Speaker 1: who would you rather be us or them? And they go, well,

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Speaker 1: I'd rather be the United States of course. So same

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Speaker 1: thing today. You know, China, there's this perception they're a juggernaut,

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Speaker 1: they're gonna it's going to be the Asian century, the

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Speaker 1: Chinese century, etc. And you know, their their economy has

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Speaker 1: come back on, their military is expanding, and their technology

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Speaker 1: is pretty good. But you wouldn't rather be China. They

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Speaker 1: have enormous vulnerabilities. First of all, Um, about forty five

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Speaker 1: percent of their economy is investment. Now normally like the

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Speaker 1: United States, for example, we're about twenty five percent investments,

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Speaker 1: so they're almost double investment. That can be okay, if

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Speaker 1: you're investing in productive assets, they're going to pay. You know,

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Speaker 1: they're not. I've been to China. I've been out to

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Speaker 1: these ghost cities. I've got mud on my boots, you know,

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Speaker 1: looking at construction sites and they build a ghost city. Okay,

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Speaker 1: there's a couple of skyscraper scrapers, an apartment building, resorts center,

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Speaker 1: a golf course, you know, trans to stop, airport, the

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Speaker 1: whole thing, and they're empty. I've been to them, George.

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Speaker 1: They're empty. And I was with some you know, Communist

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Speaker 1: party officials. They were showing me around. I said, this

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Speaker 1: place is empty, and they go, oh, don't worry, it's

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Speaker 1: going to fill up. It hasn't. You can't moftball building

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Speaker 1: you came post small clothes, baby, but you can't montball building.

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Speaker 1: It's actually people using it and maintaining it that keeps

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Speaker 1: it going. Um, so if you were using good accounting principles,

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Speaker 1: you'd write it off to zero. So they've wasted that money. Yeah,

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Speaker 1: you create some jobs, you buy some aunt and stealing glass,

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Speaker 1: that's fine, but it's not it's not sustainable. So they've

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Speaker 1: got too much debt there. The US is cutting them

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Speaker 1: off from technology because they've been stealing it. So we said, okay,

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Speaker 1: enough of that. We're starting to blacklist their companies, which

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Speaker 1: are also you know, stealing intellectual property and feeding it

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Speaker 1: right to the People's Liberation Army. So okay, they've made

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Speaker 1: great progress. But g is the new Emperor's chairman. G

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Speaker 1: he's the most powerful. He's going to be around a

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Speaker 1: long time, isn't he. He He is, And he's the most

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Speaker 1: powerful since Malsi down. He's this idea that they were

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Speaker 1: going to end up like us, like a democratic Society's

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Speaker 1: nonsense there. And he may be smarter than Mazitung well yes,

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Speaker 1: and healthier in his way. That's right, that's exactly right. Now,

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Speaker 1: you who very astutely have pointed something out with what's

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Speaker 1: going on with COVID nineteen. Yes, millions of people are infected. Yes,

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Speaker 1: at least in the United States, three hundred and eighty

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Speaker 1: thousand have died from this tragedy. They've died in Canada.

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Speaker 1: But you point out that there's something else underlying here,

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Speaker 1: and that is anxiety levels are at all time, suicides

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Speaker 1: are high, divorce rates are high, civil unrest is out

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Speaker 1: of control. There are disturbances and riots more than ever.

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Speaker 1: And it's not just over the Trump factor. I think

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Speaker 1: COVID has affected people psyche. What do you think, Well,

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Speaker 1: I agree completely, and the evidence is there, and I

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Speaker 1: have a whole chapter in my book, chapter five, just

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Speaker 1: on the mental health aspects of this and the behavioral aspects.

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Speaker 1: So yes, I talked about the virus, and I talked

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Speaker 1: about the lockdowns and the depression and the economy. That's

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Speaker 1: all there, but there's a whole chapter on mental health.

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Speaker 1: And Jorge, when I started writing the book, you know,

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Speaker 1: it's one thing when you write a book, you do research, obviously,

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Speaker 1: and you research other books on the same topic and

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Speaker 1: you learn as much as you can. But when I

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Speaker 1: started this, there was no book on COVID. This is

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Speaker 1: the first book on the COVID pandemic and the economy.

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Speaker 1: So for my research I went back to the Spanish

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Speaker 1: flu Spanish influenza of nineteen eighteen nineteen nineteen, and in

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Speaker 1: that one one hundred million people died. It was the

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Speaker 1: greatest highest fatality pandemic in the last six hundred and

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Speaker 1: fifty years, worse than the Black Death of the fourteenth century.

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Speaker 1: So that that's kind of your baseline. And the one

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Speaker 1: strange thing about it is nobody wrote about You're like,

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Speaker 1: wait a second, one hundred million people died, more than

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Speaker 1: in World War One? Why were you know, great writers?

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Speaker 1: How anyway fizgeriald despos is not writing about this. And

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Speaker 1: the answer is it happened during World War One, so

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Speaker 1: in which twenty million people died. So it was almost

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Speaker 1: think it was too much the process or people were

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Speaker 1: too traumatized. A little bit hard to explain, but clearly

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Speaker 1: it warped the behavior and that carried on for decades.

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Speaker 1: Same thing today. So you're right, suicide rates have tripled,

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Speaker 1: murder rates have doubled, drug abuses up, alcohol abuses up,

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Speaker 1: domestic violence is up. There's depression, anxiety, anger, you know,

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Speaker 1: you tell someone they've got a quarantine or stay in

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Speaker 1: an apartment for three months, which we did last spring.

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Speaker 1: We're doing it again now. It's like being in jail.

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Speaker 1: You get all kinds of or worse, maybe you get

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Speaker 1: all kinds of dysfunctional behaviors. So I looked at all that,

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Speaker 1: and again the data is there, and I looked at

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Speaker 1: the riots last summer, and for that matter, you can

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Speaker 1: look at the riot on Capital so last week. You know,

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Speaker 1: I'm against all the violence. So there's no, of course

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Speaker 1: expression about that. But you know, one was kind of

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Speaker 1: coming from the left wing, progressive, another one coming from

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Speaker 1: the right wing. In a way, it doesn't matter. Take

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Speaker 1: the politics out of it. And I say in the book,

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Speaker 1: the virus is not a Republican where democrat. The virus

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Speaker 1: just wants to kill you. And it's all you need

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Speaker 1: to know. The virus wants to kill you. And so

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Speaker 1: I connect the dots with Okay, forget the politics. This behavior,

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Speaker 1: this anger, this depression, this dysfunctional behaviors built up. I

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Speaker 1: expect more of it. That's that's a sad thing to say.

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Speaker 1: But we can't, we can't ignore the mental health aspects

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Speaker 1: of this. This will carry out, as they say, for

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Speaker 1: a generation. This will be around for twenty or thirty years.

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Speaker 1: The book just came out, they knew a great depression.

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Speaker 1: Where do people get it, Jim, You can get it obviously,

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Speaker 1: Amazon and Barnes and Noble Pals online and it's all

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Speaker 1: it's in the bookstore, so it's out actually all over

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Speaker 1: the world. So hope people have a chance to grab

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Speaker 1: it and enjoy it. Why is a bitcoin going crazy? Well,

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Speaker 1: that's a good one, you know. I did an interview

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Speaker 1: in December two seventeen, and at the time bitcoin was

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Speaker 1: going out about a thousand dollars a day, so it

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Speaker 1: was eight thousand dollars, nine thousand dollars, you know, and

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Speaker 1: so forth. And I said to the interviewer, and I

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Speaker 1: don't know bitcoin, I don't know. If you want to

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Speaker 1: buy it, knock yourself out. And I was a kid.

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Speaker 1: There was a song called a Shout Shout knock yourself out,

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Speaker 1: So yeah, if you want to do it, that's fine.

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Speaker 1: I don't I need but that's just me. It scares me. Yeah,

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Speaker 1: what I said to the interview I said, look, it

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Speaker 1: was at eight thousand dollars at the time. I said,

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Speaker 1: it's going to go to twenty thousand dollars and then

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Speaker 1: it's going to crash. And that's exactly what it did.

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Speaker 1: Within a month, it went to twenty thousand. Well now

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Speaker 1: it went to forty, but it's dry tailed down a

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Speaker 1: little bit and it will come down more. So it's

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Speaker 1: you know this idea that yes, and how bitcoin is

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Speaker 1: going to replace the dollar as the global reserve currency.

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Speaker 1: In the dollar has this problems. But people don't understand

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Speaker 1: reserve currencies. It's not like the people's back of China

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Speaker 1: has a trillion dollars one hundred dollars bills, you know,

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Speaker 1: on palace in the basement of their billing. They don't

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Speaker 1: you need a bond market they take they buy US

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Speaker 1: Treasury securities. They own the bonds, which by the way,

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Speaker 1: are in digital form. The greatest cryptocurrency is the US dollar.

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Speaker 1: I mean, it's overwhelmingly digital. You might have a couple

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Speaker 1: of bucks in your pockets in Philly, we call it

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Speaker 1: walking around money. But but that's that's miniscule compared to

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Speaker 1: the amount of digital dollars. And the message traffic is

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Speaker 1: all encrypted. So the dollars a cryptocurrency if you want

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Speaker 1: to call it that. But The problem with bitcoin is

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Speaker 1: there's no bond market. There's nothing to invest it. And

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Speaker 1: you can buy a bitcoin, but there's no bitcoin securities,

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Speaker 1: bitcoin bonds, bitcoin auctions. It doesn't have the legal payment

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Speaker 1: infrastructure framework. You need to have a reserve current. So yeah,

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Speaker 1: if you want to know, I prefer roulette, you know,

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Speaker 1: because I can have a nice drink and I enjoy

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Speaker 1: it more. But look, if people want to buy bitcoin,

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Speaker 1: let's fine, that's up to them. But it's not going

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Speaker 1: to replace the dollar. It's not going to replace anything.

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Speaker 1: Is it liquid enough to get out of? Only in

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Speaker 1: small quantity? Is if if you saw a run for

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Speaker 1: the X, they would it would just it would coll out.

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Speaker 1: I'm not saying it couldn't execute, but it would collapse,

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Speaker 1: you know, literally nine in a matter of days if

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Speaker 1: everyone tried to get out at once. It's and the

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Speaker 1: other thing that people don't understand about markets, George, is

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Speaker 1: they go, oh, it went to fourty thousand, which is

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Speaker 1: backed off, and there I understanding the thirties thousands, thirty

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Speaker 1: three thousand somewhere around there. But it only takes one transaction.

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Speaker 1: So there's a there's about a trillion dollars a bitcoin

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Speaker 1: out there. If it took all the bitcoin times the

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Speaker 1: market price, it comes to a trillion dollars. But if

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Speaker 1: I want to, I only have to go buy like

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Speaker 1: a hundred bitcoins to make the price go up, and

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Speaker 1: then they take that price and apply it to all

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Speaker 1: the bitcoins about seventeen million bitcoins. I believe in circulation.

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Speaker 1: I mean there's certainly, and if somebody wants out and

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Speaker 1: dumps it, it plummets, right correct. If more than a

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Speaker 1: small seller meets a small buyer, okay, that transaction gets done.

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Speaker 1: But if you were the equivalent of a run on

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Speaker 1: the bank, it's going to crash so fast, so it'll

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Speaker 1: make your heads spend. Listen to more Coast to Coast

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Speaker 1: AM every weeknight at one am Eastern and go to

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Speaker 1: Coast to coastam dot com for more