WEBVTT - The Financial Revolution Cycle is Here - Are You Prepared? 0:00:00.600 --> 0:00:03.720 Hello, and welcome to another episode of The Mark Moss Show, 0:00:03.720 --> 0:00:06.760 where of course we're always talking about the decentralized revolution, 0:00:06.880 --> 0:00:09.280 which is of course as the world's breaking apart. 0:00:09.039 --> 0:00:11.800 You know, going forward that centralized world. 0:00:11.640 --> 0:00:14.239 That we've been swinging to, that pendulum swinging to, and 0:00:14.280 --> 0:00:17.640 we're now moving back to a decentralized, multipolar world. 0:00:19.040 --> 0:00:21.200 And you know, I like to talk about it from three. 0:00:21.160 --> 0:00:24.479 Different revolutionary cycles, a two hundred and fifty two hundred 0:00:24.480 --> 0:00:27.800 and fifty year political revolution cycle, an eighty year financial 0:00:27.840 --> 0:00:32.080 revolution cycle, and of course a fifty year technological revolution cycle. 0:00:32.440 --> 0:00:34.919 Now the interesting thing is people are always amazed when 0:00:34.920 --> 0:00:36.840 I show them the charts that all three of those 0:00:36.880 --> 0:00:40.120 are converging right now. But of course today we're going 0:00:40.159 --> 0:00:41.960 to talk about just one. I want to talk about 0:00:42.000 --> 0:00:47.400 the financial revolution cycle, eighty year financial revolution cycle. And 0:00:47.440 --> 0:00:51.800 we're here witnessing something that we haven't seen for about 0:00:51.840 --> 0:00:54.760 eighty years since the last time this was reset, and 0:00:54.800 --> 0:00:55.800 so I want to break it down to you. I 0:00:55.840 --> 0:00:58.040 want to under I want you to understand exactly what's 0:00:58.080 --> 0:01:03.160 going on in the financial systems with inflation, federal debt, 0:01:03.400 --> 0:01:06.200 and what the FED policy has been so far as 0:01:06.280 --> 0:01:08.760 far as you know, on their warpath raising rates then 0:01:08.800 --> 0:01:11.639 the fastest pace in history. 0:01:11.680 --> 0:01:12.280 And then of. 0:01:12.160 --> 0:01:15.280 Course we'll talk about the proverbial wall that they're hitting. 0:01:15.360 --> 0:01:18.880 Now I've talked about this many many times, that they're 0:01:18.920 --> 0:01:21.000 stuck between this you know, rock and a hard place, 0:01:21.040 --> 0:01:25.959 so to speak. Unfortunately, there's probably well it's not really 0:01:26.000 --> 0:01:30.520 a way out, but there's a most likely, most probable 0:01:30.560 --> 0:01:33.720 situation that they'll probably try to pull. We know this, 0:01:34.920 --> 0:01:36.880 we've seen in the past, and we know that all 0:01:37.000 --> 0:01:38.840 nations at the end of the at the end of 0:01:38.880 --> 0:01:40.640 the rope, end up doing this. So let's talk about 0:01:40.640 --> 0:01:42.600 that a little bit. So of course, we know that 0:01:42.840 --> 0:01:45.880 inflation has been sky high. Of course the Federal Reserve 0:01:45.920 --> 0:01:48.400 that all central banks, they want inflation so they can 0:01:48.440 --> 0:01:51.160 inflate away the debts, so they make the debt much 0:01:51.240 --> 0:01:51.920 cheaper for them. 0:01:52.360 --> 0:01:55.880 It's like if you, let's say, ten years. 0:01:55.720 --> 0:01:58.040 Ago, you were the average salary you're making, you know, 0:01:58.080 --> 0:02:00.520 fifteen bucks an hour, and you take a six hundred 0:02:00.520 --> 0:02:03.000 dollars loan, and now here you are ten years later, 0:02:03.080 --> 0:02:05.320 and your rate of pay has gone up to twenty 0:02:05.320 --> 0:02:07.960 five dollars an hour, but the payment is still the same. 0:02:08.040 --> 0:02:09.920 So of course you want to inflate it away. Well, 0:02:10.000 --> 0:02:12.880 the central banks do, specifically the United States, when they 0:02:12.880 --> 0:02:16.040 have thirty two trillion of it. However, for you and I, 0:02:16.200 --> 0:02:19.720 it's not so good because as they create more money, 0:02:19.960 --> 0:02:22.440 the value of that money, the purchasing power of that 0:02:22.480 --> 0:02:26.160 money goes down. And so yes, prices go up, but 0:02:26.200 --> 0:02:28.919 it's the value going down. And so you know, I 0:02:29.080 --> 0:02:31.600 like to say that the two greatest tricks that the 0:02:31.639 --> 0:02:35.720 Fed ever played on us was one telling us trickiness 0:02:35.760 --> 0:02:38.400 that the money supply should always increase. A lot of 0:02:38.400 --> 0:02:40.120 people think that's the way it should be. It has 0:02:40.200 --> 0:02:42.040 to be that way. And the second trick is that 0:02:42.440 --> 0:02:45.960 asset price is always going up is a good thing. Well, 0:02:47.760 --> 0:02:50.200 it's a good thing for them, but is it really 0:02:50.240 --> 0:02:52.280 a good thing for you? So what I typically ask 0:02:52.320 --> 0:02:54.600 people if they'd say, well, money supply has to increase, 0:02:54.639 --> 0:02:57.120 doesn't it. So when you increase the money supply, prices 0:02:57.160 --> 0:02:59.800 go up or thereby your purchasing power the value of 0:03:00.160 --> 0:03:02.359 have gone down. And I just asked them a simple question, 0:03:03.040 --> 0:03:06.600 would you rather your money buy you more goods and 0:03:06.639 --> 0:03:10.040 services in the future or less? Of course, the answers 0:03:10.639 --> 0:03:12.480 there's always more. Of course, we wanted to buy us more. 0:03:12.480 --> 0:03:14.400 We want our quality of life to be getting better 0:03:14.480 --> 0:03:16.440 and better and better and better. We want to be 0:03:16.480 --> 0:03:19.760 working less and enjoying more. The problem is that our 0:03:19.760 --> 0:03:22.440 money continues to buy us less, so the opposite is true. 0:03:22.480 --> 0:03:24.840 We have to work more and more and more just 0:03:24.919 --> 0:03:27.160 to try to maintain our quality of living or else 0:03:27.200 --> 0:03:29.920 even potentially lose our quality of living at the same time. 0:03:30.160 --> 0:03:32.000 So that kind of frames it up. But the problem 0:03:32.080 --> 0:03:34.960 is is that the FED only wants two percent inflation, 0:03:35.120 --> 0:03:36.840 but they overshot their target. We got up to nine 0:03:36.880 --> 0:03:39.040 point one percent, and the Fed looked pretty bad. They 0:03:39.040 --> 0:03:40.280 had to do something about it if they wanted to 0:03:40.280 --> 0:03:42.440 get back down to two percent, and so they've been 0:03:42.560 --> 0:03:44.920 on the war path, raising rates at the fastest rate 0:03:45.000 --> 0:03:49.040 in history, trying to get that back under wraps. The 0:03:49.160 --> 0:03:53.320 problem is that there's really a couple different ways, two 0:03:53.440 --> 0:03:56.160 main ways that you can get price inflation consumer price 0:03:56.160 --> 0:03:59.360 inflation in an economy, and it usually comes from one 0:03:59.440 --> 0:04:03.160 or the other, usually a combination of either one money 0:04:03.160 --> 0:04:07.800 supply growth, and two significant changes in productivity and or 0:04:07.920 --> 0:04:12.160 resource abundant. So basically supply and demand, that's what it 0:04:12.200 --> 0:04:16.359 always comes down to. When there's more demand. So a 0:04:16.400 --> 0:04:19.160 lot more money in the system creates more demand chasing 0:04:19.240 --> 0:04:22.600 the same you know, set of supplies or less supplies, 0:04:23.080 --> 0:04:25.440 then the price goes up. Now, the problem is that 0:04:25.440 --> 0:04:27.600 the Fed wants inflation to come down, but they really 0:04:27.640 --> 0:04:30.760 can't do much about the supply side of the situation, 0:04:30.920 --> 0:04:34.040 so instead they work on the demand side. If they 0:04:34.040 --> 0:04:35.680 can try to make you and I more poor, we 0:04:35.720 --> 0:04:39.120 can you know, the bring our stock assets down, all 0:04:39.120 --> 0:04:42.720 our assets down, you know. Unfortunately, they want to increase unemployment. 0:04:42.800 --> 0:04:43.919 Two million people would. 0:04:43.720 --> 0:04:44.480 Lose their jobs. 0:04:44.839 --> 0:04:47.440 If they could do that. Gas is expensive, stakes expensive, 0:04:47.440 --> 0:04:49.400 then maybe we don't spend as much. If we don't 0:04:49.400 --> 0:04:53.599 spend as much, then potentially it comes back down. The 0:04:53.720 --> 0:04:57.200 problem is, though, they're working on the wrong side of 0:04:57.200 --> 0:05:00.560 the equation because it's been mostly a supply of course, 0:05:00.600 --> 0:05:03.479 we've had supply chains breaking down since the pandemic, the 0:05:03.480 --> 0:05:06.400 war with Russia and Ukraine messing things up. But at 0:05:06.440 --> 0:05:09.520 the same time they have brought down some of that 0:05:09.600 --> 0:05:12.240 consumer demand a little bit a little bit. But the 0:05:12.240 --> 0:05:15.080 problems they're working on the wrong side, as I said, 0:05:15.320 --> 0:05:19.880 because it's not the consumer that's the one spending, it's 0:05:19.920 --> 0:05:20.880 the fiscal spending. 0:05:20.920 --> 0:05:21.640 That's the problem. 0:05:22.160 --> 0:05:26.440 The US federal government was spending roughly four trillion dollars 0:05:26.480 --> 0:05:31.440 per year into the economy before the pandemic. Going into 0:05:31.480 --> 0:05:35.640 the pandemic, they increase the spending by about fifty percent, 0:05:35.720 --> 0:05:40.000 up to six trillion dollars per year, and they're still spending. 0:05:40.920 --> 0:05:43.080 So while the Fed is doing its best to bring 0:05:43.120 --> 0:05:46.440 down your spending, you're an eye spending. They haven't done 0:05:46.560 --> 0:05:49.040 a whole lot for the fiscal policy. 0:05:49.800 --> 0:05:50.719 But before we get. 0:05:50.600 --> 0:05:52.120 Into all that, I want to kind of give you 0:05:52.600 --> 0:05:53.919 a little bit of an illustration. 0:05:54.040 --> 0:05:56.000 Let's take a look at some ways that we can 0:05:56.040 --> 0:05:58.120 look at this. So I always like to. 0:05:58.080 --> 0:06:01.360 Say this little controversial kind of piece just to get 0:06:01.360 --> 0:06:05.279 people's attention, and that is that none of us want money. 0:06:05.320 --> 0:06:06.680 And of course you say, what do you mean, of 0:06:06.720 --> 0:06:08.400 course we want money, Well, we don't really want money. 0:06:08.400 --> 0:06:11.040 We want the goods and services that money buys us. 0:06:11.279 --> 0:06:13.400 And so we have to think about money. Obviously it's 0:06:13.400 --> 0:06:15.560 just a medium exchange, and so it's really the other 0:06:15.600 --> 0:06:17.039 things that we want. And the problem is if we 0:06:17.080 --> 0:06:19.680 always price those things in dollars, the price of your 0:06:19.680 --> 0:06:22.440 house and dollars, the price of oil and dollars, then 0:06:22.480 --> 0:06:24.880 we have a very distorted number. And so we want 0:06:24.920 --> 0:06:29.359 to look at gold and oil dollars and oil dollars 0:06:29.400 --> 0:06:31.000 in gold and look at all of those and how 0:06:31.040 --> 0:06:34.360 they work together and move between themselves. And so if 0:06:34.400 --> 0:06:36.240 we take the dollars out of the equation and then 0:06:36.240 --> 0:06:39.320 we compare a price of oil in gold, or we 0:06:39.360 --> 0:06:41.480 look at them both in gold and dollars, we can 0:06:41.520 --> 0:06:44.920 see that since about nineteen thirteen, when you look at 0:06:45.400 --> 0:06:47.920 a gold for a barrel of oil, zero point two 0:06:47.920 --> 0:06:50.520 ounces of gold for a barrel of oil to up 0:06:50.560 --> 0:06:53.520 to zero point one four ounces of gold for a 0:06:53.560 --> 0:06:57.360 barrel of oil. And so they fluctuated from nineteen thirteen 0:06:57.520 --> 0:07:01.040 until now in that period very tight. I mean, they 0:07:01.520 --> 0:07:06.719 jacked up right around you know, nineteen fourteen fifteen, but 0:07:06.839 --> 0:07:10.760 since then they've stayed somewhat pretty relatively stable. But if 0:07:10.800 --> 0:07:13.800 you look at that same chart in oil, the average 0:07:13.800 --> 0:07:17.720 oil price per year, where of course they've measured in USD. 0:07:17.840 --> 0:07:19.920 Of course, as they've been continue to increase the USD, 0:07:20.240 --> 0:07:22.320 the price has shot up, and if you could see 0:07:22.360 --> 0:07:24.600 the chart, it looks like a hockey stick. Of course, 0:07:24.640 --> 0:07:27.840 starting right there in nineteen seventy three, and it has 0:07:27.920 --> 0:07:29.080 just been going up ever since. 0:07:29.280 --> 0:07:29.800 As a matter of. 0:07:29.800 --> 0:07:32.520 Fact, you know, the reason why this is such a 0:07:32.520 --> 0:07:35.880 big deal is because gold has a very low inflation rate. 0:07:36.520 --> 0:07:38.640 All the gold in existence is still here and it 0:07:38.680 --> 0:07:42.040 goes up by about one point five percent per year. 0:07:42.880 --> 0:07:45.320 But on dollars, on the other hand, have been going 0:07:45.400 --> 0:07:49.040 up for much much faster. And so with that context 0:07:49.040 --> 0:07:52.200 you can understand how the financial system works, and of 0:07:52.200 --> 0:07:56.120 course you now understand why central banks want the inflation 0:07:56.200 --> 0:07:58.480 to rayge on so they can make that debt cheaper 0:07:58.520 --> 0:08:02.480 and cheaper and cheaper. The problem, of course, is that 0:08:02.720 --> 0:08:05.600 central banks, like I said, can only offset a bit 0:08:05.960 --> 0:08:08.680 of the causes of inflation. And the problem that we 0:08:08.760 --> 0:08:13.200 have here is that because it's really the fiscal deficits 0:08:13.240 --> 0:08:16.480 that are causing this, they're spending that money right into 0:08:16.520 --> 0:08:19.559 the economy, and as the Fed has raised rates, they've 0:08:19.600 --> 0:08:21.760 made us all poor and poor and poorer. But the 0:08:21.800 --> 0:08:24.520 other problem is that that means you and I don't 0:08:24.520 --> 0:08:27.280 pay as much taxes. There's not as many capital gains taxes, 0:08:27.880 --> 0:08:29.800 and just unemployment has gone up, there's not as much 0:08:29.840 --> 0:08:32.720 taxes overall, and that's just made the situation even worse. 0:08:32.800 --> 0:08:35.959 Because the federal government didn't have enough money at as 0:08:36.000 --> 0:08:40.640 it is now, taxes went down, and now by the 0:08:40.720 --> 0:08:43.760 raids going up so fast, the amount of interest they 0:08:43.760 --> 0:08:47.040 have to pay on the debt is now only making 0:08:47.080 --> 0:08:49.559 the deficit that much worse. Hey, if you're just tuning in, 0:08:49.600 --> 0:08:51.440 you're listening to the Mark Maus Show. We're talking about 0:08:51.480 --> 0:08:54.240 the situation. The FEDS found themselves in the proverbial rock 0:08:54.280 --> 0:08:57.000 and a hard place, sort. 0:08:56.840 --> 0:08:58.520 Of damned if they do, damned if they don't. I'm 0:08:58.520 --> 0:08:59.839 going to set this up a little bit more. 0:09:00.000 --> 0:09:02.920 You can understand exactly what's going on, you'll know how 0:09:02.920 --> 0:09:05.720 to position yourself, and you'll find out. Unfortunately, it looks 0:09:05.760 --> 0:09:09.560 like the most likely outcome. It's not that good, but 0:09:09.600 --> 0:09:11.240 we can be prepared for it. We're gonna get you 0:09:11.280 --> 0:09:12.520 ready for that. I got to take a very quick 0:09:12.559 --> 0:09:12.960 break though. 0:09:13.040 --> 0:09:14.920 I'm going to take a minute. I'll be right back. 0:09:15.040 --> 0:09:17.920 Don't go away, all right, Welcome back. If you're just 0:09:17.920 --> 0:09:19.839 tuning in, you're listening to the Mark Maus Show. Of course, 0:09:19.840 --> 0:09:23.520 we're always talking about the decentralized revolution, talking about the 0:09:23.559 --> 0:09:25.920 way this world is changing, and today we're looking at 0:09:25.960 --> 0:09:29.319 one of the three revolutionary cycles, the eighty year Financial 0:09:29.400 --> 0:09:32.320 revolution cycle, and we're talking about how the FED is 0:09:32.679 --> 0:09:34.959 sort of damned if they do, damned if they don't. 0:09:35.559 --> 0:09:38.280 They're trying to bring inflation back down with the kind 0:09:38.280 --> 0:09:40.280 of the only tool they have. The problem is that 0:09:40.320 --> 0:09:43.000 it's not really fixing it because it's not the right 0:09:43.120 --> 0:09:45.959 tool for the right job. You hear a lot about 0:09:46.679 --> 0:09:49.160 how inflation was in the seventies, and you'll hear reference 0:09:49.240 --> 0:09:52.920 to Paul Volker, who raised raids so fast he crushed 0:09:52.920 --> 0:09:55.600 inflation right, And you might hear that Jerme Powell. The 0:09:55.600 --> 0:09:57.840 current of the FED Reserve doesn't want to be compared 0:09:57.880 --> 0:10:01.120 to Arthur Burns. And so Arthur Burns was raising the 0:10:01.200 --> 0:10:03.959 rates and just when he thought he got out of control, 0:10:04.000 --> 0:10:06.320 he lowered the back down. Of course, then inflation raged on. 0:10:06.679 --> 0:10:09.000 He looked bad. But Vulcar he came in and he 0:10:09.040 --> 0:10:12.160 did it right. But the problem is is that it's 0:10:12.160 --> 0:10:14.560 an eighty year financial revolution cycle, and so you have 0:10:14.600 --> 0:10:16.440 to look back a little bit further, and it seems 0:10:16.440 --> 0:10:19.400 like the most comparable part of history is really in 0:10:19.440 --> 0:10:22.240 the nineteen forties. Now I'm getting a lot of this research. 0:10:22.520 --> 0:10:25.160 Lynn Alden has been amazing. She's got a couple charts 0:10:25.200 --> 0:10:27.679 that really show how this works out. 0:10:27.720 --> 0:10:31.280 That's really helpful. But she talks about how. 0:10:31.120 --> 0:10:34.160 The nineteen forties and the nineteen twenties are very similar 0:10:34.440 --> 0:10:37.160 because most of the money supply growth was again from 0:10:37.200 --> 0:10:39.520 the fiscal deficits, right from the government'spin in it, and 0:10:39.600 --> 0:10:42.960 mostly both nineteen forty and twenty twenty related to the 0:10:43.000 --> 0:10:47.560 war and of course twenty twenty pandemic stimulus. Now, in 0:10:47.600 --> 0:10:50.200 the nineteen seventies, most of the money growth was from 0:10:50.280 --> 0:10:54.120 the bank lending, and that was mostly related to demographics. 0:10:54.559 --> 0:10:59.240 And so because the seventies inflation was related to bank lending, well, 0:10:59.440 --> 0:11:01.600 then he raised the rates. People don't borrow, no big deal. 0:11:01.720 --> 0:11:04.280 So that's what happened in the seventies. However, the nineteen 0:11:04.320 --> 0:11:07.679 forties it was different. It was government spending, which was 0:11:07.880 --> 0:11:12.079 the case on that. Now, if Jerome Powell wants to 0:11:12.080 --> 0:11:16.120 treat it like the twenty twenties, then we're probably gonna 0:11:16.160 --> 0:11:17.080 see him fail. 0:11:17.160 --> 0:11:17.680 He's sharply. 0:11:17.880 --> 0:11:19.560 You know, he's been raising rates to try to stop 0:11:19.559 --> 0:11:24.400 that bank lending. But the bank lending isn't the problem. 0:11:24.760 --> 0:11:28.080 Raising or lowering interest rates, changing the price of money 0:11:28.080 --> 0:11:32.679 can only affect money creation and price inflation. But only 0:11:33.080 --> 0:11:35.920 in indirect ways. Now, some people assume that high interest 0:11:36.000 --> 0:11:40.520 rates are necessary, you know, secure price inflation, but that's 0:11:40.600 --> 0:11:44.679 not historically the case. In some context, it's neither necessary 0:11:44.840 --> 0:11:48.400 nor even sufficient, because again, they're just one tool. It's 0:11:48.400 --> 0:11:50.280 sort of like when you hear like the Fed's going 0:11:50.360 --> 0:11:53.200 to have a soft landing, you would imagine like they're 0:11:53.280 --> 0:11:56.120 like a like a like a jet, you know, with 0:11:56.280 --> 0:11:58.440 all the gauges and switches and knobs in there, and 0:11:58.679 --> 0:12:01.760 they can finally too, you know, how this thing is flying. 0:12:01.760 --> 0:12:03.560 But the reality is it's like a hot air balloon. 0:12:04.080 --> 0:12:04.840 They have one lever. 0:12:05.679 --> 0:12:08.040 They can pull the lever and let the hot air out, 0:12:08.480 --> 0:12:11.400 inflation up, and they can close it inflation down. That's 0:12:11.440 --> 0:12:14.880 really all they have. Inflation up, inflation down. And so 0:12:15.200 --> 0:12:18.520 they are trying to fight this with the wrong tools, 0:12:18.640 --> 0:12:20.920 which of course is never going to work. The nineteen 0:12:21.000 --> 0:12:24.160 forties inflation, both in the US and even some more, 0:12:24.320 --> 0:12:27.560 you know, all across the world really globally, was again 0:12:27.800 --> 0:12:31.040 it was all about to monetize fiscal spending on the war. 0:12:31.320 --> 0:12:35.040 And when the war stopped, the fiscal deficit spending stopped, 0:12:35.640 --> 0:12:38.720 the rapid money creation stopped, and then of course, yes 0:12:39.080 --> 0:12:42.960 inflation stopped. As the war ended, the global supply chain 0:12:43.000 --> 0:12:45.000 started to improve, and then productivity return. 0:12:45.080 --> 0:12:46.720 So you had two things. 0:12:46.760 --> 0:12:49.200 One, you had all that money that stopped being spent 0:12:49.280 --> 0:12:53.000 into the economy, and at the same time you improved productivity, 0:12:53.040 --> 0:12:57.480 you lowered demand and increased supply. Guess what happens you 0:12:57.520 --> 0:13:01.880 bring down prices. Imagine that. But if we look at 0:13:01.920 --> 0:13:05.040 other examples, we can see where things have really gotten 0:13:05.120 --> 0:13:08.679 away from this, like Turkey. For example, Turkey has eighty 0:13:08.720 --> 0:13:11.600 percent year over year inflation, well at least at the peak, 0:13:12.360 --> 0:13:16.040 and their interest rates were between eight percent and eighteen percent, 0:13:16.120 --> 0:13:19.440 so obviously way below the eighty percent, and then of 0:13:19.440 --> 0:13:22.840 course consumer level interest rates were you know, they're higher 0:13:22.880 --> 0:13:25.640 than that, but it's a massive amount of inflation relative 0:13:25.720 --> 0:13:28.840 to the interest rates, and so when that happens, it 0:13:28.920 --> 0:13:33.160 creates a very strong market incentive for people to borrow 0:13:33.640 --> 0:13:36.160 against that currency. So, for example, just to kind of 0:13:36.200 --> 0:13:38.720 lay this out, the Turkish lera, that's what we're talking about. 0:13:38.720 --> 0:13:42.880 It's gone down eighty percent, It's gone down about ninety 0:13:42.920 --> 0:13:45.400 five percent to the US dollar like over the last 0:13:45.440 --> 0:13:48.520 five years. So if you were in Turkey and using 0:13:48.559 --> 0:13:50.319 Turkish lira and you knew that it was going to 0:13:50.360 --> 0:13:51.920 go down to time machine and go back in time 0:13:51.920 --> 0:13:52.400 five years. 0:13:52.400 --> 0:13:53.360 What should you have done. 0:13:54.960 --> 0:13:57.880 You should have gotten out of Turkish lera. You should 0:13:57.880 --> 0:14:00.959 have exchanged as much as you could of it four dollars. 0:14:01.160 --> 0:14:03.319 That would have been good. What would have been better? 0:14:03.920 --> 0:14:06.240 What would have been better would be to borrow as 0:14:06.360 --> 0:14:09.040 much as you could in Turkish lira and then use 0:14:09.080 --> 0:14:12.600 it to buy US dollars, gold stocks, real estate, bitcoin, art, 0:14:12.720 --> 0:14:16.680 anything wine, anything that'd be expected to have a better 0:14:17.800 --> 0:14:21.000 return than the lira, which is almost anything. And by 0:14:21.040 --> 0:14:24.320 borrowing lira they could create more lira because remember we're 0:14:24.320 --> 0:14:27.040 in a debt based system, so you borrow it into existence. 0:14:29.200 --> 0:14:30.880 And even if they don't, you know, or they can't 0:14:30.920 --> 0:14:33.320 borrow it, they could simply refuse to hold it, which 0:14:33.400 --> 0:14:36.360 also contributes to the collapse of the currency. 0:14:36.440 --> 0:14:37.680 So this is a big problem. 0:14:37.680 --> 0:14:41.160 It's what known as like a speculative attack, where you 0:14:41.200 --> 0:14:44.600 can borrow the currency, you can sell against it. Basically 0:14:44.640 --> 0:14:50.080 nobody wants to hold it, so in these types of situations, historically, 0:14:50.160 --> 0:14:52.520 raising interest rates above the inflation rate is a key 0:14:52.600 --> 0:14:55.440 method to try to slow down the bank lending right, 0:14:55.680 --> 0:14:57.960 and then they would hope to slow down the broad 0:14:58.080 --> 0:15:02.320 money supply, and it works. It works good when that's 0:15:02.320 --> 0:15:05.880 the problem bank lendings. The problem, however, the problem is 0:15:06.000 --> 0:15:09.480 when that's not the problem, it's not going to work. Now, 0:15:09.600 --> 0:15:12.680 if inflation is caused by the runaway fiscal debts, which 0:15:12.680 --> 0:15:15.000 is what we're talking about here, then of course high 0:15:15.040 --> 0:15:18.440 interest rates they're not going to matter because the central bank, 0:15:18.880 --> 0:15:21.200 the government's going to spend the money regardless, they don't 0:15:21.200 --> 0:15:23.800 really care what it is they're borrowing the money anyway, 0:15:24.320 --> 0:15:27.920 forces the commercial banks and the central banks to finance 0:15:27.960 --> 0:15:32.520 the government's runaway fiscal deficits. Now, first when they raise rates, 0:15:32.560 --> 0:15:34.960 you might see a little bit of an effect, which 0:15:35.000 --> 0:15:37.200 we did slowed the economy down a little bit, but 0:15:37.360 --> 0:15:40.560 over time, raising interest rates and then keeping them high 0:15:40.640 --> 0:15:44.000 in an environment where there's runaway government deficits and high 0:15:44.000 --> 0:15:48.280 government debts, where they're causing inflation, then it runs the 0:15:48.360 --> 0:15:52.680 risk of making the inflation even worse. High interest rates 0:15:52.680 --> 0:15:55.320 on large amounts of government debt, especially when they get 0:15:55.360 --> 0:15:58.200 over ninety percent jet to GDP, which now we're up 0:15:58.240 --> 0:16:00.840 to about one to twenty five, it's always going to 0:16:00.920 --> 0:16:04.760 result in even bigger runaway debts because now they're dealing 0:16:04.760 --> 0:16:07.200 with a ballooning interest payments on the debt, and of 0:16:07.200 --> 0:16:11.720 course this ironically pushes even more money into the economy. Surprise, surprise. 0:16:13.040 --> 0:16:14.880 So if the FED, like if we went back to 0:16:14.960 --> 0:16:17.080 nineteen forty, if the FED would have raised rates really 0:16:17.080 --> 0:16:20.680 sharply in the nineteen forties war, it wouldn't have reduced inflation. 0:16:20.800 --> 0:16:23.680 It could have easily made it much worse, because of 0:16:23.720 --> 0:16:26.680 course the FED and the banking system we're stuck monetizing 0:16:26.680 --> 0:16:28.560 the fiscal deficits anyway. 0:16:28.600 --> 0:16:30.040 But I get it. 0:16:30.040 --> 0:16:33.160 It's kind of hard to understand, isn't it. But let's 0:16:33.240 --> 0:16:35.640 just say, damned if they do, damned if they don't. 0:16:36.760 --> 0:16:39.640 If they continue to leave. 0:16:39.560 --> 0:16:42.400 Rates low, then people continue to borrow money and will 0:16:42.400 --> 0:16:45.840 continue to push inflation. If they raise rates high, people 0:16:45.840 --> 0:16:49.560 won't borrow the money, but the government will, especially considering 0:16:49.600 --> 0:16:52.720 their tax receipts will drop and the interest on their 0:16:52.720 --> 0:16:55.520 debt will be going up at the same time. So 0:16:55.960 --> 0:16:59.720 what can the FED do? Unfortunately, there's nothing they can 0:16:59.720 --> 0:17:01.480 do to fix it at this point. Put there is 0:17:01.480 --> 0:17:05.119 something they can do to continue the game. And this 0:17:05.200 --> 0:17:07.000 is like I said earlier at the intro, this is 0:17:07.000 --> 0:17:09.520 what every nation has tried to do from the beginning 0:17:09.520 --> 0:17:12.320 of time. It's the final stages. I'm going to talk 0:17:12.359 --> 0:17:13.959 about that in just a minute, but I gotta take 0:17:13.960 --> 0:17:15.600 a quick break. If you're just tuning in, you're listening 0:17:15.600 --> 0:17:17.200 to the Mark mass Show. Of course, we're always talking 0:17:17.200 --> 0:17:18.959 about the decentralized revolution. 0:17:19.080 --> 0:17:19.960 We are talking about. 0:17:19.800 --> 0:17:23.640 Here the financial revolution cycle, the eighty year of financial 0:17:23.680 --> 0:17:26.320 revolution cycle, and how the FED is in the proverbial 0:17:26.400 --> 0:17:28.800 rock in a hard place with nowhere to go. I'm 0:17:28.800 --> 0:17:30.600 going to come back and we're going to talk about 0:17:30.760 --> 0:17:33.520 the endgame and this third scary solution. 0:17:33.600 --> 0:17:35.320 But I'm gonna take a quick break. Don't go away. 0:17:35.440 --> 0:17:39.560 I'll be right back. Hey, welcome back. 0:17:39.640 --> 0:17:41.640 If you're just tune in, you're listening to the Mark 0:17:41.720 --> 0:17:44.320 Moss Show. Of course, we're always talking about the decentralized revolution, 0:17:44.680 --> 0:17:47.760 and I always talk about three revolutionary cycles. Today we're 0:17:47.800 --> 0:17:51.399 talking about one of those, which is the financial revolution cycle, 0:17:51.720 --> 0:17:53.520 and how that is happening right now. Of course, we're 0:17:53.520 --> 0:17:55.600 talking about how the FEDS back is against the wall, 0:17:55.800 --> 0:17:58.399 and we're talking about specifically how they've been raising rates 0:17:58.680 --> 0:18:01.320 to try to bring inflation down. And I was saying 0:18:01.359 --> 0:18:04.439 how most people think about the seventies inflation and the 0:18:04.480 --> 0:18:07.520 Paul Volker and the Arthur Burns and how that's wrong, 0:18:07.560 --> 0:18:09.359 and really you need to look at the forties for 0:18:09.440 --> 0:18:11.119 better inflation to understand it. 0:18:11.119 --> 0:18:13.280 Because what the Fed is doing, they're. 0:18:13.080 --> 0:18:16.240 Trying to attack the wrong thing. They're trying to make 0:18:16.359 --> 0:18:19.359 you and I retail spending go down. But the problem 0:18:19.400 --> 0:18:21.840 is it's the governments that are spending the spending the money. 0:18:21.960 --> 0:18:25.040 And the problem is is that the more they raise rates, 0:18:25.400 --> 0:18:27.320 the worse it gets for the government, and the more 0:18:27.400 --> 0:18:31.320 money they spend. It's deficit spending. That's what we're talking about. 0:18:31.320 --> 0:18:33.960 And like you and I, when we go broke, we 0:18:34.000 --> 0:18:38.520 stop spending money. The government doesn't. The government doesn't. The 0:18:38.520 --> 0:18:43.040 government just runs bigger deficits. That's what they do. And 0:18:43.080 --> 0:18:47.320 so when inflation is caused by runaway fiscal deficits government deficits, 0:18:47.640 --> 0:18:49.600 then high interest rates won't stop it. 0:18:49.600 --> 0:18:50.680 They won't do much to do it. 0:18:50.880 --> 0:18:52.480 And basically what it does is because like I said, 0:18:52.480 --> 0:18:55.000 it forces the governments to just finance it. It forces 0:18:55.040 --> 0:18:58.040 the governments to borrow even more money. But the problem 0:18:58.160 --> 0:18:59.760 is is, like I said, is that as the FED 0:18:59.800 --> 0:19:03.520 is rates and then the government's borrowing more money, the 0:19:03.560 --> 0:19:06.360 cost of that borrowing goes up. But it also does 0:19:06.400 --> 0:19:10.239 something else that's really bad. What it also does is, 0:19:10.920 --> 0:19:14.560 as they're trying to bring you and I are spending down, 0:19:14.560 --> 0:19:17.840 consumer spending down, they're making us broke. So our houses 0:19:17.840 --> 0:19:19.800 aren't worth as much, our stocks aren't worth as much. 0:19:19.800 --> 0:19:22.160 We're not buying and selling as much stuff, but we're 0:19:22.200 --> 0:19:24.639 not making as much money. And what that does is 0:19:24.680 --> 0:19:27.760 then we don't pay as much taxes, So it's a 0:19:27.800 --> 0:19:30.280 double whamming for the government. One they don't get near 0:19:30.280 --> 0:19:33.639