1 00:00:00,600 --> 00:00:03,720 Speaker 1: Hello, and welcome to another episode of The Mark Moss Show, 2 00:00:03,720 --> 00:00:06,760 Speaker 1: where of course we're always talking about the decentralized revolution, 3 00:00:06,880 --> 00:00:09,280 Speaker 1: which is of course as the world's breaking apart. 4 00:00:09,039 --> 00:00:11,800 Speaker 2: You know, going forward that centralized world. 5 00:00:11,640 --> 00:00:14,239 Speaker 1: That we've been swinging to, that pendulum swinging to, and 6 00:00:14,280 --> 00:00:17,640 Speaker 1: we're now moving back to a decentralized, multipolar world. 7 00:00:19,040 --> 00:00:21,200 Speaker 2: And you know, I like to talk about it from three. 8 00:00:21,160 --> 00:00:24,479 Speaker 1: Different revolutionary cycles, a two hundred and fifty two hundred 9 00:00:24,480 --> 00:00:27,800 Speaker 1: and fifty year political revolution cycle, an eighty year financial 10 00:00:27,840 --> 00:00:32,080 Speaker 1: revolution cycle, and of course a fifty year technological revolution cycle. 11 00:00:32,440 --> 00:00:34,919 Speaker 1: Now the interesting thing is people are always amazed when 12 00:00:34,920 --> 00:00:36,840 Speaker 1: I show them the charts that all three of those 13 00:00:36,880 --> 00:00:40,120 Speaker 1: are converging right now. But of course today we're going 14 00:00:40,159 --> 00:00:41,960 Speaker 1: to talk about just one. I want to talk about 15 00:00:42,000 --> 00:00:47,400 Speaker 1: the financial revolution cycle, eighty year financial revolution cycle. And 16 00:00:47,440 --> 00:00:51,800 Speaker 1: we're here witnessing something that we haven't seen for about 17 00:00:51,840 --> 00:00:54,760 Speaker 1: eighty years since the last time this was reset, and 18 00:00:54,800 --> 00:00:55,800 Speaker 1: so I want to break it down to you. I 19 00:00:55,840 --> 00:00:58,040 Speaker 1: want to under I want you to understand exactly what's 20 00:00:58,080 --> 00:01:03,160 Speaker 1: going on in the financial systems with inflation, federal debt, 21 00:01:03,400 --> 00:01:06,200 Speaker 1: and what the FED policy has been so far as 22 00:01:06,280 --> 00:01:08,760 Speaker 1: far as you know, on their warpath raising rates then 23 00:01:08,800 --> 00:01:11,639 Speaker 1: the fastest pace in history. 24 00:01:11,680 --> 00:01:12,280 Speaker 2: And then of. 25 00:01:12,160 --> 00:01:15,280 Speaker 1: Course we'll talk about the proverbial wall that they're hitting. 26 00:01:15,360 --> 00:01:18,880 Speaker 1: Now I've talked about this many many times, that they're 27 00:01:18,920 --> 00:01:21,000 Speaker 1: stuck between this you know, rock and a hard place, 28 00:01:21,040 --> 00:01:25,959 Speaker 1: so to speak. Unfortunately, there's probably well it's not really 29 00:01:26,000 --> 00:01:30,520 Speaker 1: a way out, but there's a most likely, most probable 30 00:01:30,560 --> 00:01:33,720 Speaker 1: situation that they'll probably try to pull. We know this, 31 00:01:34,920 --> 00:01:36,880 Speaker 1: we've seen in the past, and we know that all 32 00:01:37,000 --> 00:01:38,840 Speaker 1: nations at the end of the at the end of 33 00:01:38,880 --> 00:01:40,640 Speaker 1: the rope, end up doing this. So let's talk about 34 00:01:40,640 --> 00:01:42,600 Speaker 1: that a little bit. So of course, we know that 35 00:01:42,840 --> 00:01:45,880 Speaker 1: inflation has been sky high. Of course the Federal Reserve 36 00:01:45,920 --> 00:01:48,400 Speaker 1: that all central banks, they want inflation so they can 37 00:01:48,440 --> 00:01:51,160 Speaker 1: inflate away the debts, so they make the debt much 38 00:01:51,240 --> 00:01:51,920 Speaker 1: cheaper for them. 39 00:01:52,360 --> 00:01:55,880 Speaker 2: It's like if you, let's say, ten years. 40 00:01:55,720 --> 00:01:58,040 Speaker 1: Ago, you were the average salary you're making, you know, 41 00:01:58,080 --> 00:02:00,520 Speaker 1: fifteen bucks an hour, and you take a six hundred 42 00:02:00,520 --> 00:02:03,000 Speaker 1: dollars loan, and now here you are ten years later, 43 00:02:03,080 --> 00:02:05,320 Speaker 1: and your rate of pay has gone up to twenty 44 00:02:05,320 --> 00:02:07,960 Speaker 1: five dollars an hour, but the payment is still the same. 45 00:02:08,040 --> 00:02:09,920 Speaker 1: So of course you want to inflate it away. Well, 46 00:02:10,000 --> 00:02:12,880 Speaker 1: the central banks do, specifically the United States, when they 47 00:02:12,880 --> 00:02:16,040 Speaker 1: have thirty two trillion of it. However, for you and I, 48 00:02:16,200 --> 00:02:19,720 Speaker 1: it's not so good because as they create more money, 49 00:02:19,960 --> 00:02:22,440 Speaker 1: the value of that money, the purchasing power of that 50 00:02:22,480 --> 00:02:26,160 Speaker 1: money goes down. And so yes, prices go up, but 51 00:02:26,200 --> 00:02:28,919 Speaker 1: it's the value going down. And so you know, I 52 00:02:29,080 --> 00:02:31,600 Speaker 1: like to say that the two greatest tricks that the 53 00:02:31,639 --> 00:02:35,720 Speaker 1: Fed ever played on us was one telling us trickiness 54 00:02:35,760 --> 00:02:38,400 Speaker 1: that the money supply should always increase. A lot of 55 00:02:38,400 --> 00:02:40,120 Speaker 1: people think that's the way it should be. It has 56 00:02:40,200 --> 00:02:42,040 Speaker 1: to be that way. And the second trick is that 57 00:02:42,440 --> 00:02:45,960 Speaker 1: asset price is always going up is a good thing. Well, 58 00:02:47,760 --> 00:02:50,200 Speaker 1: it's a good thing for them, but is it really 59 00:02:50,240 --> 00:02:52,280 Speaker 1: a good thing for you? So what I typically ask 60 00:02:52,320 --> 00:02:54,600 Speaker 1: people if they'd say, well, money supply has to increase, 61 00:02:54,639 --> 00:02:57,120 Speaker 1: doesn't it. So when you increase the money supply, prices 62 00:02:57,160 --> 00:02:59,800 Speaker 1: go up or thereby your purchasing power the value of 63 00:03:00,160 --> 00:03:02,359 Speaker 1: have gone down. And I just asked them a simple question, 64 00:03:03,040 --> 00:03:06,600 Speaker 1: would you rather your money buy you more goods and 65 00:03:06,639 --> 00:03:10,040 Speaker 1: services in the future or less? Of course, the answers 66 00:03:10,639 --> 00:03:12,480 Speaker 1: there's always more. Of course, we wanted to buy us more. 67 00:03:12,480 --> 00:03:14,400 Speaker 1: We want our quality of life to be getting better 68 00:03:14,480 --> 00:03:16,440 Speaker 1: and better and better and better. We want to be 69 00:03:16,480 --> 00:03:19,760 Speaker 1: working less and enjoying more. The problem is that our 70 00:03:19,760 --> 00:03:22,440 Speaker 1: money continues to buy us less, so the opposite is true. 71 00:03:22,480 --> 00:03:24,840 Speaker 1: We have to work more and more and more just 72 00:03:24,919 --> 00:03:27,160 Speaker 1: to try to maintain our quality of living or else 73 00:03:27,200 --> 00:03:29,920 Speaker 1: even potentially lose our quality of living at the same time. 74 00:03:30,160 --> 00:03:32,000 Speaker 1: So that kind of frames it up. But the problem 75 00:03:32,080 --> 00:03:34,960 Speaker 1: is is that the FED only wants two percent inflation, 76 00:03:35,120 --> 00:03:36,840 Speaker 1: but they overshot their target. We got up to nine 77 00:03:36,880 --> 00:03:39,040 Speaker 1: point one percent, and the Fed looked pretty bad. They 78 00:03:39,040 --> 00:03:40,280 Speaker 1: had to do something about it if they wanted to 79 00:03:40,280 --> 00:03:42,440 Speaker 1: get back down to two percent, and so they've been 80 00:03:42,560 --> 00:03:44,920 Speaker 1: on the war path, raising rates at the fastest rate 81 00:03:45,000 --> 00:03:49,040 Speaker 1: in history, trying to get that back under wraps. The 82 00:03:49,160 --> 00:03:53,320 Speaker 1: problem is that there's really a couple different ways, two 83 00:03:53,440 --> 00:03:56,160 Speaker 1: main ways that you can get price inflation consumer price 84 00:03:56,160 --> 00:03:59,360 Speaker 1: inflation in an economy, and it usually comes from one 85 00:03:59,440 --> 00:04:03,160 Speaker 1: or the other, usually a combination of either one money 86 00:04:03,160 --> 00:04:07,800 Speaker 1: supply growth, and two significant changes in productivity and or 87 00:04:07,920 --> 00:04:12,160 Speaker 1: resource abundant. So basically supply and demand, that's what it 88 00:04:12,200 --> 00:04:16,359 Speaker 1: always comes down to. When there's more demand. So a 89 00:04:16,400 --> 00:04:19,160 Speaker 1: lot more money in the system creates more demand chasing 90 00:04:19,240 --> 00:04:22,600 Speaker 1: the same you know, set of supplies or less supplies, 91 00:04:23,080 --> 00:04:25,440 Speaker 1: then the price goes up. Now, the problem is that 92 00:04:25,440 --> 00:04:27,600 Speaker 1: the Fed wants inflation to come down, but they really 93 00:04:27,640 --> 00:04:30,760 Speaker 1: can't do much about the supply side of the situation, 94 00:04:30,920 --> 00:04:34,040 Speaker 1: so instead they work on the demand side. If they 95 00:04:34,040 --> 00:04:35,680 Speaker 1: can try to make you and I more poor, we 96 00:04:35,720 --> 00:04:39,120 Speaker 1: can you know, the bring our stock assets down, all 97 00:04:39,120 --> 00:04:42,720 Speaker 1: our assets down, you know. Unfortunately, they want to increase unemployment. 98 00:04:42,800 --> 00:04:43,919 Speaker 1: Two million people would. 99 00:04:43,720 --> 00:04:44,480 Speaker 2: Lose their jobs. 100 00:04:44,839 --> 00:04:47,440 Speaker 1: If they could do that. Gas is expensive, stakes expensive, 101 00:04:47,440 --> 00:04:49,400 Speaker 1: then maybe we don't spend as much. If we don't 102 00:04:49,400 --> 00:04:53,599 Speaker 1: spend as much, then potentially it comes back down. The 103 00:04:53,720 --> 00:04:57,200 Speaker 1: problem is, though, they're working on the wrong side of 104 00:04:57,200 --> 00:05:00,560 Speaker 1: the equation because it's been mostly a supply of course, 105 00:05:00,600 --> 00:05:03,479 Speaker 1: we've had supply chains breaking down since the pandemic, the 106 00:05:03,480 --> 00:05:06,400 Speaker 1: war with Russia and Ukraine messing things up. But at 107 00:05:06,440 --> 00:05:09,520 Speaker 1: the same time they have brought down some of that 108 00:05:09,600 --> 00:05:12,240 Speaker 1: consumer demand a little bit a little bit. But the 109 00:05:12,240 --> 00:05:15,080 Speaker 1: problems they're working on the wrong side, as I said, 110 00:05:15,320 --> 00:05:19,880 Speaker 1: because it's not the consumer that's the one spending, it's 111 00:05:19,920 --> 00:05:20,880 Speaker 1: the fiscal spending. 112 00:05:20,920 --> 00:05:21,640 Speaker 2: That's the problem. 113 00:05:22,160 --> 00:05:26,440 Speaker 1: The US federal government was spending roughly four trillion dollars 114 00:05:26,480 --> 00:05:31,440 Speaker 1: per year into the economy before the pandemic. Going into 115 00:05:31,480 --> 00:05:35,640 Speaker 1: the pandemic, they increase the spending by about fifty percent, 116 00:05:35,720 --> 00:05:40,000 Speaker 1: up to six trillion dollars per year, and they're still spending. 117 00:05:40,920 --> 00:05:43,080 Speaker 1: So while the Fed is doing its best to bring 118 00:05:43,120 --> 00:05:46,440 Speaker 1: down your spending, you're an eye spending. They haven't done 119 00:05:46,560 --> 00:05:49,040 Speaker 1: a whole lot for the fiscal policy. 120 00:05:49,800 --> 00:05:50,719 Speaker 2: But before we get. 121 00:05:50,600 --> 00:05:52,120 Speaker 1: Into all that, I want to kind of give you 122 00:05:52,600 --> 00:05:53,919 Speaker 1: a little bit of an illustration. 123 00:05:54,040 --> 00:05:56,000 Speaker 2: Let's take a look at some ways that we can 124 00:05:56,040 --> 00:05:58,120 Speaker 2: look at this. So I always like to. 125 00:05:58,080 --> 00:06:01,360 Speaker 1: Say this little controversial kind of piece just to get 126 00:06:01,360 --> 00:06:05,279 Speaker 1: people's attention, and that is that none of us want money. 127 00:06:05,320 --> 00:06:06,680 Speaker 1: And of course you say, what do you mean, of 128 00:06:06,720 --> 00:06:08,400 Speaker 1: course we want money, Well, we don't really want money. 129 00:06:08,400 --> 00:06:11,040 Speaker 1: We want the goods and services that money buys us. 130 00:06:11,279 --> 00:06:13,400 Speaker 1: And so we have to think about money. Obviously it's 131 00:06:13,400 --> 00:06:15,560 Speaker 1: just a medium exchange, and so it's really the other 132 00:06:15,600 --> 00:06:17,039 Speaker 1: things that we want. And the problem is if we 133 00:06:17,080 --> 00:06:19,680 Speaker 1: always price those things in dollars, the price of your 134 00:06:19,680 --> 00:06:22,440 Speaker 1: house and dollars, the price of oil and dollars, then 135 00:06:22,480 --> 00:06:24,880 Speaker 1: we have a very distorted number. And so we want 136 00:06:24,920 --> 00:06:29,359 Speaker 1: to look at gold and oil dollars and oil dollars 137 00:06:29,400 --> 00:06:31,000 Speaker 1: in gold and look at all of those and how 138 00:06:31,040 --> 00:06:34,360 Speaker 1: they work together and move between themselves. And so if 139 00:06:34,400 --> 00:06:36,240 Speaker 1: we take the dollars out of the equation and then 140 00:06:36,240 --> 00:06:39,320 Speaker 1: we compare a price of oil in gold, or we 141 00:06:39,360 --> 00:06:41,480 Speaker 1: look at them both in gold and dollars, we can 142 00:06:41,520 --> 00:06:44,920 Speaker 1: see that since about nineteen thirteen, when you look at 143 00:06:45,400 --> 00:06:47,920 Speaker 1: a gold for a barrel of oil, zero point two 144 00:06:47,920 --> 00:06:50,520 Speaker 1: ounces of gold for a barrel of oil to up 145 00:06:50,560 --> 00:06:53,520 Speaker 1: to zero point one four ounces of gold for a 146 00:06:53,560 --> 00:06:57,360 Speaker 1: barrel of oil. And so they fluctuated from nineteen thirteen 147 00:06:57,520 --> 00:07:01,040 Speaker 1: until now in that period very tight. I mean, they 148 00:07:01,520 --> 00:07:06,719 Speaker 1: jacked up right around you know, nineteen fourteen fifteen, but 149 00:07:06,839 --> 00:07:10,760 Speaker 1: since then they've stayed somewhat pretty relatively stable. But if 150 00:07:10,800 --> 00:07:13,800 Speaker 1: you look at that same chart in oil, the average 151 00:07:13,800 --> 00:07:17,720 Speaker 1: oil price per year, where of course they've measured in USD. 152 00:07:17,840 --> 00:07:19,920 Speaker 1: Of course, as they've been continue to increase the USD, 153 00:07:20,240 --> 00:07:22,320 Speaker 1: the price has shot up, and if you could see 154 00:07:22,360 --> 00:07:24,600 Speaker 1: the chart, it looks like a hockey stick. Of course, 155 00:07:24,640 --> 00:07:27,840 Speaker 1: starting right there in nineteen seventy three, and it has 156 00:07:27,920 --> 00:07:29,080 Speaker 1: just been going up ever since. 157 00:07:29,280 --> 00:07:29,800 Speaker 2: As a matter of. 158 00:07:29,800 --> 00:07:32,520 Speaker 1: Fact, you know, the reason why this is such a 159 00:07:32,520 --> 00:07:35,880 Speaker 1: big deal is because gold has a very low inflation rate. 160 00:07:36,520 --> 00:07:38,640 Speaker 1: All the gold in existence is still here and it 161 00:07:38,680 --> 00:07:42,040 Speaker 1: goes up by about one point five percent per year. 162 00:07:42,880 --> 00:07:45,320 Speaker 1: But on dollars, on the other hand, have been going 163 00:07:45,400 --> 00:07:49,040 Speaker 1: up for much much faster. And so with that context 164 00:07:49,040 --> 00:07:52,200 Speaker 1: you can understand how the financial system works, and of 165 00:07:52,200 --> 00:07:56,120 Speaker 1: course you now understand why central banks want the inflation 166 00:07:56,200 --> 00:07:58,480 Speaker 1: to rayge on so they can make that debt cheaper 167 00:07:58,520 --> 00:08:02,480 Speaker 1: and cheaper and cheaper. The problem, of course, is that 168 00:08:02,720 --> 00:08:05,600 Speaker 1: central banks, like I said, can only offset a bit 169 00:08:05,960 --> 00:08:08,680 Speaker 1: of the causes of inflation. And the problem that we 170 00:08:08,760 --> 00:08:13,200 Speaker 1: have here is that because it's really the fiscal deficits 171 00:08:13,240 --> 00:08:16,480 Speaker 1: that are causing this, they're spending that money right into 172 00:08:16,520 --> 00:08:19,559 Speaker 1: the economy, and as the Fed has raised rates, they've 173 00:08:19,600 --> 00:08:21,760 Speaker 1: made us all poor and poor and poorer. But the 174 00:08:21,800 --> 00:08:24,520 Speaker 1: other problem is that that means you and I don't 175 00:08:24,520 --> 00:08:27,280 Speaker 1: pay as much taxes. There's not as many capital gains taxes, 176 00:08:27,880 --> 00:08:29,800 Speaker 1: and just unemployment has gone up, there's not as much 177 00:08:29,840 --> 00:08:32,720 Speaker 1: taxes overall, and that's just made the situation even worse. 178 00:08:32,800 --> 00:08:35,959 Speaker 1: Because the federal government didn't have enough money at as 179 00:08:36,000 --> 00:08:40,640 Speaker 1: it is now, taxes went down, and now by the 180 00:08:40,720 --> 00:08:43,760 Speaker 1: raids going up so fast, the amount of interest they 181 00:08:43,760 --> 00:08:47,040 Speaker 1: have to pay on the debt is now only making 182 00:08:47,080 --> 00:08:49,559 Speaker 1: the deficit that much worse. Hey, if you're just tuning in, 183 00:08:49,600 --> 00:08:51,440 Speaker 1: you're listening to the Mark Maus Show. We're talking about 184 00:08:51,480 --> 00:08:54,240 Speaker 1: the situation. The FEDS found themselves in the proverbial rock 185 00:08:54,280 --> 00:08:57,000 Speaker 1: and a hard place, sort. 186 00:08:56,840 --> 00:08:58,520 Speaker 2: Of damned if they do, damned if they don't. I'm 187 00:08:58,520 --> 00:08:59,839 Speaker 2: going to set this up a little bit more. 188 00:09:00,000 --> 00:09:02,920 Speaker 1: You can understand exactly what's going on, you'll know how 189 00:09:02,920 --> 00:09:05,720 Speaker 1: to position yourself, and you'll find out. Unfortunately, it looks 190 00:09:05,760 --> 00:09:09,560 Speaker 1: like the most likely outcome. It's not that good, but 191 00:09:09,600 --> 00:09:11,240 Speaker 1: we can be prepared for it. We're gonna get you 192 00:09:11,280 --> 00:09:12,520 Speaker 1: ready for that. I got to take a very quick 193 00:09:12,559 --> 00:09:12,960 Speaker 1: break though. 194 00:09:13,040 --> 00:09:14,920 Speaker 2: I'm going to take a minute. I'll be right back. 195 00:09:15,040 --> 00:09:17,920 Speaker 1: Don't go away, all right, Welcome back. If you're just 196 00:09:17,920 --> 00:09:19,839 Speaker 1: tuning in, you're listening to the Mark Maus Show. Of course, 197 00:09:19,840 --> 00:09:23,520 Speaker 1: we're always talking about the decentralized revolution, talking about the 198 00:09:23,559 --> 00:09:25,920 Speaker 1: way this world is changing, and today we're looking at 199 00:09:25,960 --> 00:09:29,319 Speaker 1: one of the three revolutionary cycles, the eighty year Financial 200 00:09:29,400 --> 00:09:32,320 Speaker 1: revolution cycle, and we're talking about how the FED is 201 00:09:32,679 --> 00:09:34,959 Speaker 1: sort of damned if they do, damned if they don't. 202 00:09:35,559 --> 00:09:38,280 Speaker 1: They're trying to bring inflation back down with the kind 203 00:09:38,280 --> 00:09:40,280 Speaker 1: of the only tool they have. The problem is that 204 00:09:40,320 --> 00:09:43,000 Speaker 1: it's not really fixing it because it's not the right 205 00:09:43,120 --> 00:09:45,959 Speaker 1: tool for the right job. You hear a lot about 206 00:09:46,679 --> 00:09:49,160 Speaker 1: how inflation was in the seventies, and you'll hear reference 207 00:09:49,240 --> 00:09:52,920 Speaker 1: to Paul Volker, who raised raids so fast he crushed 208 00:09:52,920 --> 00:09:55,600 Speaker 1: inflation right, And you might hear that Jerme Powell. The 209 00:09:55,600 --> 00:09:57,840 Speaker 1: current of the FED Reserve doesn't want to be compared 210 00:09:57,880 --> 00:10:01,120 Speaker 1: to Arthur Burns. And so Arthur Burns was raising the 211 00:10:01,200 --> 00:10:03,959 Speaker 1: rates and just when he thought he got out of control, 212 00:10:04,000 --> 00:10:06,320 Speaker 1: he lowered the back down. Of course, then inflation raged on. 213 00:10:06,679 --> 00:10:09,000 Speaker 1: He looked bad. But Vulcar he came in and he 214 00:10:09,040 --> 00:10:12,160 Speaker 1: did it right. But the problem is is that it's 215 00:10:12,160 --> 00:10:14,560 Speaker 1: an eighty year financial revolution cycle, and so you have 216 00:10:14,600 --> 00:10:16,440 Speaker 1: to look back a little bit further, and it seems 217 00:10:16,440 --> 00:10:19,400 Speaker 1: like the most comparable part of history is really in 218 00:10:19,440 --> 00:10:22,240 Speaker 1: the nineteen forties. Now I'm getting a lot of this research. 219 00:10:22,520 --> 00:10:25,160 Speaker 1: Lynn Alden has been amazing. She's got a couple charts 220 00:10:25,200 --> 00:10:27,679 Speaker 1: that really show how this works out. 221 00:10:27,720 --> 00:10:31,280 Speaker 2: That's really helpful. But she talks about how. 222 00:10:31,120 --> 00:10:34,160 Speaker 1: The nineteen forties and the nineteen twenties are very similar 223 00:10:34,440 --> 00:10:37,160 Speaker 1: because most of the money supply growth was again from 224 00:10:37,200 --> 00:10:39,520 Speaker 1: the fiscal deficits, right from the government'spin in it, and 225 00:10:39,600 --> 00:10:42,960 Speaker 1: mostly both nineteen forty and twenty twenty related to the 226 00:10:43,000 --> 00:10:47,560 Speaker 1: war and of course twenty twenty pandemic stimulus. Now, in 227 00:10:47,600 --> 00:10:50,200 Speaker 1: the nineteen seventies, most of the money growth was from 228 00:10:50,280 --> 00:10:54,120 Speaker 1: the bank lending, and that was mostly related to demographics. 229 00:10:54,559 --> 00:10:59,240 Speaker 1: And so because the seventies inflation was related to bank lending, well, 230 00:10:59,440 --> 00:11:01,600 Speaker 1: then he raised the rates. People don't borrow, no big deal. 231 00:11:01,720 --> 00:11:04,280 Speaker 1: So that's what happened in the seventies. However, the nineteen 232 00:11:04,320 --> 00:11:07,679 Speaker 1: forties it was different. It was government spending, which was 233 00:11:07,880 --> 00:11:12,079 Speaker 1: the case on that. Now, if Jerome Powell wants to 234 00:11:12,080 --> 00:11:16,120 Speaker 1: treat it like the twenty twenties, then we're probably gonna 235 00:11:16,160 --> 00:11:17,080 Speaker 1: see him fail. 236 00:11:17,160 --> 00:11:17,680 Speaker 2: He's sharply. 237 00:11:17,880 --> 00:11:19,560 Speaker 1: You know, he's been raising rates to try to stop 238 00:11:19,559 --> 00:11:24,400 Speaker 1: that bank lending. But the bank lending isn't the problem. 239 00:11:24,760 --> 00:11:28,080 Speaker 1: Raising or lowering interest rates, changing the price of money 240 00:11:28,080 --> 00:11:32,679 Speaker 1: can only affect money creation and price inflation. But only 241 00:11:33,080 --> 00:11:35,920 Speaker 1: in indirect ways. Now, some people assume that high interest 242 00:11:36,000 --> 00:11:40,520 Speaker 1: rates are necessary, you know, secure price inflation, but that's 243 00:11:40,600 --> 00:11:44,679 Speaker 1: not historically the case. In some context, it's neither necessary 244 00:11:44,840 --> 00:11:48,400 Speaker 1: nor even sufficient, because again, they're just one tool. It's 245 00:11:48,400 --> 00:11:50,280 Speaker 1: sort of like when you hear like the Fed's going 246 00:11:50,360 --> 00:11:53,200 Speaker 1: to have a soft landing, you would imagine like they're 247 00:11:53,280 --> 00:11:56,120 Speaker 1: like a like a like a jet, you know, with 248 00:11:56,280 --> 00:11:58,440 Speaker 1: all the gauges and switches and knobs in there, and 249 00:11:58,679 --> 00:12:01,760 Speaker 1: they can finally too, you know, how this thing is flying. 250 00:12:01,760 --> 00:12:03,560 Speaker 2: But the reality is it's like a hot air balloon. 251 00:12:04,080 --> 00:12:04,840 Speaker 2: They have one lever. 252 00:12:05,679 --> 00:12:08,040 Speaker 1: They can pull the lever and let the hot air out, 253 00:12:08,480 --> 00:12:11,400 Speaker 1: inflation up, and they can close it inflation down. That's 254 00:12:11,440 --> 00:12:14,880 Speaker 1: really all they have. Inflation up, inflation down. And so 255 00:12:15,200 --> 00:12:18,520 Speaker 1: they are trying to fight this with the wrong tools, 256 00:12:18,640 --> 00:12:20,920 Speaker 1: which of course is never going to work. The nineteen 257 00:12:21,000 --> 00:12:24,160 Speaker 1: forties inflation, both in the US and even some more, 258 00:12:24,320 --> 00:12:27,560 Speaker 1: you know, all across the world really globally, was again 259 00:12:27,800 --> 00:12:31,040 Speaker 1: it was all about to monetize fiscal spending on the war. 260 00:12:31,320 --> 00:12:35,040 Speaker 1: And when the war stopped, the fiscal deficit spending stopped, 261 00:12:35,640 --> 00:12:38,720 Speaker 1: the rapid money creation stopped, and then of course, yes 262 00:12:39,080 --> 00:12:42,960 Speaker 1: inflation stopped. As the war ended, the global supply chain 263 00:12:43,000 --> 00:12:45,000 Speaker 1: started to improve, and then productivity return. 264 00:12:45,080 --> 00:12:46,720 Speaker 2: So you had two things. 265 00:12:46,760 --> 00:12:49,200 Speaker 1: One, you had all that money that stopped being spent 266 00:12:49,280 --> 00:12:53,000 Speaker 1: into the economy, and at the same time you improved productivity, 267 00:12:53,040 --> 00:12:57,480 Speaker 1: you lowered demand and increased supply. Guess what happens you 268 00:12:57,520 --> 00:13:01,880 Speaker 1: bring down prices. Imagine that. But if we look at 269 00:13:01,920 --> 00:13:05,040 Speaker 1: other examples, we can see where things have really gotten 270 00:13:05,120 --> 00:13:08,679 Speaker 1: away from this, like Turkey. For example, Turkey has eighty 271 00:13:08,720 --> 00:13:11,600 Speaker 1: percent year over year inflation, well at least at the peak, 272 00:13:12,360 --> 00:13:16,040 Speaker 1: and their interest rates were between eight percent and eighteen percent, 273 00:13:16,120 --> 00:13:19,440 Speaker 1: so obviously way below the eighty percent, and then of 274 00:13:19,440 --> 00:13:22,840 Speaker 1: course consumer level interest rates were you know, they're higher 275 00:13:22,880 --> 00:13:25,640 Speaker 1: than that, but it's a massive amount of inflation relative 276 00:13:25,720 --> 00:13:28,840 Speaker 1: to the interest rates, and so when that happens, it 277 00:13:28,920 --> 00:13:33,160 Speaker 1: creates a very strong market incentive for people to borrow 278 00:13:33,640 --> 00:13:36,160 Speaker 1: against that currency. So, for example, just to kind of 279 00:13:36,200 --> 00:13:38,720 Speaker 1: lay this out, the Turkish lera, that's what we're talking about. 280 00:13:38,720 --> 00:13:42,880 Speaker 1: It's gone down eighty percent, It's gone down about ninety 281 00:13:42,920 --> 00:13:45,400 Speaker 1: five percent to the US dollar like over the last 282 00:13:45,440 --> 00:13:48,520 Speaker 1: five years. So if you were in Turkey and using 283 00:13:48,559 --> 00:13:50,319 Speaker 1: Turkish lira and you knew that it was going to 284 00:13:50,360 --> 00:13:51,920 Speaker 1: go down to time machine and go back in time 285 00:13:51,920 --> 00:13:52,400 Speaker 1: five years. 286 00:13:52,400 --> 00:13:53,360 Speaker 2: What should you have done. 287 00:13:54,960 --> 00:13:57,880 Speaker 1: You should have gotten out of Turkish lera. You should 288 00:13:57,880 --> 00:14:00,959 Speaker 1: have exchanged as much as you could of it four dollars. 289 00:14:01,160 --> 00:14:03,319 Speaker 2: That would have been good. What would have been better? 290 00:14:03,920 --> 00:14:06,240 Speaker 1: What would have been better would be to borrow as 291 00:14:06,360 --> 00:14:09,040 Speaker 1: much as you could in Turkish lira and then use 292 00:14:09,080 --> 00:14:12,600 Speaker 1: it to buy US dollars, gold stocks, real estate, bitcoin, art, 293 00:14:12,720 --> 00:14:16,680 Speaker 1: anything wine, anything that'd be expected to have a better 294 00:14:17,800 --> 00:14:21,000 Speaker 1: return than the lira, which is almost anything. And by 295 00:14:21,040 --> 00:14:24,320 Speaker 1: borrowing lira they could create more lira because remember we're 296 00:14:24,320 --> 00:14:27,040 Speaker 1: in a debt based system, so you borrow it into existence. 297 00:14:29,200 --> 00:14:30,880 Speaker 1: And even if they don't, you know, or they can't 298 00:14:30,920 --> 00:14:33,320 Speaker 1: borrow it, they could simply refuse to hold it, which 299 00:14:33,400 --> 00:14:36,360 Speaker 1: also contributes to the collapse of the currency. 300 00:14:36,440 --> 00:14:37,680 Speaker 2: So this is a big problem. 301 00:14:37,680 --> 00:14:41,160 Speaker 1: It's what known as like a speculative attack, where you 302 00:14:41,200 --> 00:14:44,600 Speaker 1: can borrow the currency, you can sell against it. Basically 303 00:14:44,640 --> 00:14:50,080 Speaker 1: nobody wants to hold it, so in these types of situations, historically, 304 00:14:50,160 --> 00:14:52,520 Speaker 1: raising interest rates above the inflation rate is a key 305 00:14:52,600 --> 00:14:55,440 Speaker 1: method to try to slow down the bank lending right, 306 00:14:55,680 --> 00:14:57,960 Speaker 1: and then they would hope to slow down the broad 307 00:14:58,080 --> 00:15:02,320 Speaker 1: money supply, and it works. It works good when that's 308 00:15:02,320 --> 00:15:05,880 Speaker 1: the problem bank lendings. The problem, however, the problem is 309 00:15:06,000 --> 00:15:09,480 Speaker 1: when that's not the problem, it's not going to work. Now, 310 00:15:09,600 --> 00:15:12,680 Speaker 1: if inflation is caused by the runaway fiscal debts, which 311 00:15:12,680 --> 00:15:15,000 Speaker 1: is what we're talking about here, then of course high 312 00:15:15,040 --> 00:15:18,440 Speaker 1: interest rates they're not going to matter because the central bank, 313 00:15:18,880 --> 00:15:21,200 Speaker 1: the government's going to spend the money regardless, they don't 314 00:15:21,200 --> 00:15:23,800 Speaker 1: really care what it is they're borrowing the money anyway, 315 00:15:24,320 --> 00:15:27,920 Speaker 1: forces the commercial banks and the central banks to finance 316 00:15:27,960 --> 00:15:32,520 Speaker 1: the government's runaway fiscal deficits. Now, first when they raise rates, 317 00:15:32,560 --> 00:15:34,960 Speaker 1: you might see a little bit of an effect, which 318 00:15:35,000 --> 00:15:37,200 Speaker 1: we did slowed the economy down a little bit, but 319 00:15:37,360 --> 00:15:40,560 Speaker 1: over time, raising interest rates and then keeping them high 320 00:15:40,640 --> 00:15:44,000 Speaker 1: in an environment where there's runaway government deficits and high 321 00:15:44,000 --> 00:15:48,280 Speaker 1: government debts, where they're causing inflation, then it runs the 322 00:15:48,360 --> 00:15:52,680 Speaker 1: risk of making the inflation even worse. High interest rates 323 00:15:52,680 --> 00:15:55,320 Speaker 1: on large amounts of government debt, especially when they get 324 00:15:55,360 --> 00:15:58,200 Speaker 1: over ninety percent jet to GDP, which now we're up 325 00:15:58,240 --> 00:16:00,840 Speaker 1: to about one to twenty five, it's always going to 326 00:16:00,920 --> 00:16:04,760 Speaker 1: result in even bigger runaway debts because now they're dealing 327 00:16:04,760 --> 00:16:07,200 Speaker 1: with a ballooning interest payments on the debt, and of 328 00:16:07,200 --> 00:16:11,720 Speaker 1: course this ironically pushes even more money into the economy. Surprise, surprise. 329 00:16:13,040 --> 00:16:14,880 Speaker 1: So if the FED, like if we went back to 330 00:16:14,960 --> 00:16:17,080 Speaker 1: nineteen forty, if the FED would have raised rates really 331 00:16:17,080 --> 00:16:20,680 Speaker 1: sharply in the nineteen forties war, it wouldn't have reduced inflation. 332 00:16:20,800 --> 00:16:23,680 Speaker 1: It could have easily made it much worse, because of 333 00:16:23,720 --> 00:16:26,680 Speaker 1: course the FED and the banking system we're stuck monetizing 334 00:16:26,680 --> 00:16:28,560 Speaker 1: the fiscal deficits anyway. 335 00:16:28,600 --> 00:16:30,040 Speaker 2: But I get it. 336 00:16:30,040 --> 00:16:33,160 Speaker 1: It's kind of hard to understand, isn't it. But let's 337 00:16:33,240 --> 00:16:35,640 Speaker 1: just say, damned if they do, damned if they don't. 338 00:16:36,760 --> 00:16:39,640 Speaker 2: If they continue to leave. 339 00:16:39,560 --> 00:16:42,400 Speaker 1: Rates low, then people continue to borrow money and will 340 00:16:42,400 --> 00:16:45,840 Speaker 1: continue to push inflation. If they raise rates high, people 341 00:16:45,840 --> 00:16:49,560 Speaker 1: won't borrow the money, but the government will, especially considering 342 00:16:49,600 --> 00:16:52,720 Speaker 1: their tax receipts will drop and the interest on their 343 00:16:52,720 --> 00:16:55,520 Speaker 1: debt will be going up at the same time. So 344 00:16:55,960 --> 00:16:59,720 Speaker 1: what can the FED do? Unfortunately, there's nothing they can 345 00:16:59,720 --> 00:17:01,480 Speaker 1: do to fix it at this point. Put there is 346 00:17:01,480 --> 00:17:05,119 Speaker 1: something they can do to continue the game. And this 347 00:17:05,200 --> 00:17:07,000 Speaker 1: is like I said earlier at the intro, this is 348 00:17:07,000 --> 00:17:09,520 Speaker 1: what every nation has tried to do from the beginning 349 00:17:09,520 --> 00:17:12,320 Speaker 1: of time. It's the final stages. I'm going to talk 350 00:17:12,359 --> 00:17:13,959 Speaker 1: about that in just a minute, but I gotta take 351 00:17:13,960 --> 00:17:15,600 Speaker 1: a quick break. If you're just tuning in, you're listening 352 00:17:15,600 --> 00:17:17,200 Speaker 1: to the Mark mass Show. Of course, we're always talking 353 00:17:17,200 --> 00:17:18,959 Speaker 1: about the decentralized revolution. 354 00:17:19,080 --> 00:17:19,960 Speaker 2: We are talking about. 355 00:17:19,800 --> 00:17:23,640 Speaker 1: Here the financial revolution cycle, the eighty year of financial 356 00:17:23,680 --> 00:17:26,320 Speaker 1: revolution cycle, and how the FED is in the proverbial 357 00:17:26,400 --> 00:17:28,800 Speaker 1: rock in a hard place with nowhere to go. I'm 358 00:17:28,800 --> 00:17:30,600 Speaker 1: going to come back and we're going to talk about 359 00:17:30,760 --> 00:17:33,520 Speaker 1: the endgame and this third scary solution. 360 00:17:33,600 --> 00:17:35,320 Speaker 2: But I'm gonna take a quick break. Don't go away. 361 00:17:35,440 --> 00:17:39,560 Speaker 2: I'll be right back. Hey, welcome back. 362 00:17:39,640 --> 00:17:41,640 Speaker 1: If you're just tune in, you're listening to the Mark 363 00:17:41,720 --> 00:17:44,320 Speaker 1: Moss Show. Of course, we're always talking about the decentralized revolution, 364 00:17:44,680 --> 00:17:47,760 Speaker 1: and I always talk about three revolutionary cycles. Today we're 365 00:17:47,800 --> 00:17:51,399 Speaker 1: talking about one of those, which is the financial revolution cycle, 366 00:17:51,720 --> 00:17:53,520 Speaker 1: and how that is happening right now. Of course, we're 367 00:17:53,520 --> 00:17:55,600 Speaker 1: talking about how the FEDS back is against the wall, 368 00:17:55,800 --> 00:17:58,399 Speaker 1: and we're talking about specifically how they've been raising rates 369 00:17:58,680 --> 00:18:01,320 Speaker 1: to try to bring inflation down. And I was saying 370 00:18:01,359 --> 00:18:04,439 Speaker 1: how most people think about the seventies inflation and the 371 00:18:04,480 --> 00:18:07,520 Speaker 1: Paul Volker and the Arthur Burns and how that's wrong, 372 00:18:07,560 --> 00:18:09,359 Speaker 1: and really you need to look at the forties for 373 00:18:09,440 --> 00:18:11,119 Speaker 1: better inflation to understand it. 374 00:18:11,119 --> 00:18:13,280 Speaker 2: Because what the Fed is doing, they're. 375 00:18:13,080 --> 00:18:16,240 Speaker 1: Trying to attack the wrong thing. They're trying to make 376 00:18:16,359 --> 00:18:19,359 Speaker 1: you and I retail spending go down. But the problem 377 00:18:19,400 --> 00:18:21,840 Speaker 1: is it's the governments that are spending the spending the money. 378 00:18:21,960 --> 00:18:25,040 Speaker 1: And the problem is is that the more they raise rates, 379 00:18:25,400 --> 00:18:27,320 Speaker 1: the worse it gets for the government, and the more 380 00:18:27,400 --> 00:18:31,320 Speaker 1: money they spend. It's deficit spending. That's what we're talking about. 381 00:18:31,320 --> 00:18:33,960 Speaker 1: And like you and I, when we go broke, we 382 00:18:34,000 --> 00:18:38,520 Speaker 1: stop spending money. The government doesn't. The government doesn't. The 383 00:18:38,520 --> 00:18:43,040 Speaker 1: government just runs bigger deficits. That's what they do. And 384 00:18:43,080 --> 00:18:47,320 Speaker 1: so when inflation is caused by runaway fiscal deficits government deficits, 385 00:18:47,640 --> 00:18:49,600 Speaker 1: then high interest rates won't stop it. 386 00:18:49,600 --> 00:18:50,680 Speaker 2: They won't do much to do it. 387 00:18:50,880 --> 00:18:52,480 Speaker 1: And basically what it does is because like I said, 388 00:18:52,480 --> 00:18:55,000 Speaker 1: it forces the governments to just finance it. It forces 389 00:18:55,040 --> 00:18:58,040 Speaker 1: the governments to borrow even more money. But the problem 390 00:18:58,160 --> 00:18:59,760 Speaker 1: is is, like I said, is that as the FED 391 00:18:59,800 --> 00:19:03,520 Speaker 1: is rates and then the government's borrowing more money, the 392 00:19:03,560 --> 00:19:06,360 Speaker 1: cost of that borrowing goes up. But it also does 393 00:19:06,400 --> 00:19:10,239 Speaker 1: something else that's really bad. What it also does is, 394 00:19:10,920 --> 00:19:14,560 Speaker 1: as they're trying to bring you and I are spending down, 395 00:19:14,560 --> 00:19:17,840 Speaker 1: consumer spending down, they're making us broke. So our houses 396 00:19:17,840 --> 00:19:19,800 Speaker 1: aren't worth as much, our stocks aren't worth as much. 397 00:19:19,800 --> 00:19:22,160 Speaker 1: We're not buying and selling as much stuff, but we're 398 00:19:22,200 --> 00:19:24,639 Speaker 1: not making as much money. And what that does is 399 00:19:24,680 --> 00:19:27,760 Speaker 1: then we don't pay as much taxes, So it's a 400 00:19:27,800 --> 00:19:30,280 Speaker 1: double whamming for the government. One they don't get near 401 00:19:30,280 --> 00:19:33,639 Speaker 1: as much revenue, so that makes a bigger deficit. And two, 402 00:19:33,800 --> 00:19:35,480 Speaker 1: the interest on the debt went up, so. 403 00:19:35,400 --> 00:19:36,439 Speaker 2: That makes a bigger deficits. 404 00:19:36,440 --> 00:19:39,160 Speaker 1: So now the deficit is going up two times. It's 405 00:19:39,200 --> 00:19:41,879 Speaker 1: like a really, really, really bad situation for the government, 406 00:19:41,880 --> 00:19:45,399 Speaker 1: which is why all of this just makes the problem 407 00:19:45,640 --> 00:19:50,200 Speaker 1: even worse. We can see that over time, raising interest 408 00:19:50,280 --> 00:19:53,240 Speaker 1: rates and keeping them high in an environment like we're 409 00:19:53,240 --> 00:19:55,760 Speaker 1: in now with runaway government deficits and high government debts 410 00:19:56,119 --> 00:19:59,760 Speaker 1: are causing inflations and they just make it worse. 411 00:20:00,080 --> 00:20:00,440 Speaker 2: All right. 412 00:20:01,040 --> 00:20:03,280 Speaker 1: Now, to understand this a little bit, we want to 413 00:20:03,280 --> 00:20:06,480 Speaker 1: take a look at some other examples when this has 414 00:20:06,520 --> 00:20:09,399 Speaker 1: happened and what's going on, And we can look back 415 00:20:09,480 --> 00:20:13,680 Speaker 1: into some other examples, like for example, in Turkey. So 416 00:20:13,720 --> 00:20:16,560 Speaker 1: in Turkey we can see that they've been running massive 417 00:20:16,600 --> 00:20:18,280 Speaker 1: inflation over there. As a matter of fact, we've been 418 00:20:18,280 --> 00:20:22,439 Speaker 1: seeing eighty percent inflation for the last couple of years. 419 00:20:22,760 --> 00:20:25,400 Speaker 2: But what Turkey did is. 420 00:20:25,359 --> 00:20:28,880 Speaker 1: As inflation started going up, they cut rates. But as 421 00:20:28,880 --> 00:20:34,000 Speaker 1: they cut rates, inflation went even higher. But eventually it 422 00:20:34,080 --> 00:20:36,800 Speaker 1: started coming back down. They cut interest rates to under 423 00:20:36,840 --> 00:20:40,479 Speaker 1: fifteen percent, and inflation exploded to over eighty percent. But 424 00:20:40,560 --> 00:20:42,960 Speaker 1: for a period of time, the money supply and the 425 00:20:42,960 --> 00:20:46,439 Speaker 1: consumer price index ended up taking off like a rocket 426 00:20:46,440 --> 00:20:48,840 Speaker 1: ship for Turkey. But the problem with Turkey situation is 427 00:20:48,840 --> 00:20:52,760 Speaker 1: that cutting interest rates did reduce the portion of inflation 428 00:20:52,920 --> 00:20:57,119 Speaker 1: caused by fiscal deficits, but it made the speculative attacks 429 00:20:57,200 --> 00:21:00,600 Speaker 1: on the currency and inflation caused by bank lending. So 430 00:21:00,720 --> 00:21:05,880 Speaker 1: this is the problem. If the FED raises rates, then 431 00:21:05,920 --> 00:21:09,000 Speaker 1: what happens is then people don't want to hold the currency, 432 00:21:09,320 --> 00:21:13,000 Speaker 1: or more specifically, they'll borrow against it and cause that 433 00:21:13,080 --> 00:21:17,120 Speaker 1: speculative At tech, nobody wants to hold the lira, especially 434 00:21:17,200 --> 00:21:21,000 Speaker 1: foreign Lira is the Turkish currency and especially foreign entities. 435 00:21:21,320 --> 00:21:22,719 Speaker 1: So what they want to do is they want to 436 00:21:22,760 --> 00:21:26,320 Speaker 1: borrow in Lira. So for example, when inflation was at 437 00:21:26,400 --> 00:21:29,480 Speaker 1: nine percent and I could get a house loan at 438 00:21:29,560 --> 00:21:32,159 Speaker 1: three percent, then I definitely wanted to do that, and 439 00:21:32,160 --> 00:21:32,919 Speaker 1: as a matter of fact, I. 440 00:21:32,920 --> 00:21:33,720 Speaker 2: Got a couple of them. 441 00:21:34,359 --> 00:21:37,320 Speaker 1: Because what happens is, remember at the beginning of this episode, 442 00:21:37,359 --> 00:21:41,520 Speaker 1: we started talking about how they inflate debts away because 443 00:21:41,680 --> 00:21:44,360 Speaker 1: you get paid, you know, five years, ten years down 444 00:21:44,359 --> 00:21:46,840 Speaker 1: the road of that new inflated amount, but your debt 445 00:21:47,000 --> 00:21:49,240 Speaker 1: was locked in at that old rate. So if I 446 00:21:49,280 --> 00:21:52,160 Speaker 1: can get a thirty year fixed loan at thirty percent 447 00:21:52,720 --> 00:21:56,159 Speaker 1: and inflation is above that five percent, seven percent, nine percent, 448 00:21:56,480 --> 00:21:59,080 Speaker 1: then I want to borrow as much money as I 449 00:21:59,160 --> 00:22:02,280 Speaker 1: can and let the inflation pay it off. So in 450 00:22:02,320 --> 00:22:04,399 Speaker 1: Turkey that's exactly what happens. But the problem is that 451 00:22:04,440 --> 00:22:08,119 Speaker 1: becomes a speculative attack. So now as many people as 452 00:22:08,160 --> 00:22:10,160 Speaker 1: they can, they're borrowing more money. But as they borrow 453 00:22:10,200 --> 00:22:13,199 Speaker 1: more money, that just makes the problem even worse, and 454 00:22:13,240 --> 00:22:15,480 Speaker 1: then they don't want to hold the currency. 455 00:22:15,200 --> 00:22:16,560 Speaker 2: So it's called a speculative attack. 456 00:22:16,920 --> 00:22:19,920 Speaker 1: Now Argentina saw similar problem that inflation rate of over 457 00:22:19,960 --> 00:22:22,639 Speaker 1: one hundred percent. I mean, imagine that one hundred percent. 458 00:22:22,680 --> 00:22:25,600 Speaker 1: That means your money basically becomes worthless every year. But 459 00:22:25,680 --> 00:22:29,200 Speaker 1: unlike Turkey, they started aggressively raising interest rates to keep 460 00:22:29,280 --> 00:22:33,280 Speaker 1: up with it. But yet inflation remains completely uncontained. They 461 00:22:33,280 --> 00:22:35,439 Speaker 1: haven't been able to do anything about it. It's almost 462 00:22:35,440 --> 00:22:39,000 Speaker 1: as if interest rate policy isn't the only variable to consider, 463 00:22:39,119 --> 00:22:41,359 Speaker 1: which of course it's not. That's the whole point that 464 00:22:41,359 --> 00:22:42,200 Speaker 1: I'm talking about. 465 00:22:42,560 --> 00:22:42,800 Speaker 2: Now. 466 00:22:43,560 --> 00:22:46,000 Speaker 1: What we have we're looking back at the nineteen forty 467 00:22:46,040 --> 00:22:48,719 Speaker 1: is what really caused it was war, Right, They had 468 00:22:48,720 --> 00:22:51,040 Speaker 1: to spend money to go to World War two, and 469 00:22:51,080 --> 00:22:54,800 Speaker 1: we had, of course the pandemic war, the war on 470 00:22:54,840 --> 00:22:56,119 Speaker 1: the pandemic, the war on COVID. 471 00:22:56,200 --> 00:22:56,800 Speaker 2: Right. 472 00:22:56,920 --> 00:22:59,600 Speaker 1: So if inflation is caused by a war, or by 473 00:22:59,600 --> 00:23:03,080 Speaker 1: a demic, graphics bulge, or a high rate of bank lending, 474 00:23:03,680 --> 00:23:07,280 Speaker 1: then it's pretty fixable, right just after the war brings 475 00:23:07,280 --> 00:23:10,359 Speaker 1: spending back down. If it's the high rate of bank lending, 476 00:23:10,400 --> 00:23:12,080 Speaker 1: then get the banks to lend less money. 477 00:23:12,119 --> 00:23:14,040 Speaker 2: Right. However, like I. 478 00:23:14,040 --> 00:23:16,800 Speaker 1: Said, if you can fix it once the war ends, 479 00:23:16,800 --> 00:23:20,240 Speaker 1: if the government turns back to their budget, then things 480 00:23:20,280 --> 00:23:23,439 Speaker 1: sort of go away. In the nineteen tens and the 481 00:23:23,520 --> 00:23:27,800 Speaker 1: nineteen forties, the US had high deficit driven inflation, but 482 00:23:27,880 --> 00:23:30,280 Speaker 1: had a clear way to bring it down after the war. 483 00:23:31,920 --> 00:23:34,280 Speaker 1: Why could they do that? Well, the reason why is 484 00:23:34,320 --> 00:23:38,840 Speaker 1: because back then they didn't have the entitlement spending. And 485 00:23:38,840 --> 00:23:41,399 Speaker 1: this is where the proverbial rock and the hard place 486 00:23:41,560 --> 00:23:45,040 Speaker 1: comes into play. This is why this time is different. 487 00:23:45,520 --> 00:23:48,000 Speaker 1: Back in the nineteen forties, they didn't have the entitlement spending, 488 00:23:48,000 --> 00:23:50,560 Speaker 1: which is the Medicare, the Medicaid, the Social security, the 489 00:23:50,640 --> 00:23:53,240 Speaker 1: interest on the debt, the military spending, all those things. 490 00:23:53,480 --> 00:23:57,240 Speaker 1: They weren't locked in, and they had a very low 491 00:23:57,320 --> 00:24:01,400 Speaker 1: amount of workers that were dependent on the system. Today 492 00:24:01,640 --> 00:24:05,720 Speaker 1: it's the opposite. Today we have the federal governments have 493 00:24:05,880 --> 00:24:07,840 Speaker 1: bulged and we have more people working for the federal 494 00:24:07,880 --> 00:24:10,760 Speaker 1: government than ever before, so dependent on the government. We 495 00:24:10,800 --> 00:24:13,880 Speaker 1: also have the entitlement spending which is higher than it's 496 00:24:13,880 --> 00:24:18,680 Speaker 1: ever been at any point, and the government does not 497 00:24:18,800 --> 00:24:23,080 Speaker 1: make enough revenue to even pay the mandatory spending. 498 00:24:23,160 --> 00:24:24,680 Speaker 2: The entitlement spending didn't pay that. 499 00:24:25,880 --> 00:24:29,080 Speaker 1: Now, in the seventies, the US had a low sovereign 500 00:24:29,080 --> 00:24:32,760 Speaker 1: to debt level of about thirty percent debt to GDP. 501 00:24:32,920 --> 00:24:34,600 Speaker 1: That was in the seventies when you hear about Arthur 502 00:24:34,600 --> 00:24:38,679 Speaker 1: Burns and vulgar. So it had an easy path to 503 00:24:39,119 --> 00:24:41,960 Speaker 1: raising the rates because the government didn't have that much debt, 504 00:24:42,119 --> 00:24:43,479 Speaker 1: So go ahead and raise the rates. It didn't really 505 00:24:43,480 --> 00:24:45,359 Speaker 1: matter because the government's the amount of debt that the 506 00:24:45,359 --> 00:24:47,040 Speaker 1: government has just a little bit. So yeah, it makes 507 00:24:47,040 --> 00:24:48,199 Speaker 1: that debt more expensive, but it's not that. 508 00:24:48,200 --> 00:24:48,760 Speaker 2: Big of a deal. 509 00:24:49,400 --> 00:24:52,800 Speaker 1: Okay, But today we have a debt to GDP of 510 00:24:52,840 --> 00:24:55,920 Speaker 1: one hundred and twenty five percent, So from thirty to 511 00:24:56,040 --> 00:24:58,399 Speaker 1: one hundred and twenty percent, it's a pretty big deal. 512 00:24:58,960 --> 00:25:01,600 Speaker 1: So the hardest inflation combination for any central bank to 513 00:25:01,600 --> 00:25:05,120 Speaker 1: deal with is three things. One a high sovereign debt 514 00:25:05,160 --> 00:25:07,120 Speaker 1: to GDP ratio in the seventies was thirty percent, today 515 00:25:07,119 --> 00:25:10,560 Speaker 1: it's one hundred and twenty five. Two large and structural 516 00:25:10,560 --> 00:25:16,040 Speaker 1: fiscal deficits tied to age demographics and imbalanced entitlement programs. 517 00:25:16,080 --> 00:25:21,640 Speaker 1: And high military spending. That's a problem. We have high 518 00:25:21,680 --> 00:25:24,000 Speaker 1: military spending. Check we just went from the war on 519 00:25:24,040 --> 00:25:26,440 Speaker 1: the pandemic to now we're war in Ukraine and potentially 520 00:25:26,560 --> 00:25:29,760 Speaker 1: war with China. Two in balance and titament's programs. Yes, 521 00:25:29,800 --> 00:25:31,520 Speaker 1: I told you, we can't even afford those. They are 522 00:25:31,520 --> 00:25:34,280 Speaker 1: at highest point ever age demographics, so the baby boom 523 00:25:34,320 --> 00:25:36,040 Speaker 1: generation is the largest segment of the population. 524 00:25:37,119 --> 00:25:38,240 Speaker 2: And then three, a. 525 00:25:38,240 --> 00:25:42,159 Speaker 1: Significant supply constraints such as tight oil markets or labor 526 00:25:42,200 --> 00:25:47,480 Speaker 1: shortages due to high public debt levels. So significant supply 527 00:25:47,640 --> 00:25:50,399 Speaker 1: constraints on such tight oil markets and labor storage. So 528 00:25:51,200 --> 00:25:53,800 Speaker 1: the Biden administration has done everything they can to shut 529 00:25:53,840 --> 00:25:56,040 Speaker 1: down oil in the United States. So we have supply 530 00:25:56,119 --> 00:25:59,439 Speaker 1: constraints on oil, and because of the high interest rates 531 00:25:59,480 --> 00:26:03,119 Speaker 1: it imposed is capital constraints and makes it very hard 532 00:26:03,359 --> 00:26:06,719 Speaker 1: for the oil companies to get more oil out. Sounds 533 00:26:06,720 --> 00:26:09,360 Speaker 1: like we're in a pretty bad situation, and so they're 534 00:26:09,359 --> 00:26:11,960 Speaker 1: trying to bring out the nineteen seventies playbook, but it's. 535 00:26:11,960 --> 00:26:14,040 Speaker 2: Just not working. Now. 536 00:26:14,040 --> 00:26:16,840 Speaker 1: They can reduce money creation from bank lending in the 537 00:26:17,160 --> 00:26:21,800 Speaker 1: intermediate term, but ironically it only makes inflation worse. So 538 00:26:21,840 --> 00:26:25,800 Speaker 1: that's exactly what's playing out at this point. Fun fun, 539 00:26:25,920 --> 00:26:29,960 Speaker 1: fun fun. Now let's talk about the nineteen forties playbook, right, 540 00:26:30,080 --> 00:26:32,240 Speaker 1: that's about nineteen forties playbook and how they can if 541 00:26:32,240 --> 00:26:35,760 Speaker 1: they keep interest rates low even though we have high inflation, 542 00:26:36,280 --> 00:26:39,840 Speaker 1: how it could actually reduce the fiscal driven inflation a bit. 543 00:26:40,680 --> 00:26:42,640 Speaker 1: But the problem is, as I said, if they do that, 544 00:26:42,840 --> 00:26:47,120 Speaker 1: then it encourages speculative attacks on the currency. If they 545 00:26:47,160 --> 00:26:50,920 Speaker 1: bring rates down and inflation is running high, everybody's gonna 546 00:26:50,920 --> 00:26:54,080 Speaker 1: want to borrow the money and attack the currency. I'm 547 00:26:54,080 --> 00:26:56,639 Speaker 1: going to tell you what is the only outcome from this. 548 00:26:56,840 --> 00:26:58,320 Speaker 1: When we come back, I'm gonna take a quick break, 549 00:26:58,359 --> 00:27:03,400 Speaker 1: don't I'll be right back, all. 550 00:27:03,400 --> 00:27:04,000 Speaker 2: Right, Welcome back. 551 00:27:04,000 --> 00:27:05,600 Speaker 1: If you're just tune in, you're listening to the Mark 552 00:27:05,680 --> 00:27:10,040 Speaker 1: Moss Show. We're talking about the FED, the FED, the 553 00:27:10,040 --> 00:27:13,159 Speaker 1: central bank policy and how you know, the we'll just 554 00:27:13,320 --> 00:27:15,440 Speaker 1: take it higher for longer, we'll just keep it higher, 555 00:27:15,920 --> 00:27:18,400 Speaker 1: what the Fed's doing to fight inflation, and how it's 556 00:27:18,480 --> 00:27:22,520 Speaker 1: completely wrong, and how they're really stuck. They're really between 557 00:27:22,560 --> 00:27:26,560 Speaker 1: the proverbial rock and a hard place. Unfortunately, there's maybe 558 00:27:26,560 --> 00:27:29,080 Speaker 1: only one way out of this, and it's not good. 559 00:27:29,240 --> 00:27:30,480 Speaker 2: As a matter of fact, it's not good at all. 560 00:27:30,560 --> 00:27:34,160 Speaker 1: So they've been raising rates to try to bring inflation down. 561 00:27:34,160 --> 00:27:36,159 Speaker 1: But the problem is I've been explaining. If you've missed it, 562 00:27:36,160 --> 00:27:37,920 Speaker 1: to go back and listen to the podcast to search 563 00:27:37,960 --> 00:27:39,880 Speaker 1: the Mark More Show and your favorite podcast player. Catch 564 00:27:39,880 --> 00:27:43,520 Speaker 1: me on YouTube at market disruptors. But as they've been 565 00:27:43,840 --> 00:27:47,320 Speaker 1: raising rates, they haven't really slowed inflation down because it's 566 00:27:47,359 --> 00:27:50,040 Speaker 1: not the consumers spending that's the problem. It's the government 567 00:27:50,080 --> 00:27:51,960 Speaker 1: spinning that's the problem. And the governments are going to 568 00:27:52,000 --> 00:27:53,600 Speaker 1: spend no matter what they do with the rates. But 569 00:27:53,680 --> 00:27:56,000 Speaker 1: what it does do is it makes the government spend 570 00:27:56,119 --> 00:27:59,919 Speaker 1: even more for two reasons. One, as they raise the rates, consumers, 571 00:28:00,080 --> 00:28:02,800 Speaker 1: you and I were more broke, which is what they're 572 00:28:02,800 --> 00:28:04,280 Speaker 1: trying to do. And so the government doesn't have as 573 00:28:04,320 --> 00:28:06,200 Speaker 1: much that they don't have as much income, we don't 574 00:28:06,200 --> 00:28:09,000 Speaker 1: pay as much taxes, So the government's income goes down, 575 00:28:09,040 --> 00:28:12,399 Speaker 1: which means they need to spend more deficits, spending more debt. 576 00:28:13,400 --> 00:28:16,560 Speaker 1: And because the interest rates went up, the cost of 577 00:28:16,560 --> 00:28:18,600 Speaker 1: that debt, the payments on the debt go up. As 578 00:28:18,640 --> 00:28:21,560 Speaker 1: a matter of fact, the United States government debt, the 579 00:28:21,640 --> 00:28:24,240 Speaker 1: interest on the debt has now eclipsed the amount of 580 00:28:24,280 --> 00:28:27,000 Speaker 1: money that the US spends on its military. Now the 581 00:28:27,080 --> 00:28:29,639 Speaker 1: US spends more money on its military than the next 582 00:28:29,960 --> 00:28:35,800 Speaker 1: ten countries combined, more than China, more than Russia, more 583 00:28:35,840 --> 00:28:40,200 Speaker 1: than France, England, Britain, whatever, all of them combined. And 584 00:28:40,640 --> 00:28:43,200 Speaker 1: the interest not paying down the debt. Just the interest 585 00:28:43,200 --> 00:28:46,200 Speaker 1: on the debt has now eclipsed that. So it's really 586 00:28:46,440 --> 00:28:49,040 Speaker 1: causing a problem now. As I said in the nineteen 587 00:28:49,120 --> 00:28:51,960 Speaker 1: forties playbook, if they were to keep interest rates low 588 00:28:52,640 --> 00:28:56,600 Speaker 1: even though inflation was high, then it could reduce the 589 00:28:56,640 --> 00:28:59,640 Speaker 1: fiscal the governments inside of the inflation a little bit. 590 00:29:00,080 --> 00:29:04,160 Speaker 1: But it encourages a speculative attack on the currency, where 591 00:29:04,200 --> 00:29:06,680 Speaker 1: we go borrow as much in that currency as we 592 00:29:06,760 --> 00:29:10,000 Speaker 1: can to go buy any assets that we can. Like 593 00:29:10,040 --> 00:29:12,160 Speaker 1: how I went and bought a couple of properties when 594 00:29:12,200 --> 00:29:14,680 Speaker 1: I could get thirty year fixed at three percent when 595 00:29:14,680 --> 00:29:17,280 Speaker 1: inflation was over that all right, I explained how that 596 00:29:17,320 --> 00:29:17,760 Speaker 1: works before. 597 00:29:17,760 --> 00:29:20,440 Speaker 2: I'm not going to go through that again. So what 598 00:29:20,440 --> 00:29:20,920 Speaker 2: do they do. 599 00:29:21,320 --> 00:29:25,480 Speaker 1: It's a pretty dangerous situation. If we don't raise rates 600 00:29:25,960 --> 00:29:28,800 Speaker 1: and inflation runs hot, we get the speculative attack. If 601 00:29:28,840 --> 00:29:31,400 Speaker 1: we do continue to raise rates, then we just make 602 00:29:31,440 --> 00:29:32,320 Speaker 1: inflation worse. 603 00:29:32,840 --> 00:29:35,840 Speaker 2: So what do we do? Well, this is where things 604 00:29:36,280 --> 00:29:37,200 Speaker 2: get a little scary. 605 00:29:37,560 --> 00:29:42,360 Speaker 1: So if we let's just run this back one more time. 606 00:29:42,440 --> 00:29:45,680 Speaker 1: So let's see if we continue to raise rates, we 607 00:29:45,720 --> 00:29:49,080 Speaker 1: make retail broke. But that doesn't really solve the problem, 608 00:29:49,080 --> 00:29:51,760 Speaker 1: and it actually makes the government deficits worse because the 609 00:29:52,320 --> 00:29:57,040 Speaker 1: deficit spending. But if we do lower rates, it will 610 00:29:57,080 --> 00:29:59,920 Speaker 1: reduce the government deficit spending, which is the main problem. 611 00:30:00,080 --> 00:30:03,200 Speaker 1: But then we open ourselves up to a speculative attacks. 612 00:30:03,280 --> 00:30:07,480 Speaker 1: So there's a third potential choice. And this is where 613 00:30:07,480 --> 00:30:08,480 Speaker 1: it starts getting scary. 614 00:30:08,520 --> 00:30:09,680 Speaker 2: And this is what. 615 00:30:09,920 --> 00:30:14,560 Speaker 1: Basically every single empire and country in the world eventually 616 00:30:14,680 --> 00:30:16,960 Speaker 1: leads to. This is the final stage when this happens. 617 00:30:17,520 --> 00:30:20,440 Speaker 1: It's kind of over. A lot of the world has this, 618 00:30:20,520 --> 00:30:21,880 Speaker 1: and a lot of the United States has it, but 619 00:30:21,880 --> 00:30:23,239 Speaker 1: we don't have it on a big scale, and that 620 00:30:23,320 --> 00:30:27,480 Speaker 1: is something called capital controls. Capital controls are basically controlling 621 00:30:27,520 --> 00:30:30,160 Speaker 1: the capital, controlling the money, controlling the flow of money 622 00:30:30,200 --> 00:30:33,400 Speaker 1: in and out of the country, and also the price 623 00:30:33,400 --> 00:30:37,520 Speaker 1: of good So for example, in California, in Los Angeles, 624 00:30:37,600 --> 00:30:40,360 Speaker 1: for example, they have rent control. Right, that's a price control, 625 00:30:40,400 --> 00:30:43,000 Speaker 1: it's a capital control. So well, rents are going up 626 00:30:43,000 --> 00:30:44,840 Speaker 1: too much, so we'll just say that homeowners can't raise 627 00:30:44,880 --> 00:30:47,440 Speaker 1: the price of those rents anymore. Right, But capital controls 628 00:30:47,440 --> 00:30:49,680 Speaker 1: are much worse because it controls the flow of capital 629 00:30:49,680 --> 00:30:53,920 Speaker 1: in and out. I literally just today at the time 630 00:30:53,960 --> 00:30:56,800 Speaker 1: of this recording, got home from being over in Spain 631 00:30:56,840 --> 00:30:58,920 Speaker 1: where I was at a conference. I was speaking in 632 00:30:58,920 --> 00:31:01,360 Speaker 1: a conference over there, and most of the people there 633 00:31:01,400 --> 00:31:03,560 Speaker 1: were international, which I guess is why I was in Spain. 634 00:31:03,600 --> 00:31:05,760 Speaker 1: Probably at least two thirds of the group were international, 635 00:31:05,800 --> 00:31:09,000 Speaker 1: and they're all business, business people, entrepreneurs, et cetera. And 636 00:31:09,080 --> 00:31:11,360 Speaker 1: many of them I talked to from sort of like 637 00:31:11,400 --> 00:31:16,560 Speaker 1: the Nordic countries, so Denmark, Finland, Sweden, et cetera. And 638 00:31:16,880 --> 00:31:19,200 Speaker 1: I was really surprised, like in the Netherlands, for example, 639 00:31:19,280 --> 00:31:21,440 Speaker 1: I didn't understand the extent of the capital controls that 640 00:31:21,440 --> 00:31:25,680 Speaker 1: they have. And so these are business owners and they're 641 00:31:25,680 --> 00:31:28,920 Speaker 1: doing business selling you know whatever, they're selling supplements or 642 00:31:28,920 --> 00:31:33,080 Speaker 1: fitness equipment or whatever, all across Europe, but the government 643 00:31:33,160 --> 00:31:35,640 Speaker 1: doesn't want money to go in and out of the country, 644 00:31:36,400 --> 00:31:39,400 Speaker 1: and so it makes it very difficult for them to 645 00:31:39,480 --> 00:31:42,800 Speaker 1: do business. Some of the team that ran the event 646 00:31:43,000 --> 00:31:47,040 Speaker 1: are from Argentina. Argentina has some of the highest inflation 647 00:31:47,160 --> 00:31:49,560 Speaker 1: in the world, and they also have capital controls. So 648 00:31:49,640 --> 00:31:54,160 Speaker 1: for example, you have this the Argentine I think it's 649 00:31:54,160 --> 00:31:58,320 Speaker 1: the Argentine peso that's losing one hundred percent of its value, 650 00:31:58,680 --> 00:32:00,440 Speaker 1: and so you don't want to hold that right, so 651 00:32:00,440 --> 00:32:01,920 Speaker 1: you want to exchange it for something else, Well, what 652 00:32:01,920 --> 00:32:03,680 Speaker 1: would you exchange it for. Well, people would like to 653 00:32:03,720 --> 00:32:07,560 Speaker 1: exchange it for a dollar. So the official exchange rate, 654 00:32:07,600 --> 00:32:08,600 Speaker 1: I don't have it pulled up in front of me, 655 00:32:08,680 --> 00:32:11,720 Speaker 1: so don't quote me exactly. But the government tells you 656 00:32:11,800 --> 00:32:13,800 Speaker 1: that the official exchange rate, because they're trying to make 657 00:32:13,840 --> 00:32:15,600 Speaker 1: it look like it's not so bad, is like two 658 00:32:15,680 --> 00:32:18,400 Speaker 1: hundred and fifty to one, two hundred fifty Argentine pesos 659 00:32:18,400 --> 00:32:22,320 Speaker 1: to one dollar. But they only allow you to exchange 660 00:32:22,440 --> 00:32:24,160 Speaker 1: and they just told me this this last weekend, so 661 00:32:24,200 --> 00:32:26,280 Speaker 1: I don't have a written down, so again sorry for 662 00:32:26,360 --> 00:32:29,920 Speaker 1: my not being completely factual. But something like the government 663 00:32:29,960 --> 00:32:31,920 Speaker 1: only allows you to exchange, you know, one hundred dollars 664 00:32:31,960 --> 00:32:33,840 Speaker 1: of that or something like that. So then there's a 665 00:32:33,920 --> 00:32:37,480 Speaker 1: black market for that, and the black market is like 666 00:32:37,840 --> 00:32:42,920 Speaker 1: five hundred to one approximately, because people don't want to 667 00:32:42,920 --> 00:32:45,760 Speaker 1: hold the Argentine payso they want a dollar. So even 668 00:32:45,760 --> 00:32:47,720 Speaker 1: though the official rate says that, since they can't really 669 00:32:47,720 --> 00:32:49,200 Speaker 1: do much of it, they'll just pay the black rate 670 00:32:49,240 --> 00:32:50,680 Speaker 1: five hundred, five hundred fifty to one. 671 00:32:50,800 --> 00:32:51,560 Speaker 2: But here's the thing. 672 00:32:52,360 --> 00:32:55,880 Speaker 1: The government won't let you spend more than I mean, 673 00:32:55,920 --> 00:32:57,600 Speaker 1: I should have written these numbers down. I think it 674 00:32:57,640 --> 00:32:59,880 Speaker 1: was like three hundred dollars on their credit card. So 675 00:32:59,840 --> 00:33:02,240 Speaker 1: these people they're in Spain, they're traveling from Argentinita, but 676 00:33:02,280 --> 00:33:05,840 Speaker 1: they can't spend money on the credit card. Well they can, 677 00:33:05,920 --> 00:33:07,960 Speaker 1: but only up to like a couple hundred dollars. Once 678 00:33:08,000 --> 00:33:11,560 Speaker 1: they go over that, then it's way worse than even 679 00:33:11,560 --> 00:33:13,280 Speaker 1: the black market rate. Then it's like exchange like a 680 00:33:13,280 --> 00:33:15,920 Speaker 1: seven hundred and one ratio. Why do they do that 681 00:33:16,400 --> 00:33:18,640 Speaker 1: because they know that the people are going to be 682 00:33:18,760 --> 00:33:22,200 Speaker 1: dumping the Argentine pace so as fast as they possibly can, 683 00:33:22,640 --> 00:33:25,360 Speaker 1: causing a speculative attack. That's exactly what they don't want, 684 00:33:25,360 --> 00:33:28,240 Speaker 1: and so that's the only way to stop it. Nobody's 685 00:33:28,240 --> 00:33:30,480 Speaker 1: going to want to hold a currency when inflation is 686 00:33:30,520 --> 00:33:33,560 Speaker 1: running that high, and that's exactly where the United States 687 00:33:33,640 --> 00:33:36,000 Speaker 1: finds itself in. So damned if you do, damned if 688 00:33:36,000 --> 00:33:40,600 Speaker 1: you don't. Inflation is raging high. The more we raise rates, 689 00:33:40,800 --> 00:33:43,160 Speaker 1: the worse it actually gets. But if we lower rates, 690 00:33:43,240 --> 00:33:46,000 Speaker 1: we have a speculative attack. So what do we do. Well, 691 00:33:46,120 --> 00:33:48,400 Speaker 1: we do what every other country in the world has 692 00:33:48,440 --> 00:33:52,080 Speaker 1: done is doing right now, and that is imposing capital controls, 693 00:33:52,280 --> 00:33:54,880 Speaker 1: and like I said, that is very, very very scary, 694 00:33:54,960 --> 00:33:57,040 Speaker 1: especially you know, being in the United States, the land 695 00:33:57,040 --> 00:34:00,000 Speaker 1: of the Free. We don't want our money being locked down. 696 00:34:00,320 --> 00:34:01,600 Speaker 1: But of course this is what they have to do. 697 00:34:01,640 --> 00:34:03,520 Speaker 1: It's the only way they can do it. It's the 698 00:34:03,600 --> 00:34:05,880 Speaker 1: only way they can do it if they want to 699 00:34:05,960 --> 00:34:11,480 Speaker 1: try to protect their currency. Some countries, you know, Argentina, Nigeria, 700 00:34:11,800 --> 00:34:15,720 Speaker 1: they've completely cut off access points to cryptocurrency because again, 701 00:34:16,080 --> 00:34:19,120 Speaker 1: people will trade their currency that's losing value for anything. 702 00:34:19,480 --> 00:34:22,719 Speaker 1: It's what Libwoo Vunmesis calls the crackup boom, and he says, 703 00:34:22,719 --> 00:34:25,560 Speaker 1: and then suddenly the people realize that inflation is both 704 00:34:25,640 --> 00:34:29,920 Speaker 1: permanent and intentional, and then they lose all confidence and 705 00:34:29,920 --> 00:34:32,799 Speaker 1: they want to exchange that currency for anything they can 706 00:34:32,840 --> 00:34:35,120 Speaker 1: as fast as they can. In the currency ultimate plummets 707 00:34:35,520 --> 00:34:38,680 Speaker 1: unless the government doesn't allow you to do it. It's 708 00:34:38,680 --> 00:34:41,680 Speaker 1: the only way to stop it. And this is not 709 00:34:41,719 --> 00:34:44,520 Speaker 1: a conspiracy. So what's been done in the nineteen forties. 710 00:34:44,760 --> 00:34:47,560 Speaker 1: The IMF International Monetary Fund put out of paper in 711 00:34:47,600 --> 00:34:52,319 Speaker 1: twenty fifteen titled quote the Liquidation of Government Debt and 712 00:34:52,360 --> 00:34:55,440 Speaker 1: an outline something that we call financial repression, and it 713 00:34:55,480 --> 00:35:00,000 Speaker 1: says that in this paper. Quoting it, it says here quote, 714 00:35:00,000 --> 00:35:03,359 Speaker 1: we suggest that once again, financial repression may be part 715 00:35:03,360 --> 00:35:06,000 Speaker 1: of the toolkit deployed to cope with the most recent 716 00:35:06,040 --> 00:35:10,919 Speaker 1: surge in public debt and advanced economies. So what they're 717 00:35:10,920 --> 00:35:13,640 Speaker 1: saying it says here quote financial repression is most successful 718 00:35:13,640 --> 00:35:17,920 Speaker 1: in liquidating debt when accompanied by inflation. For the advanced economies, 719 00:35:17,960 --> 00:35:19,600 Speaker 1: real interest rates were negative half the time. So what 720 00:35:19,680 --> 00:35:22,719 Speaker 1: they're saying in this paper is the goal to get 721 00:35:22,840 --> 00:35:27,080 Speaker 1: rid of the debt is to lock you in into 722 00:35:27,120 --> 00:35:29,560 Speaker 1: the bond market that pays a very low yield when 723 00:35:29,560 --> 00:35:32,280 Speaker 1: you have high inflation, so they inflate their debt away, 724 00:35:32,719 --> 00:35:35,239 Speaker 1: trapping you in the system so there's no escape out 725 00:35:35,239 --> 00:35:38,360 Speaker 1: for you, and stealing your wealth to. 726 00:35:38,520 --> 00:35:41,879 Speaker 2: Bring theirs back down. It's a very very scary thing. 727 00:35:41,920 --> 00:35:45,080 Speaker 1: Now we've seen this in some shape or form already, 728 00:35:45,360 --> 00:35:48,319 Speaker 1: but it's only getting worse, and unfortunately it appears that 729 00:35:48,360 --> 00:35:51,719 Speaker 1: it's the government's only way out. Damned if you do, 730 00:35:51,880 --> 00:35:54,200 Speaker 1: damned if you don't. And you and I are cott 731 00:35:54,200 --> 00:35:55,920 Speaker 1: in the middle. Now, what do you do? 732 00:35:56,040 --> 00:35:56,759 Speaker 2: Will you get out? 733 00:35:56,760 --> 00:36:01,000 Speaker 1: While you still can buy gold, buy bitcoin, buy some houses, 734 00:36:01,280 --> 00:36:05,000 Speaker 1: by buy something, because otherwise you're going to be stuck 735 00:36:05,080 --> 00:36:07,719 Speaker 1: in this financial repression nightmare. If you're just tune in, 736 00:36:07,719 --> 00:36:09,560 Speaker 1: you're listening to the Mark Moss Show. Of course, we're 737 00:36:09,560 --> 00:36:13,600 Speaker 1: always talking about the decentralized revolution of three revolutionary cycles 738 00:36:13,600 --> 00:36:16,080 Speaker 1: are converging in today. We just broke down the eighty 739 00:36:16,200 --> 00:36:21,319 Speaker 1: year financial revolution cycle and exactly what's happening. Hopefully, this 740 00:36:21,360 --> 00:36:23,479 Speaker 1: isn't meant to scare you. It's to tell you what's 741 00:36:23,560 --> 00:36:25,799 Speaker 1: coming so you can prepare. I'd love to hear what 742 00:36:25,840 --> 00:36:27,279 Speaker 1: you have to say. Leave me a comment, hit me 743 00:36:27,360 --> 00:36:29,279 Speaker 1: up on social media. I want to hear that you're 744 00:36:29,280 --> 00:36:30,399 Speaker 1: listening to the show. I want to hear you get 745 00:36:30,480 --> 00:36:32,240 Speaker 1: some value and please, if I can't ask a favor, 746 00:36:32,320 --> 00:36:33,920 Speaker 1: would you please rate and review this show and a 747 00:36:33,960 --> 00:36:34,720 Speaker 1: podcast player. 748 00:36:34,880 --> 00:36:36,600 Speaker 2: That's what I got. Thanks so much for listening. Until 749 00:36:36,600 --> 00:36:36,960 Speaker 2: next time,