Speaker 1: Hey, everyone, welcome to another episode of the Market Disruptors Show.
Speaker 1: I am sitting here today with George Gammon. He has
Speaker 1: taken the internet, taken YouTube by storm recently with his
Speaker 1: super cool videos with the white boards. If you haven't
Speaker 1: seen him, you need to, so I'll linked to it
Speaker 1: down below. UM. Has this an amazing way to take
Speaker 1: these complex subjects and make them very easy to understand,
Speaker 1: especially with the graphics. And I'm super excited to have
Speaker 1: you George, thanks for joining. Hey, thanks for having me.
Speaker 1: I'm I'm excited to have a chat and a lot
Speaker 1: to talk about that for sure, so much to talk about.
Speaker 1: And you know, I've been I've been doing that analysis
Speaker 1: and commentary for quite a long time and sometimes you
Speaker 1: get these like boring patches, but not right now, there's
Speaker 1: more than enough to go around. UM. I've been watching
Speaker 1: your video those and the last several videos you've done.
Speaker 1: They're all, you know, talking about the topic of the moment,
Speaker 1: which is the bailouts, the stimulus, the unlimited you know,
Speaker 1: quantitative easy and etcetera. And uh, you've really been breaking
Speaker 1: down like all these like acronyms that the FED keeps
Speaker 1: coming up with. Alright, maybe tell us about some of
Speaker 1: these acronyms and kind of what that means. Ah jeez. Well,
Speaker 1: the bottom line is they're just trying to buy everything
Speaker 1: in sight. So I think if you start from there,
Speaker 1: it's much easier to understand any of the I call
Speaker 1: them four letters solutions, but that you know, the news
Speaker 1: changes so quickly. First it was all the four letter
Speaker 1: quote unquote solutions that they had back in two thousand
Speaker 1: and eight, but now they've added more and they're now
Speaker 1: coming up with these five letter solutions that even the
Speaker 1: letters are expanding, just like their balance sheet. So but
Speaker 1: really what each program, let's call it, is all about
Speaker 1: is just giving the FED an excuse to either lend
Speaker 1: money directly to corporations or to buy their equity or
Speaker 1: buy their existing debt. It's really what it's all about.
Speaker 1: So the the endgame, I think is the FED is
Speaker 1: going to have stocks, bonds that they're going to own
Speaker 1: a lot of the equity and debt of the S
Speaker 1: and P five hundred. So it's all going from the
Speaker 1: private sector onto their balance sheet, if you think about
Speaker 1: it from their standpoint, makes sense because our economy is
Speaker 1: really all about asset bubbles, debt, and confidence that's what
Speaker 1: our economy is built on. And the FED I think
Speaker 1: knows that, and they won't admit it, but I think
Speaker 1: they understand it well. So they understand they have to
Speaker 1: keep those asset bubbles inflated at all costs. So if
Speaker 1: you're just thinking this through, like what would I do, Well,
Speaker 1: I want to take all of the assets that can
Speaker 1: get a haircut, and I want to put them on
Speaker 1: my balance sheet because I never have to sell. Yeah,
Speaker 1: the FET doesn't have a profit and loss, so if
Speaker 1: they get let's let's not give away the punch line
Speaker 1: before we build it up a little bit here. Well,
Speaker 1: I could go on for hours about that. But as
Speaker 1: far as the specific programs that achieve this objective, you
Speaker 1: want me to touch on that, No, we don't. I mean,
Speaker 1: we don't need to dig into each one. But it's
Speaker 1: interesting because you're kind of showing how they've been adding
Speaker 1: more and more and more. As you said, they're actually
Speaker 1: getting the acronyms are getting longer. Yeah, it seems like
Speaker 1: basically each one gives them more power, more leeway. Correct,
Speaker 1: At first, they were um allowing the primary dealers to
Speaker 1: buy assets and they were kind of loaning them. Now
Speaker 1: they're like, shoot, why go through them, Let's just buy
Speaker 1: it ourselves. Exactly. That's a great point. That's a great point.
Speaker 1: That's the biggest difference from what I've seen between what
Speaker 1: they first came out with and what they've come out
Speaker 1: with more recently. The first thing was just the primary
Speaker 1: dealer credit facility, and that's just saying, okay, primary dealer,
Speaker 1: whatever is on your balance sheet, will take it from
Speaker 1: you and we'll give you a quote unquote loan. But
Speaker 1: if you look at the the fine print, it's yeah,
Speaker 1: it's alone, but it's at zero percent interest and most
Speaker 1: likely they can roll it over indefinitely. So is that
Speaker 1: really alone? And then excuse me, so they say that's
Speaker 1: to support the primary dealers, but why couldn't the primary dealers?
Speaker 1: Was one point five trillion and access reserves actually be
Speaker 1: proactive and go into the market by the stocks for
Speaker 1: the Federal reserve, and then the Fed gives them this
Speaker 1: loan at zero percent interests that they can roll over, uh, indefinitely.
Speaker 1: So that kind of gets them around the laws that
Speaker 1: were set up. But to your point, the new abbreviations
Speaker 1: or acronyms they've come up with, these five letter duties.
Speaker 1: They just allow the FED to go straight into the
Speaker 1: market and give credit, extend credit to a lot of entities,
Speaker 1: not just corporations. But it gives them, uh like they
Speaker 1: just call them investors, and I don't know who these
Speaker 1: people are, but it gives financing to investors. And keep
Speaker 1: in mind, this is a nonrecourse loan. So again, is
Speaker 1: this really alone here, So they're giving this financing to
Speaker 1: investors for them to continue to buy asset and securities. Well,
Speaker 1: these asset back securities have student loan debt, credit card debt,
Speaker 1: they have subprime auto loans, they have SBA loans. So
Speaker 1: in essence, although that's not technically going onto the FED
Speaker 1: balance sheet, it's going onto a balance sheet of an
Speaker 1: entity that really doesn't have to sell and prior and
Speaker 1: things change so quickly. If you would have said last
Speaker 1: week the FED would go directly and buy the corporate
Speaker 1: bond market or something like that, people would have said, no, no, no,
Speaker 1: they can't do that because of this stipulation or this
Speaker 1: law or this regulation and have to be an act
Speaker 1: of Congress or the government would have to change something. Well,
Speaker 1: they pretty much just ignored that and said, yeah, it's
Speaker 1: it's the law, but whatever, we don't care. And then
Speaker 1: just no one calls him out on it because the
Speaker 1: talking heads at CNBC or the quote unquote market, they
Speaker 1: want the FED to come in and prop things up
Speaker 1: because they're taking a fifty haircut in their portfolio in
Speaker 1: the last thirty days. And you got Acmin coming out
Speaker 1: on CNBC and basically crying, trying to beg people to
Speaker 1: buy stocks. And I have nothing against him. I think
Speaker 1: he's a brilliant guy and I'd love to interview him.
Speaker 1: But well, I'll just say that he is emotional and
Speaker 1: really pleading with people to get out there and not
Speaker 1: only stay home, but also to kind of buy stocks,
Speaker 1: Like Okay, well, why why is he doing this? He's
Speaker 1: got to be talking his book. And I'd be pretty
Speaker 1: emotional too if I ran ten billion dollars and I
Speaker 1: just lost five billion of it in the last thirty days.
Speaker 1: But anyway, the bottom line is every week, every day
Speaker 1: that we move forward into this crisis, we're seeing the
Speaker 1: FED take end the government for that matter, taking more
Speaker 1: and more measures that really just ignore the law, and
Speaker 1: the bottom lines, are just gonna do whatever they think
Speaker 1: they need to do in order to keep the bubbles inflated. Now, Um,
Speaker 1: we kind of jumped right into thick of it because
Speaker 1: that's kind of where we are. Um. But if we
Speaker 1: want to just rewind the clock a little bit, this
Speaker 1: is not new. This is not because of the virus.
Speaker 1: This is been going on for a long period of time.
Speaker 1: I mean, you've been talking about this well before. So
Speaker 1: this is um, this isn't something like, oh, we have
Speaker 1: this crisis, let's do this. They've been doing this right
Speaker 1: that this is only accelerating it or is this completely new. Well,
Speaker 1: there's a couple of programs that are completely new, but
Speaker 1: it's still the same. It's a continuation, right, it's in
Speaker 1: the continuation and acceleration. Uh yeah, with it, with this
Speaker 1: with some of them. Right, with some of these programs,
Speaker 1: I believe, if I'm not mistaken, that they are new
Speaker 1: and they are to get around having to go through
Speaker 1: the primary dealers, and the primary dealers make decisions or
Speaker 1: take action in order for those reserves that the FED
Speaker 1: has to get out into the system. But as far
Speaker 1: as UM, the majority of the acronyms, they used them
Speaker 1: in two thousand and eight. But you know, to be clear,
Speaker 1: quantitative easing started off in the end of two thousand
Speaker 1: eight and was supposed to be a quote unquote temporary measure.
Speaker 1: Remember Ben Bernanke came out promised everyone that wasn't monetizing
Speaker 1: the debt, because the definition of monetizing the debt would
Speaker 1: be if they kept it on the Fed's balance sheet. No, no, no,
Speaker 1: just bringing these treasuries onto the balance sheet temporarily. We're
Speaker 1: gonna unwind as soon as we're out of the crisis.
Speaker 1: And who yelling said it's just gonna be just like uh,
Speaker 1: watching paint dry. Yeah, I think we're her words or someone.
Speaker 1: And so we found that it's not going to be
Speaker 1: like watching paint dry because they try to unwind the
Speaker 1: balance sheet. And by the way, after q E one,
Speaker 1: now I have q E two, have q E three,
Speaker 1: we try to unwind. That doesn't work. We have the
Speaker 1: not que, which was them bailing out the repo market
Speaker 1: back in September sevent And so my point is we've
Speaker 1: had this quote unquote temporary stimulus from QE that's now
Speaker 1: not only permanent but growing exponentially. And then you combine
Speaker 1: that everything that they do has the same type of effect.
Speaker 1: Why because it goes back to what I was saying earlier,
Speaker 1: with the entire economy being built on asset bubbles, you
Speaker 1: continually have to more and more and more money. You
Speaker 1: have to be more interventionist to make sure that those
Speaker 1: bubbles aren't collapsing. So let's look at the stimulus. They
Speaker 1: just came out with two trillion dollars. Okay, but we
Speaker 1: had a stimulus package back into nine but that was
Speaker 1: only roughly eight billion. So you see the amount of
Speaker 1: queue that they're having to do, the amount of stimulus,
Speaker 1: the amount of the deficits that the government has to
Speaker 1: run in order to profit these bubbles just gets more, more,
Speaker 1: more and more. So the point is any temporary program
Speaker 1: they come up with, whether it's in RIPO, whether it's
Speaker 1: in I think now with these four letter acronyms, I
Speaker 1: don't think these are gonna go away anytime soon. I
Speaker 1: think they'll be more permanent. And it just gets to
Speaker 1: a point where you're almost like Japan, where the Fed
Speaker 1: owns the bond market and they own whatever E T s.
Speaker 1: If it gets bad enough off, I think they just
Speaker 1: ignore that and buy stocks directly or bonds directly. But
Speaker 1: it's it's not temporary, it just it keeps growing and
Speaker 1: growing and growing. And right now, let's remember too, the
Speaker 1: FED did this originally to give confidence to the market,
Speaker 1: so they had kind of this Fed put and so
Speaker 1: that means the Fed is kind of back stopping the market.
Speaker 1: What we know right now that's gone, that's expired, because
Speaker 1: every time the Fed came out with a bigger bazuka
Speaker 1: over the last couple of weeks, the markets just shaking
Speaker 1: it off. It goes up for the next hour and
Speaker 1: then just tanks. The only thing that's um kind of
Speaker 1: propelled this market higher is this stimulus package that the
Speaker 1: government has come out with. But what happens when the
Speaker 1: sugar high from the stimulut from the stimulus package wears
Speaker 1: off and all of a sudden people go back to
Speaker 1: reality and say, oh wait, the job report or the
Speaker 1: unemployment numbers went up by three point three million. Right
Speaker 1: then what happens next week when the there's another three
Speaker 1: million jobs that are lost And and generally, if you
Speaker 1: look through history, you'll find that the tipping point for
Speaker 1: the United States going into a recession is always about
Speaker 1: the unemployment rate. Right, so when the unemployment rate starts
Speaker 1: to spike, that's when things get bad. And not only
Speaker 1: are we spiking now from an all time low. But
Speaker 1: we're just I mean, it's a it's a a parabolic
Speaker 1: move when you look at a chart. And I'd also
Speaker 1: like to remind people that are comparing this to two thousand,
Speaker 1: eight thousand nine that back then the jobless claims the
Speaker 1: number we receive today at its height was maybe six
Speaker 1: hundred thousand, SI, there you go, and then today it's
Speaker 1: it's three point two or three point three millions. So
Speaker 1: the previous high was I think and it was seven
Speaker 1: hundred and two thousand, six and fifty thousand, and now
Speaker 1: now millions. Yeah, So this this seems like um to me.
Speaker 1: You know, if we trace this back to the break
Speaker 1: from the gold standard, if that's nine, nine seventy one,
Speaker 1: wherever number you want to start looking at. We've started
Speaker 1: building up the debt and it seems like two eight seven,
Speaker 1: two thousand, two thousand and eight, two thousand and eleven.
Speaker 1: It keeps trying to de leverage that debt, right, and
Speaker 1: the Fed just keeps, no, don't, let's just pump more
Speaker 1: debt in. But there's so much bad debt out there,
Speaker 1: as you say, all this junk that's out there, and
Speaker 1: it's just it just it just goes away in the
Speaker 1: blink of an eye. And and and that's what they're doing.
Speaker 1: They just keep trying to like reinflate it with more
Speaker 1: debt and then each time it just takes more and
Speaker 1: more and more. Yeah, that's exactly what happens. And it's
Speaker 1: just like taking a drug or uh, you know, drinking
Speaker 1: or anything that the more of the drug that you take,
Speaker 1: the more you need to get high, the lot of
Speaker 1: diminishing returns. Yeah, exactly. So I think that's what's going
Speaker 1: on right now. We know that the FED is now
Speaker 1: pushing on a string, and at what point do we
Speaker 1: get where the government stimulus package has the same type
Speaker 1: of effect. And that's when you've really got problems because
Speaker 1: if you can't inflate a bubble through monetary policy, and
Speaker 1: if you can't do it through fiscal policy, then what's
Speaker 1: left other than the FED doing what I think they've
Speaker 1: set themselves up to do now, and that's just to
Speaker 1: buy and take the private sector balance sheet onto the
Speaker 1: balance sheet of the Fed. You know, it's a it's
Speaker 1: a scary thought thinking about that. And before we dive
Speaker 1: into that, I'm just curious. You know, we talked about
Speaker 1: the law of diminishing returns, and so we can see that, right,
Speaker 1: it was fifteen trillion, thirty trillion, I mean, what's it
Speaker 1: going to be this time? Right? Each time it gets
Speaker 1: more and more, and it almost seems like more money
Speaker 1: is being put out than the economic growth that we're
Speaker 1: getting back in return. Or we're almost at that point?
Speaker 1: Is that so like we're spending more than we're getting
Speaker 1: are we? I mean there yet? Yeah, There's been several
Speaker 1: studies done that show once the debt to GDP gets
Speaker 1: up to a certain level in a country, that every
Speaker 1: single dollar or every single um uh yeah, I guess
Speaker 1: every dollar or the government spends, they get back less
Speaker 1: in return. So there's an opposite money multiplier in fact,
Speaker 1: and I think we're there. I think the number that
Speaker 1: they came out with, I wish I could remember the
Speaker 1: specific study. It's very famous, but they said about a
Speaker 1: hundred to a hundred and ten percent of g d P.
Speaker 1: And I want to make sure that people are are
Speaker 1: clear that because a lot of people in the market
Speaker 1: or on Twitter, they say, well, yeah, we could be
Speaker 1: like Japan where they're buying all of these e t
Speaker 1: f s and the bonds, like we talked about earlier,
Speaker 1: and they're printing all of this money and it really
Speaker 1: hasn't created inflation. It's more created kind of a zombie
Speaker 1: economy where they just have very low deflation for for
Speaker 1: decades on end. And although that is a possibility, I
Speaker 1: think in the United States, it's not a probability. The
Speaker 1: probability is very low that we see that because of
Speaker 1: the dynamics with the reserve currency, the dollar, and how
Speaker 1: much the FED will have to print, and the fact
Speaker 1: that we're that we're seeing the supply chains being disrupted
Speaker 1: within the United States. And I think with what's going
Speaker 1: on with the the the illness will call it. I
Speaker 1: don't know if you're gonna put this on YouTube, but
Speaker 1: we'll say will say the illness. Everyone knows what I'm
Speaker 1: talking about. There you go, There you go. I think
Speaker 1: you could see a situation where there's a lot less
Speaker 1: goods and services that are imported, and if there are
Speaker 1: fewer goods and services being imported, there's more dollars or
Speaker 1: there's fewer dollars being exported, so more dollars are staying
Speaker 1: within the demand stick economy. And if you combine that
Speaker 1: with mm T, which is a part of the stimulus package,
Speaker 1: and you combine that with the FED creating all of
Speaker 1: these additional deposits, because as I'm sure you know, what,
Speaker 1: what most people don't understand is when the FED creates
Speaker 1: money and they just we call it print money, they're
Speaker 1: they're not really printing the money that you that most
Speaker 1: people think of. It's it's not it is kind of dollars,
Speaker 1: but it's more it's it's it's bank money. It's just
Speaker 1: reserves for the for the banks and the primary dealers
Speaker 1: that are under the Fed's umbrella. So in order for
Speaker 1: the money that the FED prints to get out into
Speaker 1: the real economy, well before it took uh an action
Speaker 1: of the primary deal they would have to do something.
Speaker 1: They'd have to buy a financial asset, or they would
Speaker 1: have to create a loan, and that creates an additional deposit,
Speaker 1: which makes the money supply grow. So if you have
Speaker 1: the FED now going directly to the real economy to
Speaker 1: create deposits, the government is doing it as well with
Speaker 1: MMT and all these other programs. And you have the
Speaker 1: fact that there's fewer dollars escaping the United States, then
Speaker 1: you have just simple more dollars chasing the same amount
Speaker 1: of goods or services, or I would argue actually fewer
Speaker 1: goods and services because if we start not only the
Speaker 1: supply chains being broken down right now because of this illness,
Speaker 1: but also in the future, if you have Trump or
Speaker 1: Biden or whomever come out and say, listen, we need
Speaker 1: to stop producing face masks in China. We can't be
Speaker 1: reliant on uh India for our pharmaceuticals. We can't be
Speaker 1: reliant on Taiwan for our ventilators. So we've got to
Speaker 1: do all these things in the United States. Well, that
Speaker 1: takes time first and all. You can't just wave a
Speaker 1: magic wand and have all these supply chains appear. So
Speaker 1: in the interim you have a reduced amount of supply,
Speaker 1: and even when that supply comes online, it's at a
Speaker 1: much much higher ice because you're producing that in a
Speaker 1: developed economy as opposed to a Vietnam something like that.
Speaker 1: So the bottom line is you have less goods and services,
Speaker 1: you have more dollars chasing them and fewer dollars escaping.
Speaker 1: So if you have fewer dollars escaping, you can have
Speaker 1: a quote unquote strong dollar. And I talked about this
Speaker 1: in a video this morning, but you can have a
Speaker 1: strong dollar. So every single time the average Joe turns
Speaker 1: on CNBC, it's the dollars strong, Holy cow, the dollars strong.
Speaker 1: The d X y is at one ten, it's at
Speaker 1: one dollars, uh, you know, crushing the euro, it's crushing
Speaker 1: the Aussie dollar or the yen, anything like this. While
Speaker 1: at the same time, the average Joe is going down
Speaker 1: to whole Foods and the price of his apples are
Speaker 1: going from a dollar to two dollars, to three dollars,
Speaker 1: to four dollars to five dollars. And so there's this
Speaker 1: disconnect I think with people, and that's something that I'm
Speaker 1: trying to preach as much as I can that hey,
Speaker 1: let's not let's understand that you have to compartmentalize your
Speaker 1: personal cp I with the strength or weakness of the
Speaker 1: dollar that you hear on TV. And and this is why.
Speaker 1: It's because of what's going on with the FED, the
Speaker 1: government and the the illness. And but I also I
Speaker 1: want to be clear too that the economy was extremely,
Speaker 1: extremely weak, and it was built on a house of cards.
Speaker 1: This at some point in time, we would have had
Speaker 1: this happen, whether it was with this illness or something else,
Speaker 1: and a lot of people say, oh, we can have
Speaker 1: this v shape recovery, which we might have due to liquidity,
Speaker 1: but we won't have due to fundamentals, because they say, well,
Speaker 1: the unemployment rate was low, we had such a great
Speaker 1: economy prior to this. My rebuttal to that is always
Speaker 1: very simple. If we had such a great economy prior
Speaker 1: to going into this crisis, why do we have interest
Speaker 1: rates at zero? Right? Right? Like why did the economy
Speaker 1: need interest rates solo? Why was it when Powell took
Speaker 1: rates up to two or two point to five all
Speaker 1: of a sudden things started to implode? Right? If we
Speaker 1: had such an awesome economy, If we had such an
Speaker 1: amazing economy, don't you think we should be able to
Speaker 1: normalize interest rates? And why can't the Fed unwind their
Speaker 1: balance sheet? Why do they have to do repo? Why
Speaker 1: did they have to do que if we've got such
Speaker 1: an amazing economy? Right? Yeah, it was definitely cracking up
Speaker 1: well before the sickness. It was it was it was
Speaker 1: kind of like I called it at first, I said
Speaker 1: it was like the pin prick on a balloon, But
Speaker 1: really it was like getting a nail and a tire
Speaker 1: that was already deflating. Yeah, so uh, one of those.
Speaker 1: But you know, yeah, you're right, everybody saying the dollars
Speaker 1: too strong, the dollars too strong. I see lots of
Speaker 1: people calling, you know, to let's weaken the dollar, weaken
Speaker 1: the dollar. Um. But of course the dollar is the strongest.
Speaker 1: Everyone's flying to liquidity. Um. They're trying to do that
Speaker 1: right by printing more and lowering rates and all these programs. UM.
Speaker 1: But I guess your last video you were kind of
Speaker 1: saying that these limited, these unlimited billouts actually lead to
Speaker 1: the dollar going down. So right now it's the dollars
Speaker 1: going up. But they're doing these bells to try to
Speaker 1: weaken them. But you think they overshoot the goal and
Speaker 1: maybe they just it just ends up making it two weeks. Well,
Speaker 1: we've got to define what we're talking about by a week.
Speaker 1: Dollar first and foremost. So if you're talking about the
Speaker 1: dollar relative to foreign currencies, that would be one answer.
Speaker 1: But if we're talking about the dollar relative to the
Speaker 1: apples that you buy, the whole foods, that would be
Speaker 1: a completely different answer. Or maybe the dollar compared to
Speaker 1: the bond market, or the dollar compared to a specific
Speaker 1: stock or the SNP, so I I really want to
Speaker 1: encourage people to compartmentalize those So I could see a
Speaker 1: situation because of what I explained before that the dollar
Speaker 1: could definitely go up. Mean, I agree with Brent Johnson
Speaker 1: and well, I can totally see where he's coming from,
Speaker 1: whether it's a guy like Brent or Jeff Snyder or
Speaker 1: anyone who's in that route Paul with that dollar bowl camp.
Speaker 1: But what they're saying is isn't necessarily that the prices
Speaker 1: of goods and services, or the price of your healthcare
Speaker 1: or the price of gasoline or your rent is going
Speaker 1: to go down. They're saying that the value of the
Speaker 1: dollar relative to the Euro is going to go up. Right,
Speaker 1: That's a totally different argument. And I do see a
Speaker 1: possibility where they'd have to come in with a Plaza
Speaker 1: accord two point oh and artificially lower the value of
Speaker 1: the dollar. They meaning the FED in the foreign FX
Speaker 1: markets to pump enough dollars out there. They've got the
Speaker 1: swap lines going right now with the other central banks,
Speaker 1: with the majority of central banks except for China, and
Speaker 1: that could ease the pressure. But even if you ease
Speaker 1: that pressure, it's still kind of creating more dollar or
Speaker 1: demand in the future. So and I don't it's it's
Speaker 1: difficult because you've got them some countries that would really
Speaker 1: like to see a dollar being devalued. Some countries would
Speaker 1: not be too keen on that. So I don't think
Speaker 1: you're going to get a universal Hey, yeah, let's all
Speaker 1: hold hands, kumbaya. Let's bring down the dollar like they
Speaker 1: did in nineteen eighty five, I think it was. But there,
Speaker 1: I think the FED can just say, listen, we don't
Speaker 1: care what you want to do. We're just gonna take
Speaker 1: five trillion dollars and pump it into the FX markets
Speaker 1: and just be like a currency manipulator, just like China
Speaker 1: has done for so long, and they just bring it down. Now,
Speaker 1: that's not to say, now let me play devil's advocate here.
Speaker 1: That's not to say that even if they did that,
Speaker 1: you would say you would see hyper inflation in the
Speaker 1: United States. Let's remember that when they did plase accord
Speaker 1: one point. Oh, we'll call it. The value view of
Speaker 1: the dollar in the FX markets, especially relative to the
Speaker 1: the German mark and the yen, went down over two
Speaker 1: years by five zero. But if you look at inflation
Speaker 1: in the United states. It's still only was up maybe
Speaker 1: five or six percent per year, So again, completely completely
Speaker 1: different buckets, right, Yeah. And and the way they measure
Speaker 1: that inflation, like you said, doesn't take everything new an account.
Speaker 1: So everyone knows the price of gas went up, and
Speaker 1: the price of homes went up, and you know, all
Speaker 1: the things that we need. The CPI doesn't measure those
Speaker 1: for some reason. Right. Uh, school went up, healthcare went up,
Speaker 1: I mean, everything's gone up, right Yeah. And everyone's CPI
Speaker 1: is different because of what they buy. So my cp
Speaker 1: I as an example, is completely different than some like
Speaker 1: a school teacher that's making thirty dollars a year because
Speaker 1: the prices of the stuff I buy is uh, it
Speaker 1: might be staying the same, or even if buying the
Speaker 1: same types of items like food, let's call it, it's
Speaker 1: a much lower percentage of my overall income. Where if
Speaker 1: you've got a school teacher making forty grand year, where
Speaker 1: the majority of her or his income is going to rent, healthcare, food, gas,
Speaker 1: he or she could experience fiftcent inflation per year those
Speaker 1: specific items that occupy of their paycheck. And um, all
Speaker 1: while the dollar is getting strong or supposedly very strong,
Speaker 1: so um it's uh, it's like watching a car crash. Right,
Speaker 1: we're with witnessing this all in real time. It's an
Speaker 1: it's an interesting time to be watching the markets. We
Speaker 1: can see the development that is going down. We can
Speaker 1: see uh you know models like you said, maybe Japan,
Speaker 1: maybe it's different, et cetera. What do you think I mean?
Speaker 1: On your YouTube channel, you say helping you build wealth
Speaker 1: and thrive. So how do we take this information and
Speaker 1: discern it in a way that we could try to
Speaker 1: thrive from this um? Right? How do we decipher this?
Speaker 1: What are we watching for and what are we trying
Speaker 1: to do? Well? First of all, I like to try
Speaker 1: to encourage people to compartmentalize their portfolio as well. So
Speaker 1: what I do is I have ten percent for insurance
Speaker 1: for an investment, which I would define is something that
Speaker 1: pays me to own it, and then ten percent for
Speaker 1: a speculation, which I define is just something I'm betting
Speaker 1: on the price going up. His insurance is like gold,
Speaker 1: like precious metals, like absolutely would be gold, not even silver.
Speaker 1: It would just be physical. Gold wouldn't be an e
Speaker 1: t F. Just physical. And that you're I'm not trying
Speaker 1: to get rich. I'm just trying to maintain the purchasing
Speaker 1: power that I already have. So with I think oil
Speaker 1: down a barrel, you see companies like Exxon, Chevron, Um, Shell,
Speaker 1: Dutch really really just tanking in price. And again it's
Speaker 1: not that they don't have problems. They definitely do, but
Speaker 1: at a certain point, it's all a function of price.
Speaker 1: And if I can get a twelve percent dividend, let's say,
Speaker 1: on an Exxon, and I know they've got a lot
Speaker 1: of debts and they've they've got but I'm not too
Speaker 1: worried about that long term. And I also realized that
Speaker 1: they could stop paying their dividend over the next one year,
Speaker 1: so it's very realistic. But listen, I'm not buying Exxon
Speaker 1: right here to hold for three weeks or six weeks.
Speaker 1: I'm buying it to hold for ten years. And if
Speaker 1: you believe that cars are still going to run on
Speaker 1: gas in call it ten years, then I think you've
Speaker 1: got to believe the price of Exxon will most likely
Speaker 1: increase above and beyond call it thirty five dollars, and
Speaker 1: they'll be able to pay their divid an end, and
Speaker 1: they might most likely be able to increase their dividend
Speaker 1: after a year, after a year and a half, after
Speaker 1: all of this is in the rear view mirror. Even
Speaker 1: if the economy goes into a Japan type situation, that
Speaker 1: still doesn't mean that oil is at twenty barrel. And
Speaker 1: it's not to say that can't go down to three
Speaker 1: or ten. But what I like to advise people and
Speaker 1: what I try to do myself, and psychologically it's actually
Speaker 1: very hard to do, but I try to completely ignore
Speaker 1: whether the price of x y z asset is going
Speaker 1: up or down. I just forget about it. And I
Speaker 1: just asked myself, is this cheap or is it expensive?
Speaker 1: And if it's cheap historically speaking, then I buy it.
Speaker 1: If it's if it's expensive, then if it's in my portfolio,
Speaker 1: then I go ahead and sell it. So I think
Speaker 1: you've got to look at the oil right now and say,
Speaker 1: historically it's definitely very cheap. I'm not saying now is
Speaker 1: the time to go in. But what I'm doing is
Speaker 1: just starting a watch list of stocks or assets that
Speaker 1: I would like to buy at a specific price, and
Speaker 1: if they get down to that price, maybe I pulled
Speaker 1: the trigger a little bit. I think that's something proactive
Speaker 1: everyone can do. Also, I think that the average Joe
Speaker 1: or Jane can always go out and make sure, make sure,
Speaker 1: make sure, make sure they've got a fixed rate mortgage.
Speaker 1: And I know the majority of people in the United
Speaker 1: States do. But if you don't make that change, Yeah,
Speaker 1: now is the time. You've got interest rates at at
Speaker 1: five thousand year lows. Go ahead and lock them in
Speaker 1: right now, because over the next ten twenty thirty years,
Speaker 1: while you're paying off this mortgage, the chances are very
Speaker 1: high that the rate of inflation exceeds your interest rate.
Speaker 1: And if the rate of inflation exceeds your interest rate,
Speaker 1: that's a transfer of wealth from the lender to the borrower.
Speaker 1: In other words, it's a transfer of wealth from the
Speaker 1: bank to you. And that's what you want. That's I
Speaker 1: love that point. I'm like your thesis on you know,
Speaker 1: the fed by and everything que unlimited. The dollar goes
Speaker 1: to zero, crashing the system, the house of cards, as
Speaker 1: you said, crashes at some point, I mean, do we
Speaker 1: start to look at like, Okay, well, shoot, maybe equities
Speaker 1: won't be a good play. I mean, maybe they run
Speaker 1: out of ammunition. Maybe the diminution returns get to it.
Speaker 1: Maybe it's more about gold, Maybe it's about lifeboats, alternatives
Speaker 1: outside of the dollar, or you don't think it gets
Speaker 1: that bad, No, I do. I don't know that the
Speaker 1: dollar goes to zero, and I definitely don't think it
Speaker 1: goes to zero short term. I think five years, ten years,
Speaker 1: it could go not to zero, but it could lose
Speaker 1: call it fifty of its value, could lose of its
Speaker 1: value per year. But I think that in what I'm
Speaker 1: talking about is not only in the United States, but
Speaker 1: outside the United States against the Euro or against all
Speaker 1: these other currencies. So I could see I definitely could
Speaker 1: see hyper inflation if you define it by the dollar
Speaker 1: losing fifty of its value on an annual basis. Totally
Speaker 1: could see that in five ten years. But I don't
Speaker 1: see it in the next And what do you think
Speaker 1: about f D. I see it was a pretty interesting
Speaker 1: The head of f D I C put that video
Speaker 1: out right and said, everything safe, don't be worried. Um,
Speaker 1: this tells you all you need to know. Why why
Speaker 1: do they have to come out and do that? Right? Uh,
Speaker 1: let me touch on your earlier point. Uh. I do
Speaker 1: think long term you want to have hedges against the dollars.
Speaker 1: So that's why I like physical gold for a speculation,
Speaker 1: obviously you gotta throw a bitcoin in there. I think
Speaker 1: the asymmetry is definitely what you want. A lot of
Speaker 1: people get on me because they like to be an
Speaker 1: either or type person. Either your gung ho about gold
Speaker 1: and you think it should be a hundred percent of
Speaker 1: your portfolio, or your super gung ho about bitcoin and
Speaker 1: crypto and you think that should be a hundred percent
Speaker 1: of your pol I really don't understand that. I don't
Speaker 1: understand the arguments going back and forth between the two
Speaker 1: camps because to me, we're all on the same team
Speaker 1: and they're not even competing asset classes. In my book,
Speaker 1: they're totally They're not even apples and oranges. I always
Speaker 1: say they're like apples, or they're like oranges and and
Speaker 1: Ford pickup trucks. That why would you not have both?
Speaker 1: But one is insurance and one is a speculation. So
Speaker 1: I wanted to touch on that. What was lost to
Speaker 1: check your I appreciate that that, and actually I was
Speaker 1: just I talk about both. I've been a bitcoin guy,
Speaker 1: I am. I talk about gold, and I constantly get
Speaker 1: hit with that. But look, our goal, our job is
Speaker 1: not to pick the one asset. Our goal is to
Speaker 1: have an allocation and we met we we we do
Speaker 1: it based off of risk and reward, and I like both.
Speaker 1: I think there's room for both and and for a
Speaker 1: lot of the same reasons, but also for different reasons. Absolutely, yeah,
Speaker 1: you got. You gotta own different asset classes for different
Speaker 1: reasons and different objectives within your portfolio to have a
Speaker 1: mathematical probability of you being ahead of the game in
Speaker 1: the long run. And I don't want to get into
Speaker 1: the boring nerdy stuff. Some of my videos I go
Speaker 1: into binomial calculators and the Kelly criterion because before I
Speaker 1: got into entrepreneurship way back in college, I counted cards
Speaker 1: at blackjack, So it always put me in that mindset
Speaker 1: of probabilities and money management. And so then we're watching
Speaker 1: the FED go into quei infinity, a lot of you know,
Speaker 1: potential inflation deflation to watch for. So as investors, if
Speaker 1: we want to kind of keep an eye on that,
Speaker 1: try to hedge against the dollar inflation at some point
Speaker 1: through gold, maybe through bitcoin um and then keep an
Speaker 1: eye on the world dominator stocks I like to call them,
Speaker 1: right the value stocks, and maybe look for good entry
Speaker 1: points at some point because you think even though the
Speaker 1: Fed's gonna go full full crazy Bazuoka style. Um, those
Speaker 1: stocks are gonna survive that. They're gonna prop them up
Speaker 1: as long as they need to. Yeah, I think they're
Speaker 1: going to try. So where's your entry point? I'd go
Speaker 1: back to just asking the question, is it cheap or
Speaker 1: is it expensive? Like a lot of people are trying
Speaker 1: to call a bottom right now, it's like it's the
Speaker 1: bottom by the dip, by the dip. Well, I don't
Speaker 1: do that because I look at the market cap to
Speaker 1: GDP you want to call it the buffet indicator, and
Speaker 1: or I look at a cape ratio and as even
Speaker 1: though we've come down, um call it or so from
Speaker 1: the highs, it doesn't mean the market's cheap. But the
Speaker 1: market is still extremely extremely overvalued. Of course their pockets
Speaker 1: of opportunity, that's true, But as a whole, the SMP
Speaker 1: is still up in the stratosphere. So I wouldn't be
Speaker 1: a buyer of the entire market until the cape ratio
Speaker 1: at least comes down below fifteen, and i'd like it
Speaker 1: even below ten. So that's kind of what I'm looking
Speaker 1: at as far as your blue chips for an entry point.
Speaker 1: But I'd also encourage people to look outside the United States,
Speaker 1: because there's stocks in other markets that are down way
Speaker 1: below where they were even in two thousand nine, and
Speaker 1: a lot of these stocks are great dividend payers that
Speaker 1: would be considered blue chips in that other country. Of course,
Speaker 1: you gotta worry about the exchange risk if your expenses
Speaker 1: are denominated in dollars. But I think that people should
Speaker 1: maybe just start doing some research to see what opportunities exist,
Speaker 1: not only in the United States, but potentially outside of
Speaker 1: the United States as well. Yeah, great, great advice. I
Speaker 1: like that. What about one last question? What do you
Speaker 1: what do you think about the DOWT gold ratio? Do
Speaker 1: you do you look at that? Yeah, I've seen that.
Speaker 1: I know it's um I think it's a lot like
Speaker 1: the silver to gold ratio, and that I don't know.
Speaker 1: I'm not good enough to know if that's an indicator
Speaker 1: or if it's just something that's kind of interesting to
Speaker 1: look at. So I try to kind of stay in
Speaker 1: my lane, if you will, and just ask myself is cheaper?
Speaker 1: Is silver cheap compared to silver? And not necessarily is
Speaker 1: silver cheap compared to gold? I didn't I did a
Speaker 1: video titled silver is not what you think it is.
Speaker 1: And I basically said, I don't believe in the gold
Speaker 1: to silver ratio. Silver isn't needed anymore, and and that
Speaker 1: that ratio is broken a long time ago. Um, the
Speaker 1: doubt of gold ratio, I still believe in that. So
Speaker 1: that's something that I keep an eye on. But yeah,
Speaker 1: I know I've was regarding the silver to gold. I
Speaker 1: interviewed Rick Rule the other day and he's in your camp.
Speaker 1: He he doesn't. He thinks it's kind of cool to
Speaker 1: look at, but it's not really an indicator. And uh,
Speaker 1: I know I interviewed Shift the other day and uh
Speaker 1: and Lynette Zang, and they're under the belief system that
Speaker 1: and they're old school. They've been doing us a long
Speaker 1: time time, and they believe there's going to be a
Speaker 1: one to one ratio again. Whether the whether that means
Speaker 1: the dows at twenty thousand and an ounce of gold
Speaker 1: is twenty thousand or five, it doesn't matter that. They
Speaker 1: just think that at some point in time in the
Speaker 1: next couple of years, we're going to be at a
Speaker 1: one to one. If we have time for one more question, yeah, Um,
Speaker 1: so you did a video talking about Jim Rickards calling
Speaker 1: the revaluation to gold. I kind of copied off of
Speaker 1: your video about that as well, and so I'm curious
Speaker 1: about that. I mean, if if you know, the unlimited
Speaker 1: bazooka cannons and the destruction of the dollar and all
Speaker 1: the current I mean, we already see the you know,
Speaker 1: I m F or the b I s calling for
Speaker 1: digital currencies with their SDRs, which maybe like Chinese to
Speaker 1: people listening, But um, I'm curious based off that video.
Speaker 1: I mean, if this qui infinity and diminishing returns and
Speaker 1: it all fails, no confidence left in currencies. The argument
Speaker 1: is the only way to restore confidence is to go
Speaker 1: back to some gold standard, whether that's one percent or um.
Speaker 1: Do you think there's a good probability of that happening,
Speaker 1: a very low probability or no chance, or where do
Speaker 1: you sit? I think there's a very good probability. That
Speaker 1: will have to have a currency, and I have no
Speaker 1: idea what currency it will be. I don't know if
Speaker 1: it will be digital. I would assume it would be digital.
Speaker 1: I don't know if that's a digital SDR or a
Speaker 1: digital dollar or libra who knows something like that, but
Speaker 1: or maybe a bitcoin, maybe hopefully. I mean that would
Speaker 1: be awesome. From a philosophical standpoint, There's nothing more that
Speaker 1: I'd like to see than to have a decentralized currency
Speaker 1: is as what we use in the world to transact.
Speaker 1: But I I don't think the governments would be too
Speaker 1: uh too keen on that to say the least. Why
Speaker 1: would why would they ever why would they ever vote
Speaker 1: to tie their hands behind their back? Right, Yeah, exactly exactly,
Speaker 1: And to have a government back digital currency, it gives
Speaker 1: them so much control. I don't think most people understand.
Speaker 1: I don't think they've pulled back the layer of the
Speaker 1: onion because I hear a lot of people on Twitter
Speaker 1: or even in the comments of my videos, they say, wow,
Speaker 1: the dollar, are it already is a digital currency? I mean,
Speaker 1: I don't really use paper money. I just use electronic
Speaker 1: digits on my bank account and I use an a
Speaker 1: t M card. And what they're not understanding is if
Speaker 1: we had a true and you can correct me if
Speaker 1: I'm wrong, but if we had a true digital currency
Speaker 1: the way where they've each token let's call it has
Speaker 1: a serial number, and they track that it goes to
Speaker 1: someone's electronic wallet, then the FED or the government could
Speaker 1: control not only the supply, but they could control the demand,
Speaker 1: and most people don't realize that. As an example, they
Speaker 1: could say, Okay, here's your worth of mm T everything
Speaker 1: for this month, but you've got to spend it in
Speaker 1: the next four eight hours. Yeah, yeah, exactly. It's programmable,
Speaker 1: it's specific, you have to spend in this timeframe. You
Speaker 1: can only use it for these certain things, like it
Speaker 1: can be stopped, sees man, you know whatever. So for
Speaker 1: sure that's what they'd want um And I think that's
Speaker 1: kind of where it goes, is like a digital SDR
Speaker 1: most likely, but I would think it maybe has to
Speaker 1: have some goal backing. Maybe it's yeah, that's yeah, that's
Speaker 1: where I was going with that. For sure. It's a
Speaker 1: great point. I think that eventually the Fiat system, the
Speaker 1: Fiat currency system that we've been trying out since nineteen
Speaker 1: seventy one is in kind of going back to Brenton Woods.
Speaker 1: That's going to collapse, and I think you're gonna have
Speaker 1: a total loss of confidence, and not only the dollar
Speaker 1: or the end the Euro, you name it. I don't
Speaker 1: think that's tomorrow, but I think ten years, fifteen years
Speaker 1: down the road, that's where we're going to be. And
Speaker 1: to your point, any currency is all about confidence, Any
Speaker 1: economy really is all about confidence. To instill the confidence,
Speaker 1: I don't think the government or the I M F
Speaker 1: or whomever is issuing this currency is going to have
Speaker 1: a choice but to back it with something that people
Speaker 1: have confidence in. And again going back to Twitter and
Speaker 1: in my comments, a lot of people say, oh, the
Speaker 1: government would never back it with gold. That's crazy, that
Speaker 1: ties their hand. But they're implying that the government has
Speaker 1: a choice. I don't know that they would have a
Speaker 1: choice now whether the digital SDR or the digital dollar
Speaker 1: is backed by one who knows. But and then, of
Speaker 1: course I think what will happen. So in the short term,
Speaker 1: I think you all have this digital fiat that gives
Speaker 1: them total control. I think that blows up. They have
Speaker 1: to have something that's backed by gold. But I only
Speaker 1: think that last maybe ten twenty years, where everyone forgets
Speaker 1: what happened with the disaster of fiat currency and you
Speaker 1: have all the politicians or economists start claiming that, oh yeah,
Speaker 1: this this is our problem. Is this stupid gold standard.
Speaker 1: We've got to get off this gold standard. We could
Speaker 1: only have the ability and the control over the amount
Speaker 1: of currency in the system, then we could just solve
Speaker 1: all the problems and we could just print money, and
Speaker 1: everyone's going to forget about what happened ten fifteen years ago,
Speaker 1: just like everyone now or thirty days ago forgot what
Speaker 1: happened in the GFC. They totally forgot. Oh yeah, that
Speaker 1: was the market can never go down. You hear all
Speaker 1: these things, the narrative is exact or was exactly like
Speaker 1: it was back in two thousand eight, two thousand and seven.
Speaker 1: It's it's shocking that the recency bias of the notly
Speaker 1: the mainstream media, but the population at large, and that
Speaker 1: that they just have this kind of like a selective
Speaker 1: amnesia where if if it's it's a cognitive dissonance type
Speaker 1: of rationalizing, where if it makes them feel good about
Speaker 1: their four oh one k or whatever they have invested
Speaker 1: in the market, if that's going to give them more
Speaker 1: purchasing car in the future, then they just kind of
Speaker 1: tend to forget things that are inconvenient, or make up
Speaker 1: things or cherry picked data points to make it easier
Speaker 1: to sleep at night, knowing that the stock market always
Speaker 1: goes up, right, the dollar is always going to be
Speaker 1: the world reserve currency. Well, I don't think so, right man.
Speaker 1: So much more to talk about. I'd love to get
Speaker 1: into some more of like the bailouts and things like that.
Speaker 1: So many different angles we could go, but I know
Speaker 1: we're out of time, so so we'll go ahead and
Speaker 1: cut it off. But I appreciate you given the time
Speaker 1: it was. It was a great conversation, and uh, thank you.
Speaker 1: Yeah for sure. Let's I love the conversation. Let's definitely
Speaker 1: do it again soon. Okay, thanks