The Jordan B. Peterson Podcast - 353. The US Dollar Might Collapse ｜ Peter Schiff

00:00:00.960 Hey everyone, real quick before you skip, I want to talk to you about something serious and important.

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00:00:57.420 Hello everyone, I'm speaking today with Peter Schiff, the economist and stockbroker who successfully predicted the 2008 housing crisis.

00:01:17.520 Today, we will discuss the current market, hyperinflation, fiat currency, and the value of gold in times of instability.

00:01:28.880 Looking forward to the conversation.

00:01:31.340 So thank you very much for talking to me today and to everyone who's watching and listening.

00:01:37.120 Thank you for your time and attention. That's much appreciated.

00:01:39.880 Thank you very much.

00:02:09.880 Thank you very much.

00:02:39.880 Thank you very much.

00:03:09.880 Thank you very much.

00:03:39.860 Thank you very much.

00:03:41.860 Thank you.

00:03:57.860 respect, if you're, you know, United States, you're a congressman, you're a senator, you know,

00:04:03.040 it's a career that a lot of people would aspire to. And once you get there, you know, once you

00:04:08.320 get to Washington, and I'm sure this is true in, you know, every country in Europe and all around

00:04:13.400 the world that, you know, you like it, right? You like the lifestyle, you like the prestige

00:04:18.260 that comes with being a government official. So you want to stay there, right? Well, how do you

00:04:25.400 stay in office? Well, you got to keep getting elected. You know, in the United States, you know,

00:04:30.860 we get elections every two years, right? So politicians are very concerned about, you know,

00:04:37.120 the polls, and they're constantly got their finger in the air, seeing where the winds are blowing, and

00:04:42.800 they don't want to say anything or do anything that might jeopardize their re-election. And of course,

00:04:49.120 one of the most important things that you need to get re-elected is you need a lot of money.

00:04:52.540 You need to spend money on advertising, on television, which is expensive. And so you tend to

00:05:00.000 cater to donors, whether it's a corporation or, you know, a union, anyone that can provide a lot of

00:05:09.240 money. You need to do things that are in their interest. And so what is usually sacrificed by these

00:05:17.260 politicians is the national interest. Doing what's right for the country is secondary to doing what's

00:05:24.440 right for themselves. And also, in order to be successful as a politician, you have to be a

00:05:31.320 really good liar. And that's probably why a lot of lawyers go into politics, because lawyers, you know,

00:05:37.240 they're paid to lie. I mean, you have to argue your client's case, even if you know they're wrong,

00:05:42.380 right? And you have to put on a defense or whatever it is. And so lawyers are generally pretty good

00:05:47.340 liars. And so they become politicians. Because if you're honest and you tell the truth, you're not 0.83

00:05:54.020 going to have a career in politics. You're just not going to, even if you manage to get elected telling

00:05:58.740 the truth, you're not going to stay in office telling the truth. So you got to lie. So here's

00:06:03.440 the situation. So you've had decades of politicians buying their reelection by promising voters something

00:06:12.220 for nothing. Because unfortunately, that's what a lot of voters want. They want something from the

00:06:17.240 government. So if you're running for office, like I ran for office in 2010, I once in Connecticut.

00:06:23.900 But, you know, all I promised was more freedom. I'm going to leave you alone. I'm going to repeal

00:06:28.120 government laws, regulations. I'm going to leave you free to do what you want. And I'm not going to

00:06:33.280 interfere with you. Some people like that message. But a lot of people, that's not what they want.

00:06:38.200 They don't want to be free. They want to be taken care of. They want to know, what are you going to

00:06:42.020 give me? What stuff am I going to get if I vote for you, right? What free stuff? And so-

00:06:48.000 Yeah, well, that's attractive in the short term, especially if you're not paying attention, right?

00:06:52.200 And lots of people don't pay that much attention to political discourse. And so if you offer something

00:06:57.480 tangible and immediate, that's gripped short-term attention. And that can be an effective strategy.

00:07:04.600 And so it's this proclivity to gift in this manner that drives inflation. Do you want to

00:07:11.800 define inflation for people? Yeah, I will in a sec.

00:07:13.840 Do you know exactly what we're talking about? Yeah, I will. I'm getting there. And it's even worse when

00:07:18.500 it comes to trying to take away something. Like if you want to cut a program spending, that's even

00:07:25.220 worse. Because once a voter has something, nobody wants to take it away. In fact, even some of the

00:07:31.060 politicians, let's say Republicans in the United States that might have opposed certain government

00:07:36.840 welfare type programs, you know, when they started, once they're in place, even those people won't vote

00:07:44.100 to take them away. That's how a danger it is. So the situation is you've had all these politicians

00:07:49.760 who have promised so much stuff that the taxpayers can't deliver. And of course, when politicians

00:07:56.440 want to give voters something, they don't want them to pay for it. So they want to spend money,

00:08:02.600 but they don't want to raise taxes because governments don't have any money. They only have

00:08:07.260 the money they take. They have to take money from the people in order to give money back to the people.

00:08:11.940 And so if the government's taking your money, that you don't like. So with paper money,

00:08:18.520 which unfortunately we have now fiat currency where governments don't need gold, real money,

00:08:25.140 they could just create paper money out of thin air, right? They could just manufacture it digitally

00:08:30.260 and there it is. That enables governments to spend without collecting taxes. They run these large

00:08:37.780 deficits and they're able to print the difference and hand out that money so they can give people

00:08:45.000 money without also taking the money away. And now they don't mind taking money away from rich people

00:08:51.000 because, you know, there's not as many of those, right? So they don't lose as many votes. Although

00:08:55.460 certain rich people can donate a lot to their campaigns, which often, you know, prevents the taxes

00:09:01.980 from getting too high. But inflation, you asked for the definition. Inflation is really just another

00:09:11.680 tax because governments create inflation. And inflation is also probably one of the most

00:09:22.000 misunderstood words in the English language. And deliberately so. I think governments around the

00:09:27.560 world kind of led the campaign to redefine inflation. So if you go back to the origin of the word,

00:09:34.900 and if you have a dictionary, even from the 1980s, a Webster's Dictionary, you'll get the real

00:09:40.680 definition of inflation. So inflation is an expansion of the money supply. That's all it is.

00:09:47.100 Deflation is a contraction of the money supply. So if you even think about the word inflate,

00:09:52.600 inflate is to expand, like a balloon. If you fill a balloon with air, it expands. So with inflation,

00:10:02.200 what's being expanded is the money supply. And who expands the money supply? Governments.

00:10:09.440 You know, or they do it generally now through a central bank, but it's the central banks of these

00:10:14.240 governments that are expanding the money supply. Now, when you expand the money supply, you have more

00:10:18.840 money. Well, if you have more money, but you don't have more stuff to buy, well, the price of

00:10:24.640 everything goes up. That's just basic economic supply and demand. The more money there is, the less

00:10:30.620 each individual monetary unit is worth. And now prices go up. Now, what governments have done

00:10:37.480 is they've said, price is going up. That's inflation. No, it's not. That is the consequence

00:10:44.380 of inflation because prices don't expand. Prices go up and down as a result of inflation. Now,

00:10:51.280 what happens is sometimes prices don't go up, but you still have inflation. And that's because

00:10:57.760 without that inflation, prices would have gone down. And if prices don't go down because government

00:11:04.120 creates inflation, that still represents a loss to the people because they lost the benefit of lower

00:11:12.160 prices. Because in capitalism, the tendency of capitalism is to reduce prices. That's why it's

00:11:20.080 so good, because you keep coming up with better ways of producing, more efficient ways, economies of

00:11:25.960 scale. If you look at the CPI, for example, in the United States in 1800, and then you look at the

00:11:33.220 same CPI in 1900, and they have the data, prices were cut in half. You had a hundred-year period

00:11:39.380 where you had deflation or prices falling for a hundred years. And that was a good thing. All

00:11:46.400 the politicians now tell us that we need prices to go up, that we must have inflation, the way they

00:11:53.060 define it, of 2% a year. Why? Why do prices have to go up every year? Why can't they go down every

00:11:59.640 year? Isn't that better if stuff gets cheaper, if the cost of living goes down? Of course it is.

00:12:04.540 But these politicians are trying to sell this lie to the public that rising prices are somehow

00:12:11.580 necessary for prosperity, that if prices don't go up—

00:12:14.900 Okay, so let me sum up what you've said. So the first thing you said that I think is worthy of note

00:12:21.580 for people to remember is that the price of something is a function of the ratio of the money

00:12:28.540 available to the goods available. And so if you make money twice as available, then things cost

00:12:34.720 twice as much. And then you defined inflation in that regard. You said inflation isn't prices going

00:12:43.320 up. Inflation is the value of money going down. And so it isn't because things are becoming more

00:12:50.120 expensive. It's because there's more money chasing the same amount or fewer items. Now, you could

00:12:54.880 imagine an inflation in a particular sector that would emerge because that thing has become more

00:13:00.860 scarce. But general inflation is a reflection of the inflation of the money supply.

00:13:06.200 Right.

00:13:06.700 Then you said, well, here's the—let me just finish the summary. You said there's drivers

00:13:12.100 of that inflation of the money supply. And the basic driver is that because we have a fiat currency

00:13:18.480 that isn't pegged to something permanent, let's say, like gold, and because politicians can create

00:13:26.300 money by printing it, they're incentivized to do so because they can offer people who aren't paying

00:13:31.720 much attention cheap gifts for nothing. And the fastest way to pay for that, because they don't want 0.99

00:13:39.100 to raise taxes, is to increase the money supply. And then you might say, and this is where we could

00:13:44.180 bring this home to land is, well, what's so bad about that is that we defer our expenses into the

00:13:49.760 future. People get more free stuff from the government. There's a bit of a tax. That's the

00:13:55.140 inflation tax, let's say. But all in all, the system works pretty well. But you started this whole

00:14:00.960 discussion by saying the biggest threat to the financial integrity of people, individuals over the

00:14:07.260 long run, is inflation. And so why does that pose the cardinal danger to long-term financial security

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00:15:52.360 Yeah, well, first of all, it's not working well. That is the problem. It worked much better when

00:16:00.940 we had honest money. When we were on a gold standard, if governments wanted to spend money,

00:16:05.920 they needed gold. And where did they get it? They had to collect taxes because they couldn't

00:16:09.880 create the gold. It needed to be mined. And so it was an honest system, and it was disciplined

00:16:16.620 on politicians. Now, the politicians don't want to be disciplined any more than, you know,

00:16:21.360 teenagers want to chaperone at the prom, right? So, you know, they want to do a lot of stuff that

00:16:25.800 the chaperone won't allow. And so gold was keeping politicians in check. But to your point about

00:16:32.800 individual prices, you can't confuse prices individually will go up and down based on the

00:16:39.400 supply and demand. But if the price of one thing goes up, it's going to necessitate the price of

00:16:44.460 something else to go down. And so the general level of prices won't change. It's only when you

00:16:50.180 have the expansion of the money supply that the price of everything goes up because the value of

00:16:54.680 money is going down. And so now you need more money to buy stuff. But the problem now is because

00:17:00.780 these governments have run such enormous deficits and, you know, inflated the housing bubble that

00:17:09.480 popped in 2008 in the U.S. and then a decade or more of massive deficit spending, quantitative easing

00:17:16.160 programs. And by the way, quantitative easing is inflation. They've basically, you know, taken

00:17:22.240 inflation and put a nice sounding name to it because quantitative easing is printing money and buying

00:17:28.520 government bonds. That's inflation. But if the politician said our policy is inflation, you know,

00:17:34.640 the public doesn't like that. So they said, no, we're doing quantitative easing. And somehow that

00:17:39.400 sounds, you know, more palatable than inflation. But they've created so much. And for years and years,

00:17:46.620 these central bankers were telling us that inflation is too low. We don't have enough inflation

00:17:50.900 because it's not 2%. And again, we don't need prices to go up. You know, and the reason they say that

00:17:58.500 prices have to go up is they claim that we won't buy stuff, that if we think prices are going to go

00:18:03.720 down, we'll just hold off on buying indefinitely, waiting for a cheaper price, and the economy is

00:18:09.000 going to collapse. And that's a bunch of BS because you buy things when you need them and when you can

00:18:14.240 afford them. I mean, if that was true, nobody would own a cell phone. Nobody would own a laptop

00:18:18.820 computer. Nobody would have a television set because all those things get cheaper every year,

00:18:24.000 yet we keep buying them. So it's nonsense that we won't buy if price is going down. In fact,

00:18:29.400 prices going down create demand. If you can't afford something, the way to buy it is for the

00:18:34.920 price to go down, and then you can afford it, and then you buy it. But they've created so much

00:18:39.980 inflation when they said it was too low that now it's exploded, right? You've got double-digit

00:18:46.680 inflation or high single-digit inflation pretty much in all the vast economies in the world.

00:18:51.860 And no government anywhere in the world is willing to actually do what it takes to reduce inflation

00:19:00.680 because, A, they have to accept responsibility for creating it, and then, B, they have to

00:19:06.600 significantly reduce government spending and or raise taxes on middle-class voters. And neither of

00:19:15.380 those choices are politically expedient. And so politicians now are under more pressure than ever

00:19:21.760 to continue to finance their spending through inflation. So the inflation tax is going to get

00:19:29.600 bigger and bigger and bigger every year. And the reason that that's such a problem is it's really

00:19:37.780 the worst possible tax because it impacts the people the most who can afford it the least.

00:19:45.220 It's the middle class, the working poor, and the retirees who are living off of fixed income. 0.95

00:19:52.640 They end up paying the inflation tax the most. They have some savings. They have a pension.

00:20:00.360 They have an annuity, a cash value and insurance policies. All this stuff gets destroyed.

00:20:07.780 Wealthier people who tend to own assets and who have more good debt, right? Bad debt is consumer debt.

00:20:15.100 You go out and you borrow money and you spend it. You buy a consumer good. You buy a TV with your

00:20:20.320 credit card and that's bad debt. Or you take a vacation and you pay for it on a credit card.

00:20:24.880 But if you buy an asset, particularly an income-producing asset, a piece of property,

00:20:30.120 a business, a stock, if you borrow money and you buy an asset, and that asset is appreciating and

00:20:38.680 generating income, inflation is your friend. Inflation helps you out because it wipes out

00:20:44.740 the value of your debt and you still have the asset. So wealthy people, very wealthy people,

00:20:50.480 if they invest the right way, will benefit from inflation.

00:20:56.040 So inflation is particularly hard on non-entrepreneurial savers. So people who've put

00:21:03.260 away a certain store of value, maybe that's in a pension, who aren't invested in some active

00:21:09.200 enterprise that could be generating revenue, it just devastates them. And if it's 4% a year,

00:21:15.220 they lose what? What does that mean? They lose half the value of their investment in like

00:21:19.460 4% a year. It'd be something like 10 years.

00:21:23.040 Yeah. And unfortunately, it's going to be a lot higher than 4%.

00:21:28.820 Yeah. Let's talk about that for a second. So two questions about that that come along with what

00:21:35.700 you've already laid out. The first question is, how is the inflation rate calculated? That's

00:21:42.520 mysterious, right? Because it relies on the consumer price index.

00:21:45.940 That's another big part of the fraud. Because certainly in America, and I know a lot more about

00:21:51.480 the US CPI, let's say, than I do about CPIs in other countries. But my assumption is that the

00:21:58.040 politicians are being dishonest everywhere. Because the inflation rate, it's like a report card.

00:22:05.280 And if our kids were responsible for grading their own report cards, it wouldn't be as shocker if they

00:22:12.880 came home with all A's, right? So that this is the problem that we've hired the government to grade

00:22:18.960 its own success in the economy. Because high inflation would be bad. So the government,

00:22:28.860 again, when they're measuring inflation and they're looking at prices, they're looking at

00:22:33.400 an effect. They're not looking at the thing itself. But over the years, governments have changed

00:22:41.780 the methodology for measuring price increases. So the CPI that we use today is nothing like the one

00:22:50.640 that we used, say, in the 1970s. Yeah, that's exactly what I want to focus on. So the CPI,

00:22:56.800 for everyone listening, that's the Consumer Price Index. And it's, in principle, please correct me if

00:23:02.180 I've got any of this wrong. It's the average cost of something like a standard basket of goods.

00:23:08.880 That's what it used to be. But the question then is, which goods? Yeah, okay, so let's go into that.

00:23:13.540 It used to be there was, the basket didn't change. They picked a basket and they just measured the

00:23:20.440 same basket year after year. And so you could see the changes. Now the basket changes. The politicians

00:23:28.360 decide what to put in the basket and when to take out. And generally, they take out stuff that's gone up.

00:23:35.160 And they put in stuff that hasn't gone up as much. There's all this substitution. There's a lot of

00:23:41.180 other indexes that they use where they have hedonics or in a CPI, there's hedonics. And so what

00:23:47.000 hedonics is, is the statisticians who compute the CPI, they look at a product and they don't use the

00:23:55.540 actual price. They subjectively decide if they think that product got better. And if they think it got

00:24:02.740 better, they adjust the price down. Now, maybe it didn't get better. And a lot of times stuff gets

00:24:08.780 worse and they don't, they don't adjust for that. Like let's say they're looking at airline prices and

00:24:17.120 they just look at the ticket price and they say, wait a minute, but you're charged extra for luggage.

00:24:20.940 You're charged extra for a blanket. You're charged extra for food. Oh, you know, they just look at the

00:24:25.200 price. You know, a lot of quality has gone down and a lot of things that hasn't been captured.

00:24:30.160 And you know, I did this exercise. I did this a long time ago in 2013 and I made a YouTube video

00:24:36.040 about it, but I just did this for kicks. I looked at the CPI in 2013 and according to the CPI over the

00:24:46.140 prior 10 years, um, the, the price of newspapers and magazines had gone up about 30% according to the

00:24:55.560 CPI. In 2013 magazines and newspapers were 30% more expensive than they were in 2003.

00:25:02.340 Well, I decided to check because it's easy to do. You know, you could just go on the internet and you

00:25:07.400 could see a picture of those magazines because they put the price right on the cover. So I took

00:25:12.680 about 20, I took like 20 of the most circulated newspapers and magazines in the country. And I just

00:25:19.740 looked at what the price was in 2003. And then I took the exact same magazines and I looked at the

00:25:26.980 price on the cover and I just compared it over the 10 years. And what I found was that the actual

00:25:33.960 increase in price wasn't 30%. It was 130%. So the question is, where did that extra 100% go? Because,

00:25:42.580 you know, those are the prices. So obviously the CPI is rigged in such a way as to have a number.

00:25:52.620 It's not that people lie when they calculate, like they get a certain number and they say,

00:25:56.660 oh no, that's too high. The methodology that is used has been engineered to mask the real degree

00:26:05.960 to which prices are rising.

00:26:08.560 You also pointed to something else that's a fundamental flaw if your reasoning is correct,

00:26:13.740 which is that if inflation is best construed as ratio of money to goods, merely calculating

00:26:20.540 inflation as a consequence of price increase doesn't capture the essential element of the

00:26:25.180 inflation. So that's a huge problem too.

00:26:27.660 Because let's say prices should have gone down by 3% and instead they go up by 2%.

00:26:32.560 That's 5% inflation in that my cost of living is 5% higher than it would have been

00:26:39.520 had you not had the inflation. And again, if you think about inflation as a tax,

00:26:44.840 when the government taxes you legitimately, let's say through a sales tax or an income tax,

00:26:50.180 whatever, the government takes your money. Money that you had goes to the government and then the

00:26:54.600 government takes that money and gives it to somebody else, right? You lose your money.

00:26:57.520 But when they tax you through inflation, they don't take any of your money. You get to keep your money,

00:27:02.380 but they print new money and they give that money to somebody else. Now, when that somebody else

00:27:06.820 spends that money that he didn't earn, it drives up your prices. So now you pay more. So the government

00:27:13.000 didn't take your money. They took your purchasing power. So it's the same thing. And you know,

00:27:18.720 another thing on our CPI, how they changed is once upon a time back in the 70s, housing prices were in

00:27:27.360 the CPI and so were rents. And that's about a third of the CPI, which is shelter. But somewhere along the

00:27:35.300 way, they decided to use something called owner's equivalent rent instead of actual rent or actual

00:27:41.360 home prices. Now, what is owner's equivalent rent? Well, it's a fiction that they made up that nobody

00:27:46.640 actually pays. Apparently, the government calls people at random and asks them if they own their

00:27:55.620 home, how much do they think they could rent it for if they were to rent it? And they keep track of

00:28:01.020 those numbers. Now, I don't know, like, you know, who they're asking. I mean, I've owned homes for a long

00:28:06.720 time. I've never gotten a call from a government guy wanting to know what I think I could rent my house

00:28:11.240 for. But if you're not a landlord and you're not in the rental market, how the hell do you know what

00:28:15.800 you could rent your house for? It's such a ridiculous way to try to measure the cost of 0.92

00:28:20.700 shelter by using a number. Okay, so let me ask you a question about that because I've really been

00:28:26.800 curious about that because it's obvious the case in Canada in particular, like housing and rent prices

00:28:33.440 have skyrocketed in the last eight years. And that's not reflected in the inflation statistics. And that

00:28:39.940 seems to be a major oversight, at least according to one line of argumentation, because that's one third

00:28:45.640 of what people spend their money on. Now, you could argue, and this is where it gets complicated,

00:28:50.540 as far as I can tell, that if what you've bought is an asset that generates income and its value goes

00:29:00.600 up, that's actually not a cost to you. It's an advantage. You already made reference to that.

00:29:04.780 Well, only if you own the asset.

00:29:07.540 Yes, if you own it.

00:29:08.320 If you want to buy it and the price has gone up, it's a disadvantage, right? Because now

00:29:12.880 the assets that you want to buy are more costly.

00:29:16.480 Right. So does that imply that a proper CPI that would include the cost of shelter would be

00:29:23.880 calculated on the basis of those who want to buy rather than those who already own?

00:29:29.860 Yeah, because-

00:29:30.220 And I'm trying to figure out how to measure inflation properly here, right?

00:29:33.540 You're right.

00:29:33.720 Very complicated problem.

00:29:35.040 If you already own a home, then the cost of buying another one is not as important to you. Of course,

00:29:42.320 a lot of people that own homes, they may want to buy bigger homes as their families grow, and so it

00:29:46.880 would be. But for those people, what's important are your maintenance costs, your insurance costs,

00:29:56.180 your property taxes. There are a lot of other factors that would be significant to you. If you don't

00:30:02.940 own, if you're a renter, then obviously rent is of primary importance to you. You're paying rent.

00:30:09.300 There's all sorts of valid ways that the government could measure shelter as a component of the cost

00:30:15.140 of living. But in the United States, they don't choose any of those valid ways. They choose another

00:30:19.640 way. And they're doing that because they want the number to be lower. They don't want to report high

00:30:25.120 inflation. And they even do this as part of the GNP, because when they report GDP, they don't even do

00:30:32.180 GDP anymore. It's GDP now that they report, gross domestic product. In order to get the number,

00:30:38.060 they have to deflate it. There's a deflator which adjusts the GDP for prices. And the government 0.79

00:30:44.460 always underestimates that deflator so the GDP looks bigger than it really is. Because in many cases,

00:30:51.900 economies are actually contracting in real terms. But because the government is dishonest in the way

00:30:56.940 it reports, it reports economic growth, even though there is no real growth. It's inflation,

00:31:02.920 which creates the illusion of growth. That's another reason that politicians like inflation.

00:31:07.580 And of course, when inflation drives up the stock market and the real estate market,

00:31:11.540 people think they're richer, right? Because, oh, my house has gone way up, my stock. But it hasn't

00:31:16.220 gone up. Your money has gone down, right? But people don't necessarily connect those dots.

00:31:22.700 You know, they think they're wealthier. But also, if you think about, as I said earlier,

00:31:28.580 inflation benefits debtors. It's a transfer of wealth from creditors to debtors. Who are the biggest

00:31:34.920 debtors in the world? Governments. And the biggest, most highly indebted government is the United States

00:31:42.360 government. We have $32 trillion of funded debt, almost, and our unfunded liabilities,

00:31:48.300 commitments that have been made where they didn't borrow the money, but they're on the hook,

00:31:51.600 like guaranteed student loans or guaranteed pensions, Social Security, Medicare, all that

00:31:56.800 stuff. That's like $100 trillion. So when the government creates inflation, they repudiate

00:32:02.940 enormous amounts of their debt. And so the governments have massive incentives to create inflation,

00:32:09.500 but then they have massive incentives to lie about it and pretend it's not as bad as it is and blame

00:32:15.820 other people, which is the main reason that they redefined inflation from the expansion of the money

00:32:21.560 supply to rising prices. Because when you know inflation is an expansion of the money supply,

00:32:26.920 then you know who causes it. It's the government. You can't blame greedy corporations for it. You can't

00:32:33.480 blame Putin for it. Putin doesn't print our money. We do. The Federal Reserve does. And so when

00:32:39.440 politicians can redefine inflation, they can blame everybody but themselves.

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00:33:49.040 shopify.com slash jbp. Okay, so let me ask you a kind of a modified Ponzi scheme question because this

00:33:59.280 is something that's bedeviled me. So I understand that, so I have two questions. I understand that getting

00:34:05.140 the measurements of something as fundamental as inflation correct is absolutely necessary.

00:34:11.520 So one of the things I've wondered is like, why aren't there independent teams of economists

00:34:16.020 who generate various true estimates of inflation, make them public so that the public itself could

00:34:25.340 gather a basket of independent estimates and know for themselves what the inflation rate is.

00:34:30.800 Very curious about that. Well, they are. They are out there. I mean, there's a website shadow.

00:34:36.140 Who's reliable? Who's reliable? Yeah, you know, well, I think the least reliable would be the

00:34:41.780 government, right? Yeah, yeah. You don't want their statistics because they're completely biased,

00:34:47.120 right? You know, it's like, you know, the mafia is not going to give you accurate statistics on crime,

00:34:52.420 right? So you got to look to independent sources. But I think it's kind of obvious, though, if you

00:35:00.780 understand what inflation is and you see the enormity. I mean, the United States is running $2

00:35:05.320 trillion a year plus deficits now. And technically, we're not even in a recession. The deficits are

00:35:10.840 going to get even bigger when this next recession starts. But how are we financing those deficits?

00:35:17.420 It's inflation. There's just no other way. Look at the Federal Reserve's balance sheet. So we know that

00:35:23.320 inflation is going to be a significant threat. It's going to reduce the value of money. And so that has

00:35:33.260 to be the single most important factor in driving your decisions on savings, on investing.

00:35:43.120 You know, and even for, in this day and age, if you don't have a lot of money to invest,

00:35:50.440 you know, I've been saying this for years to people. I started talking about it several years

00:35:54.280 ago. People have to stock up on things. You know, buy things that you're going to use in a year or two,

00:36:00.800 buy it now. Because it's going to be a lot more expensive if you wait. Why hold on to the cash if the

00:36:07.280 cash is going to lose value? Just buy the things that you're actually going to need, because those things

00:36:12.920 will retain their value if you're planning on using them.

00:36:16.660 So here's the Ponzi scheme question. So because of the efficiencies of the capitalist system,

00:36:25.840 free market system, let's say, we are generally able to produce more for less. And in some instances,

00:36:33.780 we seem to be doing that faster and faster. So consumer electronics are a good example, and price of

00:36:39.660 computation and so forth. And so what that means is that independent of inflation, because of

00:36:46.080 technological progress, things will get cheaper in the future. The future will be richer than the

00:36:51.780 present. So then you might say, if you're a politician, you say, well, if that's the case,

00:36:56.280 and if that's invariably the case, then why not defer our debt to the future? Like essentially,

00:37:02.860 why not borrow from the future? Because the future is going to be wealthier than the present.

00:37:06.760 And then I wonder, if we had a 3% increment in actual productivity per year, then maybe we could

00:37:15.880 tolerate a 2% inflation rate, because fundamentally, the tendency for things to get cheaper because of

00:37:23.180 enhanced productivity would be balanced by that inflationary proclivity. So are the politicians,

00:37:28.580 could you make a case that the politicians are making a good bet because they're throwing the debt

00:37:33.680 into the future when we're going to be richer? No, well, they are making a politically opportunistic

00:37:40.620 decision. Yeah, fair enough. Because they're telling the voters, hey, don't worry about it.

00:37:45.420 Your grandkids will pay for it, right, or whatever. And of course, not all voters have kids, right? Some

00:37:51.320 voters, you know, don't have kids. And so what do they care if somebody else's grandchildren pay for 0.98

00:37:56.740 their program? But the only time you could justify borrowing from the future is if you are creating

00:38:06.840 something that future people will benefit from. Let's say a capital investment. Let's say the

00:38:13.500 government is going to build a bridge, and that bridge is going to be there for 100 years, right?

00:38:18.180 And people who aren't even born yet are going to benefit from that bridge. Okay, maybe they can

00:38:24.020 sell bonds to finance the construction of that bridge that future people will end up paying because

00:38:30.220 they're going to have the benefit of that bridge. So you can make an argument for debt to support

00:38:35.280 that. But if we're going to borrow money just to pay for welfare benefits or Social Security benefits,

00:38:41.120 where we're leaving our children and grandchildren with nothing but a bill, right? They don't have a bridge or

00:38:47.020 a capital asset. The money's been spent. I see. So your argument basically is that if you're

00:38:54.060 borrowing from the future isn't designed specifically to drive productivity, let's say,

00:39:02.380 then it's a degenerating bet. Yeah, I don't think it's borrowing from the future. I think it's

00:39:07.200 stealing from the future. You're trying to steal. Yeah, okay, fair enough, fair enough.

00:39:10.680 But, you know, a lot of this stuff is going to backfire because I think the current generation 1.00

00:39:16.240 is going to pay for a lot of this stuff because the dollar is going to collapse. You know, we could

00:39:22.520 have hyperinflation. And because future generations are not going to pay this. You know, they're going

00:39:28.820 to leave. You know, they'll leave the countries that because they're not going to want to be subjected 0.92

00:39:32.900 to the confiscatory tax rates when they can't get commensurate benefits from government.

00:39:38.660 They're going to leave. The currency is going to collapse in value. And we're already there. I mean,

00:39:46.480 we're already at that point because you're talking about this intergenerational Ponzi scheme.

00:39:51.220 That's really what Social Security is. I mean, it wasn't created that way in the 1930s when Roosevelt

00:39:56.640 first concocted this Social Security. And it was totally unconstitutional and unfortunate that we

00:40:03.520 haven't. But the idea was that it was like insurance. The government was going to take

00:40:08.040 the money and invest it. And then when everybody was older, you would get paid your benefits. And

00:40:13.240 they even called the taxes premiums. But the whole thing was a con because it never was insurance

00:40:18.440 because the government never invested the money. They spent the money. And now they gave themselves

00:40:23.500 an IOU. They created these things called trust funds. And so what would happen is the government

00:40:27.980 would collect the money from Social Security. Then they would take the Social Security money

00:40:31.640 and spend it on whatever, military or whatever they were doing. But then they would put an IOU in

00:40:36.980 the government trust fund in the form of a bond. And then they would say, oh, we have an asset in

00:40:41.460 this trust fund. We have a bond. That's not an asset. It's your own debt. It's like if I write

00:40:47.080 myself a check for a million dollars, I can't take that uncashed check and claim I've got a million

00:40:52.540 dollar asset. No, I mean, it's also a million dollar liability. So there never was any money in Social

00:40:58.500 Security. They spent it all there. The system is broke. And now they have to keep raising taxes

00:41:04.140 on the workers. But now they won't even raise taxes on the workers. So they just keep they create

00:41:10.520 inflation to pay for Social Security.

00:41:14.120 Okay, so let me let me offer another rosy scenario, sort of like the borrowing from the future

00:41:19.980 scenario. So I've been thinking about this issue of fiat currency and the fact that the currency

00:41:25.900 is unmoored. But we have a situation in the world now where every currency is unmoored,

00:41:33.440 right? And so you might say, no matter what form of money you use, you're making a bad bet. You're

00:41:42.120 relying on something unreliable. But if you're going to rely on something unreliable, you should rely on

00:41:48.720 the least unreliable currency, right? And so then you might say, well, the least unreliable currency

00:41:56.100 becomes by default, the standard and the US has managed that for 50 years, 60 years. And so why

00:42:04.620 isn't it the case? Because you said, for example, well, people who are subject to unfair tax because

00:42:11.020 of future deferral of debt will leave. But I could say, yeah, but there won't be anyone better to go.

00:42:18.820 No, there will be. And so the whole world doesn't, you know, there have those tax rates of a certain

00:42:26.160 country, you know, saddles its future generations with too big a debt burden. Those, you know,

00:42:35.460 they could leave and go to a country that doesn't have that demographic problem, that big of a debt

00:42:41.800 burden. And of course- Right. So you think there'll still be enough, even if everyone's on fiat currency

00:42:47.640 and if all the currencies are corrupt, you still think there'll be enough variability in corruption

00:42:52.240 so that people will vote with their feet like they are in the US moving from- Correct.

00:42:56.720 Democrat states to Republican states. And the idea that, you know, it's the, you have to settle for the

00:43:02.480 least bad currency. And again, currency isn't even really money. Money is a commodity. Gold was money.

00:43:09.680 Silver, you know, it would be money. Legitimate currency, which is backed by real money, is currency.

00:43:17.860 What we have now is fiat currency. And both fiat currency and legitimate currency are substitutes for

00:43:24.160 money. They're not actual money, but they substitute. And they can function as money, but they're not really

00:43:29.560 money in the real sense of how you define money as the most marketable commodity, which is what would

00:43:35.540 be money. But people have been saying, well, you know, the dollar is the cleanest shirt in the hamper.

00:43:42.180 And, but I think the dollar only appears clean because of its status as the reserve currency.

00:43:51.140 And I think that status is in jeopardy. And when it's lost, then the dollar is going to be the,

00:43:58.720 by far the dirtiest shirt in, in, in, in that hamper. So, so, so, okay. So two questions from that.

00:44:04.720 So first of all, maybe you could walk everybody through why the government is the biggest debtor,

00:44:11.000 because people aren't really clear, even for example, about the difference between the deficit

00:44:15.740 and the debt. And they don't know what the debt means to them in real terms, because it's always

00:44:20.700 expressed in these huge numbers, like 132 trillion. It's like, no one knows what that means.

00:44:25.880 But they could figure that out if they knew how much of that debt they were responsible for,

00:44:31.080 or their families. Yeah, so you've got, you've got two things. First of all, why is the government

00:44:34.580 the big debtor? Well, you've got the national debt, which is the accumulation of every year's budget

00:44:41.640 deficit. And then you've got the annual budget deficit, which adds to the total debt.

00:44:47.940 But when I'm talking about creditors versus debtors, nations can either be a creditor nation

00:44:54.140 or a debtor nation. A creditor nation is a nation in which the world owes it money, more money than it

00:45:00.820 owes the world. A debtor nation owes the world more than it's owed. So prior to the U.S. going off the gold

00:45:07.980 standard in 1971, and in fact, all the way up to probably the early 1980s, the United States was

00:45:15.180 the world's biggest creditor nation. We generated tremendous amounts of wealth under a freer economy

00:45:24.060 than the one we have today, and one that was governed by the disciplines of a gold standard. So

00:45:28.300 we became the world's wealthiest creditor nation. Today, after 50 years of fiat money, America is not

00:45:36.780 only the world's biggest debtor nation. America owes more money than all the other debtor nations of the world

00:45:44.100 combined, right? That's how much our financial position has eroded. Now, when the dollar became the reserve

00:45:53.320 currency, it became the reserve currency because of America's financial and industrial might. We were the world's

00:46:01.200 biggest creditor nation. We also had huge trade surpluses. Now we have massive trade deficits. I

00:46:07.980 mean, over a trillion dollars a year. But when the dollar became the reserve currency, we made everything.

00:46:13.680 You know, all the consumer electronics that are now made in Japan or Korea or China, all that stuff was

00:46:19.600 made in America. I mean, if you wanted anything, we made it in this country, in America. And so since

00:46:25.960 everybody wanted American products, everybody needed American dollars to buy them, and the American dollar was as

00:46:32.740 good as gold. Because if you had dollars, you had gold. If you had $35, you could get an ounce of gold from the

00:46:38.800 government. It was convertible. And so under those conditions, the U.S. dollar became the reserve currency. But

00:46:45.140 today, the dollar would never be the reserve currency today if it wasn't already there, right? Nobody would pick the

00:46:52.620 dollar given our financial position, our trade imbalances. But, you know, it's been the reserve

00:46:58.500 currency because, you know, for the tradition of the fact that it's been. But in order for the world to

00:47:06.620 maintain this status, it's very expensive for the world. It's a huge benefit for America. I said we have

00:47:14.800 a trillion dollar a year trade deficit. That means the world has to supply America with a million dollars

00:47:21.480 worth of merchandise for which it doesn't get paid, right? It doesn't get products. You know, most

00:47:28.120 countries, in order to import, have to export. You have to export something in order to pay for your

00:47:35.200 imports. Well, we don't have to export anything. We just print money and export that. Well, that costs

00:47:39.600 nothing. But the rest of the world has to produce real stuff and use resources, land, labor, and capital

00:47:45.320 to produce products. So Americans get to live beyond their means because of the dollar status.

00:47:51.460 But the rest of the world collectively lives beneath its means. And of course, it's not

00:47:57.440 consistent because some countries have to live even further below their means, depending on how big a

00:48:04.520 trade surplus they have with the United States. That's how much they're subsidizing the U.S. economy.

00:48:10.860 So a lot of the emerging markets bear an even bigger burden of preserving the dollar status.

00:48:19.980 And so I think the world is starting to move away from the dollar, not only because of the economic cost

00:48:26.360 of maintaining it, but now we have raised the political risks. If you look at what the Biden

00:48:35.240 administration did with Russia, the unprecedented sanctions on Russia, this has really highlighted

00:48:46.260 the tremendous risk that every sovereign nation assumes by being beholden to the dollar,

00:48:54.620 because it puts tremendous power in the hands of the United States. It's like putting a noose around

00:48:59.600 your neck and then throwing it over a tree to America, who's holding the other end. Then you're 0.89

00:49:04.960 hoping that they don't pull. I mean, nobody wants to really be in that position, especially if you're

00:49:09.760 a country like China, where we've kind of made China our enemy. But in reality, China provides 0.93

00:49:16.280 America with the largest annual subsidy. They're our biggest trade deficit is with China. So they 1.00

00:49:23.960 supply us with more merchandise than anybody else. And they're our largest creditor. Now, some people

00:49:28.920 say it's Japan, but no, it's actually China because you have to take Hong Kong because Hong Kong is part

00:49:35.140 of China. So if you take all the treasuries that Hong Kong owns and the treasuries that China owns,

00:49:39.880 that's more than Japan. So they're our biggest banker. They supply us with credit. They supply us

00:49:44.980 with merchandise, right? That's all going to end, right? China is going to wean itself of that. 0.89

00:49:50.900 Okay. So let's go after that. So you said, and let me see if I got the reasons right. You said,

00:49:57.120 well, the American dollar could stand as the fundamental currency because it had come off

00:50:04.620 the gold standard, but had still benefited from that. It was extraordinarily productive. It ran huge

00:50:09.240 trade surpluses. It was a dynamic, expanding, rich country with a very stable currency. So it could

00:50:15.820 run on that for a long time. And you said, however, now, if people looked at the American

00:50:21.400 economic situation, the American dollar, without that historical context, there's no way the US

00:50:27.780 dollar would be the reserve currency. But then we're back to the dirty shirt in the hamper problem.

00:50:32.420 And I know the Russians and the Chinese and the Brazilians, et cetera, are wrestling with that.

00:50:38.040 They're trying to move people away to some degree from the dollar as a reserve currency. But

00:50:42.920 nobody in their right mind is going to trust the Chinese currency. So where do people go if it's

00:50:50.000 not the American dollar that's going to be the standard for all the reasons you laid out? Well,

00:50:54.880 you know, the euro doesn't look better, really. And certainly, you have to be insane to use Chinese 1.00

00:51:01.180 currency, I think. See, that is the false choice that everybody thinks we have to make. One of the

00:51:06.660 reasons that people are so arrogant, particularly in America, that the dollar status is not in

00:51:13.800 jeopardy. And so that we can keep on running these huge deficits, we can keep on creating inflation,

00:51:19.600 and the world's got no choice, right? But to stick with the dollar, because are they going to go to

00:51:24.920 the euro? Are they going to go to the yen? You know, the pound? I mean, the renminbi. I agree.

00:51:29.740 All of those currencies also have problems. And so do you really want to switch from one

00:51:37.520 flawed fiat currency to another, even if those other fiat currencies may be less flawed than the

00:51:42.800 dollar, right? Do you really want to make that shift? I don't think that that's what's going to

00:51:47.680 happen. What everybody is missing is that there is an alternative to the dollar that doesn't involve

00:51:54.360 another fiat currency. And that's gold. That is real money. Everybody forgets that for thousands

00:52:01.020 of years, gold was money. It was money because it worked. Now, over the course of time, we had paper

00:52:09.120 currencies that would rise and fall. I mean, hundreds of years ago, they were paper currencies that are now

00:52:13.980 worthless, and you don't even know their names. You know, they come and go. But gold has stayed.

00:52:20.020 You know, gold works as money. And so I think what these central banks are going to do

00:52:25.660 is as they get out of dollars, they will just increase their holdings of gold. Gold will be

00:52:31.820 the monetary anchor. Gold will be the reserve monetary asset, just the way it was before the

00:52:37.860 dollar. It wasn't the British pound. I mean, the British pound was a dominant currency, but gold was

00:52:43.000 what everybody owned. The British backed the pound. Do you see any evidence that some of these

00:52:48.840 alternate currencies are starting to back their currency claims with gold? Oh, yeah.

00:52:54.680 What's happening on the- Central banks are now buying more gold than they've bought in decades,

00:53:02.560 especially a lot of the emerging market countries. Not even maybe so much the United States isn't buying

00:53:09.560 any gold, and maybe some of the more mature countries, but a lot of other countries that had

00:53:16.720 predominantly held dollars and then to a lower degree, euros or yen or pounds, these countries

00:53:24.240 are increasingly buying gold. That's why gold is at a record high. I mean, gold's around $2,000 an ounce,

00:53:31.160 but in terms of just about every other currency on the planet, gold has been hitting all-time record

00:53:37.200 highs. And again, that's not really gold going up. That's all these fiat currencies going down.

00:53:42.880 But one of the reasons that countries would want gold as opposed to the dollar is the U.S. government

00:53:50.080 doesn't have any control over it. Gold is an asset that's not also somebody else's liability,

00:53:55.680 and nobody could create it. You have to mine it. No one country has the advantage. So why would you

00:54:02.060 want to take away that privilege that the United States has and just bestow it on somebody else who is 0.97

00:54:09.480 going to abuse it the same way? I mean, the United States abused that privilege that we had, and we

00:54:14.840 exported all this inflation to the world. We took advantage of the position that we were in.

00:54:21.620 So why would you want to put another nation in a position to similarly take advantage of the world?

00:54:27.600 It's much better to go back to honest money. And again, even when we were on Bretton Woods before,

00:54:34.720 you know, 1971, and we were on the dollar standard, it was because the dollar was backed by gold. Again,

00:54:41.020 if you held dollars, you held gold. That's where the saying came from, the dollar is as good as gold.

00:54:47.400 In fact, the legal definition of a dollar is a weight of gold. That's what a dollar is. Dollars are gold.

00:54:54.760 The paper currency that circulated Federal Reserve notes are not dollars. They are notes of the Federal

00:55:01.620 Reserve. Initially, those Federal Reserve notes were payable in dollars. The dollars were the gold that

00:55:08.860 the Federal Reserve notes paid. Because if you think about what a note is, a note is a promise to pay

00:55:13.800 something. A Federal Reserve note is supposed to pay something. Well, what did it pay? It paid gold. It paid

00:55:20.020 dollars. Today, Federal Reserve notes pay nothing. Their IOUs, nothing. The Federal Reserve is not obligated to

00:55:26.320 give you anything. I mean, if you have a $10 bill. Okay, so people might object, and they have,

00:55:33.140 that, well, gold is just another arbitrary standard of value. It has some intrinsic worth.

00:55:39.400 It's useful for jewelry. It's useful for certain industrial applications. But it's just another

00:55:45.820 psychologically valuable currency without any intrinsic value. And so it shouldn't be a repository

00:55:53.180 of value in principle that's any more stable than, let's say, a well-managed or even a badly managed

00:55:59.280 fiat currency. And so why is it that gold has proved itself, let's say, over centuries or millennia

00:56:08.320 as a storehouse of value? What is it about gold intrinsically, let's say, that seems to have given

00:56:14.640 at that edge. The idea that gold doesn't have any intrinsic value is just pure nonsense. It's obviously

00:56:23.140 politicians have a vested interest in trying to diminish gold as a monetary alternative to the fiat

00:56:30.940 system. And even now, you have a lot of cryptocurrency enthusiasts who say the same thing. Well, you know,

00:56:36.820 gold has no value because they want to justify something like Bitcoin, which also has no value, and say, well,

00:56:42.080 gold worked as money and it has no value, so Bitcoin could work. Well, it's not true that gold has no

00:56:48.080 value. Gold is the most valuable, the most useful metal on the periodic table. Gold became money because

00:56:58.360 it was such a valuable commodity. But gold has a lot of properties that make it uniquely qualified to be

00:57:06.900 money more so than other commodities. That's why gold was so successful over the centuries as money because

00:57:15.900 people preferred to use it as money. It wasn't governments that decided gold is going to be money. The people

00:57:22.920 decided that gold was going to be money. And once the people decided that gold was going to be money, if you were a

00:57:28.820 king, you know, well, you would tax people in gold because if you wanted to pay your soldiers to protect you,

00:57:33.900 your soldiers wanted gold, right? So it was the money created in a free market and it beat out

00:57:40.780 all other forms of money because gold, you know, a gold coin, they're all the same. You can melt gold

00:57:47.920 down and you can make it into coins. It's fungible, it's portable, it's divisible. But the other aspect of

00:57:55.160 gold, that is the key. You can save gold because if I have an ounce of gold in a hundred years, in a thousand

00:58:02.700 years, it's exactly the same. It doesn't lose any of its properties. And in fact, even if I take my

00:58:08.160 gold and I make, you know, I make a ring out of it, or I use it to make a watch, right? You can melt

00:58:15.120 this ring down and you get your gold back and it's exactly the way it was. You could do something else

00:58:20.200 with it. There's really no other metal. You can keep using it over and over and over again. I mean,

00:58:25.660 they fill teeth with gold. If you find somebody buried in the ground, you know, you could take their

00:58:30.060 fillings and, you know, the gold's still there. You know, ships from the 1400s, 1500s, they sink.

00:58:37.900 If they recover the wreckage, the only thing that's still there is the gold. And it looks exactly the

00:58:43.220 way it looked when the ship sank 500 years ago. So from a point of savings, because money has to

00:58:50.340 satisfy three primary conditions. Two of them are a unit of account and a unit of exchange.

00:58:56.320 But the third one is a store of value. And that's important because it's also makes it possible to

00:59:04.040 do loans, that I can borrow money, you can lend money, and you can be repaid. And you know that

00:59:09.240 the money that you're going to get repaid is going to retain its value. And so that's something that

00:59:14.620 gold does better than other metals. But the value of gold, even if I'm not using my gold today as a

00:59:23.880 metal, let's say I have gold stored in a safe and say, well, you know, you're not using it for

00:59:27.500 anything. That's true. But I'm preserving the future use of that gold. Somebody in the future

00:59:34.060 is going to need that gold. And so I'm storing it right now. Because, you know, there are more uses

00:59:39.760 for gold that are discovered all the time because of its very unique properties. I'm sure in 100 years

00:59:46.240 or 1,000 years, there will be more uses for gold than there are now.

00:59:50.340 What is the future of energy? Find out on Energize, a new podcast brought to you by GZERO Media's

00:59:56.660 Blue Circle Studio and presented by Enbridge. I'll be bringing you a series alongside Enbridge CEO,

01:00:02.820 Greg Ebel. Listen wherever you get your podcasts.

01:00:05.140 Okay, so let me push you on the crypto front for a second. So, you know, I've been contemplating

01:00:15.160 permanent storehouses of value, concerned about such phenomenon that we've been discussing as

01:00:22.420 inflation and potentially hyperinflation, which is far from rare, even among developed countries.

01:00:27.180 I think you have a 1% chance if you live in a developed country of hyperinflation incident at

01:00:35.560 some point in your life. It's something like that. But anyways, the cryptocurrency people, and I think

01:00:40.520 the Bitcoin people have made this case the best, is that they've managed to duplicate gold in its

01:00:46.720 important elements in that they've produced a storehouse of value that can't be corrupted because

01:00:51.980 it's blockchained and distributed. And that's a nice argument. That also gets more scarce

01:00:57.000 with time, which was quite the brilliant technological innovation that requires work to obtain. And so

01:01:07.120 that's the Bitcoin mining, but that is also easily distributable digitally. And so it's out of the

01:01:13.700 hands of governments. It's an uncorruptible store of value. It's widely distributed and it's easily

01:01:19.880 moved. And so, you know, that's not, that accounts for a fair number of the properties that you described

01:01:26.460 a monetary unit had to possess. So what do you think of crypto in general, but more specifically

01:01:35.780 about Bitcoin, because I think it's king of the cryptos. And do you think there's a case to be made

01:01:41.900 that gold has an advantage that crypto cannot duplicate? And then we might ask, well, what if

01:01:46.820 you had a gold-backed crypto? Because maybe then you could have the best of both worlds. So what are

01:01:52.660 your thoughts about the, I mean, Bitcoin's done pretty well for a currency that doesn't exist,

01:01:57.140 you know, that's not government mandated, et cetera. It's stored its value. There's a lot of

01:02:02.680 variability. Well, first of all, Bitcoin isn't a store of value because you can't store something

01:02:09.100 that you don't have, right? First, you have to have the value. So as I said, gold's value is its use

01:02:14.820 as a metal, right? That's what you're storing is the future use of gold and metal, whether you're going to

01:02:19.700 use it in jewelry or as a conductor in electronics or in medicine, whatever it is, you're storing

01:02:25.240 that. Bitcoin only has a price, doesn't have value. Price is something that you pay, right? Value is

01:02:33.120 something that you get. When you buy Bitcoin, you pay a price, but you get no real value.

01:02:37.760 And now I agree, the price of Bitcoin has gone way up from when it was first started, where, you know,

01:02:43.000 you could get multiple Bitcoins for a fraction of a penny or a dollar or whatever. They started next to

01:02:48.900 nothing. And at one point, people were paying almost $70,000 for Bitcoin. Currently, it's around

01:02:56.720 $27,000 as we're recording this. So depending on when you bought, you potentially made a lot of money

01:03:03.600 if you sold. If you bought during the mania hysteria of 2021, you know, you've lost a lot of your money

01:03:11.020 if you get out. But looking at Bitcoin, look, Bitcoin did an excellent job of replicating

01:03:18.740 the qualities that gold has that made it better money than, you know, cattle, you know, or salt or,

01:03:28.360 you know, other commodities that have been money, right? Gold did, has certain properties and Bitcoin,

01:03:33.720 you know, captured those properties. But the most important property at all, of all, is gold's

01:03:41.560 metallic properties, gold as a commodity. Bitcoin has none of that. And so Bitcoin, just like a fiat

01:03:51.360 currency, what gives a fiat currency its value? Just confidence. People just believe that it has

01:03:57.440 value. They believe that people will accept it. Now, part of that belief is driven by governments,

01:04:02.740 which declare it legal tender and which require it for payment of taxes. And so there is some real

01:04:08.560 demand for dollars if you live in America. There's a demand for euros if you're in Europe because you

01:04:13.580 have to pay taxes. And if you don't pay taxes, they could put you in jail. And so in order to avoid

01:04:18.380 jail, you need the currency that the government demands. But Bitcoin is similar to fiat in that all

01:04:27.740 of its value comes from faith and confidence. People just believe that people in the future will want

01:04:32.940 it and they'll pay a higher price for it. Except there is no legal currency status. There is no

01:04:39.580 government really, maybe other than El Salvador. I don't know what's going on over there. But there's

01:04:43.620 no government that is accepting tax payments in Bitcoin. So there's no natural demand other than

01:04:51.140 the speculative demand from people who think they're going to get rich. I mean, people who buy Bitcoin

01:04:56.000 are buying it because they expect the price to go up. And the people who buy it from them thinks

01:05:01.200 the price is going to go up. So it's this greater fool theory that the price is going to go up and 0.91

01:05:06.100 that's what's driving people to buy it. It's very cumbersome if you want to use it as a medium of

01:05:12.520 exchange or a unit of account. It's too volatile to be a unit of account. It's too expensive to be a

01:05:17.240 medium of exchange and it can't be a store of value. So it's not gold. It's digital fool's gold.

01:05:24.360 But you hit the nail on the head when you talked about a crypto that's actually backed by gold. 0.98

01:05:32.260 That works. That solves all the problems that Bitcoiners claim gold has. Well, you know,

01:05:40.480 I can't send my gold around the world. I can't use my gold to buy a cup of coffee. Well, yes,

01:05:45.640 you can. It's a lot better than Bitcoin. If I have gold stored with any third party,

01:05:51.800 it could be a government, it could be a private company, it could be anybody. You could tokenize

01:05:56.780 that gold and have a Bitcoin, similar cryptocurrency, that is a digital representation of that actual

01:06:06.000 gold. It's like a warehouse receipt, an IOU for gold. And then if I wanted to give you some of my

01:06:12.660 gold, I wouldn't have to ship you my bar. I could just send you my tokens, you know, over the internet.

01:06:19.300 And now the ownership goes from me to you. You know, it's an improvement on paper money. Because

01:06:27.060 again, initially, paper money came as a substitute for gold. I had my gold stored with a blacksmith.

01:06:33.960 And instead of lugging my gold around, my blacksmith gave me an IOU. And then I could

01:06:38.800 circulate that IOU because everybody knows the gold is there. And instead of having to get it,

01:06:43.740 they just circulate the IOU in a paper terms. Well, it's much more efficient to do it crypto

01:06:51.820 digitally. And you can take an ounce of gold or a gram of gold and divide it, you know, to tiny

01:06:58.300 little pieces so that I could buy a cup of coffee and pay the barista with my gold using the token.

01:07:06.380 And it would be faster and cheaper than Bitcoin. And the difference is when I'm paying with gold,

01:07:12.360 I'm paying with something real. I'm getting one commodity for another. I'm getting coffee and

01:07:17.300 the guy that sold me coffee is getting gold. And you can actually denominate the price in gold

01:07:23.500 because gold is stable. I mean, it can function much better as a monetary instrument. The only thing

01:07:29.360 that you have, you have to trust, you have to trust the third party. But I mean, capitalism is all about

01:07:35.320 trusting third parties. I mean, private third parties, we, we buy an insurance policy. People

01:07:40.520 buy life insurance, fire insurance, health insurance. It's all a third party that's selling

01:07:45.000 you that policy. The policy is only as good as the third party's ability to, to pay, you know, how do

01:07:51.320 you, you know, we have rating agencies, we have capitalism, we have competition for reputation.

01:07:56.280 There is no reason that you can't have third parties to store your gold. And then you could

01:08:02.860 use it. You don't have to store all of your gold that way. You can keep a lot of your gold yourself,

01:08:06.740 but the gold that you want to use as a media of exchange, you can use that digitally. And that

01:08:13.860 works much better than Bitcoin. You have real value. You have real. Well, I've talked, I've talked to

01:08:19.460 people who have attempted to produce gold backed cryptocurrencies, and they've run into, from my

01:08:27.200 understanding, a variety of legal impediments on that front. Do you know of anybody who's doing that

01:08:32.480 successfully? And if so, why aren't they prime competitors, let's say in the international market

01:08:39.900 for Bitcoin? I mean, the argument you laid out seems to make sense. And so you'd think, well, you'd think

01:08:44.720 two things, you'd think, given that governments are rushing to digital currencies, and that some

01:08:51.340 governments would like to displace the US dollar as the reserve currency, that the logical thing to do

01:08:57.620 for some enterprising country would be to produce a digital currency that was gold backed. And so what's

01:09:04.500 happening on that front? Okay, so there's two things. First of all, the demand that is mainly coming

01:09:13.060 in cryptocurrencies, including Bitcoin, is to get rich, right? People want to buy Bitcoin because

01:09:21.180 they think it's going to go to the moon. And so that's really the demand for cryptocurrencies.

01:09:27.940 It's not to have an alternative as a medium of exchange and as a unit of account. Most people that

01:09:35.740 are buying Bitcoin, they still use dollars or euros or pounds in their transactions. They just hoard their

01:09:42.040 Bitcoin because they think they're going to get rich. And so there's no real demand yet for a

01:09:50.660 cryptocurrency that's backed by gold to be used as a medium of exchange. People are still content to

01:09:56.980 use their fiat currencies for that role. But I think that once this crypto bubble really pops

01:10:05.840 and the losses, you know, stack up and people get burned and they're no longer interested in these

01:10:14.680 get rich quick schemes. And they really start to focus on an alternative, not to get rich, but to

01:10:23.680 preserve what they have, right? Because that's what gold is, right? Physical gold is not about getting

01:10:28.920 rich. It's about avoiding becoming poor. It's about avoiding the inflation tax. And so I think as the

01:10:36.080 inflation rates get worse throughout, you know, the world, there will be more of a demand for an

01:10:45.080 alternative medium of exchange to these fiat currencies that can also store value.

01:10:50.500 Well, you said, you said some of that is happening already. You said that many countries around the

01:10:55.320 world, the central banks are buying gold. The central banks, right. It seems to be a, right,

01:11:01.420 right. So, and many of those central banks are also starting to experiment with the idea of an

01:11:06.640 imposed digital currency. Well, there, there's flirting on the margins. But what they're talking

01:11:11.540 about is a digital fiat currency that just gives them more control. Yes, I know. They just want,

01:11:16.880 and if they want to eliminate cash, it's just inherently a very oppressive monetary system that

01:11:23.500 concentrates even more power in government and diminishes individual liberty and makes it easier

01:11:29.600 for governments to become more tyrannical. So that's a whole different topic. But staying on

01:11:34.980 a gold-backed crypto. So one reason is that there's not a lot of demand for it yet.

01:11:40.460 The other problem, though, is that to the extent that there is some demand, there is such a huge

01:11:47.700 regulatory impediment. And I think it's deliberate on the part of governments. Governments

01:11:53.380 don't want to have to compete with gold. And so the barrier that a lot of companies face,

01:12:01.240 because it's very easy to tokenize gold. This is not a hard process. It's the regulatory environment.

01:12:07.960 It's the money laundering laws, you know, that are there, that make it very expensive to get into this

01:12:17.920 business. Because you have to comply with all these rules and regulations. And also you have

01:12:25.820 the potential for governments to declare these tokens securities, which they're not. But some

01:12:32.460 government can say, no, it's a security. And now it's got to be registered. And you've got to comply

01:12:37.100 with all these other rules and regulations. So government makes it very expensive to compete

01:12:43.040 with their fiat currencies. So what has to happen is the advantage of a gold-backed crypto has to be

01:12:51.600 so large that it could absorb those costs. And that's going to happen because the inflation is

01:12:57.620 going to be so high. But also, you're going to have sovereign nations potentially coming out

01:13:03.520 with gold-backed cryptos. In the United States, you may have state governments coming out with their own

01:13:08.820 official gold-backed cryptos. I mean, all of this is going to happen. The market is going to find

01:13:17.700 solutions to this problem. You know, whenever the government, you know, has some type of service

01:13:23.600 that it provides, and of course, all government services are going to be flawed. You know, we talked

01:13:28.200 about how capitalism lowers prices. Governments raise prices. Whenever you look at an industry

01:13:33.720 that's heavily regulated, education, right? Prices go up all the time because the government is so

01:13:40.680 involved. That's why it keeps getting more expensive. And the quality goes down. The quality

01:13:45.540 of education. I mean, a high school degree, you know, 50 years ago is way more valuable than a college

01:13:51.680 degree today, even a master's degree. So governments have destroyed- Especially a master's degree.

01:13:56.660 Yeah. The governments have destroyed the value of degrees while dramatically increasing the price to

01:14:03.340 get one. So government drives quality down and price up. The free market does the reverse. It drives

01:14:10.200 quality up and price down. Government, let's say the post office, right? Post office was a problem. And so

01:14:19.500 then FedEx came along, right? And okay, we can avoid the post office. Or more recently,

01:14:24.400 governments create monopolies in taxi cabs. Well, Uber comes along, Lyft comes along and creates some

01:14:34.220 competition to these government monopolies. So the same thing is going to happen with money.

01:14:40.080 Government money is so bad and it's going to get worse that the market is going to offer alternatives.

01:14:48.440 And yes, the government is going to try to put up roadblocks to protect its monopoly. 0.87

01:14:53.540 But ultimately, it won't work. And, you know, the people will find ways around it.

01:15:01.260 Okay. Okay. So, well, let's turn on the recommendation front now. So, and we can talk a

01:15:06.260 little bit about your particular business as well. So I would say that one of the threads running

01:15:11.780 through our conversation is, well, first of all, you're cautioning people against the immense danger,

01:15:17.720 not only of inflation, but of potential hyperinflation. And you're making the case that

01:15:22.900 fiat currencies, including the American dollar, are intrinsically weak and getting weaker for a

01:15:28.760 variety of reasons. And that's true systemically, not only in the US, and that that's going to

01:15:35.780 inevitably increase inflationary pressure. Now, we've seen a fair bit of that in the last two years,

01:15:41.440 let's say. And it's certainly, I think, evident to anyone who's thinking that the actual inflation

01:15:46.300 rate is much higher than the pronounced inflation rate. Okay. So now, hypothetically, people are going

01:15:52.200 to want to know how to protect themselves against inflation if they're trying to store wealth in the

01:15:57.320 long run, trying to maintain their savings at minimum, let's say. And you make a strong case that

01:16:04.560 gold is the proper medium in which to invest savings that you wish to maintain. Now, you

01:16:12.680 broker gold purchasing services. We can walk through that a little bit. And so someone could say, well,

01:16:18.460 you know, you have an iron in the fire. You have a stake in the outcome here. It's not surprising that

01:16:22.360 you're putting forward the pro-gold vision. But I presume the reason you're doing that is because

01:16:27.080 you actually believe it and are invested that way yourself. So what would you recommend to people who

01:16:32.500 are listening, and these would be people of a moderate income, let's say, or perhaps on the lower

01:16:38.280 side, what would you recommend to them to be doing in order to protect themselves against the threat of

01:16:45.720 inflation as the future rolls forward? Yeah. Well, first of all, absolutely right. I don't promote

01:16:51.360 gold because I have a bunch of gold I'm looking to unload. I mean, I went into that business because I

01:16:56.980 believe that people need to own it. I mean, in fact, I started shift gold. I was, I owned a broker

01:17:05.000 dealer and a lot of my customers wanted gold because I promoted gold. I talked about it, but I

01:17:11.280 didn't, I didn't sell it at the time. I was just, you know, I was stockbroker and I was helping people

01:17:16.160 with their stock portfolios, but I also recommended that they go and buy some gold and they would go and

01:17:21.560 buy it from other companies. But what was happening is people were getting ripped off. A lot of these

01:17:26.680 gold merchants were overpricing their products. They were, you know, pushing them into numismatics

01:17:32.920 or these collectibles. And I didn't like what was going on. And so in order to make sure that my

01:17:38.460 customers didn't get ripped off, I started my own business so that they could buy gold from me and

01:17:44.320 I could make sure that they weren't pushed into these other products and that they bought bullion and

01:17:49.600 they paid a low price for it. So that's how I got into the business because I believed in it.

01:17:55.040 Now, I don't look at gold though as an investment. I look at gold as money. So to the extent that you

01:18:01.680 want to keep liquidity, you don't want to make an investment, right? You don't want to buy real

01:18:07.540 estate. You don't want to buy stocks. You don't want to buy bonds. You just want to keep some cash.

01:18:12.800 That's where I see gold as a place in the portfolio, right? And not the cash that you might need. I mean,

01:18:19.180 at least now, I mean, when we're starting to use gold back crypto, then you could keep everything

01:18:24.940 in gold. But for now, you want to pay your rent. Your landlord isn't taking gold yet. I mean,

01:18:29.820 he probably will in the future, but right now he wants, you know, dollars or euros. So you got to

01:18:34.700 keep some cash to pay your bills. But if you're talking about cash that you're going to hold onto

01:18:40.100 that you might use in a few years, maybe to make an investment, maybe you think real estate's going to

01:18:46.220 go down. Maybe you think stocks are going to go down. And so you want to have some dry powder to

01:18:51.300 buy. That's where you want to keep gold instead of currency, because currency could lose so much

01:18:56.820 value that, you know, stocks can go down in value, but still go up in price. You know, so let's say

01:19:03.460 stocks could go down 10 or 20% in terms of gold, but they can go up in terms of dollars or euros.

01:19:11.580 So it's better to hold your dry powder in honest money. And especially now, because if you look

01:19:17.880 around the world, interest rates in almost every country are still below the official inflation

01:19:23.240 rates, which means rates are negative. And of course, the real inflation rates are much higher

01:19:28.080 than the official rates. So you're losing a lot in cash. Maybe 10, 20 years ago, that wasn't the case.

01:19:35.140 You could get an interest rate that exceeded the rate of inflation. And so you were paid for the loss of,

01:19:41.200 uh, purchasing power. And people would say, Hey, you don't want to own gold because you're giving up

01:19:45.980 that interest. Well, now there is no interest. There's negative interest. Gold actually lets you

01:19:50.960 avoid that negative interest because negative interest is a loss that's imposed on you by

01:19:56.660 holding a currency. So you avoid that loss by owning gold. So gold, uh, is a substitute for money,

01:20:02.720 but you want to make investments. You don't want to just leave all your money in gold. Gold is a metal.

01:20:09.180 It's not doing anything. It's not producing anything. Uh, you're going to do better over

01:20:13.900 time, investing in productive assets. And that's what I do. Right. If you can identify them.

01:20:21.120 Yes. And if you don't overpay for them, I mean, that's a mistake that a lot of people make.

01:20:25.080 They look at a company that has a good product and they think, Oh, let me buy that stock. Well,

01:20:31.960 the stock could be way overpriced. So it's not just buying a good company. It's paying the right price.

01:20:38.640 Right. Because that's, what's going to determine your long-term return. If you overpay for an

01:20:45.120 asset, you're probably going to lose money eventually. Now you can, how would you, how do

01:20:49.100 you view, how do you view, let's say the relative importance of something like a good. So there are

01:20:54.980 these funds, which I'll just outline this for people who are listening that allow you to purchase

01:20:59.320 a basket of stocks essentially. And often those stocks are weighted to the index is used to assess

01:21:08.020 stock market performance. And so you can buy shares in a mutual fund, in a fund, let's say,

01:21:15.260 that owns a basket of stocks, a large basket of stocks. And so then you average your risk across

01:21:21.540 many companies and you benefit in principle from the average increase in productivity across that

01:21:27.180 basket of stellar companies. And so those, those index portfolios have proved to be a pretty good

01:21:34.360 alternative to actively managed money. And how do you see investing in gold in relationship to

01:21:40.300 something like investing in an index fund? Well, I mean, they're very different. So first of all,

01:21:46.560 the, the, the idea of just indexing and just say, look, I'm just going to buy the market. I'm going to

01:21:51.720 buy all these stocks, you know, in certain periods of time, that could work out, right? Because if a lot

01:21:58.640 of money is flowing into those indexes, it's going to push up the price of the stocks that are included

01:22:03.380 in those indexes. But right now, because so many people have indexed, the stocks in those indexes,

01:22:11.840 by and large are overpriced. And if you buy, if you overpay for an asset, as I said, you're going to

01:22:18.500 lose eventually. Now you can overpay for an asset and you can make money if you can sell it to somebody

01:22:23.480 who overpays by an even greater amount. And so you could trade overpriced assets if you're nimble

01:22:29.300 and make money. But if you're a long-term investor, the way to make money is to buy something cheap,

01:22:35.180 buy it when it's undervalued, especially if it pays a good dividend, because now you can collect

01:22:39.780 your dividends while you're waiting for the asset that you bought cheap to become expensive. And I

01:22:46.080 don't like passive investing. You know, what I do for my clients and what I do personally is I actively

01:22:52.140 invest. And over the long run, that is much better than indexing. Over certain periods of time,

01:23:01.280 indexing can do better. And then it becomes a self-fulfilling prophecy because the money gets

01:23:08.900 sucked in chasing the performance. How do you know that your active investing is allowing you to

01:23:16.560 accurately identify stocks that are properly or underpriced? I mean, that's the million-dollar

01:23:22.080 question. Well, there are some basic truths to assessing value of a business, right? You could

01:23:30.840 look at a business because that's what a stock is. When you're buying a stock, you're buying a piece of

01:23:36.260 business. So you look at the business and you could look at the revenues, the profits, the debt.

01:23:43.360 You know, you could look at all these metrics and you can tell, you know, is it cheap? Am I buying the

01:23:51.580 income potential of this business? Am I getting a good price? You can look at ratios historically

01:23:58.040 that show you that something is cheap or expensive. Now, the problem that a lot of people have is their

01:24:05.220 time horizons are so short. Because yes, an asset can stay cheap for a while before the price goes up.

01:24:11.620 And usually, when you get something cheap, it's because there's a problem. Something's got to be

01:24:17.920 going wrong that's causing people to sell. So what you have to be able to do is do your homework

01:24:22.940 and decide, is this problem that is hurting the price of this stock, is it fixable? Is it long-term?

01:24:31.280 Can we see beyond this problem to the solution? And is the market getting something wrong and I'm

01:24:37.400 getting a good price? Conversely, when stocks are expensive, it's because they're doing great and

01:24:43.540 everybody loves them. And then what you have to decide is, well, are people being too optimistic about

01:24:48.820 this company that's doing really well? Are there problems that the market is not paying attention to

01:24:53.800 that are likely to come up in several years? So there are ways to do this. And if you're smart and you

01:25:01.080 have basic principles over a long run, I think you're going to outperform just a static basket

01:25:08.220 of stocks where you're just going to pay whatever price the market is demanding. I mean, people say,

01:25:13.520 well, the market- And you're saying that's partly because

01:25:15.160 these index stocks, they also tend to be somewhat inflated in value because so many people have

01:25:21.480 dumped money into them. Exactly.

01:25:23.080 So that's artificially inflating the price of the entire basket, right? Right.

01:25:26.680 Then that runs at counter purposes to the idea of random sampling. It's no longer random if you're

01:25:32.080 buying a preferentially priced basket of stocks. And then it's going to work in reverse when a lot

01:25:36.640 of people want to get out of the indexes, all these stocks are going to get sold. Because a lot of these

01:25:42.520 stocks don't even pay dividends. I mean, the problem is, let's say you're buying a bunch of stocks.

01:25:47.620 They don't pay dividends. If you retire and you have all these stocks and now you need money,

01:25:53.080 to pay your bills because you don't have a job, you've got to start selling your stocks.

01:25:57.400 And that puts downward pressure.

01:25:58.980 So by placing those stocks in an index, they're no longer independent either, right? You bundle

01:26:05.920 them together. And so the presumption of independence that was there to begin with is violated by the

01:26:11.120 bundling of the stocks in the index.

01:26:13.200 But the other point I'm trying to make is if I'm building a portfolio for my clients of companies that

01:26:18.840 I'm buying cheap, and because I'm buying them cheap, I'm getting a high dividend. I'm getting

01:26:23.060 a lot of income on my stock. Because see, if you're just buying a stock because you think

01:26:27.420 the price is going to go up, that's just speculating. You could be wrong. The price

01:26:31.360 could go down. I'm buying stocks that even if the price never goes up, I still make a good

01:26:36.640 return because I'm getting a dividend right now, regardless of what happens to the stock

01:26:41.000 price. So if you build a big portfolio of good dividend paying stocks while you're still

01:26:46.400 working and you don't need the income, you can take those dividends and buy more stocks

01:26:50.740 and build up your portfolio. But then when you retire, you don't have to sell your stocks.

01:26:56.060 You just take your checks, your dividends, and you start spending those. You stop reinvesting.

01:27:01.380 And so that's not a Ponzi mentality. That's legitimate investing in the market by buying

01:27:07.380 companies that throw up. And the most important thing, though, that I think people could do now

01:27:11.600 is recognize, though, if I'm right about what's going to happen to the dollar and the U.S.

01:27:16.060 economy, the companies I'm buying are international and their customers are outside the United

01:27:24.980 States. And these are the customers that are going to benefit when the dollar declines and the U.S.

01:27:31.240 loses that reserve status and Americans can no longer live above their means. That means a lot

01:27:36.960 of other people who are living beneath their means, they're going to get a reward from the

01:27:41.400 dollars, a loss of status. And those consumers in those other countries are now going to be

01:27:48.540 in better shape. I want to own businesses that have those customers. I want businesses whose

01:27:54.820 customers are going to get richer, not whose customers are going to get poor. I want customers

01:28:00.040 who have a lot of savings, not a lot of debt. So I own businesses that are going to be able to thrive

01:28:06.380 in an economy where the U.S. economy is in a lot of trouble, where it's in stagflation. And I also own

01:28:13.460 companies that sell products and provide services that people need. And they're going to continue to

01:28:20.680 buy those goods and services, even if they have to cut back on other things to afford it. You don't want

01:28:26.360 to have a portfolio where consumers can easily do without what you're selling. Or if you're not even

01:28:32.860 selling anything, a lot of these tech companies, all their income is from advertising. They give

01:28:38.460 away the products and they have advertisers. But if the consumers can't afford to buy products that

01:28:43.980 the advertisers are advertising, then all that ad revenue goes away. And a lot of these tech

01:28:49.640 companies that have these really high multiples, they're going to come crashing down.

01:28:54.080 Okay. So if you were, we're starting to come to near the end of the time for our discussion. If you

01:29:00.920 were giving people advice who are beginning to invest, let's say these are people who might say

01:29:07.160 have a hundred to $5,000 a month to invest, what would you recommend? When do you think people

01:29:18.080 should start doing that? At what level of income should you start to consider putting away some of

01:29:22.980 your money? How much should you put away? And then what concrete steps could you take to start doing

01:29:28.060 this? It's broken down in a very simple manner because lots of people have no idea how to start

01:29:32.760 doing this. When it comes to investing, I mean, the earlier you start, the better because you get the

01:29:37.680 compounding effects of that. Now, if you allow inflation to destroy the value of what you've

01:29:44.800 invested, then, you know, that's no good. But if somebody only has, you know, $500, $1,000 a month to

01:29:52.700 invest. I mean, what I would recommend is that they use my mutual funds. I mean, you could go

01:29:57.360 to my website, europac.com. Now, I think the minimum is $2,500 to get your account going,

01:30:06.960 right? So you have to have at least that amount. That's not a lot, but you can go on my website and

01:30:11.020 just buy my funds. Now, my funds are also available at all the discount brokers. So if you

01:30:15.580 have an account at Schwab or Fidelity or Ameritrade or, you know, all these, you know, my funds are on

01:30:22.600 their platforms. But then I think the incremental investment, you can invest $100 or $500 at a time.

01:30:31.780 You know, you can have small investments once you've established the portfolio. But then you do

01:30:38.420 get the benefit of professional management and diversification. You get a big portfolio of stocks

01:30:44.920 that are actively managed by me and my team, where we are, you know, looking for good opportunities,

01:30:52.420 buying stocks when they're cheap, selling them if they get too expensive, you know, constantly,

01:30:58.480 you know, evaluating our holdings, making sure that the stocks that we thought were cheap

01:31:04.120 because they had a problem, that those problems are being solved and that we're right on our research.

01:31:10.060 And if something comes up and we think we've made a mistake, we can sell a stock and redeploy the

01:31:16.480 money. Or if we find an opportunity that we like better than one that we have, we can, you know,

01:31:21.340 we can make the changes. That's something that you can't do when you're just in a static model,

01:31:28.920 you know. And that's why my funds, the performance has been so fantastic recently in the last, you know,

01:31:36.000 one, three and five years relative to our peers is because we've done such a good job of stock

01:31:43.240 picking and sector allocation. I mean, not only are we way ahead of our benchmarks, which would be

01:31:48.280 an index, but we're way ahead of everybody else who's trying to beat the indexes. But I think the

01:31:53.900 time period where my funds are going to do the best and I have a value fund, a dividend payer fund,

01:32:00.500 an emerging market fund, a gold fund, and an international bond fund, it's going to be in the

01:32:07.120 future years when the dollar is really weakening. I mean, the dollar hasn't weakened dramatically yet.

01:32:12.540 I mean, in terms of purchasing power, it has. I mean, that's clear. I mean, you need more dollars to

01:32:16.580 buy everything. But in terms of euros or yen or pounds, that's not the case. But that's coming. I think

01:32:23.480 we're going to see a substantial decline in the dollar relative to these other currencies. And that is the

01:32:28.680 environment where my funds are going to do the best. And as inflation rates pick up and we see

01:32:34.060 bigger increases in commodity prices, that's going to really benefit my investment strategy.

01:32:41.260 Okay. So let's close with this, perhaps. So the devil, to some degree, is always in time frame,

01:32:47.900 you know, and you've made a case for the inevitable weakening of the American dollar as a reserve

01:32:54.380 currency and of its value as a fiat currency. And that's in keeping the latter part in particular,

01:32:59.840 in keeping with its gradual descent into comparative lack of value against gold since 1971.

01:33:06.900 But so the devil is always timing. And so over what period of time do you think this unfolding

01:33:16.440 into a more inflationary period is going to occur? And what makes you reasonably convinced,

01:33:22.460 let's say, of your timing? Well, timing is always difficult. I mean, I know what's going to happen.

01:33:29.640 I've known what's going to happen for a long time. That might be the problem. But where we are right

01:33:35.920 now is exactly where I've been forecasting we would be, even going back to, you know, my predictions of

01:33:43.440 the 2008 financial crisis. You know, I knew that crisis was coming because I understood the mistakes

01:33:49.120 that the Federal Reserve made to create that housing bubble. And I knew the consequences for

01:33:53.400 the financial system when it popped. But even before the bubble popped, I knew the mistakes

01:33:59.160 the government was going to make. I predicted QE before I even knew the word. I knew they would do

01:34:04.340 this. And I knew they would inflate an even bigger bubble that has finally popped. Because I knew that

01:34:10.620 eventually the Fed would be in a position and other central banks where they would have created so much

01:34:16.560 inflation, that they would now be under pressure to do something about the inflation problem.

01:34:22.120 But they couldn't do that without creating a worse financial crisis than the one that they used

01:34:27.800 inflation to mitigate in 2008. And that financial crisis has already started. We saw that with the

01:34:33.920 failure of Silicon Valley Bank and Signature Bank. And a lot more banks would have already failed

01:34:39.120 had they not been bailed out. The government, you know, came in and propped them up and printed more

01:34:44.520 money and came to the rescue, which is another mistake. But we're at a point now where inflation

01:34:52.160 is going to start to run out of control because the Fed has started to return to inflationary monetary

01:34:57.240 policies when inflation has already, you know, triple its 2% target. We're starting another recession

01:35:06.520 from the weakest, you know, financial position that we've ever been in. And all the stuff that's been

01:35:14.320 happening is stuff that I predicted. In fact, even when COVID first started and everybody was saying,

01:35:21.640 oh, this is very deflationary. I said, no, it's not. It's massively inflationary because people are not

01:35:27.880 working, they're not producing, and we're printing even more money than ever. We're actually paying people

01:35:33.340 more to stay home than they earned when they actually were productive. I said, this is, you

01:35:37.380 know, creating even more inflation. And so we're at this ticking point, you know, and in fact, when

01:35:43.980 the central banks had to keep interest rates at zero for so long, they did that for a reason. That was

01:35:49.720 because they didn't want the whole thing imploding. So they kept it on life support until they couldn't

01:35:54.300 do it anymore because of the outbursts of consumer prices. But I think we've passed that point.

01:35:59.960 And so this is happening. This is the time frame where the air is coming out of this bubble. It's still

01:36:06.420 early. If you remember, in 2007, when the subprime market blew up, and I was very, you know, active there,

01:36:14.760 we had shorted the subprime market. I mean, you know, they made, wrote a book, they made a movie about

01:36:20.320 that trade. Well, I lived that trade. We did that trade. So I was predicting, you know, subprime. I mean, you can

01:36:26.300 go, one of my videos on YouTube is mortgage banker speech I gave in 2006 in front of 3,000 mortgage

01:36:33.620 bankers. I went there to promote this hedge fund that was shorting subprime, but you can still watch

01:36:38.240 my talk. What you don't have on the internet is the smaller talk that I gave later specifically on

01:36:44.980 that fund, right? This was the larger talk. I had about maybe 50 people that came to the smaller

01:36:50.080 presentation about the fund. But I knew at that time that the bursting of that bubble would create

01:37:06.220 this crisis. But when the subprime problem initially reared its head, everybody said,

01:37:12.240 don't worry about it. The Federal Reserve said it was contained. Ben Bernanke said, don't worry about

01:37:16.460 subprime. It's contained. Well, I was on television at that time, all the time. I used to be on cable

01:37:22.160 news every week back then. I said, no, it's not contained. This is the tip of an iceberg. This is

01:37:26.960 a huge problem in the entire mortgage market. We're headed for a financial crisis. You know, it's anything

01:37:32.820 but contained. Well, the government got that wrong. Then when inflation really burst out as far as high

01:37:39.260 prices in 2021, what did they say? Oh, don't worry about it. It's transitory, right? Well, I said, no,

01:37:45.640 it's not transitory. It's permanent. It's here to stay. They were wrong again. Well, they're ignoring

01:37:50.040 the warning signs again, just like they ignored the subprime problem, just like they ignored the

01:37:56.840 outbreak of the CPI. They're ignoring all the early warning signs of the financial crisis that we're in

01:38:03.560 now and the great recession that's beginning that is much worse than the last one. And so the significant

01:38:12.280 thing is going to be the difference, because I think this time we're headed for a currency crisis.

01:38:17.080 That's going to be the end result of this next collapse is going to be the end of the dollar

01:38:22.180 status in a currency crisis. And so you have to have a very different investment portfolio than the one

01:38:28.800 you had in the prior decade. Just hiding out in tech stocks isn't going to work. Those stocks are

01:38:33.800 going to go down. You have to have the international value, the dividend paying, the commodity exposure,

01:38:39.100 old-fashioned type investing, gold. And that's what I'm doing. And again, for wealthier people,

01:38:47.160 you don't necessarily have to buy my funds. You can buy my funds, but we have separately managed

01:38:51.400 accounts. So if you contact Europe Pacific Asset Management, we manage portfolios, individual

01:38:56.740 portfolios of stocks that I think will perform extremely well during the economic environment

01:39:04.560 that we're in and that we're going to continue to be in. Most people, unfortunately, are going to get

01:39:09.620 wiped out. People are going to lose a lot in this environment, but there's going to be a small

01:39:14.400 percentage of people, there always are, who will make money during this time period. And I just prefer

01:39:20.940 to be among those people, right? Just like, you know, not everybody made money off the subprime

01:39:25.740 collapse. There were a number of people who understood the problem and bet against the conventional

01:39:31.420 wisdom and they made money. And the conventional wisdom is generally wrong, and it's wrong right now.

01:39:37.280 They expect things to happen and aren't going to happen. They have a lot of confidence and faith in

01:39:41.800 central banks and the Fed, and they're wrong. This is not going to end the way they believe. There is a

01:39:47.560 huge mispricing of assets now, just like there was for mortgages back then. A lot of people don't

01:39:53.680 understand this, and they're going to suffer, but the people who understand it are going to profit.

01:39:58.760 And I'm hoping that as many people as possible, I can help them profit by getting them properly

01:40:06.060 positioned with their portfolios. All right. Well, that's an excellent place to stop, I would say.

01:40:11.880 We're pretty much right on time there. And so, for everybody who's watching and listening, thank you

01:40:17.000 very much for your time and attention. And Peter Schiff, thank you very much for talking to me today and

01:40:21.400 walking me through a lot of this somewhat elementary material. But it's very good for people to hear

01:40:26.480 exactly how these things work, right? Because we're not well taught on the financial front.

01:40:31.420 And many of the terms that are bandied about, inflation, debt, deficit, investment for that

01:40:36.400 matter, gold standard, fiat, people don't understand these things. And to provide people

01:40:41.480 with that information is extremely helpful. We will link to all of the opportunities that Peter

01:40:48.640 described in the description of the video. So, you can check that out if you want.

01:40:52.080 And I'm going to switch over to the Daily Wire Plus side now and talk to Peter for another half an

01:40:58.100 hour. I do that with all my guests to get a little bit more biographical information to find out how

01:41:02.840 he got where he is and maybe to delve a bit more deeply into his ability to have prognosticated

01:41:09.620 accurately regarding the 2008 financial crisis, which was quite the interesting catastrophe in which he

01:41:16.900 seemed to get right when very few people did. So, for all of you who are watching and listening,

01:41:21.680 maybe you can direct your interest to the Daily Wire Plus side and offer them some support in doing

01:41:26.920 so. They make these podcasts, for example, possible and at least at the quality that they're now being

01:41:32.000 broadcast. And Peter, thank you very much for agreeing to talk to me today and for sharing what

01:41:36.060 you know with everybody who's listening. And we'll talk again right away and hopefully we'll have a chance

01:41:43.020 to meet at some point in the future. Jordan, it's been my pleasure to be here. I really appreciate

01:41:47.260 the opportunity to speak with your audience and hopefully I can come back and we can expand on

01:41:52.300 these principles. And yeah, if you're ever out here in Puerto Rico or Connecticut, I'm there once in a

01:41:58.440 while, but happy to meet you. Yeah, well, hopefully that'll happen in the not-too-distant future.

01:42:05.140 And once again, oh, and to everybody here, I'm in Monastery at the moment.

01:42:09.860 Heligen-Croix, just outside of Vienna, taping this podcast. And to the crew here, thank you very

01:42:15.460 much for your help. To the Daily Wire Plus people for setting this up, that's always much appreciated.

01:42:19.600 And Peter, thanks again. Everyone watching, ciao. Thanks for participating and we'll see you on the

01:42:25.180 next podcast. Hello, everyone. I would encourage you to continue listening to my conversation with

01:42:32.360 my guest on dailywireplus.com.

The Jordan B. Peterson Podcast - May 01, 2023

353. The US Dollar Might Collapse ｜ Peter Schiff

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