1 00:00:00,240 --> 00:00:01,040 Speaker 1: Price controls. 2 00:00:01,280 --> 00:00:02,160 Speaker 2: They're coming now. 3 00:00:02,240 --> 00:00:04,600 Speaker 1: Kamala is talking about it now, but it's nothing new 4 00:00:04,800 --> 00:00:07,960 Speaker 1: except for that. Now it's making mainstream news and they're 5 00:00:08,000 --> 00:00:11,360 Speaker 1: saying the quiet part out loud. Now again another lawmaker, 6 00:00:11,480 --> 00:00:14,560 Speaker 1: this time just happening to be Kamala thinks she can 7 00:00:14,600 --> 00:00:17,239 Speaker 1: now pick the price of bread, bacon, or lettuce, even 8 00:00:17,280 --> 00:00:19,200 Speaker 1: though she probably hasn't been to a grocery store in 9 00:00:19,200 --> 00:00:21,439 Speaker 1: the last four years since she's been in office, nor 10 00:00:21,480 --> 00:00:24,079 Speaker 1: has she ever ran a farm or any business for 11 00:00:24,120 --> 00:00:27,520 Speaker 1: that matter. And just like here, dozens of other leaders 12 00:00:27,680 --> 00:00:30,920 Speaker 1: from the Roman Empire to the Soviets to Venezuela, and 13 00:00:31,000 --> 00:00:34,519 Speaker 1: even the US President Richard Nixon thought he could give 14 00:00:34,560 --> 00:00:37,000 Speaker 1: it a go. And the results, well, the results have 15 00:00:37,159 --> 00:00:40,159 Speaker 1: always been the same. But because it's been tried so 16 00:00:40,280 --> 00:00:43,920 Speaker 1: many times with predictable results, we also have a playbook 17 00:00:44,000 --> 00:00:46,760 Speaker 1: that we can follow to protect ourselves. So in this video, 18 00:00:46,760 --> 00:00:48,800 Speaker 1: we're going to take a look at what Kamala and 19 00:00:48,840 --> 00:00:51,840 Speaker 1: other politicians are saying. We're gonna look at the prices 20 00:00:51,880 --> 00:00:54,360 Speaker 1: to understand what price gouging is. 21 00:00:54,520 --> 00:00:55,200 Speaker 2: We're gonna look. 22 00:00:55,120 --> 00:00:59,080 Speaker 1: At soaring corporate profits since the pandemic. We're gonna examine 23 00:00:59,160 --> 00:01:02,720 Speaker 1: Richard Nixon's previous attempt right here in the United States, 24 00:01:03,120 --> 00:01:04,960 Speaker 1: and we're going to look at how we can protect 25 00:01:05,000 --> 00:01:07,040 Speaker 1: ourselves as this progresses. 26 00:01:07,319 --> 00:01:10,120 Speaker 2: So let's go now. Uh oh, just real quick. If 27 00:01:10,120 --> 00:01:11,920 Speaker 2: you're new to the channel, my name is Mark Mawson. 28 00:01:11,959 --> 00:01:16,440 Speaker 1: I've been making these videos to help people understand economies, markets, 29 00:01:16,760 --> 00:01:20,080 Speaker 1: business so they could live a more wealthy life. 30 00:01:20,120 --> 00:01:23,440 Speaker 2: Now I'm not some academic. Instead, I've been in the trenches. 31 00:01:23,480 --> 00:01:26,360 Speaker 1: I've been building businesses for two decades, dealing with the 32 00:01:26,560 --> 00:01:29,600 Speaker 1: ups and downs of the FEDS reckless boom and bust economies, 33 00:01:29,840 --> 00:01:32,680 Speaker 1: trying to earn a profit, trying to keep my employees 34 00:01:32,720 --> 00:01:35,720 Speaker 1: working while trying to make enough profit to provide for 35 00:01:35,800 --> 00:01:38,959 Speaker 1: my own family. So I'm live this all right, something 36 00:01:39,000 --> 00:01:41,600 Speaker 1: that you know, these politicians have never done. 37 00:01:41,680 --> 00:01:43,440 Speaker 2: So let's just go ahead, just jump right into it, 38 00:01:45,240 --> 00:01:45,600 Speaker 2: all right. 39 00:01:45,640 --> 00:01:49,720 Speaker 1: So, price controls a brand new idea or no, not really. 40 00:01:49,840 --> 00:01:52,480 Speaker 1: As we've talked about, it's something that we've seen since 41 00:01:52,520 --> 00:01:56,560 Speaker 1: the Roman Empire all the way up. Yeah now today. Now, 42 00:01:56,840 --> 00:02:01,920 Speaker 1: what is basically being proposed is stopping price gougers, stopping 43 00:02:02,080 --> 00:02:06,000 Speaker 1: greedy businesses from gouging people of prices, which sounds really 44 00:02:06,040 --> 00:02:08,840 Speaker 1: good gets public support. But we're really talking about is 45 00:02:08,919 --> 00:02:12,040 Speaker 1: setting the price of goods. Now, let me just say 46 00:02:12,080 --> 00:02:14,679 Speaker 1: that all goods, the majority of goods in the world, 47 00:02:14,680 --> 00:02:17,799 Speaker 1: at least in America, are denominated in US dollars. 48 00:02:17,800 --> 00:02:19,120 Speaker 2: How much is a home four. 49 00:02:19,080 --> 00:02:21,000 Speaker 1: Hundred thousand dollars? How much is a gallon of milk, 50 00:02:21,120 --> 00:02:23,160 Speaker 1: you know whatever, I don't even know five dollars? How 51 00:02:23,200 --> 00:02:25,079 Speaker 1: much is a gallon of gas? Right, So it's all 52 00:02:25,120 --> 00:02:28,960 Speaker 1: denominating dollars. And when the government, or really the Federal 53 00:02:29,000 --> 00:02:33,320 Speaker 1: Reserve sets monetary policy, they are setting the price of money. 54 00:02:33,480 --> 00:02:34,840 Speaker 2: And when they set the price of money, they're setting 55 00:02:34,840 --> 00:02:35,480 Speaker 2: the price of all goods. 56 00:02:35,520 --> 00:02:38,400 Speaker 1: But we're gonna talk about actual goods and services today, 57 00:02:38,520 --> 00:02:41,120 Speaker 1: So they're setting the price of goods and services. We 58 00:02:41,160 --> 00:02:42,919 Speaker 1: can see all the headlines, of course, I don't have 59 00:02:42,960 --> 00:02:44,640 Speaker 1: to tell you. I'm sure you've heard a million times 60 00:02:44,680 --> 00:02:48,360 Speaker 1: by now. Kamala Harris unveils an economic plan, including a 61 00:02:48,440 --> 00:02:51,320 Speaker 1: whopping one point seven trillion handouts. 62 00:02:52,000 --> 00:02:53,360 Speaker 2: We'll come back to that in a second. 63 00:02:53,520 --> 00:02:57,080 Speaker 1: One point seven trillion handouts and a ban on grocery 64 00:02:57,120 --> 00:03:01,120 Speaker 1: store price gouging. Those greedy grocery tree stores. We're going 65 00:03:01,160 --> 00:03:04,480 Speaker 1: to look at grocery stores specifically, so price gouging. So basically, 66 00:03:04,760 --> 00:03:07,760 Speaker 1: we're going to set the price that they can't sell 67 00:03:07,800 --> 00:03:11,280 Speaker 1: above gouging sounds a lot better for their media, so 68 00:03:11,320 --> 00:03:13,880 Speaker 1: they get more public support. Basically, what she's saying is 69 00:03:13,919 --> 00:03:16,680 Speaker 1: we're going to set a price that grocery stores cannot 70 00:03:16,720 --> 00:03:19,760 Speaker 1: sell over. That's exactly what they're talking about. Now, this 71 00:03:19,840 --> 00:03:21,399 Speaker 1: has been coming for a long time. I've been talking 72 00:03:21,400 --> 00:03:23,680 Speaker 1: about this for a long time. This is a trend, 73 00:03:23,720 --> 00:03:26,320 Speaker 1: and so we look at data, we look at charts, 74 00:03:26,400 --> 00:03:28,960 Speaker 1: we want to understand the trend, the direction we're going in. 75 00:03:29,040 --> 00:03:31,760 Speaker 1: It's not always what we have today we're trying to 76 00:03:32,120 --> 00:03:34,040 Speaker 1: be in front of. We're trying to front run the information. 77 00:03:34,080 --> 00:03:36,520 Speaker 1: So it's the trend. So we can see here. This 78 00:03:36,720 --> 00:03:41,080 Speaker 1: was Senator Elizabeth Warren, no friend to any business or investor, 79 00:03:41,440 --> 00:03:44,920 Speaker 1: back in twenty twenty one. So several years ago, one 80 00:03:45,440 --> 00:03:48,960 Speaker 1: Senator Warren calls for the Department of Justice to actually 81 00:03:48,960 --> 00:03:52,960 Speaker 1: go and investigate companies selling turkeys for what she called 82 00:03:53,000 --> 00:03:58,440 Speaker 1: price gouging top poultry companies, anti competitive practices because turkey 83 00:03:58,480 --> 00:04:02,120 Speaker 1: prices were so high. Okay, so she's been talking about 84 00:04:02,400 --> 00:04:05,120 Speaker 1: cracking down on these greedy businesses and setting the price 85 00:04:05,160 --> 00:04:08,080 Speaker 1: of what they can sell turkeys for. We had President 86 00:04:08,200 --> 00:04:11,160 Speaker 1: Biden go on and make sort of like a public 87 00:04:11,320 --> 00:04:14,640 Speaker 1: service announcement right before the Super Bowl last year. So 88 00:04:14,800 --> 00:04:17,640 Speaker 1: when the time the most Americans are watching TV at 89 00:04:17,680 --> 00:04:19,159 Speaker 1: one time, he ran a PSA. 90 00:04:19,400 --> 00:04:21,960 Speaker 2: Let's listen to what he had to say super Bowl Sunday. 91 00:04:22,560 --> 00:04:23,520 Speaker 3: There anything like me? 92 00:04:23,680 --> 00:04:25,760 Speaker 1: You'd like to be surrounded by a snack or two 93 00:04:25,960 --> 00:04:27,119 Speaker 1: while watching the big Game. 94 00:04:27,640 --> 00:04:29,920 Speaker 3: You know, when buying snacks for the game, you might 95 00:04:29,920 --> 00:04:32,159 Speaker 3: have noticed one thing sports drinks. 96 00:04:31,839 --> 00:04:34,919 Speaker 1: Bottles are smaller bag of chips is sureer chips. 97 00:04:35,040 --> 00:04:37,800 Speaker 2: They're still charging in chest as much as an ice 98 00:04:37,800 --> 00:04:38,200 Speaker 2: cream lever. 99 00:04:38,360 --> 00:04:40,320 Speaker 1: What makes me the most angry is the ice cream 100 00:04:40,360 --> 00:04:43,839 Speaker 1: carts that have actually shrunk insides, no on price. 101 00:04:44,240 --> 00:04:46,480 Speaker 2: I've had enough of what they called shrinkslation. 102 00:04:47,120 --> 00:04:49,200 Speaker 1: I'm calling their companies to put a stop to this. 103 00:04:49,960 --> 00:04:53,360 Speaker 2: Let's make sure businesses do the right thing now, all right. 104 00:04:53,440 --> 00:04:55,040 Speaker 2: So he's saying this shrinkflation. 105 00:04:55,240 --> 00:04:58,839 Speaker 1: You know, customed or brands are now selling less goods 106 00:04:58,839 --> 00:05:02,280 Speaker 1: for the same price trainflation, and he's not going to 107 00:05:02,440 --> 00:05:03,120 Speaker 1: stand for it. 108 00:05:03,120 --> 00:05:03,680 Speaker 2: What does that mean? 109 00:05:03,880 --> 00:05:06,279 Speaker 1: Well, he's going to come in and tell businesses what 110 00:05:06,320 --> 00:05:08,480 Speaker 1: they can sell for. All right, So this has been 111 00:05:08,520 --> 00:05:11,360 Speaker 1: coming for a long time now. It's not just a 112 00:05:11,400 --> 00:05:15,000 Speaker 1: partisan it's not just Republicans are scared about this or Democrats. 113 00:05:15,200 --> 00:05:16,240 Speaker 2: It's both sides. 114 00:05:16,279 --> 00:05:19,800 Speaker 1: So here we have a video on CNN, which is 115 00:05:19,839 --> 00:05:22,440 Speaker 1: of course more of a democratic news station, and let's 116 00:05:22,440 --> 00:05:24,680 Speaker 1: hear what they have to say about these plans that 117 00:05:24,720 --> 00:05:25,800 Speaker 1: Kamala wants to roll out. 118 00:05:26,920 --> 00:05:29,040 Speaker 2: We've seen it happen in Venezuela. We've seen it happened 119 00:05:29,040 --> 00:05:31,680 Speaker 2: in the Soviet Union. Price controls just don't work. It 120 00:05:31,720 --> 00:05:33,680 Speaker 2: expresses a level of economic literacy. 121 00:05:33,800 --> 00:05:36,400 Speaker 3: We've seen this kind of thing tried in the lots 122 00:05:36,400 --> 00:05:41,359 Speaker 3: of other countries before Venezuela, Argentina, the Soviet Union, et cetera. 123 00:05:41,839 --> 00:05:46,520 Speaker 3: It leads to shortages, it leads to black markets, you know, 124 00:05:47,240 --> 00:05:48,560 Speaker 3: plenty of uncertainty. 125 00:05:48,680 --> 00:05:51,880 Speaker 4: It sounded a lot like this notion that we were 126 00:05:51,880 --> 00:05:55,120 Speaker 4: going to set price controls and that if we were 127 00:05:55,200 --> 00:05:58,200 Speaker 4: returning to the nineteen seventies, you can't pay more than 128 00:05:58,279 --> 00:06:00,800 Speaker 4: let's say, two dollars and fifty cents milk, and if 129 00:06:00,839 --> 00:06:03,400 Speaker 4: you do, we're gonna charge the grocery store with some 130 00:06:03,520 --> 00:06:07,000 Speaker 4: criminal act. And obviously this hasn't worked these sorts of 131 00:06:07,040 --> 00:06:09,040 Speaker 4: policies in Venezuela or. 132 00:06:08,960 --> 00:06:09,799 Speaker 2: So it be at pressure. 133 00:06:10,080 --> 00:06:13,960 Speaker 1: Okay, so you can hear everyone knows these are bad ideas. 134 00:06:14,000 --> 00:06:16,320 Speaker 1: Everyone's scared and a lot of people are scared that 135 00:06:16,839 --> 00:06:19,159 Speaker 1: she's running on this platform because she thinks it could 136 00:06:19,520 --> 00:06:19,880 Speaker 1: They think it. 137 00:06:19,880 --> 00:06:21,440 Speaker 2: Could actually torpedo her career. 138 00:06:22,320 --> 00:06:24,080 Speaker 1: But the problem is gained a lot of public support 139 00:06:24,080 --> 00:06:26,800 Speaker 1: because the public don't know. But I'm gonna break it 140 00:06:26,839 --> 00:06:28,240 Speaker 1: down for you right now. I do want to just 141 00:06:28,240 --> 00:06:30,080 Speaker 1: say real quickly as something I've been talking about for 142 00:06:30,120 --> 00:06:32,200 Speaker 1: a long time. Of course, I've been pounding the table 143 00:06:32,200 --> 00:06:35,479 Speaker 1: on inflation, inflation, inflation, and I said that since the 144 00:06:35,560 --> 00:06:39,200 Speaker 1: FED has been stuck between a rock and a hard place, basically, 145 00:06:39,200 --> 00:06:42,640 Speaker 1: whether they cut or they print, all roads lead to 146 00:06:42,680 --> 00:06:43,320 Speaker 1: more inflation. 147 00:06:43,880 --> 00:06:46,159 Speaker 2: And I said there was a third scarier option. 148 00:06:46,279 --> 00:06:48,400 Speaker 1: The third scarier option is, well, but if we just 149 00:06:48,880 --> 00:06:52,080 Speaker 1: cut prices or cap prices, and that's exactly where we 150 00:06:52,160 --> 00:06:52,919 Speaker 1: find ourselves. 151 00:06:53,120 --> 00:06:54,400 Speaker 2: Okay, So all. 152 00:06:54,400 --> 00:06:58,160 Speaker 1: Right now, Senator Warren Biden and Kamala they're all talking 153 00:06:58,200 --> 00:07:00,600 Speaker 1: about food. They're talking about price gout gin on food 154 00:07:00,600 --> 00:07:02,200 Speaker 1: because of course that affects the poor people, and they 155 00:07:02,240 --> 00:07:04,440 Speaker 1: can't afford to eat anymore, apparently, So we're gonna look 156 00:07:04,440 --> 00:07:06,920 Speaker 1: at food. But before we do, as a thought experiment, 157 00:07:07,200 --> 00:07:09,360 Speaker 1: let's just look at price gouging for a minute. And 158 00:07:09,440 --> 00:07:13,160 Speaker 1: let's look at maybe the most often cited example of 159 00:07:13,520 --> 00:07:15,720 Speaker 1: price gouging, which is drug prices. 160 00:07:15,720 --> 00:07:16,960 Speaker 2: You hear about this quite often. 161 00:07:17,000 --> 00:07:19,000 Speaker 1: So there was this tweet that went up the other 162 00:07:19,080 --> 00:07:22,080 Speaker 1: day and it was this guy, what is his. 163 00:07:22,080 --> 00:07:23,640 Speaker 2: Name, Warren Gunwales. I don't know where. 164 00:07:23,640 --> 00:07:24,840 Speaker 1: They want to give him a lot of credibility. You 165 00:07:24,840 --> 00:07:28,480 Speaker 1: shouldn't follow him, but he said that price controls are actually. 166 00:07:28,120 --> 00:07:30,480 Speaker 2: A good thing. Well, let's just take a look at this. 167 00:07:30,600 --> 00:07:34,520 Speaker 1: So price of ozepic first of all, and you don't 168 00:07:34,560 --> 00:07:36,240 Speaker 1: need to pay for ozempic. You can go to the 169 00:07:36,240 --> 00:07:38,440 Speaker 1: gym and just eat less. You're probably not gonna like that. 170 00:07:38,520 --> 00:07:40,160 Speaker 2: Leave me a comment, tell me how much how bad 171 00:07:40,200 --> 00:07:42,240 Speaker 2: that is? But it costs He says, it. 172 00:07:42,240 --> 00:07:46,120 Speaker 1: Costs five dollars to make ozepic five bucks, but in 173 00:07:46,160 --> 00:07:48,600 Speaker 1: the US they sell it for nine hundred and sixty 174 00:07:48,680 --> 00:07:49,480 Speaker 1: nine dollars. 175 00:07:49,760 --> 00:07:50,840 Speaker 2: What a ripoff? 176 00:07:52,600 --> 00:07:54,640 Speaker 1: What a ripoff? Okay, well, let's just take a look 177 00:07:54,640 --> 00:07:57,160 Speaker 1: at that. Is it a ripoff? Let's think about this 178 00:07:57,200 --> 00:07:58,760 Speaker 1: for a minute. Now, Like I said, you could just 179 00:07:58,800 --> 00:08:01,640 Speaker 1: die an exercise, or you can pay for this now. 180 00:08:01,640 --> 00:08:04,000 Speaker 2: This tweet Robert Sterling was a really good take. 181 00:08:04,040 --> 00:08:06,240 Speaker 1: And this is the thought experiment we're using as an 182 00:08:06,240 --> 00:08:10,120 Speaker 1: extreme example. Let's just say a scientist invents a product 183 00:08:10,120 --> 00:08:14,000 Speaker 1: that costs five dollars per unit, likeozempic. So they invented 184 00:08:14,000 --> 00:08:16,960 Speaker 1: this and it only costs them about five dollars, all right, 185 00:08:17,120 --> 00:08:20,640 Speaker 1: five bucks for the raw materials and the direct labor 186 00:08:20,680 --> 00:08:23,640 Speaker 1: cost to manufacturer. So obviously to manufacture are right cheap 187 00:08:23,640 --> 00:08:26,320 Speaker 1: because the robots just basically compressed the powder together. So 188 00:08:26,360 --> 00:08:28,440 Speaker 1: the raw materials and the labor is about five bucks 189 00:08:28,520 --> 00:08:31,480 Speaker 1: to produce it, so then it costs five bucks to 190 00:08:31,480 --> 00:08:34,080 Speaker 1: make it. He asked, what's a fair price to charge 191 00:08:34,080 --> 00:08:37,440 Speaker 1: for that? Well, they shouldn't be able to charge more 192 00:08:37,480 --> 00:08:40,319 Speaker 1: than two or three times. Okay, why right, we'll get 193 00:08:40,320 --> 00:08:43,200 Speaker 1: to that. Should she be allowed to charge ten dollars 194 00:08:43,240 --> 00:08:45,400 Speaker 1: for a fifty percent gross margin? Is that? 195 00:08:45,760 --> 00:08:45,960 Speaker 2: Is that? 196 00:08:46,000 --> 00:08:49,560 Speaker 1: Beir What about charging five hundred for a ninety nine 197 00:08:49,600 --> 00:08:50,720 Speaker 1: percent gross margin? 198 00:08:51,240 --> 00:08:53,319 Speaker 2: On top of that? What if I told you? 199 00:08:53,400 --> 00:08:55,720 Speaker 1: If you think about the second, third, fourth order thinking, 200 00:08:55,960 --> 00:08:58,360 Speaker 1: what if I told you the scientist expects to sell 201 00:08:58,440 --> 00:09:02,280 Speaker 1: one million units of this new medicine, and that the 202 00:09:02,320 --> 00:09:07,080 Speaker 1: scientists will generate nearly five hundred million dollars of gross 203 00:09:07,120 --> 00:09:10,000 Speaker 1: profit off of that off of just a off of 204 00:09:10,120 --> 00:09:12,679 Speaker 1: just five million dollars in direct cost, because it's only 205 00:09:12,720 --> 00:09:14,040 Speaker 1: costing her five bucks to make it. 206 00:09:14,360 --> 00:09:15,560 Speaker 2: So what if she's going to make. 207 00:09:15,480 --> 00:09:20,320 Speaker 1: Five hundred million off of only five million in direct cost? 208 00:09:20,600 --> 00:09:24,240 Speaker 1: But see the keyword being direct cost. That sounds really unfair, right, 209 00:09:24,480 --> 00:09:27,040 Speaker 1: Like we can probably get Elizabeth Warren and Kamalada get 210 00:09:27,040 --> 00:09:29,200 Speaker 1: a lot of support for that because it sounds so unfair. Right, 211 00:09:29,480 --> 00:09:32,720 Speaker 1: Why should she be allowed to sell something for such 212 00:09:32,720 --> 00:09:36,840 Speaker 1: a markup that cost her less money? Right, that's the 213 00:09:36,920 --> 00:09:37,480 Speaker 1: question to ask. 214 00:09:37,520 --> 00:09:40,400 Speaker 2: But let's just think through this, Okay, So. 215 00:09:42,480 --> 00:09:46,120 Speaker 1: What if what if she had invested one billion of 216 00:09:46,120 --> 00:09:48,400 Speaker 1: her own money to create the product? 217 00:09:49,200 --> 00:09:50,520 Speaker 2: So we've looked at. 218 00:09:50,320 --> 00:09:53,040 Speaker 1: Direct cost to manufacture it. But what if she had 219 00:09:53,040 --> 00:09:56,160 Speaker 1: invested a billion dollars of her own money at. 220 00:09:56,080 --> 00:09:58,280 Speaker 2: Risk to create that product. 221 00:09:58,600 --> 00:10:02,240 Speaker 1: What if her gross profit so before overhead, is generating 222 00:10:02,280 --> 00:10:06,560 Speaker 1: just a fifty percent return on her invested capital. You see, 223 00:10:06,720 --> 00:10:09,520 Speaker 1: they're looking at just the direct cost without looking at 224 00:10:09,520 --> 00:10:12,640 Speaker 1: the money that was invested at risk and then using 225 00:10:12,679 --> 00:10:15,280 Speaker 1: that to get a now a fifty percent return on investment. 226 00:10:15,480 --> 00:10:18,040 Speaker 1: But what if I also told you, like an infomercial, 227 00:10:18,240 --> 00:10:20,640 Speaker 1: in addition to the one billion she invested onto the 228 00:10:20,679 --> 00:10:23,840 Speaker 1: research and development to design this new product, she had 229 00:10:23,880 --> 00:10:27,679 Speaker 1: also spent one point five billion on R and D 230 00:10:27,840 --> 00:10:31,640 Speaker 1: research development on other products that never made it to market, right, 231 00:10:31,840 --> 00:10:33,120 Speaker 1: for products that didn't work. 232 00:10:33,200 --> 00:10:34,559 Speaker 2: So she she spent. 233 00:10:34,440 --> 00:10:36,280 Speaker 1: A lot of money to design all these products. 234 00:10:36,320 --> 00:10:38,440 Speaker 2: A couple of them didn't work, one finally did. 235 00:10:38,600 --> 00:10:40,200 Speaker 1: All right, so now she did that they didn't get 236 00:10:40,240 --> 00:10:42,040 Speaker 1: they didn't work at again regulatory approval. 237 00:10:42,360 --> 00:10:43,480 Speaker 2: Would that answer change? 238 00:10:43,520 --> 00:10:47,600 Speaker 1: Knowing that her overall return on invested capital is now 239 00:10:47,760 --> 00:10:51,520 Speaker 1: only twenty percent at most, we might still think that's 240 00:10:51,559 --> 00:10:54,000 Speaker 1: too high. Okay, well let's keep going. Then, Well, what 241 00:10:54,040 --> 00:10:56,200 Speaker 1: if I told you the inventor could have taken her 242 00:10:56,240 --> 00:10:58,880 Speaker 1: two point five billion and instead of putting it at 243 00:10:58,960 --> 00:11:01,959 Speaker 1: risk and doing all that schooling and all that creativity 244 00:11:01,960 --> 00:11:03,760 Speaker 1: and all that hard work and risking the two point 245 00:11:03,840 --> 00:11:06,480 Speaker 1: five billion, she could have taken that and just invested 246 00:11:06,480 --> 00:11:09,079 Speaker 1: it into real estate instead, and she could have made 247 00:11:09,200 --> 00:11:12,360 Speaker 1: fifteen percent as a return on her invested capital. 248 00:11:12,640 --> 00:11:14,839 Speaker 2: In real estate instead. Now would you. 249 00:11:14,800 --> 00:11:17,720 Speaker 1: Change your answer knowing that this brilliant investor, I'm sorry, 250 00:11:17,720 --> 00:11:18,760 Speaker 1: this brilliant inventor. 251 00:11:18,520 --> 00:11:20,480 Speaker 2: Who went to all the schooling was super creative and 252 00:11:20,559 --> 00:11:21,800 Speaker 2: solved this big problem. 253 00:11:22,160 --> 00:11:26,520 Speaker 1: Knowing that she just didn't create products that change people's life. 254 00:11:26,559 --> 00:11:29,040 Speaker 2: She just didn't change or create change. 255 00:11:29,280 --> 00:11:31,200 Speaker 1: She could have easily just taken her money, deployed it 256 00:11:31,200 --> 00:11:34,360 Speaker 1: in the passive opportunities, and sat on a beach. She 257 00:11:34,360 --> 00:11:36,440 Speaker 1: could have bought more single family homes so you couldn't 258 00:11:36,440 --> 00:11:40,400 Speaker 1: afford those things, and done no contribution to society. If 259 00:11:40,480 --> 00:11:44,240 Speaker 1: you don't understand these why questions are relevant, If you 260 00:11:44,240 --> 00:11:47,440 Speaker 1: don't understand why these questions are relevant, or why investor 261 00:11:47,520 --> 00:11:51,800 Speaker 1: returns matter, you might want to put your phone down 262 00:11:52,080 --> 00:11:55,120 Speaker 1: right now and stop making comments. You see a lot 263 00:11:55,120 --> 00:11:57,200 Speaker 1: of people have opinions on these things, but they don't 264 00:11:57,200 --> 00:12:01,560 Speaker 1: really understand this. Why would somebody invest their money into 265 00:12:01,600 --> 00:12:04,160 Speaker 1: this without some expected return of profit? 266 00:12:04,559 --> 00:12:05,960 Speaker 2: They wouldn't. 267 00:12:06,200 --> 00:12:08,120 Speaker 1: Why would they go to all the schooling to be 268 00:12:08,160 --> 00:12:10,080 Speaker 1: creative to solve these problems? If there was no return 269 00:12:10,120 --> 00:12:13,000 Speaker 1: on profit, they wouldn't. They could just go buy the 270 00:12:13,040 --> 00:12:14,679 Speaker 1: real estate and sit on a beach. 271 00:12:14,840 --> 00:12:15,839 Speaker 2: Hopefully that makes sense. 272 00:12:16,040 --> 00:12:19,280 Speaker 1: Okay, Now, why are prices increasing? 273 00:12:19,880 --> 00:12:22,080 Speaker 2: Let's just look at that for a minute. Now, people 274 00:12:22,120 --> 00:12:24,880 Speaker 2: don't know the answer to that. Apparently supposedly right now, 275 00:12:24,880 --> 00:12:25,280 Speaker 2: we don't know. 276 00:12:25,320 --> 00:12:26,680 Speaker 1: And part of the reason why we don't know anymore 277 00:12:26,679 --> 00:12:30,960 Speaker 1: is because they change the definition of inflation. These are 278 00:12:31,000 --> 00:12:33,720 Speaker 1: some really bad takes I found on Twitter. Obviously, like 279 00:12:33,760 --> 00:12:35,760 Speaker 1: I said, this price fixing is all over the news, 280 00:12:35,800 --> 00:12:37,560 Speaker 1: so there's a lot of stuff going on Twitter. Here 281 00:12:37,679 --> 00:12:41,920 Speaker 1: is doctor Jane George from Tennessee. Now, Jane George is 282 00:12:41,920 --> 00:12:45,280 Speaker 1: a six generation Tennessee in a candidate for US Congress. 283 00:12:45,320 --> 00:12:48,120 Speaker 1: So this is somebody who's running for US Congress. She says, 284 00:12:48,160 --> 00:12:51,400 Speaker 1: are you kidding me? In twenty twenty two, Kroger reported 285 00:12:51,440 --> 00:12:56,200 Speaker 1: an operating profit of over four billion dollars. These greedy 286 00:12:56,200 --> 00:12:58,200 Speaker 1: grocery stores. Kroger is one of the largest grocery store 287 00:12:58,240 --> 00:12:59,720 Speaker 1: changes that are out there. If you don't know, they 288 00:13:00,240 --> 00:13:03,520 Speaker 1: over four billion dollars. Walmart had an operating profit of 289 00:13:03,720 --> 00:13:07,800 Speaker 1: twenty one billion. Cost of increase to the consumer every 290 00:13:07,880 --> 00:13:12,120 Speaker 1: year since COVID, the corporations are gouging consumers. She says, 291 00:13:12,520 --> 00:13:15,040 Speaker 1: I want to run for Congress and Tennessee and I'm 292 00:13:15,040 --> 00:13:16,840 Speaker 1: going to support them all and we're gonna stop this 293 00:13:17,000 --> 00:13:22,559 Speaker 1: price gouging. Okay, so they made four billion, let's just 294 00:13:22,600 --> 00:13:25,199 Speaker 1: take a look at that. Let me show you a 295 00:13:25,240 --> 00:13:27,520 Speaker 1: couple more bad takes real quick before we look at 296 00:13:27,679 --> 00:13:30,920 Speaker 1: the actual numbers of how much profit this four billion 297 00:13:31,000 --> 00:13:31,840 Speaker 1: was that Kroger made. 298 00:13:31,880 --> 00:13:33,079 Speaker 2: There's a couple more takes right here. 299 00:13:33,280 --> 00:13:35,320 Speaker 1: So you think price gouging is good and the corporation 300 00:13:35,400 --> 00:13:38,000 Speaker 1: should be allowed to starve Americans so that CEOs can 301 00:13:38,040 --> 00:13:39,400 Speaker 1: get multimillion dollar bonuses. 302 00:13:39,960 --> 00:13:42,679 Speaker 2: Parke gouging is fine. That's what they're saying. That's the 303 00:13:42,720 --> 00:13:43,360 Speaker 2: way to look at this. 304 00:13:43,440 --> 00:13:46,040 Speaker 1: They should be able to just starve Americans these grocery 305 00:13:46,040 --> 00:13:48,720 Speaker 1: stores like Kroger. You must be a wealthy and occult 306 00:13:48,720 --> 00:13:50,800 Speaker 1: and unable to think for yourself, or a troll maybe 307 00:13:50,840 --> 00:13:52,680 Speaker 1: all three. So if you think that it's okay for 308 00:13:52,760 --> 00:13:55,680 Speaker 1: Kroger to make four billion dollars while Americans are starving, 309 00:13:56,040 --> 00:13:59,680 Speaker 1: you're a troll. This guy, for the record, I says 310 00:13:59,679 --> 00:14:04,240 Speaker 1: here grocery chain seeing a three hundred percent increase in 311 00:14:04,320 --> 00:14:07,000 Speaker 1: profits when the cost of goods are only going up 312 00:14:07,040 --> 00:14:10,160 Speaker 1: by ten percent. This guy modern man. If you look 313 00:14:10,200 --> 00:14:13,400 Speaker 1: at his bio he's an economist, but he says that 314 00:14:13,480 --> 00:14:16,760 Speaker 1: grocery store change are seeing a three hundred percent increase 315 00:14:16,880 --> 00:14:19,680 Speaker 1: in profits when the cost of goods will go by 316 00:14:19,720 --> 00:14:22,800 Speaker 1: ten percent. This guy down here, al, what is wrong 317 00:14:22,800 --> 00:14:26,160 Speaker 1: with ensuring food prices aren't artificially inflated? 318 00:14:26,200 --> 00:14:26,840 Speaker 2: Are you dumb? 319 00:14:27,080 --> 00:14:32,000 Speaker 1: Of course we should make sure they're not artificially inflated. Okay, okay, okay, 320 00:14:33,320 --> 00:14:34,160 Speaker 1: let's just break. 321 00:14:33,920 --> 00:14:36,240 Speaker 2: This down for a second. I can't go on past 322 00:14:36,280 --> 00:14:37,080 Speaker 2: with this point. 323 00:14:37,120 --> 00:14:40,800 Speaker 1: In a free market, there is no such thing, and 324 00:14:40,800 --> 00:14:44,040 Speaker 1: there's no possible way to do this. So what happens 325 00:14:44,120 --> 00:14:46,120 Speaker 1: is everybody operates on a profit. 326 00:14:46,720 --> 00:14:49,160 Speaker 2: If I wanted to charge way more and. 327 00:14:49,120 --> 00:14:51,360 Speaker 1: I have this massive profit, guess what's going to happen 328 00:14:51,560 --> 00:14:54,200 Speaker 1: In a free market, competitive environment. Someone is going to 329 00:14:54,200 --> 00:14:56,320 Speaker 1: come compete with me and they'll do the work for 330 00:14:56,440 --> 00:14:57,200 Speaker 1: half the profit. 331 00:14:58,000 --> 00:14:59,360 Speaker 2: But those margins still pretty fat. 332 00:14:59,360 --> 00:15:01,400 Speaker 1: So somebody else will come compete with me and charge 333 00:15:01,440 --> 00:15:04,000 Speaker 1: me for even less, and compete for even less, and eventually, 334 00:15:04,040 --> 00:15:06,960 Speaker 1: in a free market, the competition drives profit margins down 335 00:15:07,000 --> 00:15:08,560 Speaker 1: to where they're barely sustainable. 336 00:15:08,760 --> 00:15:09,480 Speaker 2: If you're like a. 337 00:15:09,400 --> 00:15:11,760 Speaker 1: Contractor or some sort of service provider, you already know 338 00:15:11,800 --> 00:15:15,560 Speaker 1: this your competition makes it where your prices get compressed. 339 00:15:15,800 --> 00:15:18,560 Speaker 1: That's what happens only and only in a system where 340 00:15:18,600 --> 00:15:23,200 Speaker 1: the government imposes regulations and doesn't allow competition. That's the 341 00:15:23,360 --> 00:15:28,400 Speaker 1: only way these fat margins could even be possible. Otherwise 342 00:15:28,400 --> 00:15:30,200 Speaker 1: they're going to get compressed all the way down. But 343 00:15:30,440 --> 00:15:32,520 Speaker 1: let's just look at some of these numbers from an economist. 344 00:15:32,560 --> 00:15:35,960 Speaker 1: Three hundred percent increase in profit with only ten percent 345 00:15:36,080 --> 00:15:37,720 Speaker 1: increase in good We're gonna look at that data here. 346 00:15:37,880 --> 00:15:39,360 Speaker 1: But I just want to play this for you real 347 00:15:39,440 --> 00:15:41,200 Speaker 1: quickly because this video also just came out. I was 348 00:15:41,240 --> 00:15:42,880 Speaker 1: gonna do a whole video just on this, but I 349 00:15:42,960 --> 00:15:45,240 Speaker 1: decided to pivot. And this is from the IMF, the 350 00:15:45,280 --> 00:15:47,920 Speaker 1: International Monetary Fund, so this is the central bank above 351 00:15:47,960 --> 00:15:48,560 Speaker 1: central banks. 352 00:15:48,560 --> 00:15:49,760 Speaker 2: They just put out this whole video. 353 00:15:49,840 --> 00:15:54,720 Speaker 1: It says, ask an economist inflation, why is it happening? So? 354 00:15:55,080 --> 00:15:58,040 Speaker 2: Is it the greedy corporations? What the heck is going on? 355 00:15:58,200 --> 00:16:01,280 Speaker 1: Well, let's just go ahead and hear from an economist 356 00:16:01,360 --> 00:16:03,680 Speaker 1: of the IMF and hear what they have to say. 357 00:16:04,040 --> 00:16:07,640 Speaker 5: Well, there's two big buckets of reasons. The first is 358 00:16:07,680 --> 00:16:11,720 Speaker 5: when there's shortages and supply or slow downs and supply. 359 00:16:12,200 --> 00:16:15,040 Speaker 5: The other big bucket is on the demand side, so 360 00:16:15,160 --> 00:16:18,400 Speaker 5: people demanding or wanting more goods and services than there 361 00:16:18,440 --> 00:16:19,320 Speaker 5: are available. 362 00:16:19,760 --> 00:16:22,880 Speaker 1: Okay, so there you had it, two reasons why prices 363 00:16:22,920 --> 00:16:24,760 Speaker 1: go up. And of course, like you learn this in 364 00:16:24,800 --> 00:16:29,120 Speaker 1: elementary supply and demand. Duh, Right, So when there's less 365 00:16:29,120 --> 00:16:33,120 Speaker 1: supply and there's more demand, prices are going to go up. Likewise, 366 00:16:33,160 --> 00:16:35,720 Speaker 1: when there's more demand and less supply. Right, it's an 367 00:16:35,760 --> 00:16:38,640 Speaker 1: equation supply and demand. We didn't need an economist from 368 00:16:38,640 --> 00:16:40,440 Speaker 1: the IMS to tell us that. But let's just think 369 00:16:40,480 --> 00:16:43,800 Speaker 1: this true. So if we want prices to come down, 370 00:16:43,880 --> 00:16:47,480 Speaker 1: we should add more supply, right. We should make it 371 00:16:47,520 --> 00:16:49,560 Speaker 1: easier for business to compete. We should make it easier 372 00:16:49,560 --> 00:16:51,720 Speaker 1: for business to do business. Cut the red tape so 373 00:16:51,720 --> 00:16:53,720 Speaker 1: we can get more supply into the market. 374 00:16:54,160 --> 00:16:56,440 Speaker 2: Or we can reduce the demand. 375 00:16:56,680 --> 00:16:58,280 Speaker 1: Of course, that's what the central banks we're trying to do, 376 00:16:58,520 --> 00:17:01,440 Speaker 1: reduce demand by making you feel more poor. 377 00:17:01,560 --> 00:17:02,400 Speaker 2: Now, one of the ways we. 378 00:17:02,360 --> 00:17:05,399 Speaker 1: Can cut demand is stop pumping in. What do the 379 00:17:05,440 --> 00:17:08,919 Speaker 1: Kamala want one point seven trillion dollars she wants to 380 00:17:08,920 --> 00:17:12,720 Speaker 1: pump into the economy, which creates more demand. You cannot 381 00:17:12,760 --> 00:17:17,119 Speaker 1: create more demand without increasing the supply at the same time, 382 00:17:17,520 --> 00:17:19,760 Speaker 1: it sort of looks like this. Now there was a 383 00:17:19,800 --> 00:17:22,679 Speaker 1: saying it's the economy stupid. In this case, it's the 384 00:17:22,800 --> 00:17:23,680 Speaker 1: money stupid. 385 00:17:23,880 --> 00:17:26,000 Speaker 2: You can't just keep printing this much money. 386 00:17:26,040 --> 00:17:28,439 Speaker 1: Kamala wants another one point seven trillion. You can't just 387 00:17:28,520 --> 00:17:31,560 Speaker 1: keep doing that without also increasing the supplies. 388 00:17:31,840 --> 00:17:34,600 Speaker 2: But when you threaten stores, you're going to shut them down. 389 00:17:34,840 --> 00:17:37,040 Speaker 2: Does that incentivize more stores to. 390 00:17:37,000 --> 00:17:40,720 Speaker 1: Open or does that incentivize less stores to open. If 391 00:17:40,760 --> 00:17:43,359 Speaker 1: grocery stores can't make a profit, are they incentivized to 392 00:17:43,400 --> 00:17:46,119 Speaker 1: stay in business selling groceries or will they pivot to 393 00:17:46,200 --> 00:17:48,760 Speaker 1: something else they make better. Now, let's look at the 394 00:17:48,840 --> 00:17:51,600 Speaker 1: data here, because these economists are saying that these grocery 395 00:17:51,640 --> 00:17:54,000 Speaker 1: stores are gadgets. They're making four billion dollars while people 396 00:17:54,040 --> 00:17:56,040 Speaker 1: are starving in it. Their profits went up by three 397 00:17:56,080 --> 00:17:57,920 Speaker 1: hundred percent when their cost of goods win up by 398 00:17:58,000 --> 00:17:58,800 Speaker 1: ten percent? 399 00:17:59,280 --> 00:18:00,800 Speaker 2: Is that true? Look of the data. 400 00:18:00,880 --> 00:18:02,280 Speaker 1: So the first thing I want to take a look 401 00:18:02,320 --> 00:18:04,840 Speaker 1: at is us. Let's just look at Kroger, who is 402 00:18:04,880 --> 00:18:07,639 Speaker 1: called out by gouging people, one of the largest grocery 403 00:18:07,640 --> 00:18:09,320 Speaker 1: store change and the money supply. 404 00:18:09,640 --> 00:18:10,600 Speaker 2: So what we can see here. 405 00:18:10,680 --> 00:18:14,119 Speaker 1: This blue line right here is the money supply, and 406 00:18:14,160 --> 00:18:17,719 Speaker 1: what we can see since twenty twenty, the money supply 407 00:18:17,840 --> 00:18:22,280 Speaker 1: has grown by almost forty percent thirty eight point eighty 408 00:18:22,280 --> 00:18:25,280 Speaker 1: six to be exact. So we've seen about a forty 409 00:18:25,320 --> 00:18:27,159 Speaker 1: percent increase in the money supply. 410 00:18:27,320 --> 00:18:28,400 Speaker 2: That's the rate of debasement. 411 00:18:28,800 --> 00:18:34,400 Speaker 1: Meanwhile, what we have here is Kroger revenue and Kroger 412 00:18:34,440 --> 00:18:38,040 Speaker 1: total expenses. So you have the total revenue minus the 413 00:18:38,080 --> 00:18:40,840 Speaker 1: expenses equals your net profit, right And what we can 414 00:18:40,880 --> 00:18:43,600 Speaker 1: see is that gross revenue went up by twenty three 415 00:18:43,640 --> 00:18:46,760 Speaker 1: point three nine, expenses went up by twenty three point 416 00:18:47,000 --> 00:18:53,480 Speaker 1: zho nine, which means they made about point three point 417 00:18:53,480 --> 00:18:55,199 Speaker 1: three Let's break that down a little bit more so 418 00:18:55,240 --> 00:18:57,440 Speaker 1: you can see that. What we have here is a 419 00:18:57,560 --> 00:19:02,359 Speaker 1: chart of Kroger and their profit margin. Now, the profit 420 00:19:02,440 --> 00:19:06,679 Speaker 1: margin is not that high. This is zero percent profit 421 00:19:06,760 --> 00:19:07,120 Speaker 1: right here. 422 00:19:08,640 --> 00:19:12,440 Speaker 2: Okay, so this is nineteen ninety and here's twenty twenty. 423 00:19:12,840 --> 00:19:16,280 Speaker 1: Right now, they're making about one point four to three 424 00:19:16,440 --> 00:19:17,439 Speaker 1: percent profit. 425 00:19:17,600 --> 00:19:18,240 Speaker 2: One percent. 426 00:19:18,320 --> 00:19:20,600 Speaker 1: Now, I mean, if a business can't make like ten 427 00:19:20,680 --> 00:19:23,840 Speaker 1: percent profit, it probably shouldn't be in business. With my business, 428 00:19:23,840 --> 00:19:27,360 Speaker 1: we're aiming for forty to fifty percent profits because we're 429 00:19:27,600 --> 00:19:29,760 Speaker 1: trying to make, you know, a living, we're trying to 430 00:19:29,760 --> 00:19:33,760 Speaker 1: stay in business. Here they're making one point four percent profit, 431 00:19:33,880 --> 00:19:39,439 Speaker 1: and there's years where they're negative profit. So some years 432 00:19:39,440 --> 00:19:43,520 Speaker 1: they lose, some years they make back, some years they lose, 433 00:19:43,880 --> 00:19:47,080 Speaker 1: some years they make back one point three percent. What 434 00:19:47,080 --> 00:19:50,320 Speaker 1: did that economist say they're making three hundred percent gains. 435 00:19:50,480 --> 00:19:52,600 Speaker 1: That's certainly not what the data tells us. And it's 436 00:19:52,640 --> 00:19:55,040 Speaker 1: not just Kroger again, they're one of the largest. 437 00:19:55,080 --> 00:19:56,000 Speaker 2: But let's just take a look. 438 00:19:56,040 --> 00:19:59,040 Speaker 1: Here's a bunch of food manufacturers. So here we have Nessley, 439 00:19:59,640 --> 00:20:03,280 Speaker 1: unile Ever, Pexico, Coca Cola, General Mills, and again what 440 00:20:03,359 --> 00:20:08,119 Speaker 1: we have here is zero percent right here, and we 441 00:20:08,160 --> 00:20:10,680 Speaker 1: can see that Coca Cola is the highest at twenty 442 00:20:10,760 --> 00:20:13,560 Speaker 1: two percent. Coca Cola is gouging. Oh my gosh, cut 443 00:20:13,560 --> 00:20:15,679 Speaker 1: out the Co Cola twenty two percent. But most of 444 00:20:15,680 --> 00:20:18,879 Speaker 1: them are in this ten to twelve percent range. Is 445 00:20:18,920 --> 00:20:22,399 Speaker 1: that gouging to make ten percent profit with all that risk, 446 00:20:22,720 --> 00:20:25,639 Speaker 1: all that effort. I don't think so, not as a 447 00:20:25,640 --> 00:20:29,600 Speaker 1: business owner. Here we have eggs, so they say that eggs, 448 00:20:29,600 --> 00:20:32,200 Speaker 1: we're being gouged by eggs. Here's the largest egg producer 449 00:20:32,200 --> 00:20:34,240 Speaker 1: in the United States. I put a redline here for 450 00:20:34,440 --> 00:20:38,760 Speaker 1: zero percent, and they're making currently eleven point nine percent 451 00:20:38,840 --> 00:20:42,639 Speaker 1: profit on their business. Not too greedy in my opinion. 452 00:20:42,840 --> 00:20:46,160 Speaker 1: But also again that makes up for all these years. 453 00:20:46,040 --> 00:20:49,600 Speaker 2: That they were losing. It doesn't take that into consideration. 454 00:20:49,960 --> 00:20:53,520 Speaker 1: So when you average these profits out, they're not making this. 455 00:20:53,800 --> 00:20:56,199 Speaker 1: They have to just make back from what they lost. 456 00:20:56,600 --> 00:20:58,479 Speaker 1: You can see it in the data here. And now 457 00:20:58,600 --> 00:21:02,480 Speaker 1: let's look past food, look at all businesses. This is 458 00:21:02,520 --> 00:21:06,760 Speaker 1: all businesses that are non financial. And what we can 459 00:21:06,760 --> 00:21:10,280 Speaker 1: see this black line is zero percent. And look where 460 00:21:10,280 --> 00:21:11,280 Speaker 1: we're at right now. 461 00:21:12,080 --> 00:21:12,840 Speaker 2: This is all. 462 00:21:12,680 --> 00:21:16,040 Speaker 1: Businesses that are non financial. Yes there's some big years, 463 00:21:16,440 --> 00:21:19,159 Speaker 1: and yes there's a lot of losses. These gray shaded 464 00:21:19,200 --> 00:21:21,159 Speaker 1: areas are recessions. So what all you can see is 465 00:21:21,200 --> 00:21:24,040 Speaker 1: after a giant loss, when you come out of recession, 466 00:21:24,080 --> 00:21:26,600 Speaker 1: it sort of snaps back and we make some good profits. 467 00:21:26,920 --> 00:21:28,680 Speaker 2: But then I lose below zero. 468 00:21:28,760 --> 00:21:31,280 Speaker 1: We have a recession and I snap back, right, and 469 00:21:31,320 --> 00:21:34,200 Speaker 1: so they're just trying to get back to Even if 470 00:21:34,200 --> 00:21:37,160 Speaker 1: the profit margin got that fat, then lots of other 471 00:21:37,200 --> 00:21:40,080 Speaker 1: competition would come in and take that profit away. 472 00:21:40,200 --> 00:21:40,560 Speaker 2: All right. 473 00:21:40,600 --> 00:21:42,240 Speaker 1: Now for my favorite part, because you know that I 474 00:21:42,280 --> 00:21:45,120 Speaker 1: love history so well, what it's saying says that those 475 00:21:45,160 --> 00:21:47,719 Speaker 1: who don't know history are bound to repeat it, and 476 00:21:47,760 --> 00:21:50,960 Speaker 1: that's exactly what we're about to do. So warning, there's 477 00:21:51,000 --> 00:21:53,040 Speaker 1: past attempts, not just past attempts. 478 00:21:53,600 --> 00:21:55,200 Speaker 2: Pretty much every government that gets out of. 479 00:21:55,119 --> 00:21:58,280 Speaker 1: Control tries this at some point. The Roman Empire tried 480 00:21:58,320 --> 00:22:01,760 Speaker 1: it with disastrous results. The Venezuela has tried it with 481 00:22:01,840 --> 00:22:06,560 Speaker 1: disastrous results. You have empty food jelves. That's what happens, right, 482 00:22:06,840 --> 00:22:12,280 Speaker 1: either capital in a communist country like this in Russia 483 00:22:12,359 --> 00:22:16,680 Speaker 1: and the Soviet Union. In Venezuela, you have bread lines 484 00:22:17,320 --> 00:22:20,159 Speaker 1: under capitalism, bread lines up for you. 485 00:22:21,320 --> 00:22:22,320 Speaker 2: Right, That's the way it works. 486 00:22:22,400 --> 00:22:25,040 Speaker 1: But let's just look back at a more recent example, 487 00:22:25,080 --> 00:22:27,879 Speaker 1: because it happened right here in the United States not 488 00:22:28,000 --> 00:22:29,960 Speaker 1: that long ago. As a matter of fact, good old 489 00:22:29,960 --> 00:22:32,679 Speaker 1: President Richard Nixon. He's not just known for taking us 490 00:22:32,680 --> 00:22:35,119 Speaker 1: off the gold standard. He's also known for trying to 491 00:22:35,200 --> 00:22:37,879 Speaker 1: fix the problems created by that. So I put up 492 00:22:37,880 --> 00:22:40,320 Speaker 1: this long Twitter thread over the weekend as I got 493 00:22:40,359 --> 00:22:42,679 Speaker 1: inspired on this. If you're not following me on Twitter, 494 00:22:42,800 --> 00:22:44,960 Speaker 1: you should. It's at one Mark Moss. We'll link to 495 00:22:45,000 --> 00:22:47,400 Speaker 1: it down in the description below. I put a lot 496 00:22:47,400 --> 00:22:49,840 Speaker 1: of daily commentary on there, so it's a good place 497 00:22:49,840 --> 00:22:53,200 Speaker 1: to additional information. So I put this long tweet thread album. 498 00:22:53,200 --> 00:22:55,199 Speaker 1: But let's just pull out a couple examples of what 499 00:22:55,280 --> 00:23:00,240 Speaker 1: he did. So in order to combat prices rising because 500 00:23:00,240 --> 00:23:01,760 Speaker 1: he severed the gold standard, he had to do a 501 00:23:01,800 --> 00:23:04,480 Speaker 1: couple of things, and he created an economic strategy known 502 00:23:04,520 --> 00:23:04,880 Speaker 1: as the. 503 00:23:05,000 --> 00:23:06,560 Speaker 2: New Economic Policy. 504 00:23:06,800 --> 00:23:10,720 Speaker 1: Now like FDR's New Deal, this was the New Economic Policy, 505 00:23:11,119 --> 00:23:13,959 Speaker 1: And basically it was the suspension of the gold standard. 506 00:23:14,080 --> 00:23:15,840 Speaker 1: Let's just get off that pesky thing and print as 507 00:23:15,920 --> 00:23:19,199 Speaker 1: much money as we can, the implementation of wage and 508 00:23:19,359 --> 00:23:20,240 Speaker 1: price controls. 509 00:23:20,320 --> 00:23:22,760 Speaker 2: So Nixon did this. You don't have to go that 510 00:23:22,880 --> 00:23:24,199 Speaker 2: far back into history books. 511 00:23:24,280 --> 00:23:27,119 Speaker 1: I believe Kamala was alive at this time this happened, 512 00:23:27,160 --> 00:23:29,800 Speaker 1: although she was a very young child, probably Okay. So 513 00:23:30,080 --> 00:23:31,960 Speaker 1: Phase one of what this looked like here in the 514 00:23:32,080 --> 00:23:36,160 Speaker 1: United States in the seventies was a ninety day freeze 515 00:23:36,200 --> 00:23:40,080 Speaker 1: on wages, prices, and rents. That was August of nineteen 516 00:23:40,119 --> 00:23:43,360 Speaker 1: seventy one. No one can raise their prices on anything. 517 00:23:43,440 --> 00:23:45,280 Speaker 1: You can't pay more for your workers, you can't pay 518 00:23:45,400 --> 00:23:46,879 Speaker 1: more for food, you can't pay rents. 519 00:23:47,080 --> 00:23:47,439 Speaker 2: None of that. 520 00:23:48,040 --> 00:23:51,080 Speaker 1: At that time, inflation was five percent, which sounds relatively 521 00:23:51,320 --> 00:23:53,720 Speaker 1: tame in today's day and age, right, we're as high 522 00:23:53,720 --> 00:23:56,040 Speaker 1: as what eight and a half nine percent just about 523 00:23:56,080 --> 00:23:57,879 Speaker 1: two years ago. Now we're down in the three and 524 00:23:57,920 --> 00:24:00,800 Speaker 1: a half percent range, So five sounds pretty reasonable, but 525 00:24:00,840 --> 00:24:03,919 Speaker 1: they calculated much better back then. Okay, so that's what 526 00:24:04,000 --> 00:24:06,800 Speaker 1: they did. No one could raise prices, but that wasn't enough. 527 00:24:07,800 --> 00:24:10,760 Speaker 1: So what we had to do was then start phase two. 528 00:24:11,280 --> 00:24:14,160 Speaker 1: And in phase two, the controls were administered by increasing 529 00:24:14,200 --> 00:24:16,000 Speaker 1: the size of the government. Of course, it's always about 530 00:24:16,000 --> 00:24:18,840 Speaker 1: that when FDR is new deal. Let's expand the government. 531 00:24:19,119 --> 00:24:22,320 Speaker 1: Here phase two, let's expand the role of the government. 532 00:24:22,080 --> 00:24:23,359 Speaker 2: So the government can spend more money. 533 00:24:23,760 --> 00:24:25,880 Speaker 1: And what they did is they created all these new 534 00:24:25,920 --> 00:24:29,840 Speaker 1: government bodies, including something called the Price Commission and something 535 00:24:29,880 --> 00:24:33,200 Speaker 1: called the Payboard. So they created these government regulations regulatory 536 00:24:33,200 --> 00:24:36,560 Speaker 1: bodies to make sure people weren't charging too much, and 537 00:24:36,600 --> 00:24:38,400 Speaker 1: they just spent a bunch more money in the process. 538 00:24:38,760 --> 00:24:43,560 Speaker 1: The Price Commission was literally responsible for approving or rejecting 539 00:24:43,640 --> 00:24:47,480 Speaker 1: price increases, so no one could raise their prices without 540 00:24:47,760 --> 00:24:51,520 Speaker 1: being approved by the Price Commission. And then we saw 541 00:24:51,680 --> 00:24:56,000 Speaker 1: companies like Amicico, Steel, Champions, Spark Plugs, Woolworth, et cetera. 542 00:24:56,119 --> 00:24:59,520 Speaker 1: Were ordered to roll back prices. So if they had said, no, 543 00:25:00,080 --> 00:25:01,840 Speaker 1: you raise them without permission, you have to roll them 544 00:25:01,880 --> 00:25:06,359 Speaker 1: back and provide refunds to customers. So now this money 545 00:25:06,359 --> 00:25:08,439 Speaker 1: that you made, give it all back. In addition, in 546 00:25:08,480 --> 00:25:12,200 Speaker 1: some cases, the controls led to companies facing severe financial 547 00:25:12,200 --> 00:25:17,119 Speaker 1: penalties and to pay triple damages for exceeding price limits. 548 00:25:17,160 --> 00:25:20,720 Speaker 1: Triple damages. So grocery stores are making one point four 549 00:25:20,760 --> 00:25:25,560 Speaker 1: percent one percent, if you have to pay back triple damages, 550 00:25:25,560 --> 00:25:29,040 Speaker 1: what does that do to your profit margin? Means you 551 00:25:29,040 --> 00:25:29,919 Speaker 1: have no profit margin. 552 00:25:30,280 --> 00:25:31,160 Speaker 2: Okay, let's keep going. 553 00:25:31,160 --> 00:25:34,200 Speaker 1: Because that didn't work, So what else could we do? Well, 554 00:25:34,240 --> 00:25:36,440 Speaker 1: then what we want to do is micro manage the 555 00:25:36,760 --> 00:25:40,040 Speaker 1: entire economy, because of course, you know, a dozen couple 556 00:25:40,040 --> 00:25:42,240 Speaker 1: dozen guys in Washington no better than the entire market. 557 00:25:42,359 --> 00:25:44,240 Speaker 1: If we want to micro manage the economy, and they 558 00:25:44,280 --> 00:25:48,600 Speaker 1: had a cost of living counsel. Sounds kind of dystopian, 559 00:25:48,640 --> 00:25:51,920 Speaker 1: doesn't it. No company was allowed to increase prices without 560 00:25:52,000 --> 00:25:55,440 Speaker 1: prior government approval. Of course, none of that worked. There 561 00:25:55,480 --> 00:26:00,800 Speaker 1: was massive unattended consequences of this by freezing prices, input 562 00:26:00,880 --> 00:26:02,600 Speaker 1: costs like raw materials went up. 563 00:26:02,880 --> 00:26:05,000 Speaker 2: The control squeezed. 564 00:26:04,320 --> 00:26:09,399 Speaker 1: The profit margins for many businesses. This led to widespread shortages. 565 00:26:09,520 --> 00:26:12,240 Speaker 1: So again they're talking about food here. If I can't 566 00:26:12,400 --> 00:26:14,080 Speaker 1: you know whatever, they would say, I can't sell a 567 00:26:14,119 --> 00:26:15,080 Speaker 1: loaf of bread for more. 568 00:26:14,920 --> 00:26:15,639 Speaker 2: Than two fifty. 569 00:26:15,800 --> 00:26:18,640 Speaker 1: Okay, Well, if I can't produce the bread for two 570 00:26:18,760 --> 00:26:22,320 Speaker 1: fifty and I can't sell it for more than two fifty, 571 00:26:22,359 --> 00:26:27,000 Speaker 1: then I can't bake bread. If my gasoline costs went 572 00:26:27,119 --> 00:26:29,439 Speaker 1: up and my wheat costs went up, and my labor 573 00:26:29,480 --> 00:26:30,600 Speaker 1: costs went up, and. 574 00:26:30,560 --> 00:26:33,040 Speaker 2: I can't produce it, I can't sell it. It's just basic. 575 00:26:33,160 --> 00:26:33,720 Speaker 2: One oh one. 576 00:26:33,800 --> 00:26:37,159 Speaker 1: Here, come on, if you can't produce a good for 577 00:26:37,359 --> 00:26:38,960 Speaker 1: less than you can sell it for. 578 00:26:39,200 --> 00:26:41,440 Speaker 2: Then you can't produce the good. It's why at least 579 00:26:41,440 --> 00:26:42,679 Speaker 2: to shortages. 580 00:26:42,280 --> 00:26:48,240 Speaker 1: Every single time. Now it got worse, let's keep going. 581 00:26:48,600 --> 00:26:51,639 Speaker 1: It wasn't just the prices, and it wasn't just shortages 582 00:26:51,680 --> 00:26:53,800 Speaker 1: of bread, all right. It wasn't shortages of gas. So 583 00:26:53,880 --> 00:26:56,280 Speaker 1: back then you had to line up to get gasoline, 584 00:26:56,440 --> 00:26:59,119 Speaker 1: and only certain people can get gas on certain days, 585 00:26:59,160 --> 00:26:59,760 Speaker 1: for example. 586 00:27:00,040 --> 00:27:01,040 Speaker 2: It align up for food. 587 00:27:01,440 --> 00:27:03,720 Speaker 1: Then they created a new government body called the Committee 588 00:27:03,720 --> 00:27:07,080 Speaker 1: on Interest and Dividends, And this is where things got really. 589 00:27:06,840 --> 00:27:07,359 Speaker 2: Really bad. 590 00:27:07,760 --> 00:27:11,720 Speaker 1: They capped dividend increases. They capped how much publicly traded 591 00:27:11,760 --> 00:27:15,440 Speaker 1: companies businesses could pay out distribute those profits. 592 00:27:15,480 --> 00:27:17,520 Speaker 2: They capped that. What did that do well? 593 00:27:17,560 --> 00:27:20,600 Speaker 1: Of course it discouraged investment. Well, if they can't pay 594 00:27:20,640 --> 00:27:22,240 Speaker 1: me part of the profit, why would I invest in 595 00:27:22,359 --> 00:27:24,560 Speaker 1: the company. And that led to a decline in the 596 00:27:24,600 --> 00:27:27,200 Speaker 1: stock market performance. So of course I'm not going to invest, 597 00:27:27,200 --> 00:27:30,160 Speaker 1: which means the stock market comes down. And of course 598 00:27:30,200 --> 00:27:33,320 Speaker 1: that caused potential investors to invest less, and of course 599 00:27:33,359 --> 00:27:37,280 Speaker 1: that created a ripple effect of decreased confidence in the economy. 600 00:27:37,600 --> 00:27:40,400 Speaker 1: No one was investing, so that no one was building, inventing, 601 00:27:40,440 --> 00:27:44,480 Speaker 1: no one was producing, of course, and then we hadn't 602 00:27:44,480 --> 00:27:47,280 Speaker 1: even got to phase three and four. Yet basically at 603 00:27:47,280 --> 00:27:49,360 Speaker 1: phase three and four they made things. 604 00:27:49,160 --> 00:27:49,840 Speaker 2: Got so bad. 605 00:27:49,920 --> 00:27:52,040 Speaker 1: The economy got so bad that markets got so bad 606 00:27:52,080 --> 00:27:54,080 Speaker 1: they had to throw in the towel. By nineteen seventy three, 607 00:27:54,320 --> 00:27:56,520 Speaker 1: inflation had to reach double digits, so it had gone 608 00:27:56,520 --> 00:27:59,960 Speaker 1: from five percent to over ten percent, the consumer price 609 00:28:00,200 --> 00:28:03,480 Speaker 1: increasing by eight percent in a single year, and wholesale 610 00:28:03,480 --> 00:28:06,639 Speaker 1: prices are up over twenty percent from nineteen seventy two 611 00:28:06,680 --> 00:28:09,639 Speaker 1: to nineteen seventy four. So in just a couple of years, 612 00:28:09,680 --> 00:28:14,720 Speaker 1: they completely distorted the entire economy. Shortage of food, shortages 613 00:28:14,800 --> 00:28:17,560 Speaker 1: of gas, as well as a decrease in the stock 614 00:28:17,600 --> 00:28:20,639 Speaker 1: market because of declining confidence. It was complete wreck, and 615 00:28:20,680 --> 00:28:23,080 Speaker 1: of course Richard Nixon had to wave the white flag 616 00:28:23,359 --> 00:28:26,800 Speaker 1: and cancel price controls, not without a whole lot of 617 00:28:26,880 --> 00:28:29,600 Speaker 1: damage and harm to a lot of people along the way. Okay, 618 00:28:29,680 --> 00:28:31,320 Speaker 1: what do we do to protect ourselves? Like I said, 619 00:28:31,320 --> 00:28:32,919 Speaker 1: this has been tried over and over and over and 620 00:28:32,960 --> 00:28:37,080 Speaker 1: over again. So what do we do. Obviously, yeah, write 621 00:28:37,080 --> 00:28:39,680 Speaker 1: your politician, go vote, sure, do all those things. But 622 00:28:39,720 --> 00:28:41,960 Speaker 1: on a personal level, what do we do for my 623 00:28:42,000 --> 00:28:43,240 Speaker 1: business and for myself. 624 00:28:43,480 --> 00:28:45,160 Speaker 2: Well, there's a couple of things. The first thing is 625 00:28:46,160 --> 00:28:48,520 Speaker 2: there's always goods available. So in the. 626 00:28:48,560 --> 00:28:51,760 Speaker 1: Shortages that happened in the market, what happens is you 627 00:28:51,840 --> 00:28:54,760 Speaker 1: have this alternative market, a parallel market, a black market 628 00:28:54,800 --> 00:28:55,400 Speaker 1: that pops up. 629 00:28:55,600 --> 00:28:57,120 Speaker 2: So there's always going to be goods and services. 630 00:28:57,120 --> 00:28:59,360 Speaker 1: If you have enough money, it just has to be 631 00:28:59,400 --> 00:29:02,680 Speaker 1: done on the black market. Okay, So then that means 632 00:29:02,680 --> 00:29:04,720 Speaker 1: that I should just have more money. 633 00:29:04,840 --> 00:29:06,360 Speaker 2: Okay, that's number one. 634 00:29:06,440 --> 00:29:08,040 Speaker 1: But number two what we want to do is we 635 00:29:08,040 --> 00:29:11,320 Speaker 1: want to change our denominator, all right, is something that 636 00:29:11,360 --> 00:29:13,960 Speaker 1: everybody can do. So this is Kroger. Back to Kroger. 637 00:29:14,160 --> 00:29:16,920 Speaker 1: This is their net income, not priced in dollars, but 638 00:29:17,000 --> 00:29:17,840 Speaker 1: priced in gold. 639 00:29:18,080 --> 00:29:19,360 Speaker 2: And what we can see is if we take. 640 00:29:19,280 --> 00:29:21,720 Speaker 1: Away the dollar and just say, let's say they priced 641 00:29:21,760 --> 00:29:23,840 Speaker 1: everything in gold, what we can see is it's remained 642 00:29:23,880 --> 00:29:28,000 Speaker 1: pretty flat. Right here, It's remain pretty flat. So what 643 00:29:28,000 --> 00:29:29,560 Speaker 1: we want to do is change our denominator. So what 644 00:29:29,560 --> 00:29:31,959 Speaker 1: do I mean by that? So you might see prices 645 00:29:32,000 --> 00:29:34,560 Speaker 1: getting more expensive. Home prices are getting more expensive, Gas 646 00:29:34,640 --> 00:29:38,600 Speaker 1: prices are getting more expensive, Foods getting more expensive, maybe 647 00:29:38,840 --> 00:29:41,200 Speaker 1: unless you change your denominator. So right here is the 648 00:29:41,280 --> 00:29:44,640 Speaker 1: case Shiller National Home Index. This blue line shows the 649 00:29:44,760 --> 00:29:47,560 Speaker 1: rata which homes have been going up, and you realize 650 00:29:47,560 --> 00:29:49,480 Speaker 1: that homes are getting priced out of the market. Right, 651 00:29:49,600 --> 00:29:50,760 Speaker 1: homes are getting so expensive? 652 00:29:50,760 --> 00:29:51,760 Speaker 2: How we ever afford it? 653 00:29:52,000 --> 00:29:55,320 Speaker 1: Well, that's priced in US dollars. If I price homes 654 00:29:55,360 --> 00:29:58,680 Speaker 1: in gold, they've actually been going down. So if I 655 00:29:58,800 --> 00:30:01,520 Speaker 1: used gold as my unit account and I measured everything 656 00:30:01,520 --> 00:30:05,040 Speaker 1: in gold as and not US dollars, things are actually 657 00:30:05,040 --> 00:30:07,320 Speaker 1: getting cheaper for me, not more expensive. 658 00:30:07,720 --> 00:30:08,840 Speaker 2: We can look at it another way. 659 00:30:09,240 --> 00:30:13,920 Speaker 1: Here is homes in Palo Alto, California, So Palo Alto 660 00:30:14,000 --> 00:30:18,200 Speaker 1: Silicon Valley, crazy high home prices. This blue line is 661 00:30:18,280 --> 00:30:21,600 Speaker 1: home price is going up. This is since twenty twelve. 662 00:30:21,680 --> 00:30:24,560 Speaker 1: You can see it going up. But priced in apple Stock, 663 00:30:26,000 --> 00:30:28,240 Speaker 1: the price of homes have been going down. So if 664 00:30:28,240 --> 00:30:31,280 Speaker 1: I own explosive assets like apple Stock, homes are getting 665 00:30:31,440 --> 00:30:33,880 Speaker 1: way cheaper for me. They're not getting more expensive. What 666 00:30:33,880 --> 00:30:35,840 Speaker 1: do you mean they're getting expensive for you? I haven't 667 00:30:35,880 --> 00:30:38,880 Speaker 1: seen that. Or of course, in bitcoin terms, we can 668 00:30:38,920 --> 00:30:42,280 Speaker 1: see the same thing priced in bitcoin. Homes in Palo 669 00:30:42,320 --> 00:30:45,480 Speaker 1: Alto have gone through the roof, but in bitcoin terms. 670 00:30:45,400 --> 00:30:47,760 Speaker 2: They've completely dropped off of a cliff. 671 00:30:48,280 --> 00:30:52,040 Speaker 1: And so while just making more money isn't the easiest 672 00:30:52,040 --> 00:30:55,200 Speaker 1: thing to do, everyone can change their unit of account. 673 00:30:55,520 --> 00:30:58,600 Speaker 2: And whether that's gold for you, whether that's apple stock, or. 674 00:30:58,600 --> 00:31:02,920 Speaker 1: Whether that's bitcoin, you can see that life gets easier. 675 00:31:02,600 --> 00:31:04,920 Speaker 2: When you look at things from a different lens. That 676 00:31:05,000 --> 00:31:05,400 Speaker 2: makes sense. 677 00:31:05,840 --> 00:31:07,360 Speaker 1: Let me know what you think. Leave me a common 678 00:31:07,400 --> 00:31:09,760 Speaker 1: down below. Let me know what lens that you want 679 00:31:09,800 --> 00:31:12,880 Speaker 1: to price your assets in. What will be your personal. 680 00:31:12,520 --> 00:31:13,840 Speaker 2: Unit of account? For me, it's bitcoin. 681 00:31:14,080 --> 00:31:15,800 Speaker 1: For you, it could be gold, it could be rice, 682 00:31:15,880 --> 00:31:17,840 Speaker 1: it could be bushels of oranges. 683 00:31:17,880 --> 00:31:18,320 Speaker 2: I don't know. 684 00:31:18,560 --> 00:31:20,000 Speaker 1: Let me know in the commons down below, of course, 685 00:31:20,040 --> 00:31:21,760 Speaker 1: as always, give me thumbs up if you like the video. 686 00:31:21,760 --> 00:31:23,120 Speaker 1: If you don't give me thumbs down, that's okay, but 687 00:31:23,120 --> 00:31:25,080 Speaker 1: at least tell me why in the comments down below. 688 00:31:25,520 --> 00:31:27,680 Speaker 1: Oh yeah, subscribe. If're not, lady subscribed, and that's what 689 00:31:27,720 --> 00:31:29,880 Speaker 1: I got to your success, I'm out.