Mind Pump: Raw Fitness Truth - 1270: Peter Schiff on the Post COVID-19 Economy & How to Thrive

Episode Date: April 13, 2020

In this episode, Sal, Adam & Justin talk with well-known economist and author, Peter Schiff, on the likely long-term effect of COVID-19 on the economy. How the medicine may be worse than the disease. (4:21) The difference between money and wealth. (11:34) What causes inflation? (14:43) The consequences of inflation in history. (17:39) His predictions for the economy post-COVID-19. (22:40) Why is the government doing what they are doing? (25:55) Is American life better off today? (31:50) The war on savings and how to escape this inflation tax. (40:15) Keynesian vs Austrian economics. (49:05) The concept of artificial demand and economies of scale. (56:03) What is it to stop a private company from creating their own currency? (1:01:51) What will happen with the US dollar? (1:07:53) Is it smart to buy real assets? (1:12:50) How the government always creates a crisis by interfering with capitalism. (1:15:45) How will this crisis affect the 2020 election? (1:19:20) The COVID-19 impact on human behavior. (1:22:54) The problems with the ‘everything’ bubble. (1:26:01) Related Links/Products Mentioned April Promotion: MAPS Prime/Prime Pro ½ off! **Code “PRIME50” at checkout** Special Promotion: MAPS Anywhere ½ off!! **Code “WHITE50” at checkout** Visit Paleo Valley for an exclusive offer for Mind Pump listeners! **Code “Mindpump15” at checkout for 15% discount** Amazon.com: Peter Schiff books How World War II Still Determines Your Tax Bill - TIME Keynesian Economics Coronavirus hyperinflation risk looms, buy gold: Peter Schiff What is Austrian Economics? Economies of Scale Anti-Money Laundering Initiatives Under the USA Patriot Act Man who predicted the 2008 financial crisis says coronavirus may mean his bets of stock-market carnage are finally beginning to crystallize Mind Pump Free Resources Featured Guest Peter Schiff (@PeterSchiff)  Twitter Europac Schiff Gold YouTube Podcast

If you want to pump your body and expand your mind, there's only one place to go. MIND, MIND, MIND, MIND, MIND, MIND, with your hosts. Saldas Defano, Adam Schaefer, and Justin Andrews. So in this episode of Mind Pump, we wanted to bring someone on who could help us understand the potential ramifications of what's going on right now economically speaking. Now luckily for us, we were able to get a hold of Peter Schiff. Now, if you don't know who he is, he's a very, very well-known economist. He's been on massive shows like the Joe Rogan podcast and others talking about how our

actions affect the economy. He's famous for predicting accurately, very accurately predicting the 2008 financial crash. This guy knows what he's talking about. And we wanted to provide an episode that gave you some solutions. I mean, besides wanting to avoid this virus from hurting a lot of people.

A lot of businesses are shutting down. The government is spending record amounts of money to keep businesses open and to provide people with some kind of relief, but that all has economic ramifications. Some people are saying that this could cause a real economic crash. So we wanted the best.

We wanted the best person to talk about what's going to happen and to talk about what you can do to protect yourself. Now Peter Schiff has written some amazing books like The Real Crash. This one's actually quite popular. He has a website where you can get information on how to invest and how to protect yourself. It's europack.com. That's e-u-r-o-p-a-c.com. It's a SEC registered investment advisor and broker dealer. He has another website called SHIFT Gold. That's SCHIFT.G-O-L-D.com. He has a podcast that you can listen to him talk about these kinds of things. His podcast is called The Peter Shiff Show. So go check it out. Look, if you want to learn how to

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Here's how you get the discount. Go to mapsfitnisproducts.com and use the code prime50. That's P-R-I-M-E 5-0 on no space for the discount. So Peter, we wanted you on the show because these are a bit unprecedented times and I've heard I've heard people say things, you know, people who are kind of on your side say things like the medicine may be worse than the disease and what they're referring to is the reaction from government, the trillions of dollars that they're trying to pump into what they'll say

the economy, the stimulus checks, all this money, that may actually cause things to be much, much worse than they are now. What's your stance on what's going on now with how the government is reacting to, in terms of economics, the money that they're pumping in. Well, there's no doubt that the cure is worth than the disease, but you have to understand exactly what referring to, because you have to separate

the two things that we're doing. So first, you have the efforts to contain the spread of the virus, right? Where everybody is encouraged to stay at home and not to interact and not to go to work, right? So that's part of it. And you can argue whether or not this is actually the appropriate policy.

I mean, clearly there's a big cost. If that's the policy, if that's what we're going to do, then we've got to be willing to accept the economic consequences of that, right? If we're all going to stop working, then it's going to cost something. And there's no way the government can magically eliminate those costs. It's just a sacrifice that we're all going to have to make, and that we're going to have less money. We're going to have less stuff to buy. Economic activity is going to slow down. People are going to lose jobs.

We have to decide whether or not that is worth it to avoid this contagion, right? Or is it not worth it? Obviously, one of the things that's happened because so few people are now driving to work is the number of accidents, fatal accidents has gone down. So by everybody staying home, fewer people are dying in automobile accidents. Now, okay, so should we stay home indefinitely so people don't die in automobile accidents? Or, you know, is our automobile accidents an accepted consequence of our lives? I mean, every time we get into a car, we know there's a small chance that we could die in an accident, but we go in a car anyway because we want to enjoy life and we're willing to take that small risk. You know, so the question is, you know, what

are we giving up? Is it actually worth the small risk that we end up getting the coronavirus, and then we end up dying from it, which is very, very rare. In fact, the only people that really die from it are people who are old and have a lot of other health problems. And maybe they should be the ones that are staying home home and everybody else should just be going about their lives maybe a little bit more cautious about washing their hands and about not getting too close to people but there's a lot of gaps, a lot of daylight between what we're doing now and that. So that's one thing. I'm not an expert on medicine or science and so I'm not even going to really opine on whether or not this is the correct response. What I am talking about is what the government is doing

in addition to that because we're all staying at home, the government feels that they have to give everybody a bunch of money, right? So the government has to bail out all the businesses bail out all the workers bail out everybody who's supposedly sacrificing you know to fight this war on the coronavirus and the fed is just creating trillions and trillions of dollars magically out of thin air and we're handing it to companies we're handing it to individuals we're handing it out to states that is what I think is going to do all the economic damage Because that money is not free. See nobody is asking how are we going to pay for all this money? I mean if all of us are sitting at home and not working yet

We're getting all these checks in the mail and a lot of people are going to be getting more money not working Then they were paid when they actually had work When they were doing doing stuff, but they're not producing anything They're just sitting at home watching Netflix and the money is just arriving and so if we're just gonna just shower the country with money that didn't exist until the Fed just magically conjured it into existence What are the consequences of that? We're gonna destroy the value of our money. And so people are going to suffer and all of the things the government is doing to bail out

businesses that probably should fail because they're not viable. And everything that we're doing to encourage people not to work is simply going to exacerbate the economic pain that is being created. It's going to delay any kind of recovery. And the other factor that people have to consider is why is the US economy in such a vulnerable position so that this coronavirus is so harmful? And that's because of the debt. That's because of everybody in the economy was, you know, maxed out with debt. Companies were levered up.

Employees were levered up. So the typical company doesn't have money saved up so that they can go a couple of months without revenue, yet still be able to pay their expenses. I mean, a normal economy, that would be the case. Companies would have a nice reserve of cash in case something goes wrong. I mean, if it's not coronavirus, I mean, a lot of different things can go wrong. And when you operate a business, you need to make sure that if those things go wrong, you're not out of business.

So you maintain an adequate amount of reserves. And of course, if times go bad, you can furlough workers, right? And you can recall them when business picks up. Under a normal economy, workers can go a few months or longer without a paycheck, because workers have savings. Because while they're working, they put money aside, and they don't borrow money to buy stuff on a credit card, they don't borrow money,

to take vacations or to buy cars, they buy cars they can afford and they pay cash, so they can survive. But because of the Fed keeping interest rates so artificially low, everybody is living paycheck to paycheck. Nobody can go any amount of time without that revenue coming in. So all the corporations are failing.

All the individuals can't pay their rent, can't pay their mortgages. This whole house of cards that the Federal Reserve has inflated with constant bailouts and stimulus instead of allowing a solid economy to replace the bubble, that's why we're in such bad shape now. Peter, really quick, I want to ask you because a lot of people get confused over the difference between money and actual wealth or what the money represents because I know someone listening right now is thinking, well what's the deal if if the Fed and the Federal Reserve is like the the central bank of the country and if they just if they print money to give to us so now that we have money why is that a

bad thing what's the difference between that and a normal paycheck that I would get for doing work? Yeah well because the paycheck is actually tied to the work. And so the money has some relationship to the value that you added to society by doing work, because when you did work, you created services or you helped produce goods. And as a result, you now get money that is commensurate with what you added of value into a society. But if the money is just created and you don't do anything, if you don't add any services, if you don't add any goods, then the money has no value. It was just paper. I mean, all money does is it enables everybody to allocate what's been produced.

And the more you earn, the more you get to consume. It's like you have a greater claim on output. So if, let's say you set up a business and you produce all sorts of goods that benefit society, that people get to buy, the profit that you earn now entitles you to go into society and buy stuff because you are taking out in proportion to what you put in. Money simply allows us to divide up what we've all collectively produced. But if we don't produce anything and we just have money, then what the money doesn't have any value, the money doesn't have any value

The money derives its value from the goods and services that we create that we all agree We're gonna allocate based on that monetary unit. So all we're doing now is increasing the The demands for what's already there? We're allowing people to bid higher prices to buy the goods and services that are already there but and the problem is because people are not working as much and not producing and not providing

services these supply of goods and services that were collectively producing has declined and and and if we're collectively producing has declined. And if we just add more money into that, then prices have to go way up because we have less stuff to buy and more money to buy it with. So everybody just bids up prices and all the Fed is doing is creating inflation. And that doesn't benefit anybody. I mean, if what the Fed is doing work, if we really could have

all this stuff for free, then why did we wait for the coronavirus? I mean, why not just do it all the time? I mean, if there's no consequence, why are we even paying taxes? Why doesn't the government just print the money it needs and just spend it? Right? So it's So essentially, if you have, let's say, $10 in circulation and an apple is worth $1, and then we just put another $10 in circulation that's not tied to anything that we've made or produced, the apple's value automatically in terms of dollars goes up. It's twice as much because now there's two times as many

dollars in circulation. That's what inflation is. The value of the apple hasn't gone up. The price of the apple has gone up. Right now, if at the same time we increased the supply of money, there were more apples because apple farmers grew more apples, well then okay. Then the price of apples could stay the same, or if the money supply stayed the same, and we just produce more apples, then the apple price would go down. And that would be a good thing because now we could buy more apples because we produce more of them. I mean, what determines how much you can get of something is how much of that something that we can produce. So the more efficient farmers become at growing apples, the cheaper apples become and the more apples we all get to enjoy. But if the farmer doesn't grow any apples and we just print a bunch of

money, the money doesn't create the apples. It's the apples that give purchasing power to the money. If we only have apples, even if there's no money, we could still eat the apples. We have to figure out another way to divvy them up, but it's the apples that have value. The paper money itself has no value. Now, when we have real money, let's say we're using gold as money, right instead of paper, right well Gold requires effort to produce just like apples require effort to grow and so when people are buying apples and they're paying with gold They're exchanging one valuable commodity for another right so in that sense the money actually has value But when you're talking about the fiat currency that we have now

That money has no value whatsoever. It costs nothing to make and you can do nothing with it Right, if you can't spend your dollars. Let's say you know I don't know if you guys are old enough to remember Gilligan's island Yeah, but you know if you get a bunch of castaways on an island Would it matter if somebody dumped a bunch of paper money on the island? I mean, other than maybe using it for fire, because maybe it'll burn.

Having that paper isn't going to help you. What you need is stuff. You need food or you need tools. The paper money doesn't have any value just by itself. And so what gives that paper money value is the goods and services that we all produce and agree that we will exchange it for that paper money. Now Peter, you're explaining how printing money, pumping it out, giving it to people, give it to companies will result in inflation. In other

words, the price of everything goes up, the value stays the same or drops because we're producing less. And so you fix no problems. Now we did a lot of this in 2008 after the great recession. There was lots of money being pumped in, continue to be pumped in to the economy printed money, you know, not tied to anything. But we, as a consumer, you know, if I'm just a regular guy, consuming things, I didn't see prices inflate like crazy, or did we, did we see inflation from the money that we've been pumping in since 2008?

Are we already seeing these effects? Well, number one, we don't know what would have happened to prices, consumer prices had the government not Created all that money had to be not done QE one two and three It's certainly possible that we could have seen a significant reduction in Consumer prices which would have benefited consumers who would have been able to buy more products for less money And so the fact that inflation prevented prices from falling for less money. And so the fact that inflation prevented prices from falling is still a problem for the economy because we missed out on those benefits. But I still think that consumer

prices rose more than what the official statistics revealed. But yes, we didn't have runaway inflation, it wasn't really bad inflation. And there was a couple of reasons for that. One is that the way the money entered the economy, the primary effect was on asset prices rather than consumer good prices. So if you look at what happened to the stock market, if you look at what happened to the stock market, if you look at what happened to the bond market, to the real state market, those prices went way up. And so that was an effect of inflation. So if you wanted to buy stocks, they were a lot more expensive. If you wanted to buy a house, it was more expensive. If you wanted to buy bonds, the prices were more expensive.

And so that was a consequence of inflation. But the other reason that we didn't see a bigger increase is because we, the United States, we are creating the reserve currency of the US dollar. And a lot of the dollars that we created ended up getting exported and they were used by the Chinese and the Japanese and everybody else to buy Treasuries But in exchange for the dollars that we sent to China and Japan They sent us all sorts of consumer goods. So Paper money went out and went into the bottom market and all sorts of products went. So, paper money went out and went into the

bond market and all sorts of products went in and filled up the shelves on Walmart and Amazon. So, we got all this stuff but the money we know went out. So, that kept the lid on prices. But I think what's gonna happen this time is the inflation is gonna be more in consumer goods than financial assets. I don't think DeFed is going to be able to push up stock and real estate prices again the way it did before. And of course what they're doing now is much bigger, right?

The amount of money that is being printed now dwarfs what we did in 2008. So just because 2008 didn't produce a big increase in consumer prices, doesn't mean that what they're doing now won't, when what they're doing now is so much bigger, especially if this is the nail and the dollar's coffin. If the dollar ends up crashing because the world is going to abandon it as the reserve currency and return to gold, which is what I think will happen Then all of those all that paper money that the Chinese and the Japanese and the Saudis and the Russians and everybody else have been holding on to All that money comes back, right?

They start selling their treasuries and they get their dollars and they're like, you know what? We don't want to hold on to these dollars anymore and they get their dollars and they're like, you know what, we don't want to hold on to these dollars anymore. So let's buy something with them. And the only place their legal tender really is in America. So now, what do the Chinese do with their dollars? If they don't want to buy our bonds, they come in here and buy stuff.

They'll buy property or they'll buy used cars and they'll ship them back to China. Or they'll buy all sorts of stuff. And what they'll also stop doing is sending us stuff, right? Because we're not going to be exchanging dollars for goods anymore. So a lot of these goods that are being produced in Chinese factories, they're not going to be shipped to the United States. They're going to stay in China. And the Chinese consumers are going to buy those goods. Americans are going to go without those goods. So now, the Fed's going to be cranking out all this money, and the money is not going to get sent to China. It's going to stay here, but there's going to be nothing to buy because

the Chinese aren't sending us their goods anymore. So prices could just go through the roof, and we could just have massive inflation. How do you see this unfolding? Is it going to be, because you see things, obviously we're infusing money right now, we also are putting holds on foreclosures, is it going to be because you see things, obviously, we're infusing money right now. We also are putting holds on foreclosures. Is it going to be like a fall off the cliff thing? Are we going to see this like slowly trickle and it's just going to continue to go down? What's your prediction? Well, maybe it'll be a slow trickle until it becomes a complete waterfall.

But yeah, I mean, the things that we're doing now, we're encouraging people not to pay rent. And so once people have skipped their rent for a few months, I mean, are they going to stop paying again? I mean, maybe people are going to start to think of not paying rent as some kind of a civil right. Like, why should I have to pay rent? I mean, I should be able to just live for free. You know, why should I have to have a job? I'll just keep getting these unemployment benefits, which are higher than what I got. And you know, once the government, you know, starts giving something to voters,

it's very hard to take it away. I mean, nobody wants to vote to take it away. So a three month moratorium on evictions becomes a six month moratorium, becomes a one year moratorium. And once you know you can't be evicted, well, why pay rent rent what's the point I mean you know you're not gonna get evicted anyway if you and if you if the bank can't foreclose on you if you don't pay your mortgage well then why pay your mortgage no no then why pay you know I mean why pay anything I mean so the government is creating this moral hazard what we need to do is allow the free market the function you know

they they want to talk a lot about world war two and they try to compare this to world war two about sacrifice but you know nobody got bailed out bailouts in world war two nobody got stimulus checks in world war two what people got were tax increases the government raised taxes massively during world war two and americans loaned money to the government not the other way around the II and Americans loaned money to the government. Not the other way around. The government didn't loan any money to Americans.

American citizens loaned the equivalent of trillions to the government so they could pay for the war. And a lot of businesses were interrupted. When you take 15 million men, young men, and ship them off to war, those are 15 million men who aren't eating in restaurants. They're not taking their girls out on dates They're not going to movies. They're not Staying in hotels. I mean imagine what happened to the travel industry There were a war two the whole world is fighting nobody was going anywhere So you had all these businesses that were completely interrupted yet nobody got any bailout money

None So why why can't we do that today because in 1941 we had a viable economy businesses had savings Individuals had savings nobody was have credit card debt student loans auto loans You know that we had a real economy and so we could fight a real war we had the resources to do it we're broke now thanks to decades of bad monetary and fiscal policy this country was vulnerable to any crisis

if it wasn't the coronavirus it had been something else that's why i keep saying the coronavirus is the pin the pin is not the saying the coronavirus is the pin. The pin is not the problem. The problem is the bubble that the pin pricked and everybody wants to focus on the pin and they can't see the bubble because they're too busy looking at the pin. Now Peter, what you're explaining is, sound, consistent, this is economic science.

You're not saying anything that you're making up. This is how economics works. I have to believe that our government, the Fed, the people that come up with our policy, also understand basic economics. So my question to you is, why are they doing what they're doing? Is it because they're trying to kick the can down the road

and hope that innovation and economic production just offsets all this damage that they're doing. Why are they doing this? What you're saying again is basically, it's like you take a math basic cloud, one plus one equals two. This isn't crazy stuff that you're saying. This is basic economics. They have to know this stuff.

Why are they doing what they're doing? Well, first of all, don't assume that they know basic economics, because I think that's a bad assumption. In fact, a lot of people learned economics in college, and they learned it from a Keynesian professor and a Keynesian textbook, and Keynesianism is kind of like astrology. It's not science. It's not like astrology. You know, I mean, it's not science. It's not like astronomy. So if you think you know economics

because you studied canesianism, you don't know crap about economics. So it's possible that these guys don't actually know basic economics. They only think they do. But let's assume for the sake of argument that they're not all complete idiots, right? And they actually understand,

you know, what common sense when it comes to economics. The problem is, the political realities are that the average voter doesn't understand economics. And the way you get elected isn't by telling people, don't worry, the free market is going to function. And there's nothing we could do to help. Anything that we do will just make it worse. So, you know, you're just going to have to deal with your situation on your own, right? That's not how people vote. You know, if you just say, look, I'm going to leave you alone and allow the market to work, you know, that doesn't appeal to a voter like, oh, I'm going to send you a big check. I'm going to send you a check so that you're made whole. It's not your fault. So I'm going to make sure

that you get bailed out. And so that is what wins votes. And so when you look at how economic policy is being formulated, it's not about doing what's best for the country. It's about doing what's best for the incumbents who want to get reelected. But also, if you do the right thing, economically, the immediate impact is always that the problem gets worse before it gets better. And it's that immediate impact that scares the hell out of the politicians who know that an election is right around the corner and even if you know there's some long-term gain

associated with that short-term pain the politicians are worried that they won't be around in the long run because that don't lose the reelection during the short-term pain so their motivation is to kick the can down the road to try to get reelected. Even if doing it makes it worse in the long run, because for them, it solves their short term re-election problem.

Because everybody says, hey, how can the government just sit back and let people lose their jobs, let businesses fail? Well, if they do that, the economy will emerge from the decline quicker and healthier and in the long run fewer businesses will end up failing and fewer people will lose their jobs and will have a more productive economy But if the government intervenes in the way it's doing it will slow down the pain but ultimately elongated and make it worse because in the long run, even more people will lose their jobs and even more businesses will fail because of the government's

efforts to prop them up and eliminate all of the good things that the free market is trying to do. The free market is trying to rebalance the economy. It's trying to cleanse the economy of inefficient businesses that are wasting capital and wasting resources and reward the prudent and punished the reckless and do all these good things. It's like if somebody is out of shape and overweight, right? Get into something that maybe makes sense, right? To the audience. If somebody is really out of shape,

they smoke, they drink, they don't exercise, you know, and they're just out of shape. And you say, okay, I got a solution for you. This is what you have to do. You're going to stop eating all this junk food. You're going to go on a diet and you're going to exercise. You're going to do cardio. You're going to do weights. You're going to do all this stuff. And the guys like, well, what if I do all that stuff? I'm going to have to give up all this stuff I like. I mean, I love eating.

I love picking out on junk food before I go to bed. And I don't want to exercise. I mean, that's too tiring. I'd rather, you know, so there's this short term pain, right? If somebody does that, and in the long run, right, they're much better off. They could get healthy, they could live longer, they could enjoy life more. There's a lot of benefits to being in shape.

But in order to get that way, you have to make some changes that are disruptive. You know, what happens is a politician comes along and says, oh, you don't have to do any exercise, you don't have to diet, just take this pill. This'll just make you lose weight in your sleep. Oh, okay, yeah, that sounds great. You know, I don't want to do this,

I don't want to do this stuff. You know, they want to, they want to promise gain with no pain. Right. But, you know, we don't want to do this stuff. They want to promise gain with no pain. Right. But we've done work. Great analogy. Now I'm going to run a counter to you because I guarantee someone listening right now is thinking, okay, 1941 money went full fiat meaning it's not connected to anything now. They can print as much as they want.

But it went full right? But objectively speaking, whether you go back from 1941, 1971, whatever, objectively speaking today, life is easier, it's better, we got more stuff, it costs less for the most part. So why then if all this, we've had this bad policy, this bad economic policy, how come then life has objectively just still gotten better? Is it in spite of the policies? I mean, what's going on? Why are we better off then still? All right, well, first of all, I won't even accept the premise that were necessarily better all.

I mean, some of us are clearly, and that is despite government, not because of government, because yes, we have had a lot of technological advancements, you know, over the past 50 years. I believe that we would have had even more technological advancements, had we had less government, had we been more free, had we paid lower taxes, had we had less regulation, I think scientific achievement, industrial achievement would have been much greater. But still, despite everything that the government has done, we have still managed to improve on our knowledge and our

Efficiency's you know that then what we had you know 50 years ago or a hundred years ago and of course We've been living beyond our means right one of the reasons that people live a better life is because they're indulging Their themselves today. I mean nobody has anything saved for retirement So you could go back and look at American life Let's say as late as the 1960s or early 1960s. People were saving for their retirement. So they had money to retire. In the interim, if you were a guy, a typical guy in 1960, 1950, 40, even if you didn't even graduate high school, you could earn enough money to get married, support your wife, who did not have a job. She did not have to work. She stayed home.

She did the cooking and the cleaning, maybe even had a house to help. So you could support that woman, that wife, on your blue collar job, right? That you didn't even go to college for. And you could have two or three kids, four kids. You could raise them. You didn't have to borrow any money. You had no credit cards.

You know, you made enough money to actually be able to support your family on your income without going into debt. And you could also say for retirement. So today, that's impossible. Even the average college grad can't support a wife today. So the wife has to have a job just to be able to pay the rent or to pay the mortgage. And they're doing that with debt, even with both people working, even with a husband and wife,

both working full-time jobs. Sometimes they're working two jobs. They still have no savings. They're still on debt. Whereas a guy in 1950 did all that without his wife and without the debt. So, are we really better off now than we were despite all of the technology? And in fact, if you go back and you look at the changes in America from like 1900 to 1950, or let's say 1890, or 1950, or 1950 nineteen you know compared to from nineteen fifty to now or whatever this eighteen eighty whatever this similar set period is life improved much more back then right if you looked at a man if you looked at america in eighteen eighty right versus nineteen fifty nobody had electricity nobody had cars nobody had air conditioning no one had telephones. There was no movies

You know, I mean people in 1880 Didn't live much different than people lived in 1680 or 1480 I mean very but all of a sudden you know we started to have a free market revolution We had sound money. We ended the Civil War. We're on a gold standard, limited government. And we had this industrial revolution where people now have electricity, indoor plumbing. They have refrigeration.

They have air conditioning. They have telephones. They have airplanes. They have cars. I mean, if you took somebody in a time machine from 1880 to 1950, they would be completely amazed that everything they saw. I mean, it would be unbelievable the difference

in the quality of life between reading by candles and having to go to bathroom and an outhouse and having no, I I mean to all the things To the kid just going into a kitchen in 1950 with all those appliances that none of them existed people I mean they didn't have larger machines. They didn't have dishwasher's all that stuff was here in 1950 the only real difference Between 1950 and now is we have cell phones And we have personal computers.

But other than that, it's not that much different as far as life, the improvement in life. And if you figure that we're working a lot harder and we have a lot less to show for it. So, you know, we could be so much richer than we are if we had maintained that trajectory. Like, I like to, I used to watch this show called the Jetsons when I was a kid in 1960s. That's true. And so when they wrote this, when they wrote the 60s, they made this, a Hanabar bearer made the cartoon. They just assumed that life would continue to evolve the way it did.

So in the future, George Jetson, who is the husband, right, Judy is wife, she doesn't have a job, and George only works two days a week, right, for like four hours a day. And he's like, oh, these two day work weeks are killing me. I pushed the button like eight times. You know, like, you know, work, people are working less, right? People are enjoying more leisure and more freedom because we've continued to advance our technology and make capital investments that free up labor so that people don't have to work as much. That is the idea.

That is the goal of society. I mean, it's not a goal that anybody is orchestrating on their own, but ultimately, what capitalism does is it replaces labor with machines so that all of us don't have to work as hard and we can have more leisure. We can do the things in life that we enjoy, not the stuff that we have to do because we can produce more.

And we get more goods, we get more services with less human effort going into it. And then everybody benefits from the abundance of goods that are produced, goods and services. But what's happening now is we're not doing that. We're trying to figure out how, we don't wanna make sure that we're all working hard. I mean, that is not what people want.

People don't wanna work hard. They wanna work as little as possible and have as much as possible. And that free markets ultimately do that. And we were moving in that direction. I mean, that's why women stopped working. Once upon a time, women had to work. So did men.

Children used to have to work. The reason that children stopped working isn't because of child labor laws. No, it's because their parents or their father was able to become more productive based on the gains in productivity from the free market that the kids didn't have to work anymore. That's what happened. That's why you still have child labor in some countries. It's not because their parents are mean. It's because it's the only way they can feed them.

Peter, let's say, because I think we would both agree that we don't have a lot of faith in the government shrinking. Then that's what it would take. It would take government having to shrink and that's probably not going to happen based off of what we've seen for the last few decades, for sure. So if there was somebody during this time who was a little more prudent and saved $100,000

and they're not freaking out right now, how would you advise them to invest, knowing what you know and what you probably predict is going to happen with government? That's a great question because what I'm getting from you is save your money, but I'm also getting from you. Money is going to be worthless. So what do you do? What do you do?

You got a hundred grand, you want to invest? Yeah, actually, absolutely, because the key to economic growth is savings. Savings is what provides the capital for businesses to expand and invest in the equipment and create the jobs that delivers prosperity. But what the government is doing is destroying savings. And so the economy is going to implode when you have a war on savings. And government shrinking is, yes, it's extremely important because that's the only way out of a recession is to reduce the burden that government places

on an economy by cutting spending. And so if the government really wanted to help, they would make itself smaller by cutting spending and reducing regulations so that the economy would be better able to get us out of this mess by freeing up resources back to the private sector That would be able to be used productively, but none of that is going to happen So what you have to understand is if you are in the minority of people who actually did do it right right you have savings You are going to be taxed through inflation to bail out all the people who have debt and don't have savings. That is what happens.

So when the government prints up all this money and sends it to the unemployed and sends it to businesses, where is the purchasing power coming from? It's being taken from the people who already have money, right? So the government has two ways of taxing you. The legitimate way is by actually taking your money in taxes. You have $100 and the government says we're going to take 30. And we're going to use it to spend on stuff. So you had $100.

The government takes 30. You got 70 left. Well, what if the government doesn't take to 30? They just print money and spend it. Well now your $100 feels like $70 because prices have gone up to the point where you've lost 30% of your purchasing power. So there's no free lunch. The government is going to get you one way or the other. And so the way they're taxing everybody, the way they're taxing the prudent to bail out the reckless is through inflation. And the good news though is that the inflation tax is avoidable.

At least for now, it's not illegal. You can get rid of your dollars that are about to depreciate and convert them into something else. You can buy gold. And as the dollar goes down in value, the price of gold will go up. So instead of having, you know, a thousand dollars of gold, you know, you now end up with 1500 or 2000. So you can afford the higher prices. So the government's not taxing the people who own gold because they're not printing gold. They're only taxing the people who have dollars.

So avoid the tax by getting out of the dollar and so you can buy gold. I sell physical gold at shift gold. But also if you have a bigger portfolio and you don't want to just have it in a non-income producing asset, what I am helping people do is I'm building portfolios of good solid businesses is on building portfolios of good solid businesses in Singapore, in Australia, in New Zealand, in Hong Kong, in Switzerland, in Norway, in other countries that I think on a scale are far more physically responsible than the United States, that are not going to see a destruction of their currency.

Their economies are in much better shape. And if you own income-producing assets in those countries, you will have a viable portfolio that will rise by more than the domestic inflation rate, and which will provide you with an income stream that will increase as the dollar loses value so that you won't be taxed through inflation because as prices go up because the dollar is going down, your dividends in Norwegian, Krona, in Swiss, France, in New Zealand dollars, those dividends are buying more and more US dollars. So now as you get your dividends checks, you have more money to buy the more expensive goods.

Whereas if you stayed in the dollar, you'd have the same amount of money, and then you'd have to buy fewer goods because the price of goods would be going up. So yeah, I mean, people have to act quickly to protect themselves. And that's what I'm doing at my brokerage firm at your Pacific Capital.

People should, you know, uropact.com. You should reach out to me, talk to my brokers about getting your accounts transferred over to us, funding accounts, moving over retirement accounts, and getting out of US financial assets, particularly bonds, but also US stocks, which remain very overvalued, and prepare yourself to escape this inflation tax because it is going to wipe out the retirement of so many Americans. We talked about women entering the workforce. The real entry where women really started to work was in the 1970s. The reason that that happened was because when we went off the gold standard in 1971,

the dollar lost about two-thirds of its value. The Deutsche Mark went from four, you could buy four marks to the dollar, it went down to one and a half. The Swiss Frank went from 23 cents, you could buy a Swiss Frank franc from 23 cents It went up to 75 cents in that decade You used to you got 360 Japanese yen for one dollar in 1971 by 1980 you were only getting about 150 right? So the dollar went way down. That's why oil prices went up so much oil went from three dollars a barrel to thirty dollars a barrel The reason that happened it wasn't because OPEC jacked up prices. It's because we tried to buy oil with paper instead of gold. And so once we started giving paper, well, the price went up. And so prices went up. But

what happened was wages did not go up nearly as much as prices. And so what happened was now all of a sudden, the husband, based on the big increase in prices, his pay wasn't enough to support his wife anymore. So the wife now had to get a job, right? It wasn't because of women's lib that all these women started working. They were liberated when they didn't have to work. The minute they were forced to work, they lost that liberty. And so it was a reduction in the standard of living. When now all of a sudden the kids have to fend for themselves, there's no one taking care of the house.

I mean, and I'm not like a male showvonist, I mean, it's fine if the man wants, if the woman wants to work and the guy wants to take care of the house, the kid's okay. But if nobody can take care of the house and the kid's because everybody is forced to work, I don't think that's an achievement. I don't think that's something that we should think as an advancement. I think that is a reduction in our quality of life. But I think what's going to happen this time,

is that it's not just women are going to start working because they're already working. I mean, I don't know, maybe we'll have to send the kids to work and take them out of school. But the other thing that's going to change dramatically is retirement is going to be a thing of the past. I mean, you know, because if you look at a movie, if you, if some of your kids will watch you, you watch something from the 1950s and, you know, they see the mom at home, like, well, why isn't she at work? Oh, well, well, there was once

a time, mothers didn't work. They, they, they were able to stay at home and when the kids came home from school, they were there and they were doing, you know, because it looks very foreign to most kids because you know, all they know is their moms have job, just like their dads, there's no difference. Well, I think at some point in the future, you know, people might look at a movie from this time period and they'll see an older person who's not at work.

Hey, why is that? What's that guy doing? He's just playing golf in the middle of the day. Oh yeah, yeah, yeah, you know, because once upon a time when people got old, they retired and they, oh, what's that? What's that? What does that mean?

They stopped working because inflation is gonna destroy the value of everybody's savings, everybody's pensions, everybody's Social Security benefits. So nobody is gonna retire. The money is gonna retire. Peter, you said something earlier, and I wanna take you back to it. So the audience could get a better understanding.

Could you give us a quick economic lesson on the difference between Keynesian philosophy versus like free market philosophy and economics? We're Austrian, right? Right, yeah. So if they're obviously they're teaching it in schools, I have a friend that actually has his degree and then we argue all the time, I'm a free market guy.

And he, him and I go back and forth and he's got the degree in economics. And I'm assuming that the reason is is because this is how he was taught. Could you school me and our audience on really what the fundamental differences are between those two? Yeah, well, I mean, there are a couple of easy differences

to grasp. So Austrian economics looks more at the individual and the ability of free people to be productive and in pursuing their self-interest, helping everybody else through Adam Smith, the invisible hand. I mean, it's very much a classical view of economics that focuses on production savings and supply, right? That the key to a rising standard of living is producing more

things and being efficient and being productive and that so that you're looking at how is how are things being produced? How do businesses produce more stuff so that we're looking at how are things being produced? How do businesses produce more stuff so that we all can consume more? And so you're looking at it from the supply side and you're looking at it from the individual, the entrepreneur angle. And Austrians see money as just another commodity, a mother good, when money is gold, right? They look at it, money is a commodity that you exchange for other commodities, or the way in the way I describe that when it comes to fiat money.

But the Keynesians look at government as an enabler of prosperity, and the way they do this is through increasing demand, right? They don't look at problems in economics as an absence of supply They look at it as an absence of demand, right? They're just not enough demand people don't aren't buying enough We need more buying and so they want to focus on things that stimulate demand and they think well Let's have government spend money. let's have government print money, and we're gonna have demand. And but what they don't understand is demand

without supply means nothing. And they don't understand the difference between the legitimate demand and desire because you don't have to stimulate desire. I mean, everybody wants everything, right? It's not like I need to be stimulated to want stuff. I want all kinds of things. The limiting factor is what I can afford.

And the government can't make things more affordable by creating money. What makes things more affordable is greater production that brings down the cost, right? When cell phones first came out, if you remember the first cell phone in the 1980s, really, these things cost thousands of dollars to buy back then. And to use them was very expensive.

I mean, I remember when I got my first cell phone, I barely used it, you know, because, and if someone called me, I would be really quick because it was so expensive to make the call. But what increased the demand for cell phones wasn't people wanting them more because everybody wanted one. It was a question of, you know, could you afford it? What the reason everybody has them now isn't because the demand for cell phones went up.

It's because the price went down because production went up because businesses became so much more efficient at producing cell phones that they became affordable to everybody. It wasn't just Gordon Gecko who could afford a cell phone. It was everybody. It was his maid that could afford a cell phone. And so the Austrians recognized a basic economic principle that supply is what creates demand, that you can't demand something that hasn't first been produced. And so government can't stimulate production by stimulating demand. Demand gets stimulated all by itself simply through the productive process.

And if there's a bunch of goods that aren't being consumed, all that has to happen is the price has to be allowed to fall. And now they're going to get bought. You don't have to print more money to stimulate those sales. Just let prices come down to the point where people can afford it. But you have Keynesians now, they seem to think that the worst thing that can happen to prices is that they go down. Right, please.

They think, oh, we need government to prevent prices from going down. Why? Prices, you know, they try to argue that, well, you know, if prices go down, nobody will buy anything, which is a bunch of nonsense. I just talked about cell phones. I mean, the reason that we're buying cell phones is because the price went down. I remember the first time I saw a high-deaf television.

I walked into like a good guy's, or one of these $10,000. And I think it was still, it was $10,000. The first one I saw was $10,000. And it wasn't even a big screen. It was maybe like 28 inches. I don't remember 32 inches. And it was $10,000, but I remember

looking at it and I was amazed. I was like, it's like looking through a window, right? Compared to the what I had back then, I really would have liked that television set, but I didn't want to spend $10,000 to buy. I didn't like it that much. It wasn't $10,000. The first television sets that came out in the nineteen forties this sets themselves were like a huge piece of furniture but the screen was about two or three inches it was only black and white and the first television set was as much money as a car who the heavy you know who bought it

really really rich people that bought it just so they can tell their friends they had and you know what what you watch there was like two hours of programming uh... on cbs you know and you had a watch within a certain window at time and to even see it i mean but now everybody has multiple tb's because they're dirt cheap right so the idea that nobody will buy television sets if the prices go down is nonsense the only reason we all have them is because the price goes down. Everybody who buys a computer today knows if they just wait a year, they can buy a better one for less money.

So why do people buy computers? Because they don't want to wait a year. They want it right now. The Keynesians don't understand the time value of things. They think that we will wait indefinitely to buy something at a lower price. If we think the price is going to go down. No. The only reason people don't buy something waiting for a lower price is because they can't afford it. And so they wait for the price to come down to the point where they can't afford

it. But if the price never goes down, they'll never buy because they'll never be able to afford it. Peter, you know, this, so you're talking about electronics right now. Why is it that the price of things like electronics for, you know, quality is just gone down tremendously. I mean, the first, like you said, the first Walkman was $307 in those dollars. You, you adjust for inflation. It's like $800. I could probably got find a cassette player

on Amazon right now for five or 10 bucks. Why is it that electronic prices have gone down, but the cost of things like education and healthcare has exploded? Well, because education and healthcare are heavily subsidized by the US government. So anything that the US government gets involved in, the price is going to go up. I mean, that's how government works.

They subsidize things. If the government was involved in consumer electronics, the same thing would be happening. I mean, if the government was guaranteeing loans so that people can borrow money to buy computers, computer prices would have gone up and set it down. And people would have all kinds of debt you know related to this. I mean you can see if you look at medicine because it's really easy because you can take a look at medicine where the government is involved and where it's not. You can take a look at cosmetic procedures like you can look at orthodonture? What it costs to put braces on your kids teeth?

Braces today are a fraction of what they cost 20, 30, 40 years ago. The same thing with Ilasic surgery, which you know, you can get your eyes fixed at a fraction of the cost of what the same procedure cost 20, 30 years ago and even all cosmetic procedures, you know, breast implants, you know, liposuction, all this stuff is cheaper. And the reason is because there is a free market in it, there is no government subsidy to get these procedures. There's no insurance and third party payer, which is, you know, only there because of government's

tax law where people get insurance tax-free. If you have a job and your employer pays you a salary, you pay income taxes, but if he gives you insurance, it's tax-free, so that has created an artificial demand for people to prefer insurance to cash, and so then instead of getting cash and then buying medical care, they get insurance and then they run everything through a third party, which is dramatically

increase the cost of basic medical care. I mean things that used to be very inexpensive, you know, back in the 1940s and 1950s. I mean, if, you know, you had a baby, you could go to the hospital for two weeks and have a baby and the average guy could afford it no problem. I mean, you didn't need insurance. And now you go and you get a baby, you're out of the hospital the next day because it's so damn expensive.

And it costs like a brand new car because everybody pays for it with insurance. I mean, if things medical treatment used to be inexpensive in this country before the government got involved in subsidizing it, the same thing with education. You know, I mean, my father went to college. He didn't borrow any money to go to college. And he came from a relatively poor family. So how did my father pay for college?

He had a summer job. He waited tables over the summers and that's all it took. And based on doing that, he could pay all of his tuition, all of his room and board. It didn't cost his parents any money and he worked his way through college just like most of his friends. I mean, that was a common thing to work your way through college. If your parents couldn't afford to pay and by the way, it wasn't expensive. So if your parents couldn't afford to pay. And by the way, it wasn't expensive. So if your parents were upper middle class, it was no big deal to pay for college.

But if they were lower middle class or upper lower class, all right, the kids got a job. It was no big deal. Why is college so expensive today? Because the government is so heavily involved in subsidizing college and paying for college and making loans for college. But if the government was not involved in any way in college, if there was no government

scholarships, if there were no government guaranteed loans, college would be much cheaper today than it was when my dad went. Because of all of the advances that there's been, I mean, when my dad went to college, they didn't even have photocopy machines. I mean, let alone computers. I mean, they were so inefficient back then. If you take a look at all the tools we have today,

plus a lot more people are going to college now than when my dad went. When my dad went to college, probably 10% of the high school grads went to college. Now it's probably what, 50% or 60% something like that. There's something called economies of scale. If when my dad went to college, the average class had, you know, 50 people and now the average lecture has 500 people, it should be cheaper per person if we're if we're educating a lot more people then the cost per person should be going way down

not up especially when you consider all of the advancements that colleges have today to make them more efficient that did not exist 70 years ago. So if you got government completely out of education, college tuition would implode. It would be so cheap to go. That's something. It's only government. Anything the government gets involved in. You can see it. It becomes extremely expensive. The free market lowers costs and increases quality. The government does the opposite. It reduces quality and increases costs. I have this philosophy or this theory that I have that I've shared on the show before and I don't know how sound it is and I would love to hear you comment on it that. I believe

so strongly in the free market that it'll find its way, even if government still keeps trying to get involved. I think we see an example that in the Silicon market that it'll find its way, still even if government still keeps trying to get involved. And I think we see an example of that in the Silicon Valley right now where we live, where you have Facebook, Apple, Google, and they're building these massive, almost their own economy where they have grocery stores and dentists and doctors and lawyers and movie theaters, all on campus.

And what is the stop a company like Google or Apple that has employees, let's say the average income, I think Google is like $200 something thousand. So they are making $200,000 US dollars right now, but what is the stop them from saying, would you like $200,000 US dollars or would you rather have $10,000 US dollars and will give you $300,000 US dollars or would you rather have 10,000 US dollars and will give you

300,000 Google dollars which you can use to spend anywhere on any of our Campus which supplies basically all the things that you would normally like what is this stop a company from doing something like that? well, I mean obviously any private company could create a superior The any private company could create a superior form of currency to the US dollar. Right. I mean, anybody could do that. I mean, like what if McDonald's came out and said, we're going to have a McDonald's

buck and this buck is good for a one hamburger, no matter what. Right? So at least you know that you can get a hamburger. It's back by a hamburger. They have enough locations that you know, you take your dot you can get a hamburger. It's backed by a hamburger. They have enough locations that you take your, you get a hamburger. And even if you don't eat hamburgers, you can, you know, somebody wants something so you can, you can exchange it, right? You know, because the, what we have now is backed by nothing.

Right, that's why things are sparse. And it would be nice. I mean, airlines can issue currency back by frequent firemiles. I mean, any company that's big enough that you have confidence is not going to go out of business can issue a currency that can circulate as a meat of exchange. And people could decide, you know, what they want to be paid in, right? Merchants could decide, yes, I trust Google Bucks, I trust McDonald Bucks, I trust any of these currencies. And they can circulate.

But the only thing that stops that is the government, because the government doesn't like competition. So the minute you create money, the government comes out, you like you're some kind of terrorist, and there's all sorts of rules and regulations that would basically make it prohibitively expensive for anybody to do that. So it's just like, if somebody decides they want to deliver mail, if a neighborhood kid decides that he wants to get on his bicycle and deliver mail and compete with the post office, the government is going to put him out of business.

They say, legal, you can't compete with the post office. And the same thing is done money. It's illegal. The government doesn't want anybody competing with the Fed Because it would be so easy to compete with the Fed because their product sucks They're product their product does not meet retain its value. I mean, it would be very easy for anybody Any company to say hey, I've got gold and evolved and I'm gonna come up with money That's backed by this gold and then you could just circulate it

I mean that people would trust that and then it would you know, you know, it would maintain its value That's why I don't feel how they could stop how could they stop Apple or Google or Facebook from doing something like that if they make it just that simple where it's you work Well you because you put them in jail for a long time for money laundering because here's what because of the Patriot Act It all started it with 9-11 and a Patriot Act, but you have all these rules on anti-money laundering. So what the government would say is, okay, let's say Google creates money. They're gonna say, how do you know

that some drug dealer isn't using this money. How do you know that some terrorist isn't using this money? That's what they say. But they really don't give a damn about terrorists or money launders. They really care about tax evasion, right? They really think of, hey, what if somebody uses your money

and they don't report the income and we've been sold on some tax review? So what they say is we need you to put into place the procedures so you can track every single transaction that takes place with this money because we want it, we want you to make sure that everybody who's using your money is paying their taxes. Well, how the hell are you going to do that? And then they're going to say if we find that you didn't see a red flag that somebody who's evading their taxes or who may evade taxes is using

your money and you didn't do enough to ferret that out. You're going to jail for 20 years. You know, we're gonna find you five million dollars and put you in jail. Some of the biggest penalties that exist today are for not doing enough to stop money laundry. I mean, it's one of the worst thing, I mean, much worse than armed robbery or rape. I mean, the penalties for just not spying on your customers are really, really high. So, so that's the problem. I feel like there's still loopholes for this.

I feel like if it's not money you create, it's just you provide a service of all these things that it allows you to. As long as you don't allow it to be transferred. See, the minute you allow the value to be transferred, now you've created a medium of exchange, you've created a currency, and now you're subject to the money laundering.

Let's take out transfer and just say that when you now work for our company that you get to go to the movies at least twice a week, you get to go to the grocery store at least once a week, you get to go to the dentist once a year, and like they just put a package together and it's a free quote unquote service and we just pay you less per year. How do they pay those people though? That's the other. Yeah, I mean, they could do that unless the IRS says that you have to include the value of those services as part of your compensation and

pay taxes on it. I mean, because the problem is that the government has can legislate and they got the guns. So they could do whatever they want and they don't. And if you're out competing them, they can shut you down. I have a question for you about, you know, after 2008, you know, unprecedented amount of money pumped into the economy. Lots of people ran to gold because it's a great protection against the de-value of the dollar. Gold's price went through the roof. Everybody expected the dollar to crash, but it didn't, in fact, the dollar's value

actually did better later on, and gold kind of fluctuates depending on if people want. How did that happen? Why didn't the dollar just keep going down at that point? Why did it kind of stay? Because I remember going to Europe and the dollar's value after 2008 was a little while after that. It was actually worth more when compared to the euro, for example.

How come it didn't crash in value? Well, first of all, you have to realize that the price of gold in 2001 was at $7 hours an ounce and so By 2011 it went all the way up to 1900. Yeah, so it had a huge rise and you know it so by then it was entitled to a pullback and the lowest gold got was 150 in December of 2015. So the lowest it got was about four or five times where it started to rise.

So gold had a big move, right? People forget how much gold moved up, leading up to and during the earlier part of the O8 financial crisis. Also, the dollar fell precipitously from 2001 to 2008. In fact, in 2008, the dollar was at an all-time record low against the yen, against the euro, against the Swiss franc. So the dollar was extremely weak, and it was only from that very, very weak position that the dollar rose. And all of the dollars gains, or most of them, took place in 2013.

That was the big year of dollar gain and in the 2014. And the reason for that was that's when Europe started to do QE and they started to do some of the bad things that we did. So that made the dollar look better by comparison. But more importantly importantly the fed was out there talking about how great everything was everybody was agreeing that hey qe worked and fed was saying okay we're gonna shrink our balance sheet back to normal we're gonna normalize interest rates everything is fine and so the market started to look ahead to normal interest rates they started to look ahead to the Fed returning its balance sheet back below a trillion So they were gonna sell all these bonds sell all these mortgages. They were gonna shrink the money supply The dollar was gonna become scarce as all these dollars at the Fed created temporarily

We're gonna be destroyed and so the markets began to factor all that stuff in well None of that was true. I was saying at the time that this is BS, the Fed is never going to do this. It's impossible to do what they're claiming they're going to do. They're going to go back to QE. They're going to go back to zero. I said that the whole time.

Well, obviously, I've been proven right. The Fed is back at zero, QE4. And in fact, I always said the QE4 would be bigger than 1, 2, and 3 combined. And it's, you know, it already is, and it's just getting started. But now, I don't think anybody is going to believe that the Fed is ever going to be able to shrink its balance sheet back to normal, that the Fed is ever going to be able to return interest rates to normal because the more debt we have, the bigger the balance she gets, the harder it is to actually do that.

And if they couldn't shrink a four and a half trillion dollar balance sheet, how on earth are they going to shrink a ten trillion dollar balance sheet? If they couldn't normalize interest rates when the national debt was twenty trillion, how are they going to do it when it's forty trillion, right? It's just, it's even more impossible to do. And so then people are going to realize that the Fed is now trapped itself into a spot where once price inflation gets going, the Fed has no tools to combat it. Because the only way the Fed can fight inflation is by shrinking the money supply and raising

interest rates But that's something they'll never do because if they do that they create a financial crisis where there's no bailouts Where everybody fails and everybody gets wiped out which we know they're not going to do so the cash going to be out of the bag People are going to realize that the dollar is a one-way ticket down That it's only a question of time before it's worthless and and it's going to drop like a stone and there's nobody that's going to buy it It's just you know There's no one's going to drop like a stone. And there's nobody that's going to buy it. It's just, you know, there's no one's going to get fooled into thinking that the Fed can raise rates.

So the dollar just is going to be a bottomless pit. And, you know, the worst thing you can do is be the last one left holding the back. I mean, the first people out are going to be having the best position. So gold, silver, probably good investments. What about assets? What about buying things like property, land and stuff like that?

Do you think that would be smart as a way to kind of protect yourself or hedge against what seems to be at some point inevitable? Yeah, well, that's exactly what I mentioned earlier. That's what I'm helping my clients do at your Pacific Capital is to buy real assets, to buy land through property trust, we own land and Singapore and New Zealand, places like that, commercial property, industrial property, agricultural land. That makes sense, but it doesn't make sense to buy a lot of assets in America. It makes sense to buy assets abroad. And the reason for that is, if I'm correct, America is going to be a much poorer nation in the future than

it is today. And as a result, assets in America are going to have less value relative to assets in wealthier countries, right? It only makes sense, right? Real estate is a function of how much you can sell it for or what you can rent it for, right? Well, rich people can pay higher rent than poor people. So if you own a piece of property surrounded by poor people, you can't rent it out for very much money. But if you have a property where you have a lot of rich people, they'll pay higher rent.

So I want to find the countries that are going to be richer in the future, and I want to buy my real estate there. I don't want to buy my real estate in countries that are going to be poorer in the future, because now my real estate is going to have less value. Now, if it's a particular piece of property, like it's Oceanfront Property in Hawaii, maybe I'm Maui, okay, well, rich people can always buy that, right? It's not, you know, but if you're talking about in the heart land, like somewhere in a suburb of Indiana,

I mean, no, Japanese tycoon wants to buy a vacation house, you know, in a mill and nowhere. So that real estate is only gonna be a function of the real income of the people that are in, you know, community distance of that house. And, you know, commuting distance of that house. And, you know, so, and I think when you have massive inflation and people are spending a lot of their money on food and a lot of their money on energy and stuff like that,

they don't have money left over to pay their rent. So, rents are gonna come down. And when everybody is renting out their basement and renting out their attic, when everybody has two or three roommates and several families are living in the same house because that's the way they can cut their costs. I mean, look, this is going to be a disaster for the U.S. So you don't want to invest in the U.S. now. When you want to invest in the U.S. is after everything crashes, when everything is really a mess. And then if we finally see the error of our ways and have free market reforms and shrink government

and cut government spending and create the foundation for a free market led savings and investment recovery, then you come back and you buy up all these assets real cheap, that's what you do. You don't buy them now. Well, what worries me is that it'll be blamed on capitalism and instead of running towards the more market, what'll end up happening is we'll run towards

stronger central government, which historically, when you see crashes, that tends to happen. You tend to get stronger, more tyrannical central government, which actually brings... Oh yeah, I mean, yeah, yeah, that's exactly what's gonna happen. That's what happened in 2008. to happen you tend to get stronger more tyrannical central government which actually break up i mean yeah that that's exactly what's gonna happen that's what happened in two thousand and eight uh... because i remember you know in two thousand and eight

congress uh... had a commission and the commission was to look into why the financial crisis happened right that was all idea and i tried very on you know much i had a kept writing and i had people call, I wanted to testify at those hearings because I knew exactly why the financial crisis happened because I predicted it for the exact reasons that it happened. I went through the housing bubble and how it was being created and what was going to happen. I mean, I nailed that

crisis. I have not seen anybody explain the crisis better after it happened than my explanations years before it happened. So I was like, okay, I'm the one that predicted the crisis better after it happened than my explanations years before it happened. So, I was like, okay, I'm the one that predicted the crisis and I'm commonly credited as being the guy that forecasted. Can I testify as to why the crisis happened? No, they wouldn't let me there. The only people who were allowed to testify were people who said we had a crisis because we didn't have enough government. We had too much capitalism, we had too much free markets, people who said we had a crisis because we didn't have enough government. We had too much capitalism, we had too much free markets that if only we had more regulations

that it wouldn't have happened. And that of course was the opposite, it's true. Had we had free market regulations, it wouldn't have happened. But because the government interrupted the natural regulations of the market, it created the bubble and created the crisis. And so yes, the government always creates a crisis by interfering with capitalism. And then when the crisis happens, they blame the crisis on capitalism, not on their interference

with it. And the solution is always to do more of what caused the problem, which always makes the next problem worse. So, yes, that is what's going to happen initially. That is what's happening now. It's going to get blamed on capitalism. So things are going to have to get really, really bad before anybody considers blaming government.

So that's what has to happen. The government has to make it so bad, right? That people are starving, that they're lining up for hours for food, right? That there's all sorts of civil unrest. Things have to get really, really bad. And then, you know, there's a revolution against government. But what we have to make sure is that the government doesn't have the means to suppress that revolution.

You know, because we have no more privacy anymore, no more rights, no more freedom, they take away all the guns, because they want to make it so that we're all basically slaves. That's what happens with these communist countries. See, these communist leaders come to power in a communist revolution. They always promise to make everybody's lives better. They promise, oh, if we just get rid of the bosses, get rid of the capitalists, they won't exploit us anymore, we'll all have better lives. And so people believe believe that but it doesn't take long before the communist destroy everything and people are much poorer and then the only people who have money are

the people who are in the communist party right the people who are in government that have all the connections they're the ones that have the money and there's no longer a meritocracy but let me just finish this one so then what happens is the people want to escape the people want to leave communism, and now the government has to make it illegal. They have to lock you up. They have to build walls to keep you from fleeing, because nobody wants to live in a worker's paradise,

because they find out that it's not paradise, it's hell. Right, yeah, I love it. And now, so that leads me to this question. How do you think this whole situation with the coronavirus, with the economic hit that we're already taking right now, and we're in an election year, how do you think this is gonna affect the election?

Do you think it's gonna make it more likely that someone like Donald Trump gets reelected or do you think it's gonna make it more likely for someone like Joe Biden to get elected? I got mixed feelings on it. I mean, I tend to think that it makes it harder for Trump to get reelected because, you know, to the extent that we're in recession

and it's a bear market and people are unemployed when they go to vote, they don't tend to reelect the incumbent. I mean, that's historical. Now, the question is, will Trump be able to convince the voters that everything would have been great and was great except for the coronavirus and therefore it's not his fault? And so he should be reelected because the economy will get back to the great place that it was at before the virus. Now of course, we didn't

have a great economy. We had a bubble, but will the voters know that? I mean, the voters knew we had a weak economy under Obama. That's why they voted for Trump because Trump told the truth to the voters about how lousy the economy was despite government statistics which painted a rosier picture. But now as president, he's touting those same statistics as if they're real now. And they were frauds in the past. When now he's telling the same lie that that were told before and so it's going to make it easier for Joe Biden to say vote for me and I'll make America great again because Trump promised it but didn't deliver it even without the coronavirus people's lives were not really improving under

under Trump all we were doing was running bigger deficits uh... and you know and and we were paying for government with bigger deficits instead of the income tax uh... but so it it depends on you know if trump is able to successfully blame the coronavirus i think originally he was going to run against the fed and claim that the feds defense fault uh... but now i think it's a bigger boogie man and specially now that the fed

is doing everything he wants printing all the money and their their act in it's ironic to win when trump was a candidate he was critical of jennie yelling yeah for keeping interest rates too low and printing too much money and now he was critical of a a pal for uh... not printing enough money and for not keeping interest rates low enough. So he became an advocate of exactly what he criticized. So a complete 180 between candidate Trump and President Trump. But you know, I think that the election

is going to come down to a battle of socialist ideologies, the socialism of the Republicans versus the socialism of the Republicans versus the socialism of the Democrats. And it's going to be an auction on who could promise the most free stuff. And I just think that the Republicans are always at a disadvantage once the election is decided by free stuff, right? Because the Republicans have already, they can't advocate for freedom and capitalism and limited government. bookends of orities that they can advocate for freedom and capitalism and limited

government they've already bought into the myth that prosperity comes from government spending and that there's no cost to money printing and so since they're now fighting this battle on the democrats turf you know i mean they got the home field i just i just think that if if voters have a choice between a democrat and a democrat don't pick the Democrat every time. And so that's Biden, you know, as opposed to Trump. One more question here.

How do you think this, all of this is going to have, what kind of an impact do you think it's going to have on that psychology of people? Let's say things open up tomorrow tomorrow no more shelter in place. You know, people are still a little scared, you know, maybe they don't want to go to the gym, maybe they're scared to go to the store. How long do you think that's going to last? I feel like the fear of what's going on is going to linger far longer than the actual risk itself. Yeah, I mean, first of all, it seems to me now that

government has invested interest in not bringing this thing to an end because the longer they keep us all cooped up, the more they can I mean, first of all, it seems to me now that government has a vested interest in not bringing this thing to an end. Because the longer they keep us all cooped up, the more they can blame the problems on the virus. There's a lot of economic problems that were going to happen anyway. Now all of a sudden, they can blame on the virus. You have all these states that were going to go bankrupt anyway. You have all these municipalities that were teetering on the edge of bankruptcy.

Now they can claim, well, it's not our fault. We need all this bailout money because it's the virus. So a lot of governments, this is like a get out of jail free card for all of their past sins. You know, they just, oh, it's like, you can't blame us for this. So in a way, there's a, there's a vested interest to keep everything the way it is, you know, to, to maintain the scapegoat. But I do think even if like all of a sudden like we cured the coronavirus

like we got a vaccine, we got a cure and people went back to work. A lot of people aren't going to have jobs to go back to even if they want to because a lot of people aren't going to want to go back to work because they make more money not working. But see a lot of these companies were only kept afloat by debt. We had a credit bubble before the coronavirus pricked it. Now that that bubble has been pricked, you can't reflate it. So a lot of these companies that were being kept afloat by cheap money are going to fail during this situation.

They're not going to be there. The jobs are not going to be there. So even if we recover from the coronavirus, all we're going to be there. The jobs are not going to be there. So even if we recover from the coronavirus, all we're going to recover back into is a recession that we would have had anyway. We're not going to suddenly have this great economy because there's nothing to go back to. People keep thinking that, well, we had a great economy before the crisis, and so we'll just go back to it after. No, we had a bubble economy before the crisis. And since the bubble popped, we can't go back to a bubble that doesn't exist anymore. So it's going to be different.

And yes, I do think fewer people are going to eat in restaurants. So we need fewer restaurants. A lot of restaurants have to go out of business. Fewer people are going to go to the movies. So movie theaters have to shut down. I mean, I think people are going to be changing their changing their behavior both because of economic circumstances because they don't have the money i think i afford to eat out as much they can't afford to go to the movies as much uh... you know especially when you could just you know

eat home and watch netflix so you know uh... you don't have to spend all that money and so i think the economy is gonna have to restructure based on that reality. And of course, the government is going to make it harder to do that with all the regulations and taxes that will slow down that process. But no, there is no going back to Oz at this point. I mean, that's gone. And to that point, though, Peter, a lot of people are comparing this to the coronavirus and what's happening right now, more like what happened to us in 9-11 than like what happened in the housing crisis. So what happened with that was we did see a huge crash initially, but it rebounded in

like 56 days. Now what's to stop the government from just infusing money like crazy and re-inflating another bubble and we see a crash, but then we're right back in two to three months. Well, okay, you have to look at the proportion to what happened. So they were able to inflate a housing bubble very quickly after the stock market bubble popped. And in fact, the housing bubble didn't just begin to inflate when the stock market bubble popped. If you really look at the origin of the housing bubble, prices just begin to inflate when the stock market bubble popped. If you really

look at the origin of the housing bubble, prices really started to move up in about 1997. And so that bubble had, you know, was forming in 2000. And so what the government did by slashing rates to 1% was just add fuel to a bubble that had already started and And it was particularly powerful fuel because you know, it was already in motion and so That bubble was much bigger than the stock market bubble and so the economy was able to go from bubble to bubble Right, and it was like okay. This one is better More people were getting rich in real estate than they were in stocks. And the big difference between real state wealth and stock market wealth is you know, most people weren't borrowing money against their stocks to go

out and take vacations and buy cars and remodel their houses. But it was very common for people who owned homes to immediately extract any new equity in the form of a cash out refi or a home equity loan. So gains in real estate immediately translated into more economic activity, more spending. Plus, most people when they bought stocks, they paid for the stocks in full. People were buying houses with minimal down payments or no down payments at all. So the return on housing was so much bigger because if the stock market went up 20% and you put $10,000 into the stock market and it went up 20%. You made $2,000. But if real estate went up 20% and you bought a house for $500,000 and it went up 20%, you made $100,000,

and you put nothing down. You got a $100,000 for nothing. And then you just refinanced it or took out a loan and started buying all kinds of stuff. So that bubble was powerful enough that it created a phony recovery. Now, with that bubble popped in 2008, since it was a much bigger bubble than the stock market bubble,

the resulting financial crisis was much worse. I was warning about that for years because I knew that the problem with the real estate bubble was not the people who bought houses, but the people that loaned them the money. I knew that they weren't going to get their money back. So I knew a drop in the housing market would produce a financial crisis, which is what happened. But when that happened, instead of learning from their mistakes and allowing a free market recovery, we then inflated an even bigger bubble in housing, in stocks, in bonds. We, there are people that call

it the everything bubble, corporate buybacks, student loans. I mean, the government flooded the market with credit much more than it did between 2001 and 2008 one in two thousand and eight right of course all greenspended was take interest rates to one percent and they only stayed there for about a year and a half and they did no quantitative easing so that was you know nothing compared to you know the stuff that went on after oh eight which is nothing compared to what's gone on now so the reason it's not going to work again is because the bubble that just popped is so enormous, right? And the economic damage that was done as it was inflating is so huge that there is no way to replace that bubble with a bigger one.

It's just impossible. Just if they try to do it, they end up destroying the dollar. We end up, you know, we overdose on stimulus. We die. Like, if you build up a drug habit that is so big, if every time you need to restart the habit, you need more and more drugs, eventually you can take, you know, you need so many drugs that you can't even survive, the dose that's required to get high. So that is the problem. You know, we're not in a situation today where

those tools are available. I've been saying for a long time that fed us out of bubbles. There's no more bubble blowing. There's no more rabbits in the hat. This is it. We're now going to have to deal with the consequences of the 2001 bubble, the .com bubble, of the housing bubble and of this bubble. Because every time a bubble popped, we kicked a can down the road by making a bigger bubble. And then when that bubble popped and now we have a bigger can, we kicked that one. So now we have all these unresolved problems from going back decades, that the market was never able to resolve and restructure from, because we didn't want to deal with the pain, we kept delaying it to a later date. Well,

we finally caught up to the can. This is it. No more kicking. We're gonna have to deal with it And it's gonna be horrific But at least on an individual level as I said if you want to come through this thing Solvent financially if you actually want to increase your wealth as other people are getting wiped out You can do that as long as you make the right investments. That's what I've been doing personally And that's what I'm trying to help as many Americans do through my broker dealer, your specific capital. Thank you very, very much. Very, very, I think it was a great podcast for people to kind of learn a little bit about

what's going on and I appreciate you giving people options because it is scary to hear a lot of the stuff that you're saying and it would be really scary if we were left without any options. Yeah, and you know, people can listen to my podcast, the Peter Shiff Show, it's at shiffradio.com, on YouTube, on my YouTube channel, a Shiff Report. I'm putting out a lot of content. I've been saying that, you know,

the only thing spreading faster than the coronavirus in America is ignorance, economic ignorance. And, you know, so I've got the anecdote for that. I've got the vaccine for that. And that's my podcast. I'm talking the truth. You're not getting the truth from your conventional sources of information.

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