American Thought Leaders - Why the World Has Less Trust in the Dollar, and How Trump Can Change That: Carol Roth

Episode Date: January 3, 2025

Sponsor special: Up to $2,500 of FREE silver AND a FREE safe on qualifying orders - Call 855-862-3377 or text “AMERICAN” to 6-5-5-3-2“We do need to shrink our spending and we need to get a hold on the debt, but it needs to be done in a way that you have the growth go first. Otherwise, you’re going to end up with less revenue, which means you’re going to actually widen the deficit and create a worse problem—a ‘no good deed goes unpunished’ type of scenario.”As part of our special series on the U.S. presidential transition period, I’m sitting down with Carol Roth, a former investment banker and author of several books—most recently, “You Will Own Nothing: Your War with a New Financial World Order and How to Fight Back.”In this episode, we discuss the biggest financial challenges facing the incoming administration and how best to navigate them.Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of The Epoch Times.

We do need to shrink our spending and we need to get a hold on the debt, but it needs to be done in a way that you have the growth go first. Otherwise, you're going to end up with less revenue, which means you're going to actually widen the deficit and create a worse problem, a no good deed goes unpunished type of scenario. In this latest installment of our special series on the U.S. presidential transition period, I'm sitting down with Carol Roth, a former investment banker and author of several books. Most recently, You Will Own Nothing, Your War with the New Financial World Order, and How to Fight Back. In this episode, we dive into the domestic financial challenges facing the incoming Trump administration and how best to navigate them. This is American Thought Leaders and I'm Jan Jekielek. Before we start, I'd like to take a moment to thank the sponsor of this

podcast, American Hartford Gold. As you all know, inflation is getting worse, job numbers are a lot worse than previously forecast, and many Americans are worried about a coming recession. But there is one way to protect your savings. American Hartford Gold makes it simple and easy to diversify your savings and retirement accounts with physical gold and silver. With one short phone call, they can have physical gold and silver delivered right to your door or inside your RRA or 401. American Hartford Gold is one of the highest-rated firms in the country with an A-plus rating from the Better Business Bureau and thousands of satisfied clients.

If you call them right now, they'll give you up to $2,500 of free silver and a free safe on qualifying orders. Call 855-862-3377, that's 855-862-3377 or text American to 65532. Again, that's 855-862-3377 or text American to 65532. Carol Roth, such a pleasure to have you on American Thought Leaders. So great to be here. I've been looking forward to this discussion. You have written a fascinating book talking about a new financial world order. We've seen a lot of changes to the financial world order

in recent times, and I think we're in for another big change. Tell me what you're seeing. Yes. Straight out of You Will Own Nothing, we have a country with 120 percent debt to GDP, 7 percent deficits to GDP. We have a global order where the biggest central banks in the world are no longer buying our treasuries and now they're transacting and settling in gold and looking to move away. Everything, Jan, is moving and shaking. And so we are just at the precipice of this big change. The way I would articulate where we are today is the U.S. at the center of the global financial order, being the world's reserve currency, being the currency, holding the currency that is used in most of the trade around the globe. And we have been in that position for about 80 years. Prior to us, it was Great Britain.

Prior to them, it was the Dutch. So this is something that cycles on a pretty regular basis. Sometimes there are smaller cycles. Sometimes there are bigger cycles. The bigger cycles are usually preceded by a war. I like to say that not every war leads to a new financial world order, but every major new financial world order, at least in modern times, has been preceded by war. So where we are today, we are in a situation where the U.S.'s sort of grasp on being that

center of the financial universe is getting a little bit slippery. And it is really nobody else's fault, but the US's fault. We are supposed to be holding via the Fed, the world's reserve currency steady, not only on the international stage, but also domestically. Sometimes those are at odds with each other. And so as things have slipped internationally, strangely enough, they've also slipped domestically. And the Fed's done a terrible job of keeping our currency stable at all.

We've also seen the weaponization of the U.S. dollar. And so between that and our fiscal foundation being very rocky, these are the kinds of things that are shifting what's happening on the global fiscal front. There's also a reason why people would want to use the U.S. dollar to settle deals, because it is just much more predictable than anything else. You wouldn't want to do it with Brennan B., for example. Well, that was the thought. You know, whether you call it the RMBs, the yuan, the trade in China, the reality is that a lot of the countries that are aligned now known as the BRICS nation,

the Brazil, Russia, India, China, Saudi Arabia, some of the other South South Africa's in there. These nations are actually starting to engage in trade in their local currencies. And what the Chinese have done is said, well, maybe you don't want to take the renminbi, you don't want to take the yuan. What we're going to do is we'll offer settlement in gold. And so as countries around the world who used to hold lots and lots of U.S. dollars via our treasuries as reserves, they have been lightening up on those reserves. In fact, in the last 10 years, central banks around the world have been net sellers of treasuries, not net buyers. But what has been replacing that currency in their reserves is not

another currency. They're not going to the euro or something else. What has been replacing it has been gold, a neutral reserve asset. And so I think that speaks to not only the U.S.'s issue with its fiat currency not holding that stable, doing the kinds of things that precede a shift in the global financial order, but these countries sort of being on the other side of that. And what you have to understand is, again, it's not really their fault. When you have energy, when you have food and other commodities that are priced in U.S. dollars. And now all of a sudden, it's going to take many more U.S. dollars for you to afford those things. That becomes a national security issue for your country. It means that your country may end up having food issues. So we can kind of

understand why those things are happening. Also, as I talked about the weaponization of the dollar, when we chose to freeze Russia's reserve assets, who wants to hold the U.S. dollar in reserve if at any point in time the U.S. can go, no, just kidding, we're going to put a freeze on those. So again, it's been sort of our behaviors that are dictating these changes and these other countries who, you know, maybe have found it easier in the past and there's been less friction, there's been more reason to use the dollars, are now saying for a whole host of reasons, we need to find another way to do this. Doesn't mean the U.S. dollar is going away. It doesn't even mean that it's going to not be the most used currency in terms of

settlement. But given its huge dominant position, even changing the reserves or changing the trade just a little bit has major implications for our own standard of living here in the United States. Okay. And so that's very interesting because there's the other side of things, which is basically the Fed's balance sheet, which is up to north of $9 trillion now? Yeah, so I think the Fed's, it's come down a little bit. Certainly that was the impetus for shifting what we have seen in our fiscal foundation, disrupting risk in the market, being a catalyst to allow the government to spend money that they didn't have, and frankly, to create massive inflation in the lives of Americans.

And it's something that has had sort of a dual path. If you are an asset holder, if you hold stocks, if you have a house, if you have other tangible assets that are valuable, you've seen that asset inflation. That asset inflation actually was the first inflation we saw because it's closest to the source of that money printing. And so those people who are asset holders have said, wow, this is great. I have so much more equity in my house. My 401k balance is the highest that it's ever been. This is fantastic. But for the have-nots, the people who are not in a position to have many assets, then that trickled down into cost of living inflation. And so not only are they

struggling to afford food and afford rent, but there's a bigger chasm now that has been created between, you know, can I become an asset holder in the future? Can I afford this house? Can I get, you know, involved in the markets in a meaningful way and have the same kinds of returns and play catch up? And unfortunately, that's really manifested in more and more young people being concerned that they're not going to be able to seize the American dream. So that has been enabled purely by Fed monetary policy and government fiscal policy. And it's enabled thing that is going to necessarily stop, or maybe it's going to be shifted over time. But the reality is that the most likely outcome,

given sort of the political will, is that we will probably see a continuation of that inflation in order to have this huge debt load that we have be able to be, quote unquote, managed by our politicians. Games and finance have identified that this is something that is a massive problem. In addition to looking at just the overall debt to GDP, we also look at the deficits to GDP. And on a historic basis, again, about 3.4% is sort of an average deficit, which isn't great, but becomes even less great when we have a lot of debt and we have a lot of interest expense. Right now, the country is running deficits that are 7% deficit to GDP, so about double the historic average. So when we look at the growth, the quote-unquote growth that we have had in our country, a lot of that has been done based on taking on these massive deficits, which need to be financed. And that's a huge problem, because that means if Trump wants to cut the deficit, he has to make sure that we're growing at the same time. Because if you purely just cut spending

that's been pushing 2% GDP without growth, then all of a sudden you're taking in even less money each year in terms of GDP and then taxes and the like. And that could create a recession and create a whole other set of problems. When we were looking at like Ronald Reagan, that was a situation where the debt to GDP was like 30 percent. So the tools, the things that they could do at that point in time to try to right the ship are very different than what it is today and frankly are quite limited. The other thing that we have going on is that we have a lot of foreign investments in the United States, which is great until we do something that causes them to need to raise dollars. And then again, they have to sell dollars in order to be able to pay for their own food and oil. And that could create

another financial loop. So we really have this very delicate situation that requires perfect choreography. And unfortunately, there are just a lot of things at odds. So we do need to shrink our spending and we need to get a hold on the debt. But it needs to be done in a way that you have the growth go first. Otherwise, you're going to end up with less revenue, which means you're going to actually widen the deficit and create a worse problem, a no good deed goes unpunished type of scenario. So we have to increase the pie while cutting the cutting the cutting of the pie simultaneously. Exactly. That's a really great way to think about it is that we need that pie to expand. We need to get much, much larger so that, you know,

when they take their little piece off, it actually does what it says that it's going to do. Because if we don't have the growth and then we end up cutting too much of the pie, then you end up having sort of the opposite impact. And that is something that I don't think enough people appreciate. And when you hear things like, oh, the economy is doing fine or the economy is doing great, again, you have to say it's being driven by a wartime deficit. And that is really like window dressing. When you pull down the facade,

you can see what's behind that curtain. And now you're seeing what the Wizard of Oz looks like and it's not great. And so Trump has been left with a veritable mess here. And that's something that he's going to have to work very delicately. The best news possible is that he has a very smart Treasury Secretary pick in Scott Bessant. And this is somebody who is going to understand this choreography and probably be thinking out of the box versus an academic like Janet Yellen, who helped to create the situation to begin with. Well, so and there's also this, you know, the whole Doge initiative, right, with Elon Musk and Vivek Ramaswamy at the helm identifying cuts. If you were going to be helping them identify cuts, where would you go first?

Well, I have my own pet project, which is this Corporate Transparency Act beneficial ownership information rule that impacts small businesses, treats them like financial criminals, makes them put their names and information like driver's licenses into a database, you know, to stop the cartels, because I'm sure the cartels are all going to sign up to do that, and has crazy penalties like jail time, almost $600 a day in fines. And courts have already found it unconstitutional. So even though it's working its way up the court system, it's been appealed. Everybody's sort of like, hey, we have the backbone of this country, 34 million small businesses, maybe let's reduce barriers for them. So that would be a very easy

thing that's not going to shift anything. But it kind of goes back to the point of there's cutting spending and there's cutting regulation and bureaucracy and instilling efficiency. And so I think if you look at the timing of that and this choreography I keep talking about is that they really probably first should start with some of the deregulation and the efficiencies that are going to create drive growth first and then figure out a way to phase in these cuts as we're seeing that growth because i can see them looking at this like a business and just saying we're going to take you know do what elon did when he bought twitter now x and we're just going to cut the staff which again if we were in, or even if we were 10 or 15 years ago, would have been a really

great idea, but it has so many other things attached to it now. The other thing is that within the executive branch, there's so much bureaucracy that frankly, isn't the way how government's supposed to work, but also is going to be easier for them to touch because it's not going to need congressional approval when you start moving outside of that there are things that are probably going to you know butt up against congress and that's where we may see some of the barriers so the things that they can directly impact the things that get rid of the regulations that unleash growth first and then the timeline for that spending so that it neatly kind of folds in, I think will put us on a really good path. I wish we could do it the Argentina way. I wish we could do it a different way. But we're really in a tough position right now. And I cannot

underestimate that. So tell me a little bit more about this small business, because during COVID, you know, small business took a massive hit. I forget the exact numbers. I bet you actually know those numbers. But it was a dramatic, dramatic reduction. And small business has been traditionally kind of the engine of growth of America, if I understand correctly. So maybe if you could comment on that. There's this act that you want to axe basically that's restricting small business growth, but overall how to unleash that once again, the small business? So small business has been a passion for a long time.

I cover what happened during COVID in a book called The War on Small Business. So this is something that's definitely in my wheelhouse. And what was done there was really draconian because we were fed this lie that we were all in this together, but we were very much not all in this together. It really depended on who you were. So the very first thing financially that happened during COVID was that there was support for the stock market. So Wall Street got its support, you know, straight out of the gate. The next thing that happened were these closures that happened at the state and local level. And what they said was if you were a small business, you had to close,

but if you were a big business, you could stay open. So if I had a dog, I could get their fur trimmed and I could get their nails done at a big box retailer. But if I wanted to get my hair done or my nails done at a small business salon, that was off the table. And again, this wasn't really based on any data or science. It was based on political clout and connection. And why that was so nefarious is that if we had had truly everyone in the same boat, if Wall Street hadn't been supported, if we had had Amazon not be able to deliver your grocery store closed, your Walmarts closed and the like, these big companies that have a lot of clout and power would have made a big deal. And the entire COVID sham would have gone away in about two weeks. And we would have gotten, you know, if it lasted even that long, we would have gone straight to a mitigation strategy. But because those companies were benefiting from staying open, and frankly, in many cases, benefiting more because people couldn't go to these other

businesses. And so they could only spend their money with these big companies. We saw the stock market hit an all-time high in early June of that year, yet they continue to tell us that we needed more support for the market. It really was this very ugly scenario. Yes, there was the PPP program. The point of that was because of eminent domain. The whole reason behind that was because these businesses were taken. They couldn't work because of the quote-unquote public good, and so they were owed due compensation. And frankly, the amount that they got versus what they lost was a fraction. And then they gave it to all of these other businesses and the like that really didn't need it. So it was a really poorly administered program. And then coming out of that, then you had all the after impacts. You had the messed up supply chain. You had the messed

up labor markets. Again, all these things that really hurt small businesses more than the big businesses that had more money, that had been open this whole time, had more flexibility in terms of how they did business. And then you get into the Biden administration, and then you have this massive inflation. And so they've just been hit from one direction to the other. And they are the backbone. 34 million plus small businesses in this country versus about 21 plus thousand big businesses. They account for about half the private economy. They account for about half the jobs, but more than half of new jobs. And they really are the engine for people to be entrepreneurs. If you layer in things like independent work and gig work, you get up to a figure of almost 70 million people. So this was really kind of the way

that people are pursuing work in the world. And so to have all of these additional regulations, this nuances, the bureaucracies, small businesses don't have departments and lawyers and money and time to be able to deal with all that. So the best thing you could do for small businesses is just leave them alone. If you could just roll back some of these ridiculous regulations and stop making them party to these new regulations, something like CTA BOI. They exempted the big businesses, not the small businesses. Like who's ever even heard of that? It's insane. But we're seeing that happen more and more first with COVID and then with CTA BOI. So that's really, you know, what needs to happen here. And it needs to happen on the flexible work front. It needs to happen, you

know, with these different rules and regulations. Small businesses don't want a hand out or a hand up. They just want to be left alone and not be bothered by the federal government or state or local government at every turn. That is what is going to help them thrive. And just for the benefit of our viewers, CTBOI, if you could clarify what that is. Yeah, so that's what we talked about earlier in the program, the Corporate Transparency Act Beneficial Ownership Information Rule, the Financial Crimes Division asking small businesses with entities like LLCs to go and register with FinCEN. And as we noted, there is an injunction in place right now. So you don't have to do it. But if we don't get some clarity on that, the penalties can go back on the table at any point in time. And Carol, so that 70 million number, that's still today despite these

record closures during the COVID years? So the interesting thing about the COVID closures, I've done the math, probably about a million businesses that closed, but on a net basis, you don't see it because there were so many businesses that were opened during that time. People who couldn't go to work started side hustles and started selling on Etsy and the like

so it really masked but I've seen numbers and saying like oh a third of small businesses closed they may have closed down temporarily but they were resilient and they opened back up not to say a million businesses isn't significant significant because it atrocious. And as I said, we only have 21,000 big businesses. So that is a big, big number, but it's not as big of a number as sometimes is portrayed. And it does get obfuscated by the fact that there were so many businesses that were created over that time. And at this point in time, as I said, you know, the number of net small businesses continues to climb. And we're at 34 million plus and counting, plus all of our independent contractors. So this is, you know, the fabled American entrepreneurship at work, basically, right?

That's what you're saying here. Absolutely. And, you know, you have to be an optimist. You have to be willing to slug it out. If you're going to be an entrepreneur, it is not for the faint of heart. It is not an easy thing to do. But people pursue it because they want to work flexibly. They want to be their own boss. They have something that they're passionate about. They want to bring value to their community. They want to come up with a new technology, all sorts of reasons. And that is the American way. And it's frankly part of the American dream. It's what attracts people here from all over the world. In fact, immigrants are really a huge percentage of the entrepreneurs in the United States because they see what is going on in other parts of the world and they want to come here for that opportunity to explore entrepreneurship. And I think it's a big surprise sometimes when

they come here, all of the rules and regulations and barriers that the government are putting up in a place which is supposed to stand for that freedom and for the entrepreneur. Carol, one of the things I haven't talked a lot about on this show is actually the impact on the smaller banks. We often think of Chase, all these large Merrill, all these large banks, but there's actually quite a vibrant part of the economy is also these smaller banks. And I'm wondering if you could speak to that a little bit and where they're at right now? So this goes back to the Great Recession financial crisis and it's just another frustrating tale of no good deed goes unpunished and the people who do the bad things don't really get what's coming to them and everyone else bears

the costs of what they do. So during that time, you had banks and other financial service organizations who took on a crazy amount of risk and it didn't pay off and everybody had to bail them out. And so, of course, what was Congress to do? But what politicians do, oh, we have to come in with regulation. We're going to come up with the Dodd-Frank Act and all of these other rules and regulations and make it more stringent to ensure this doesn't happen again. And what ended up happening as a result of those regulations was not that these big businesses really paid any sort of price. They ended up doing, frankly, more business, but that community and local banks ended up being the ones who were hurt. We saw many shut down. We saw the formation of community banks basically grind to almost a halt

because they couldn't, again, afford or didn't have the right amount of staff. It just, you know, it was just too much of a task for them to comply with all these new rules and regulations. And so that meant that the places that small businesses go to get their loans now were smaller in numbers, and it ended up shrinking lending to the small business community, while the big banks ended up doing more and more business. So it's just another one of these examples of when government gets involved, and especially if they're not thinking through all the issues or they frankly don't care about the small guy. They only care about these big banks that are giving them the lobbying dollars and who have the ears. And frankly, many of them own the Fed, right?

Who owns the Fed? But the banks do. That it ends up hurting the little guy. It's just a repeatable theme. So that's really been a challenge, you know, both for those who wanted to have a small community bank and for the lending and capital availability to small businesses. You know, what is the role of these? You know, we don't think of them as credit unions. You know, we just don't think of them as much unions. We just don't think of them as much anymore as we did at one point. At least that's how I sense it.

Well, I think it depends. It's sort of like everything else in this country. It depends on where you live. Do you live in a blue area in a big city? Or do you live in a red area in a more rural area? For people who are in smaller communities, in redder areas, they love doing their business with a bank who understands them, who they feel like is aligned with their goals and their values, that isn't pushing nonsense like ESG and the like. So they do play a very important role. I also think if you think of banking as a system and you think about spreading out risk, that if you have more touch points in your system, if you have more banks in your system, yes, you may have a higher number of things that go wrong, but there's less of a concentration.

So any one thing going wrong doesn't necessarily create this massive event. When you start getting the consolidation and you only have a few players left, that's when you end up with a scenario where there is more exposure to failure. And funny enough, if you look back two years ago, when we had the bank failures, you know, Dodd-Frank did nothing to stop the failures of these larger banks again, were the ones that were, you know, at risk. And one of them, you know, one of the authors of Dodd-Frank that is named in the bill, Mr. Frank, was actually on the board of one of these banks that went down. Actually, the San Francisco Fed chair was overseeing one of the other ones. So it just kind of goes to show you that a lot of this is meant to be lip service and to maybe have some regulatory capture and other elements. But does it actually really make things better, particularly for Main Street, particularly for the average American?

No. And I think that's the frustration. The Democratic Party really had become that party that was supporting the elites, the haves, and not thinking about what's going on on Main Street and with the average American. And so I think that's if I had one piece of advice to give President Trump and this administration is to have more people who understand the pulse of Main Street and how the things that he's doing are going to impact the average American weighing into these decisions because he has a visionary team, he's got disruptors, he's got a lot of smart people, but what's really missing is that Main Street representation. And again, that is the backbone of this country. And if Main Street doesn't thrive, the United States doesn't thrive. Well, and so one place that will be developed, I suppose, is in the SBA, the Small Business Administration. So what role do you see that playing? And do you feel like there needs to be more than that in terms of engaging with Main Street? Kelly Loeffler has been appointed, if she's confirmed, to be head of the SBA. And this is not meant to be a dig at her, but her background is growing big businesses.

She had a company that she helped with her husband grow that is publicly traded. And not that she isn't a fan of the entrepreneur, but I don't know that she spent the time to really dig into all the issues to be able to say, hey, SBA has kind of been out here to the side. We really need a seat at the table weighing in on these things. So I think there's room in the administration because SBA is very much focused on lending in the small business community, but kind of not a whole lot of other things. I think there needs to be more policy advisory that's focused, that comes from a small business council perspective, even if that's volunteer, even if it's less official. But just say, oh, hey, yeah, we didn't really think about how this is going to impact small business.

Because part of the reason is small business is so diverse, right? We're talking about these 34 million businesses. They're across all kinds of geographies. There's all kinds of demographics of the owners. There are all kinds of industries that have their unique issues that are all put under this like, you know, one umbrella. And again, that's not necessarily always thought of in that way. So they don't have necessarily the right voices, but there are a lot of great organizations that hopefully Trump could tap and expand, just like he did with the tech and Doge.

He's innovating, he's creating new opportunities, get some more small business and main street representation on the team. Well, it strikes me that Doge, in fact, could play a very significant role if its role is indeed to look at regulation and what regulation to remove to kind of unleash that small business growth. Absolutely. Absolutely. So I want to take us back to that fiscal foundation. I really like that term that you use. And just maybe quickly remind us the elements of that and where we need to focus. So we've covered a number of areas here. I just kind of want to bring it back and do a quick recap. So if you think about how the government looks from a income statement perspective and a balance

sheet perspective and the like, first you go, OK, how are they getting revenue? They're taking that revenue in terms of taxes from us. And they take in about $5 trillion last year. So it's just an insane amount of money that they have to spend. And then they have to spend it in certain ways. And they have to spend it on entitlements, which are getting bigger and bigger. Right now, they have to spend it on a lot of interest, because on our balance sheet, we have all of this debt. And then they have to spend it on a lot of interest because on our balance sheet, we have all of this debt. And then they have to spend it on defense and whatever other courts and some of the nonsense that they spend it on. So when they go to spend it, they overspend on a regular basis.

And right now, the overspending is running about 7 percent of GDP, which is about double the historic average. It's something you would not normally see outside of the time of us engaged in the middle of a massive war. The spending that the government is doing is crowding out private investment. It's propping up what looks like growth, but it's doing it at a huge expense that we have to finance at the same time that interest rates are going up. So when they come in and look and say, well, what is it if we have debt to GDP that's too high? What is it that we can do? Right. So we have debt on top and GDP on the bottom. Well, we could grow the GDP. And so that's something that i think everyone agrees we need to do we have to find ways through deregulation through hopefully some lower taxes and putting more hands and or more money

into the hands of productive people to continue to grow the gdp but you know there's there's probably some limit to that right we don't have some sort of miracle growth element that's going to make it you know grow too too high uh from year over year so but we want we want to continue to grow that and then we want to make sure that as we're growing that that the debt doesn't keep pace or that you know maybe it stays in place be great if we could shrink it but that's probably not going to happen for a while because of the deficit and so what we need to do is we need to get down that deficit. But again, because the deficit is creating growth and that growth is what gives us the tax revenue, that if we end up cutting spending too much and we then cut the

growth, then we have less taxes, we have more of a deficit, and that debt to GDP situation gets worse, our deficit gets worse, and then ultimately we end up in a massive financial crisis. So that is the delicate balance that the Trump administration has to deal with. They've been handed a mess, and, you know, it's going to take some very smart people showing a lot of restraint and knowledge and great choreography for us to do this. I think the focus is probably going to be slower than some people might want to see happen. But again, we are turning around this massive ship. So if you're not seeing the results overnight, it doesn't mean that it's not moving in that direction. You know, something that just struck me here is that, you know, President Trump has been threatening, I guess, tariffs on countries that are looking to de-dollarize or taking

steps to de-dollarize. So he's very keen on seeing the dollar remain in that role as the reserve currency? He is. There are a lot of things with tariffs and foreign exchange and dollar policy that are all very sort of wonky. But some of the things that he's talking about actually stand at odds with each other, given where we stand in our fiscal foundation. So my take is that tariffs are very much kind of art of the deal, that he's using them for leverage to bring people to the table for conversations. I don't think that we will have widespread tariffs of 100 percent across the board on some of these countries. I think that would be devastating to the United States for various reasons. You know, everything kind of flows through and that would strengthen the dollar and do things that, you know, impact

sort of this delicate balance we were talking about. So I'm sort of at this point in time looking at it as a way to sort of talk big, get people to the table, find other ways around it. But you saw President Trump extend a hand and invite Xi Jinping to the inauguration. And I think very much that is meant to show reverence. And I think that is something that could potentially bring China to the table. So as we're thinking about this global shift in the financial order, I would be prepared for something very different and interesting to happen probably within the next four years. And this is something driven by the Trump administration? That's what you're talking about? Yeah, I think that I mean, I think it's gonna be driven by the Trump administration out of

necessity, because we don't have a lot of really great options. And as we are going to have to continue to run some level of deficits and our debt will continue to grow as he tries to get that under speed, we have to find people to buy that debt. And you have to remember that there's also, I think it's just over $7 trillion of existing debt that's maturing and needs to be refinanced. So we need to go out into the market and find buyers for all this debt. And if there aren't enough buyers, what does that do? That raises the interest rates, and we don't want to see that happen either. So I think that given all of these things, the fact that central banks around the world have not been buying treasuries, as we talked about, they've been net sellers and buying gold, that the foreign community

may, you know, particularly given the strength of the dollar, be sellers, not buyers. There are going to be some different things that are on the table here. And so I would be prepared for that. And I would also be prepared for a return to inflation. Again, this path is not going to be easy. We're already starting to see signs of that kicking up a bit. But in this choreography to try to get the ship turned around, there's going to be some bumps. There's going to be some rough waters. And, you know, this is part of what it's going to take if we are going to be able to save the path that we're on financially.

One of the sponsors for the show is actually a company that sells gold. I went out and bought gold with this company to make sure I was, you know, I guess, you know, true to whatever it is that I'm trying to explain to people about the value of this. And I've seen the value increase quite substantially over the last year. You know, and gold is a safe haven, right? Safe haven buy that people make. I'm kind of curious. I mean, obviously, I'm not going to get you to give me investment advice personally here right now. But I mean, people have to be wondering, where do I keep my money? Right. It doesn't, given that with your prediction that inflation is going to be going up, right, probably you don't want to keep it as cash. But at the same time, you need to live somehow. Right. So how do you

look at this? Yeah, that you kind of stole my line. I was going to say, we know the one place you don't want to keep it is in your mattress, because it's going to be continued to be worth less and less, particularly versus a bag of groceries or versus your rent, which is what you really care about here in the United States. This is not financial advice. Everybody should go talk to their own financial advisors. It depends on your risk, depends on your objective. But a principle that makes sense in any time, but just maybe has a little bit more urgency today is that you need to have investments in hard assets, things that are going to hold their value and appreciate in value. And you need to be diversified. There are a lot of different paths

that some of these crazy ideas that are going to be required in order to make sure that we keep a handle on all this debt that we have are going to take. And we don't know which one that is going to be. And so having a diversified portfolio makes sense. If you think that Wall Street is going to be taken care of and that that's going to continue to inflate, then, yes, you know, you want to have stocks, even though right now stocks are very, very highly valued. But you want to you want to have the diversification, something like gold or for the people who are into things like Bitcoin. Those are being used as insurance policies as hedges. So I would never tell anyone to go put all of your money into a hedge or to an insurance policy, but maybe up to 5% of your portfolio, it makes sense to have an array of alternative assets

that can kind of hedge against these other things that are going on. And then again, depending on what area of the country you're in, to the extent that you can own your home, that can be another place where you can really tend to accumulate equity. Homes are the largest asset on balance sheets of people in the United States across the country. So diversification is key. And I know that this is challenging because for a lot of people, they're just struggling to meet their daily needs and don't really have the money to make investments. But to the extent that you can have some personal austerity, maybe you forego

that Disney World trip this year. Maybe you cut back in certain areas and just put some money away and put it to work for you so that you're trying to keep pace with inflation. And hopefully, you know, the other piece of inflation is making sure that your wages keep pace, too. So, you know, making sure that you're able to have a raise or have more productivity so that you can keep pace from a work standpoint, then it doesn't hit you quite as hard. But it's a very challenging time. And again, for the people who don't have assets and don't have the ability to invest in assets, it really has felt like that American dream is slipping away. Hopefully we can get this settled over the next few years so that that American dream can feel more attainable and be more attainable for a broad swath of Americans,

because otherwise, you know, what it is that we're based on doesn't work here. You know, this is interesting. We have a piece just actually today that was promoted in our app, just talking about kind of the state of the economy. And one of the key points identified there is just that inflation is exceeding wage growth, for example, right? And of course, this is a huge problem, right? Because you're actually making less

in this kind of a climate. Consumer spending is kind of keeping things up, but then the credit card debt is expanding dramatically. So it's a little bit of a false picture, isn't it? It is. It's the window dressing. And that's, you know, unfortunately, just like the United States government is using debt to fuel growth, the consumer is using debt to fuel growth. And we do have record household debt, record credit card debt, record car debt down the line. And people are dipping into their savings more. Now, the good news is that people must feel secure in their jobs,

because if they felt like they weren't secure in their jobs, they wouldn't be going in and making these decisions. But we don't like to see Americans using too much debt to fuel spending, because we know that that's not sustainable on an ongoing basis. And when you look at averages, it doesn't really tell the story, because again, it's the people who are really hurting the most, the middle and working class, the people who are more poor, who are footing that, while the people who are doing well have just been killing it again in the stock market and their home values. again, need to have a very strong focus on what is going to strengthen main straights, because if you have the haves and have nots, you're going to have social unrest. We saw that, unfortunately, play out a couple of weeks ago in the health care space. And people are feeling very resentful that there are some people who are doing well, not even based out of merit, but based out of decisions that are being driven by Fed policy and monetary policy. And if that continues, that's just not healthy for society. We need everybody to participate. Well, if I can speak to that for a

moment, you know, one of the consequences of these, you know, decades of very, very cheap money, of these very, very low interest rates, has been, I just call it in my mind, the financialization economy. I don't know if this is the official term. It might be. amounts, which is not Main Street typically, can make huge amounts of money by actually not doing anything but manipulating money, which isn't particularly productive actually for the country, but it looks incredible on balance sheets and so forth. I'm talking about this broadly here, but maybe speak to that a little bit. The. So, I mean, the perfect example, and I apologize, but it's the name of it, that there is this meme cryptocurrency called Fartcoin. And Fartcoin has a market cap right now that is higher than most companies in the S&P 500. It's ridiculous. So people are just throwing their money on something that is a meme or a joke, trying to make a few bucks. That is not the hallmark of a healthy society. That's what

happens when there's too much money in the system, when there's a bubble, when things are out of whack. And unfortunately, that is the scenario that has been created. And because there is this chasm between the people who have assets and don't, you have people who should be making conservative bets, trying and educated bets, making very risky bets to try to catch up. And we all know, we've seen this movie before, we all know how that ends. It doesn't end well at some point in time. We just don't know what that time frame is. And so that is not healthy for the system. We want to go back to a system that works where people can actually come up with some valuation metrics to be able to make their investments based on where we have debt levels that make sense, that where everybody's not going into crazy amounts of debt

to just keep pace. It's just not a sustainable path. And I think that's what so many organizations and individuals have been warning about, that everything that has happened, which has come out of 15 years, as you said, of zero or near zero interest rate policy that we went through, the disrupted risk that shifted the amount of cash in the system, that you did all of these

crazy things that let people make these crazy bets and saw things just go up and up and up, at least on a nominal basis, maybe not on an inflation adjusted basis. But that is just not healthy or sustainable. And so we need to get back to some degree of normalcy and reality. Again, I think that the election was very much a vote on normalcy and reality. They're trying to get rid of all the people who were disconnected from reality. But again, they left a giant mess in their wake and it's been going on for more than just the last four years. And so we need to have the patience and the stomach to be able to get through it because it's not going to be a pretty process along the way. And it hasn't been pretty. So let's say you're the average person and you don't have

a ton of money to invest. And again, I understand we're not doing investment advice. I'm just kind of curious. I keep hearing people say you need to diversify, but diversifying is very complicated. It might be simpler to just be like, why don't I just put it all in gold? Why not just do that? Well, in stocks, you can do the S&P 500, right? So that's a diversified index of stocks, and it's not picking one or two stocks. You can have some stocks, maybe you have some treasuries, maybe you have a little bit of gold and crypto if you like it. So things that give you different exposure, and certainly to the extent that you can get a financial advisor or even they have these robo advisors online that use models that say, how conservative are you? And they'll come up with some allocations and you can take it as a suggestion. You can follow it or

not. But the very first thing that if you're just starting out and your company has a 401k program or you're a business that can set up some sort of a 401k and double down, that's what you want to do. If they have a matching program, that means you get money that is being put in not just by you, but by your company. Take that all day long. Max that out first as your very first investment decision, because every dollar that you get in, if they match dollar for dollar, ends up being $2 that's being invested on your behalf. So I think it's doing these behaviors, even in small ways, consistently, because again, it may seem like a few pennies here, a few pennies there, but pennies add up to dollars, individual dollars add up to hundreds of dollars, and so on and so forth. And when we're in a scenario where we are probably facing ongoing sticky inflation, maybe rearing up a little bit over time, a couple times during the course of this administration,

and after, you are going to want to be able to keep your purchasing power as much as humanly possible. So it's interesting that you seem to be bullish on Scott Bessant as Treasury Secretary. You know, a number of people on the show have likewise been, notably Kyle Bass, very publicly. So tell me a little bit about why you think he will do such a great job. And I think you mentioned, for starters, that he understands this international architecture. So first of all, I feel like anyone, you pulled somebody out of the phone book and they're going to do a better job. We've had a treasury, we've had a big, big mess at treasury over the last few years. And so we're going to be welcoming a change.

But Scott Besant is very sophisticated in his knowledge of everything from currency to central banks around the world to macroeconomics and sort of how all of these pieces are interconnected. And in finance, you usually have people who have one area of expertise, and it doesn't always translate sort of across the broad needs. And we need somebody who has that sophisticated background. Early in his career, he started under the tutelage of, I think, one of my favorite investors and somebody who is sort of known as a hero on Wall Street, Stan Druckenmiller. And that was that famous bet against the British pound in the early 1980s. And so they, again, very early on really understanding the currencies. By the way, Stanley Druckenmiller has nothing but great things to say about Besant. The issue for people is where they worked, and they worked for George Soros. And as I've said many points in time, George Soros, you have to approach in a sort of different way if you're in finance, because as an activist, he is reprehensible.

But as a investor, he is brilliant. And so a lot of the very brilliant minds on Wall Street have all come out of working with George Soros. From what I understand, and this has been reported, although Soros funds deny this, but it's been fairly widely reported around Wall Street, is that there was a period of time when there were a bunch of activists that were coming to the Soros fund and saying things like, we want you to divest from Israel, for example. And Scott Besant got a bunch of people reportedly went into Soros' office and say, if you do this, I'm going to resign.

And so I think this is somebody with a strong moral compass who's been willing to stand up to Soros, the activist. He himself has said that when he started his fund, even though he took money from Soros to begin with, he actually returned it and they have not talked and spoken in many years. And, you know, he is somebody who has been a Trump supporter since 2016. So this isn't a new hanger on or some sort of plant that's going into the organization. This is somebody who has been a confidant of Trump and his family for quite some time.

So I completely understand if you're not familiar with sort of that background that when you say, "'Oh no Soros,' that that would be a scary thing." But this is clearly somebody who has benefited from Soros the investor and stood up to Soros, the activist, and has just incredible intelligence and smarts to deal with what it is that is ahead, and has already floated some creative ideas. Some of them are a little out there, but I think we're going to need that creativity to manage where we are today. So I think that's

actually, along with Tom Homan, I think one of the strongest picks that Trump's made. Well, and so what is the biggest challenge that Treasury will have in your mind? It's financing the United States without breaking the entire global treasury market, the U.S. treasury market is the sort of the benchmark for the world. And so we have to have something that is very stable. And when we're in a situation where I think he's going to have $13 trillion to finance, the $7 trillion that's rolling over, plus probably another $6 trillion in deficit spending that he's going to have to finance over the next year. I think that's going to be a giant challenge. And he's going to probably have to come up with some unique things. And then just on an ongoing basis,

working with Trump and the other people on the teams to find and navigate a way out of this is equally as challenging. So he's got a lot of work ahead of him. And Carol, if people want to hear more about your thoughts about small business, you know, macroeconomics, wherever, where can they go? So I have a free newsletter. We cover things like economics. Throw in some humor there at carolroth.com slash news is the sign up. It comes out usually a couple of times a month. I'm on all social platforms, but mostly active on X, formerly known as Twitter, at Carol J.S. Roth.

And of course, I have multiple books out. Most recent is You Will Own Nothing. So some of the topics that are interesting, as we talked about this new financial world order, what's been going on with the Fed or why we're in this financial position, I do more of a deep dive in some of the books. So those are my main touch points.

Okay. Well, Carol, thank you. You know, this has been a fascinating conversation for me. Any final thoughts as we finish up? So I think that the big takeaways here, as we revisit the things that we've talked about that I just want to underscore one more time, is that, you know, there are things that sound simple to do. Oh, we should just cut spending. That would be simple at any other point in time, but we're at a very precarious point financially.

And so some of the things that sound easy are actually incredibly complicated. So certainly keep that in mind. And then just from an overarching theme that the most important thing as this country gets back on track is that we need everybody participating in the growth, in the American dream, in the future. As we make America great again, it has to be great for everybody. And so I hope that as policies come out, to the extent there are things that don't really make sense for everyone,

that people use their voices to push back. Because we are seeing that, especially with social media, with platforms like X, that you are able to influence some of these outcomes. I certainly think it was in play during the election. We've seen certain proposals go on and off the table. We've even seen people who've been put up for positions have either a second chance or maybe has some cheerleaders because of everyone's voices. So don't be afraid to step up because we really do need to make sure, even if you don't feel like you're part of Main Street,

if it doesn't work for Main Street, it's not gonna work for anyone else in the long term. So, you know, make sure that we're championing the backbones of this economy. Now, you're mentioning platforms. I can't help but think of the platform Robinhood, right? Yeah, you know, Robinhood's interesting. It's had sort of some challenges over time in terms of, yes, it's allowed for access when it has worked, but there have been times when it has sort of glitched up. So if you're going to use a platform, make sure that you understand the risks, make sure that if you have a banking system, that you make sure that they have the appropriate level of insurance and do something that's right for you

because we're in a scenario right now where it seems like everything is just going to go up forever but things don't go up forever and so make really smart decisions you work really hard for your money so make sure that you're making smart decisions if you're going to make a bet then it's got to be with entertainment dollars it's got to be with you know something that you're going to make a bet, then it's got to be with entertainment dollars. It's got to be with something that you're willing to lose it all. But otherwise, you make educated investment decisions. Well, Carol Roth, it's such a pleasure to have had you on. Thank you so much. Appreciate it. Thank you all for joining Carol Roth and me on this episode of American Thought Leaders.

I'm your host, Janja Kellek.