Peak Prosperity - Psychology of Bubbles, Power of Narratives

Episode Date: December 13, 2024

Markets are in a “super bubble” due to AI, central bank policies, and psychological factors, risking economic downturns. Investors should diversify, reduce debt, and build financial resilience.

Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. And it's possible maybe this goes for another three to five years. The longer this goes, the worse the damage is going to be on the other side. But that's just an indication to me that on individuals' behavior, they're believing that this is a new paradigm, that the rules of the past don't apply. The following is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content.

The markets look like they're in incredible bubbles. What do we mean by bubbles? And if a bubble's going to burst, is it going to be an inflationary burst or a deflationary burst? We're going to talk about that. It's a really important topic as we come in towards the end of the year of 2024. Paul Kiker, so good to see you again of Kiker Wealth Management. Man, I'm ready for this topic. I am too. Good to see you again, Chris. All right, so we've made the case over a few episodes, but let's rebuild it for people here. This idea that we're in a bubble. A bubble, how do you define a bubble? What's a bubble, Paul? That's a good question. I've never been asked to actually define the bubble. A bubble, how do you define a bubble? What's a bubble, Paul? You know, that's a good question. I've never been asked to actually define the bubble.

I would define a bubble as overvaluation that leads to euphoria and delusion, really. And I'll show a good chart here that does a good job representing actually what that would be psychologically. But I believe it's a psychological diversion, if I'm forced to come up with a definition, psychological diversion from reality and long-term fundamentals. Because what we get into in the bubble, and I need to give credit on this Twitter post here is finance a lot, but the main stages of a bubble, the stealth phase, smart money moves in. We've talked about this a couple of times, moves into the awareness phase. You get a little bit of volatility. They call that a bear trap. So what a bear trap is, is when you get some volatility in the market and investors sell because they're remembering kind of the collapse that occurred before. So an example of that phase would be

kind of 2013-14. After we come out of 2008, you start to see some slowing in the economic data. Now, granted, the government came in with quantitative easing. What was that number two or were we in Operation Twist at the point? Whatever it was they were printing at that time pushes a lot of people out of the markets, and then it takes off again. Then you start to get in that mania phase. So we've been through the enthusiasm. I believe we're through the greed. I think we're moving from the delusion phase into the argument that this is the new paradigm.

So just like anything in our lives, I think what a bubble is, is we justify the price action. We justify that this is different this time, because as humans, our weakness is to look in the most recent five, three to five years, and then project that into the future. So I believe it's a psychological thing to where people throw proven fundamentals out the window and convince themselves that this time is different. And I'm starting to see around the edges a lot of quotes that this time is different. So you're talking, again, that 1929 quote famously by Irving Fisher. He said, we've reached a permanently high plateau of prosperity. Correct.

Right. I think he wrote that much to his enduring, like he'll be remembered for nothing else except that. Might've been a great guy. Might've had a lot of good ideas. But he said that, sort of the Paul Krugman of his day, I guess. Who, who, Paul, Paul gets no, no love from this quarter. Not from me at all either. All right.

But that's the sentiment, right? 1929, you're at the terminal stage of a big blow-off. It went through all of those phases you just showed us there, right? You get this, you know, top-end economist saying, we've reached a permanently high plateau of prosperity. You think we're hearing that again? I do. I really do. And think about that. Put yourself in that time. And just what we saw during COVID with the mask mandates, and people are waking up now like, what were we thinking

with the things that we allowed ourselves to be sucked into, right? And then there's still those few that are holding on to it. But imagine the psychological sentiment. How many people were gambling? How many people were in that delusional phase when he came out and made that statement? I would assume because of human nature and what I've seen in the investing cycles over the past 26 years, there was a sigh of relief that yes, okay, I know that this doesn't fit the historical textbooks. I know people like Benjamin Graham told us to stay away from situations like this. We know that smart people throughout history got caught up in the tulip bubble, but you know, technology's here. This is the new paradigm. So I believe that that was probably a relief for a lot of investors back then. But, you know, here's one thing that's very

interesting. So UBS comes out in one of their research reports recently, and they point out, quote, the current, talking about technology plus stocks, because they're garnering basically all, you know, what, 35 to 40% of the S&P 500 right now. So their statement is, quote, the current premium is less about the potential of AI, okay? So rather it is a response to superior fundamentals, namely rapid sales growth, and here we come, a sustainably high and sustainably high EBIT margins. And EBIT margins are earnings before interest and taxes. So there's a quote that's coming around the edges

that basically is justifying that these technology companies are in sustainably high earnings. But as I read that, all I could think of was the interview with Joe Rogan and Marc Andreessen, where you've got a government that in the backdrop has been basically protecting through monopolistic powers these top companies. So if they're protected as a monopoly, maybe they've got sustainably high margins. Okay, maybe they do. But the reality is if the Trump administration comes in, we bring back free markets, or there's a forcing of bringing back free markets at some point in the future, then technology

can change quickly and innovation comes in. If those monopoly positions are dislodged, then it's not sustainably high. So that's my biggest concern. We're seeing that around the edges right now, and it doesn't seem to concern very many people. You know, we're at the tail end of, I think we're in a super bubble. Okay. And it's kind of global. It's across all the Western central banks. And they've gotten us into this massive debt bubble. Right. And now they're kind of locked into it. So they have to keep it going. I don't think anybody has a plan. This AI stuff, as much as I see it, it represents

to me now, Paul, this idea that it's the bargaining phase of this journey where people like, oh, oh, oh. AI will bail us out. Right. And it's kind of vague. Remember eyeballs, pets dot com. You know, they're not making land anymore. This isn't this bubble ain't my first rodeo. Right. So so I know what I know when I see it, because it, and I've had lots of conversations just this week with people who are very deep into the whole AI side. And listen, there's some things it's going to do that's amazing. But what I can't find is the business case for it. There's trillions of dollars of spending and market cap throwing at this.

And the question I have is very simple. It's like, well, what are eyeballs worth? Wait a minute. You know, are houses worth more than they should be? What's the business case? Because at the end, here's the definition of a bubble I finally came across when I was researching the crash course back in 2008, the one I like best. A bubble exists when asset prices rise beyond what incomes can sustain. That's a perfect fundamental answer, Chris. I like that. And then under that, when you ask the question, well, what has to happen for a bubble to occur? The simplest answer again, and this came from, I think from Hayek, he said,

oh, that's easy. Bubbles require two things. It requires ample credit because you're not going to do it out of cash flow. So somebody's got to be loaning money into this enterprise. So ample credit and a good story. We have a good story. We have both right now, actually. Well, I have that story, right? I have that story. As I look into these markets, you and I have talked about the story. The story is, hey, the Fed's going to bail this out. They'll print. The story I have, it may or may not be true.

But AI has a story. AI has a story. And that Fed story is a story that matters in the markets because it's absolutely terrifying for any of us that are running a risk-managed portfolio. When you start to see the markets roll over, they start to move. You raise cash to prepare for the inevitable outcome. And then all of a sudden, out of left field, the Fed comes in, and here's, you know, funny money for everybody. And then you have to immediately kind of retake that position and say, okay, they kicked the can down the road a little bit longer, potentially.

But as they do that, obviously, you know, the pressures get worse and worse. And so at this stage, it's pretty clear that let's just take one example. I think everybody's familiar with this now, that the government, U.S. government now has thirty six trillion dollars of debt. And that's been enabled because the Fed just keeps printing and throwing money out there and reliquifying the capital markets, which is just a one-step-removed, fancy-pants way of saying that, you know, if anybody needs cash, the Fed just prints it, makes sure it's available, right, one way or the other.

And they do that by all kinds of complicated ways. Sometimes they expand their balance sheet. That's straight up printing. We're all familiar with that. But sometimes they remove the reserve requirements for banks so they have more cash to use because they have to hold less in reserve. And for anybody who doesn't know, we used to have, we say we have a fractional reserve banking system. That has not been true since March 26, 2020, when the Federal Reserve dropped the reserve requirement to zero. Remember that? In the depths of COVID, they just came out with this little announcement. It was on their webpage one day. They're like, oh, henceforth, reserve requirements will be zero. So

banks now have to hold zero, which's there's no tether between how much they want to how many how big of a loan they want to make and what they're holding so banks just now can literally with that requirement they had a complete license to just print as much money as they want as long as it goes on to their you know liability asset side so they print money up it's a lot you know that's the liability side but the asset side is what do they buy with that well i mean if you were paying uh your your depositors 0.1 but you could buy treasuries at two percent you did that all day long yes and then we had the the silicon valley bank and Signature Bank blowups in

2022, right? Because that went upside down on them when the Federal Reserve raised interest rates. And here we are. So, Paul, they've just been printing, printing, printing, printing, printing. It's given us some crazy stuff, including this, again, from the Kobiasi letter. Kobiasi Kobe, Kobe, Kobe, Kobe, Kobe, Kobe, Kobe, I don't know how to pronounce it. I'll have to call them up someday and find out. Wrote here recently, just this week, the euphorometer talk about what that means in a minute, an indicator of measuring investor sentiment hit a record 1.1 points according to top down charts, which is where it came from. This bullish metric uses S&P 500 forward PE, so guessing what analysts think the forward PE is, the volatility index, or VIX,

and the bullish sentiment from investor surveys. And the indicator has now exceeded the previous record posted during the 2000 dot-com bubble, And it's gone from depressed levels to euphoria in just two years. This is the most explosive turnaround. Here it is against the S&P 500 in black here. That's the 2000 market top right there. Here we have our 2007 market top, 2008. And this was the panic. And this has been the fed just reliquifying the whole way that's all the fedness how to do so of course people have responded and it's this last little bit from that come down into 2022 up here into 2024 that's caused this explosion right here so what do you make of that?

So here's all I can think as you're talking everybody through that chart there. First, we have a thought that this is a new paradigm. And I've always thought about this. You know, go back to what Christ teaches us. You know, it's not necessarily your actions. It's the thought that ultimately leads to the actions. So first, we see the new paradigm in people's actions. It's the thought that ultimately leads to the actions. So first we see the new paradigm in people's actions. So if we go back to that banking situation, you know, the government's like, okay, let's go to 0% reserves because whispering in the back of their mind, this is a new paradigm. The banks, you know, the Fed can bail out the banks. We're okay. So now you get

into investor action. You get this 2022 pullback that starts getting real scary. All of a sudden, there's a little bit of liquidity in the system. And then now everybody behaves on this new paradigm with that euphoria that blows through the delusion, right? So I think all that is is actions that are now leading to statements that are the new paradigm. Because it's a thought in the back of your mind, you act based on that. And then when you get rewarded for it, now you start saying it out loud because it's like, holy cow, can you believe what happened? We're in this new paradigm now, so I have to change my, you know, we have to throw out all the old rules. And I

believe that that's a sentiment where I'm seeing across the board right now, whether it's demoralization of individuals that have tried without a strategy to wait this out until the market came down, right? And then it never did. And it just keeps lasting longer than anybody can imagine. So I think it was Jesse Livermore, which was a legendary trader, said the market can stay irrational longer than you can, say, solve it. And going back to basically if you short the market and the market continues irrational, it'll wipe you out regardless of fundamentals because that behavior takes over. And I'm seeing ridiculous bullishness

and ridiculous complacency kind of across the board in the investment world, there is a recognition that we're in a bubble. But the argument is this is going to be like the late 1990s bubble, and we have more time, right? We have more time. And it's possible, maybe this goes for another three to five years. The longer this goes, the worse the damage is going to be on the other side. But that's just an indication to me that on individuals' behavior, they're believing that this is a new paradigm, that the rules of the past don't apply. Yeah. Well, let me point out one other thing from this chart, which is that it used to be, excuse me, back in the day, I think this was back in 2000, these were humans actually trading back then. Today, it's computers trading, okay?

Mostly, just from a volume standpoint, but also from a speed standpoint and also from an emotional standpoint. Silica algorithms are not humans with standard greed and fear circuitry. But see this big old top up here? This took time, right? It was 1998, 1999. It was 2000. Big old sort of a rounding process. And then even this is kind of slow, and it's a fall.

And then you get to this bottom. There's a couple bumps there. Something changed around 2008 where computers really started to take over. And you see that bottom? I remember that bottom. That bottom lasted hours, right? Everything was falling and then it wasn't. And I was like, huh. And I should have wised up at that point. I should have said, oh, new sheriff in town, something different. But I'm convinced, Paul, that the

powers that be, the whomevers, when they decide they get a little freaked out and they want to just dump money in and get this thing to change course, they can do it instantly now. And so you see, that's very sharp. That's a needle. I call them needle bottoms now. Bottoms used to be W's to me or U's. They had a shape. Now the shape is a needle. It's like it's plummeting and then it's not, right? You know, and so here you see a big, long topping process that happened here. But again, it just needle bottomed out and came up and that's a needle. And so I'm convinced that the Federal Reserve at all and Wall Street collectively, I don't think they have a plan, Paul. I think their plan is make stuff go up into the right and hope something like AI comes along and bails it like there's some new economic engine. Right. Yeah. Yeah. You know, the Internet story. Okay. The internet to truly transformative, right? I get that

housing wasn't transformative, right? Like it just didn't make sense. Like how is a house worth more than it costs to build? You know, it's not, um, you know, we had this whole fantasy. The story was, Oh, your house is an asset. Look at all these assets people have. You heard Greenspan and then Bernanke come out and say, oh, people are tapping the at the equity in their houses. Right. With the HELOCs and all that. You know, they're unlocking the equity in pocket, liabilities take cash out of your pocket. So that was just speculative fervor there on asset prices. But now what's our story? What is that new giant economic engine of growth? And people are saying it's AI. Correct. I'm stuck again. And maybe I'm just, I don't get it. And I need to be 23 to understand this stuff these days, because new paradigms are hard to get your head around. But Paul, here I don't get it. And, you know, I need to be 23 to understand this stuff these days because, you know, new

paradigms are hard to get your head around. But Paul, here's how I see it. I'm a big company. I'm IBM. I suddenly get AI. AI can suddenly, you know, means I don't need this entire department of people because I don't need them anymore. And so now I have a more profitable business.

But I just had to fire half my staff. Correct. They are no longer earning big salaries, part of the economy. So unless AI means machines selling goods and services to other machines, I don't, I don't, it's a two-faced coin. I get it. Yes, it's going to be good for corporate profits, but it's going to be terrible for wages and earnings. And therefore, it's pretty much of a wash. Let me see if I can find that data here. I will say this. So non-AI startups or unicorns, as they call them, okay?

This is going to be close, guys. It's not going to be exact, so don't hold me to the exact numbers, but it's approximately 420 employees that a, that a unicorn startup has that's non AI, AI unicorn startups are around 200 employees. So that's 50% cut in the workforce. So if the, you know, let's say we get the Department of Government Efficiency in there, and you don't have an administration that's just willy-nilly hiring employees to keep unemployment looking good. If the government's not going to absorb these employees, where are they going to go? And then that's less people purchasing more goods. So, this is one of those things where technology is inherently deflationary. So the expansion of AI, and if it is adopted, let's say it eliminates 30% of the workforce, that helps profitability dramatically. But if you have an over-leveraged society,

you have a recklessly spending government that's reached a point that they can't, that it's unsustainable from a long-term standpoint, when we have to reset that system, we're going to come, we're going to exit this new paradigm, go blow through the other side of the delusional phase and back to reality. And unless the government's able to come in and just print us into oblivion, that tends to be deflationary. It should be deflationary, at a minimum deflationary back to long-term sustainable fundamentals, because where are people going to be employed? That's a good question. And by the way, when we look at credit cards here, over a trillion dollars, you know, so again this is the in that entire euphoria phase you know where people are suddenly it maps doesn't it paul remember we saw that euphoria

really take off in 2020 we see that that that 20 2022 you see that big bolt in in the euphoria meter it's so people are i mean dude we're like we're like, this is it. This is the roaring twenties. You can feel it, right? Pile it out. Like, dude, anything goes, nothing matters, right? YOLO, right? Just put it on the card, buy the stocks. I mean, it's just, it's incredible what's going on right now.

And somehow we're going to have this thing where you have all these people getting really over leverage. And by the way, an Escalade, I think, was 50,000, 60,000 just like 10 years ago. I think they're 130,000 now minimum. I know it's a nice car. It's Cadillac, all that. But people are like, I could show you an equivalent for auto loans, right? We have student loans. So household debt, we're just stretched to the max, and then we're just going to, what, fire 30% of these people because AI is coming along?

Right. I don't know if anybody's thought this all the way through yet, but so AI, deflationary is what you're saying. Yeah, AI is inherently deflationary. So I have actually found just a personal story. So I've been looking how to use AI within my business, right? So a lot of things it's done is a supercharged internet search. It makes things a little bit more efficient there. So there is a little bit more efficiency in finding information. But again, going back to the trading algorithms, I'm just going to table this

and plant a seed. We can see the biases depending upon who put those artificial intelligence together. Because there's programming involved, we can't not, we can't, our biases are subconscious in so many areas. So I've looked at sufficiency. So now there's this new artificial intelligence program that's come out kind of not only for the financial advisor industry, but you have an app that you can plug it in for a phone call. Now, we have not implemented this. I would tell anybody that I've talked to if we have it put in there, but I have a friend that's been using it. And it immediately summarizes, take notes of the whole conversation, and then comes up with bullet points, to-dos, all of that.

He was just absolutely amazed. He's like, Paul, literally when I get off the phone call with my clients, within two minutes, it has a summary of our phone call, the action items, and I can put an email together and send it out to clients on what to do. Normally, it takes 45 minutes to an hour to really go through, talk to your team. So that shaves, that's a lot of extra capacity that comes in for communicating with individuals. That's going to be ridiculous for my productivity if this is something that we actually implement. But it's not life-changing. I mean, it helps me to be more efficient so you can squeeze some more contacts in your day. And it probably also eliminates adding another employee

at some point in the future because I'm more efficient in what I'm using and not adding more employees is deflationary from a long-term standpoint because that business can grow without adding those employees. So what's going to happen is the people that are adopting this, the rich are just going to continue to get richer. And the more imbalanced that economy becomes, you know, the more demoralized we're going to have with the underlying society. And it's completely unsustainable from a long term standpoint. And those of us that are using that, you know, and have made good decisions in the past start to rely on that wealth and believe that that wealth is going to protect us. And then debt doesn't matter because

I can cover it. And all I can think of too is these long cycles we go through, Chris. A lot of the baby boomers look at their parents who came through the Great Depression who refused to take on any debt whatsoever. Debt was a bad thing because there was no fear of debt in the roaring 20s. And then it just absolutely upended the lives of a whole generation. But now you've got this other generation that's looking in the rear view mirror that's going, well, I wish I hadn't listened to my parents and I wish I'd have borrowed more money and I wish I'd levered up a little bit more. And those wishes have turned into actions, and all of the government fuel has just fueled this bubble. And this is not going to end any different than what it did before. When this thing cracks, those who believe that their

wealth is going to protect them from foolish behavior and human weaknesses are going to be the most let down on the other end of the cycle. I mean, this is a big, giant conversation because I use AI as well. It's astonishing how much time it saves me on certain research things. I'll show you an example of that in just a minute, because I think there's something important here. So it gives me quicker insights, which is fine. And that's what I do with my tribe is I go out and I find insights as quickly as I can and see if we can turn that into actionable intelligence, right? But let's back up a second. You know, I think we have to have a foundational conversation, which is, well, what is money, right, to start with, right? Because here we are, we're talking about money and how to grow money, and we interchangeably use that term with wealth. And I think actually those are separate

terms, because money is a claim on wealth, right? Real wealth, as you know, is your health, it's your friends, it's the house you have, it's the land, it's the productive enterprise, it's how good your employees are and how well they fit into your enterprise. That's real wealth. And currency is this stuff we use to sort of like trade across and among those things, right? There always has to be a balance between the amount of that currency and the stuff being produced. That's what the Fed was supposed to do. Milton Friedman famously said back in the day, he's like, you could run the Fed with a laptop computer, right? It just, it's not a big deal. You just want to make sure you have enough currency floating around so that all the things people are doing have sufficient lubrication. The problem has been,

is that we have this system that allows certain groups of people, the capitalists, the so-called billionaires, to start accumulating more than their fair share of this pie, right? And now we have all these billionaires doing things like Bill Gates and throwing their weight around and, you know, doing stuff that maybe a lot of us wouldn't agree with necessarily or entirely in that particular example. So somebody tweeted the other day and they said, hey, how about we say that the most you can actually accumulate is nine hundred ninety nine million. And then you get a plaque that says you won capitalism and we name a dog park after you. Right. I like that. That's good. But we're at this point where if you understand that exponential accumulation function, so let's say I'm Bill Gates. Let's say

I have I'll just make a number up. I have one hundred billion dollars to my name and I can only possibly spend a billion dollars. I mean, I'm just, and this is, I mean, I'm, I'm throwing what, $3 million a day out the door, just living. Right. Um, and, uh, but I take my a hundred billion and I park it in something that's accumulating 5%. Well, I'm getting 5 billion coming in.

I can only spend one. What do I do with the other four? Well, I put that on my pile for next year. Now I have a100,000. And it just goes off very quickly. And we're at that stage where all the currency units are being vacuumed towards a very small group of people. And that, of course, leads to Plutarch saying, which is the oldest and most fatal ailment of all republics is a gap between the rich and the poor. We just saw this UnitedHealthcare CEO get gunned down. And, Paul, I got to tell you, the amount of schadenfreude, the amount of people saying, I'm not at all upset by that.

It was astonishing. I think it exposed something here, which is already we're feeling that social tension of that gap. And I think AI is going to take that gap and put it on steroids. Right? I do too. Because what your story tells me, you don't need an executive assistant anymore. Right? That's a job gone.

That's right. You know, instead of after it's over, picking up the phone and calling a dictation service or using a program and then having the assistant that goes through and summarizes it, posts out all the to-dos and all that stuff, that's one less person gone. That's just on that component. Well, if I was at another 40% capacity to my week, for example, just by being more efficient in that, well, now you can take on 40% more relationships and that's one less advisor that you need. So that's actually two employees instead of one that it can eliminate in that situation and it increases profitability. But here's the sad part about it, Chris. Now, all of a sudden, the pace of our life moves faster because those that are implementing this are

starting to separate from the other individuals. So now you've got to implement this and it's just, it's that treadmill just gets faster and faster and faster. So the technology hasn't been used necessarily to make our quality of life better. It's all about this treadmill of just trying to maximize profitability, maximize profitability maximize profitability some you know some individuals are doing it because they're trying to to maintain their standard of living due to the loss of purchasing power through inflation and others are implementing it just out of pure greed right just pure greed you know all of us have to determine at what point have you accumulated enough? Right. At what point? At what point have you reached escape velocity?

You know, and some people, it's what they call the FU money. Right. They get to the point that they can just speak honestly about everything across the board. They try to take that time and those resources to change the direction of our society. To an extent, I think we saw Elon Musk do that with the purchase of Twitter, X, which is now X. So, you know, I didn't create this to live with a treadmill that just continually ramps up to try to make ends meet and maintain our standard of living. Hello, everyone.

I'm Chris Martinson of Peak Prosperity, and I want to tell you about something. So you've probably heard about the Great Reset. You know things are highly uncertain right now. There are things happening in the markets that just don't make a lot of sense, and there's an unfortunate conclusion lurking under all of that, which is that there are some people out there, I call them the raccoons of Wall Street, who have found ways legally, air quotes legally, to take your money, your wealth, your stocks, your bonds, maybe even your house from you.

This falls under the idea of something called the great taking. And it's a fairly complicated topic, but this is what I do, and I do exceedingly well. I will find ways to understand this and communicate it to you, and I'll find the other experts out there who are just the best at figuring out what you can do and how you can understand this thing. Now, I hope that nothing comes of this great taking idea. I hope that the trigger is never pulled, but it might. So to help you get there, we have the great taking webinar, a variety of experts, and we have seven strategies that we will outline and also are contained in this workbook that comes along with the great taking. It's there anytime you want. Once you have secured your access to the great taking webinar, you'll be able to download it, look at it, and view it anytime you want.

And you should actually do this with people you love, other people you care about, and anybody else you think who might need to know this information. So with that, please consider taking advantage of this amazing offer to get educated and then take action to protect your wealth. Because the Great Taking, it's a very real thing obviously they wouldn't have spent so much time finagling the law and putting in this trigger if they didn't mean to pull it one day let's hope that they don't but if they do i want you to be on the right side of the line so that you're not on the great taking side of the line. Now, back to our program.

A lot of people could probably say a statement that's like this. If inflation was zero, I have enough to retire on. If inflation is at 4%, that's my asymptote. That's my, I don't know, it's getting tight. If inflation is 5% or more, I'm hosed, right? So I have to keep working. So it's that uncertainty because we don't know what inflation is going to be. We just know the Fed has said, well, 2% is the floor. We have a minimum threshold of inflation.

They've been making those bubble noises about, well, maybe it should be 3% or 4%, right? Because it was 3% or 4%. So it's just self-serving claptrap. But this is the driver of a lot of it for me. This is federal government current expenditures, interest payments, interest, just paying interest. This is highly inflationary because that's cash out the door. So when the government is spending $1.1 trillion per year on interest payments, Paul, those go to the people who hold the government debt. That's $1.1 trillion of cash going out from the government door into whoever's holding all of that debt, right? And that's a combination of foreigners and domestic, but blah, blah, blah. It's mostly wealthy individuals or entities holding all that.

That would be the Yale endowment. That would be the Pritzker family. That would be, you know, big banks, money center banks, you know, et cetera. But that's,

that's highly inflationary because that cash has to get, it has to come from somewhere. And it's not coming from income tax receipts which would be the the the d the the non-inflation if the government had to live within its means this would actually be a deflationary chart because the government would have to be pulling that from income tax receipts it would sort of be a wash in essence so they'd be pulling down demand because they're taking so much cash from people to give it to these people and etc but pulling down demand because they're taking so much cash from people to give it to these people and etc but they don't obviously they're running you know massive two

trillion dollar a year deficits which means this is inflationary right here so when we get back to our original hypothesis for this thing are we going to play so i'm kind of i'm positioning myself personally full disclosure towards what i consider to be the old playbook, Paul, which might be wrong. But that is there's some sort of a scary decline in the markets that gives the Fed the cover they need to do more of this stuff we're talking about, which is to open the floodgates again. That's the deflation first, then inflation. Ka-boom, as Eric Jensen of iToolip called it back in the day, or do you think we just go straight to the inflationary phase? They just skip that little kabuki theater first step and just say, ah, print. Where do you think we go here?

It's possible that we move into the inflationary phase. I haven't ruled that out, and that's one thing that's in our playbook that I keep telling myself. Now, I'm 80 percent on the side that we're going to have that deflationary decline. And I still think that they need to generate enough pain because one thing that we can see is the American people spoke. I mean, you know, nobody in the media said that they thought Trump would get the popular vote across the board. OK. And I think that's a response to the inflationary pressures that people have felt for the past three to four years. So we've had political voting in a direction that that. The media certainly didn't expect to happen, and even those of us who knew we needed to change didn't think that it was that prevalent across the board necessarily. I thought it was,

but I didn't think it would necessarily be that strong of a statement. So I don't believe that they wanted to go straight into the inflationary side, because now you're going to have people that are going to know exactly what they're doing, and it's going to be clear as day, and the pain's going to, that pressure of life is just going to continue to crank down, and they're going to fall behind. And I believe that that would lead to a revolt quicker than if we had an economic cycle, they allowed a little bit of one return, the market drops 50%. Deflation occurs in the interim period, and maybe it goes down 50 or 60. And the large majority of the population loses their job, right? Let's say you go to 10%, 15, or 20% unemployment,

which would be great depression levels. Well, all of a sudden now, it's like, I would rather have that inflationary pressure than no money coming in to pay my bills. So that's the reason, I think, just psychologically, that we're still going to enter that big downturn in the markets. However, and I believe that we're going to have that inflationary crack on the other side, Chris, but I have changed my thesis a little bit over the past couple of years. Because I think for American investors, because when you look at what has happened in the US markets, and bear with me, I want to pull up these charts to reflect it, and it'll take me just a second here. I want to go to interest rates.

Okay. So what I want to show is the U.S. has garnered all of the assets relative to the rest of the world for the past, and I know I've shown this chart before, but for the past 16 years. So let's share this. There we go. So what I'm showing here is the major market indexes, S&P 500, the Goldman Sachs Commodity Index, the Morgan Stanley IFA Index, and emerging markets. So

developed markets, commodities in blue, emerging markets in green. If we go back to January 1st, 2008, emerging markets is still 11% below what they were 16 years ago. Wow. Developed markets, Europe, Canada, the developed market index is 3.7% above what it was 16 years ago. Commodities in general in that index are 11.6% below what they were 16 years ago. U.S. equities up 311%. So, you know, that's a dramatic outperformance that has been fueled by behavior, right? So investors are just chasing what is working, and that's another thing that adds fuel to this. So my concern is if we have that crack

and if we have that inflationary boom on the other side, that more than likely means dollar strength and it's dramatically in the short run. Brent from, I can't think of his last name right now, from Santiago, dollar milkshake theory, right? The dollar strengthens in the short run. The government prints, the dollar in one report I read the other day is down to 50% of global trade now. The BRICS naturally gravitate towards stronger currency behavior. You have a currency that collapses in the U.S., and now all of a sudden, you have funds that are

fleeing the U.S. into the rest of the world. So my concern is that for U.S. investors that think that playbook's going to be the same as what it was before, that we're going to end up in a situation for U.S. investors that's going to be very similar to what the Japanese investors experienced after their bubble burst in the late 1980s. Because after all, Japan has set the standard for printing and printing and printing and artificially holding interest rates low. So what happens, Chris, if this is what occurs to American investors? Do you know anybody who has any plausible theory that the U.S. equity markets could be down for the next 34 years? No, 34 years. That takes us out to 2050. I think the world's kind of like,

I don't know what it looks like in 2050, but it's, whew, nobody has that amount of time. And by the way, that whole sustained rise there in Japan on the right side of that chart, right? That's with them taking debt per capita and absolutely smashing it through the roof because they have a declining and aging population. And they've just been printing and printing and printing, and that is 100% manufactured up into the right behavior by the Bank of Japan, who have ruined the economic future of their countrymen. They sure have. Because they needed prices to go up and to the right.

It's a central banker thing. But it's so irresponsible. I think it's immoral, not amoral i i think it's um but yeah they're they've got a debt problem some someday you know uh the yen is is my is my dark horse candidate for first major currency to fail yes yes because of that whole and they just kept more money in the system. It's like, no, the money is supposed to serve and facilitate trade, and trade is what people do.

So if you have fewer people, and that's what they have in Japan, right, then the economy can shrink. That's okay. The problem is the banking system doesn't like to be able to do that. So banking system. Banking system needs more money in the banking system. And that's who central banks serve. That's right. That's who they serve. So, you know, if we go back to that thought experiment, because we have an unknown future and I spend a lot of my time.

OK, so our strategy is designed to be able to make adaptations. OK, because I wanted to have the flexibility to be able to go outside of my preconceived ideas with measurable data that gives us confidence to make that decision. Because if you don't, you're speculating. Right. There's so many people that are speculating right now because they don't have some measure, and you can adapt those measures. So by having tools that can tell you, okay, what if the U.S. ends up like Japan did? When's the average investor going to realize that you should have moved the large majority of your assets into other countries? What if a Japanese citizen on that first crack, you ride the wave in Japan, you get that first crack to the downside and you have

something that says, okay, I'm a Japanese investor, but you know what? The U.S. markets are really strong because in the 1990s, the U.S. and let me show that because I want to go back and show this just the response that happened on the other side. So I don't have daily data going back prior to 1994 for emerging markets, commodities, and developed. So that starts really 1994, 1995 on those. But it doesn't really change the outcome that much because if you look at the S&P 500, when that bubble burst in Japan, there were some investors that were smart enough to kind of gain, especially that bubble that was in 1995, where the U.S. took off from 1995 right here to the year 2000. If we go back and look at what occurred in Japan, so this is 1995 right here, all the way down to the year 2000, where it was basically sideways. So what if you were a Japanese investor and you had

a strategy that told you to overweight the U.S. markets, then you escape that period of time far better than what the average individual did. So that's one of the things that I'm looking at. I'm always trying to game, okay, if I'm considered a possible outcome, whether we get there or not, and our rules are pointless in that direction, I'm not having to overcome my biases because I've already considered it and I can move one or two steps faster. And I believe that that's where investors need to be right now is enjoy this rally that's taking place in the market. Enjoy it. Okay? It's unprecedented historically. What would have been wise decisions for individuals back in the year

2000 to do when we broke all of those historical parameters of 1929 and there was the thought that, hey, it's the new age, it's the new economy. Warren Buffett doesn't know what he's doing anymore. If some of those investors had harvested some of those profits and maybe paid off their primary residence or reduced some of their credit and maybe paid off their primary residence or reduced some of their credit card debts or gotten themselves in a more solid foundation or built themselves 24 or 36 months worth of emergency funds by sweeping that profit off the top, they were more resilient over the following years. So one thing I would encourage investors to do out there, hey, you may feel like a fool for a year or two, but this is not going to end well unless we have truly entered a new paradigm.

And that's been attested so many times throughout history. So if you've got these ridiculous, crazy profits out there, sweep some off the top, right? Sweep some off the top. Reduce your debt. Build up your emergency fund. Maybe pick up some precious metals from a long term standpoint, not a recommendation. You need to seek counsel on that. But if you don't have any, sweep those profits and diversify where you are, because if it's not different this time,

you're going to look in the rearview mirror with regret and say, I wish I'd have been a little bit more prudent. OK. Okay. And the prudent decisions are not the most fun in the short run. Okay. You know, going and drinking yourself into oblivion, swinging from the chandeliers and, you know, at the club at two o'clock in the morning and, and, you know, you might get away from that, but, but, you know, there's, they're typically always consequences. It may not be as fun in the short run, but the individual that was sitting at the dorm room studying their little rear end off to give themselves better skillset for the long term didn't have as much fun in the short run, but they made the sacrifice in the short run to be in a far better position in the long run.

Well, and of course the Federal Reserve has been very active in punishing the prudent and rewarding the chandelier swingers and all that. So let's talk about this then, starting with the Japanese model you gave out there. So I'm going to show something here. And this gets us back to fundamentals, because I think fundamentals at the end, Paul, have to play a role. And that's really something that's been forestalled for a long time. So what I'm showing you here is in blue, that blue line is the price to book of the S&P 500 index coming in through 1990, up through the mid-90s, coming up into 1999. And this is 2000 right here. Okay. So I bet a lot of people bet if they lost, you you know got their 401k turned into a 201k during that period i bet they wish they could go back and say oh man that was just so obvious that was just unsustainable because here's what happened after 2000 okay so we had that big rise to 2000 then price to book you know we had the market crack and it came down and really falling and by the way just to put this in context this this is 2005 to nine, this chunk right here, this price to book, even during the mania of 2008, remember? So we had that whole housing bust. Stocks weren't participating. That was a

housing bubble burst. So price to book. So what does book, what does that mean for people to know? That's the price you're going to pay for a share of a company relative to its book value now now in a book value a lot of people say that's a stodgy thing because that's just adding up paul if i had to liquidate this company what would it be worth right that's its book value it's tangible property plant and equipment um kind of stuff and obviously companies are worth more than than just the sum of the bricks and the mortar and the machines right i get it but it's a good way to look at it because ultimately that's what you produce things with is your book. So it's a fundamental value measure. Now, what do you think it looks like coming out when the Fed started to

do what they were doing? Well, let's take a quick peek. Oh, price to book is back to the same blow-off levels that it was in 2000. And what you're saying is there are going to be some people probably kicking around in a few years going, man, I wish I'd read that sign properly. I know a lot of people wish they'd read it properly here. It's always easier in retrospect. But you can see here the Fed has clearly had a point of view. You could draw a ruler straight line on this. There was a, there was a little downturn in, in, you know, here, and then in 20, you know, COVID, then the COVID blow off, then this, but this is the part, this is the period of time we're in right now. It is one of the fastest,

most sustained rises in price to book that we've seen outside of the COVID $5 trillion print-a-thon. It's pretty profound. And again, remember, if a bubble is when asset prices rise beyond what incomes can sustain, the price to book is that fundamental measure of the income in essence. It's like, what's the core underlying value that we can put out here? And maybe this is AI. Maybe the world has changed, and I haven't recognized that yet. But now I have to fall back on, what are those four words? This time is different? Correct. Well, and let's say it changes, Chris. But let's go back and look. When the 2000 and 2003 bubble burst, I remember that clearly. There were people that were warning about it, and people were ignoring them, right?

Oh, somebody was warning in 1995. Well, you know, quote, you're an idiot. But when the market broke in 2000, it went down into 2003. Housing was actually really affordable. Back during that time, for most of the country, you could buy a rental property because they weren't that popular, as popular as they are today. And the rent was affordable for the tenants that were in there would pay for that property in seven to eight years. So by the time we get into 2007, you have a real estate bubble, but not a stock market bubble. And I remember that period of time because a lot of

our areas, builders and real estate investors, and I mean, it was an absolute mania. And I had people that were friends of mine. They're like, you know, Paul, I'm so sorry you do what you do for a living. If you'd been, if you'd have been a builder or if you'd been all into real estate, they felt sorry for me, right? Now, with the risk-managed strategy on the other side of that, it was a completely different story. That coin turned. That's the long-term gain. But we didn't have a fundamental bubble in equities. It was in the real estate market that nearly took the banks down, and you had a 57% decline in the market from top to bottom at that point. Where we are today, housing's unaffordable, rent is unaffordable, cars are

unaffordable. The stock market is at the most ridiculous, historically dangerous levels that have been a clear warning. You don't know how close we are to the top, but we're within a top, even if we set higher records on everything that's taking place there. So what's going to pick up the slack on the other side of that, right? So if AI is coming in and it's putting pressure on real wages rising and it's basically eliminating jobs, which is what it's going to do in the future, then this is the everything super bubble that could turn into a deflationary event that spirals out of control like 1929. And maybe printing money doesn't necessarily turn things around because there's so much damage within that system within it cracks. We can't rule out that possibility, I don't think. Do you, Chris? No, no. And it's why I preach resilience. And I think people should have multiple streams of

income and have their money managed really, really well. And think about having a garden, because we might be back to victory gardens or 1929, 30 style survival gardens. I don't know, because it's never different this time. There always has to be this fundamental relationship between what you're producing and then the claims that are put against that. So, look, this is a longer-term view of that same chart we were just looking at, U.S. price to book. People were smart, Paul, back here in the 30s and the 40s and the 50s and the 60s and the 70s and the 80s, just as smart as they are today. Right. We're no smarter than we were back then. And then we had then this is where this is where things went off the rail. This is where we got our first activist Federal Reserve chairman. And that was Alan Greenspan, Mr. Mumbles. Nineteen eighty seven crash happens and he

puts out the famous Greenspan put oh we have to this is terrible because he hobnobbed and he hung out with wall street people and he was all enamored with that lifestyle and he liked being famous and he liked being able to mumble jargon and nonsense and people slavishly saying what an amazing man he was he loved that well this is the greenspan put in operation and it blew up And that would have been a great time to sit back and go, you know, maybe we shouldn't have done that. It kicked off moral hazard. And, you know, a lot of people, a lot of innocent, ordinary people, hardworking people, you know, got tanked. And I was one of them, Paul. I was here. I was a genius, right? Because I just had this broker at Merrill Lynch,

and I would just take money that I was earning. I was working at Pfizer at the time, of all things. I was in corporate finance. And then it broke, and I had no idea what happened. I was like, what? And my broker was giving me things, stocks for the long haul. I was unsatisfied with that, so I started looking into things. Frankly, this is why we're sitting here talking today, because when that break happened, I got curious. And ultimately that led to this thing called the crash course I came up with. But fundamentally at this point, this would have been a great time to say, you know what, we're fine. We're actually at an elevated end of a multi,i-decade sort of range. And that was unsatisfactory to them. They wanted everything just going up and to the right all the time. So fine. What's the plan,

though? And this is why I wish we had a decent press who would sit down and drum-pow, mumble something about, you know, long-run economic growth looks fine, blah, blah, blah, blah. It's like, dude, what's the plan? Price to book is at levels hardly ever seen before. What's the plan? Where are we going with this story? How's this work out for the average person? How does this make the country stronger and more durable?

Nick can't answer that. No, I mean, in no way it does. I mean, it gives us a plastic face. It gives us the appearance of prosperity. But you've got a lot of pain that's there for the average citizenship. I mean, if our government is leading us in the right direction, the large majority of the populace is benefiting instead of just those that are surrounded by the halls of power. You know, and what comes to mind is the Hunger Games. You had the Capitol that is completely detached from reality,

and then you've got these all other, I can't remember what they call them, but communities that are progressively in more pain and more pain and more pain, and there's nobody in the halls of power that actually understands what they're going through, right? Exactly. Except for the few, the one or two that actually wake up and then they have their own issues because they're detached from reality. But the thing that you go back through history, you know, 40s, 50s, and 60s, they were no

smarter. We're no smarter than they were then. Yes, we have more information today and we have more access to information, but we have less wisdom, I believe, to know what to do with that information. So there was a period of time where information was power. And if you had information that made a difference today, information is a commodity, but what is very rare is the desire and the hunger for wisdom to know what to do with that information. That's one thing I love about Proverbs is God says, clearly, there's no strings attached. If you ask for wisdom,

I will give it to you. And how many people actually ask for wisdom? So I think we're a lot more emotionally weak today than what they were then. And the government's feeding on that for their own pockets and for their own power positions. Because in 2008, we got back to long-term fundamental price value. So if they'd have just let the system work itself out on the other side, then we would probably be back to the wealth spread across the country. The middle class would be strong and resilient. We would have new products today because innovation would have been able to come up in that desperation and that time that people would have had during that bad economic environment. And we wouldn't be worried about these type of valuations and emotional weakness leading to just pure greed and speculation for probably another 40 or 50 years. The problem is they never allowed that to happen.

So now we're in this super bubble that unless they can pull it off with perfection, and humans can strive for perfection, but we're never going to reach perfection. Unless they can pull it off with perfection and reset the rules going forward completely and wipe out all the lessons learned throughout history, this is going to end with a ridiculous amount of misery for the average individual, but especially for those that are in the capital for the Hunger Games situation, because if they're not wiped out on the other side of it, then the people are probably going to tear the walls down to the capital and drag them in the streets and have some, you know,

express their own pain in a physical manner on those that are in power. I'm not calling for that. I'm just saying that's happened throughout human history. Hello, I want to take just a quick break from this program here to tell you about, well, what I'm up to. This is the pond that's on the property that Evie and I own. And you know what we're doing here? We're getting ready for some hard times, we think. But we're also doing it in a positive and loving and open manner. And we're building soil and building abundance and doing all of that and growing food.

Why are we doing that? Because if you're like us, you know that the world is going in a really not good direction. We understand that there are risks out there that are new, right? There could be a financial accident. We know there's a fiscal train wreck coming, probably a monetary train wreck coming to the United States and the world by extension. We know that there's the possibility now of a new world war. There's all kinds of risks out there. Nobody's talking about them. Well, we are at peak prosperity, so this is an invitation to come join our community.

It's been running for about 15 years. I'm your information scout. Every day I wake up, I'm scouring the world. I condense it. My superpower is taking complex topics and presenting them back to people so they can, A, understand them, but B, take action on them. So I want to help you protect your wealth, build more wealth. I want to help you be more healthy by understanding that we have a toxic food system that's out there to get you addicted to toxic substances so that then the pharma sick care system can sell you cures for all that toxicity you just ingested. I want you to understand that this nature, really important for your child's development,

your grandchildren, for your own. It's time to reconnect with the things that are important. That's what the Peak Prosperity Community is. So you're invited to join. A lot of entrepreneurs there, scientists, doctors, lawyers, architects, you name it. We've got people who've been successful at life because they're open-minded, they're curious, they're learners. And this is a time to learn. We'll give you a 30-day money-back guarantee, no questions asked, because we want to make sure that we're a good fit for you and you're a good fit for us. Consider

joining Peak Prosperity. That's it for now. Thanks. We'll get back to our programming, and I hope to see you at the website soon. So here's some wisdom as far as I can tell, right? The founding fathers wrote a lot of wisdom into the constitution, the bill of rights, all kinds of things, right? And they were well-rooted in God and understood, I think, their Proverbs better than I ever will, right? So there was wisdom in that. So here's some wisdom that we've lost, which is that the reason, you know, you see these comparisons sometimes people like, why is United States so much more dynamic than Europe?

Well, it's because Europe's gone down this path where it's got an administrative state and it's overweening and too many regulations and all that stuff. So, so there's a balance you have to strike between freedom and administrate administrivia. Right. And there's a there. You know, I get it. You could be too anarchistic. No rules is no good. But there's a balance point. Europe's clearly tipped way over that balance point. Right. They are not it's not a free country, free, a free continent in any way, shape or form.

They are not dynamic. And so people from Europe know, from Europe will come here and go, wow, you know, you can make mistakes here, and there's this entrepreneurial mindset, and you can, you know, you've got a culture that really supports all of that. But we're also tipping down this point where you have a lot of folks, and I think that's what we just voted against, right?

That's what I hope the Department of Governmental Efficiency, DOGE, is going to do, is start getting us back to this idea that freedom leads to prosperity. And we've tipped over that. And the second thing is you need a middle class, a solid middle class. That is the stable foundation of our country. Yes. And instead of having the wisdom, which Brett Brett Weinstein described to me one day, as he said, wisdom is the ability to practice delayed gratification. Good statement. You're going to study instead of hang off the chandeliers. You're you're a CEO and you're going to think maybe I shouldn't take 500 times the average salary of the person.

I'm going to delay that a little bit. I'm going to spread that a little bit. I'm going to spread that wealth and create better things. So I've been talking about this in the context of that shooting of that healthcare CEO. And this is collectively across all of the insurance space, right, for not just that one company, but, you know, workers' earnings, you know, up 27 percent, but premiums are up 55 percent. Deductibles up 111 percent, which, you know, come out of workers earnings at the end if you have to, you know, access medical care. This is a racket. This is just treating the middle class like a disposable, squeezable turnip. Right.

And this is just health care. I could show you similar charts. Do you know we pay 10 times as much for cell phone service than you do, say, in Hong Kong? I didn't know that. You know, a good family plan might be $300 a month here, and Hong Kong is $30, right? It's ridiculous. So, okay, so cell phones are a racket. Health insurance is a racket.

Insurance insurance is a racket insurance insurance is a racket right on and on so it's just all rackets and and all of those things are just individual corporation sectors just squeezing and nibbling into the middle class but it's like termites in a house they're going to destroy the very thing that gives them the thing that they're able to destroy in the first place there's's no, I feel like there's no adult supervision overseeing this at this point. Everybody's just grabbing what they can for themselves. I don't, where's that, we're in this together thing. And that was the anger I saw people displaying, you know, because UnitedHealthcare has a practice of denying 31% of all claims because it's their business practice. We know that if we deny 31%, only 10% of those people are going to have the fortitude because they're sick, you know, to see it through and to get through our gauntlet and have a successful claim.

So we make it as hard as possible to people who, by definition, are not at their best just because it's our business practice, right? It's immoral and it's evil and it's pure greed. And only weak men give over to that. Only weak men give in to their base animalistic desires. That's not what makes us better as a society. And Chris, you know, go back to 2010. Obama is supposedly for the people and, hey, we're going to do this health care and this thing's going to be great. But let's judge it by the fruits. Okay, that's led to a society to where I was shocked at the number of people. There was no remorse for the execution of that CEO. I mean, there was none. And you think about what happened with that family, and all life is valuable. I believe all life is valuable. Even evil life at a point can change. But we also have laws and justice in place for treason where there are people that need to be executed, even though that life is valuable, because they put the halls of power is obviously if we go back to that 2010 decision, the American people were sold a bag of poo is what they were sold. This is going to be better for you. There

was all this euphoria about how this is going to be great. And, and the fruit of those actions has been a burden placed on the American people to where now you have the type of weak individuals that are running these companies. And instead of going, you know what? Our business is to cover the health care costs of those peoples that pay us premium to make their sick experience or end of life experience as easy and as low stress as possible. But no, that's not what they're doing. They're not being fiduciaries and fulfilling the obligation. What they're doing is serving their own base desires and going, hey, let's play some statistics.

If we can say no to 31% of the people and only 10% have the ability, fortitude, or knowledge to be able to fight us, now we're 20% more profitable. And I, as a CEO, can have one more big house, right? And it's just so criminal and evil. And it was done in such a deceptive way that the American people didn't understand it until the administrative class was so in depth and in charge that now you've got a mountain of regulations and paperwork to cut through that's overwhelming to change it. And it's just absolutely evil. It is. And this is, speaking of that Obamacare, it was phased in in 2014, finally, and this is the price of the stock of United Health Group, UNH here, on a 20-year chart. And this is the

moment where, oh, Obamacare came along, and you just saw, it just was an orgy of profitability. Billions and billions and billions of stock options were rewarded to the C-suite over a period of time because, you know, they won the lobbying game. They successfully lobbied, and Obamacare was the largest single giveaway to an industry outside of, I think, the defense stocks, right? It was just this big, giant giveaway. And to be fair, it wasn't just Obama. It was the Uniparty. This included a lot of Republicans, rhinos, non-conservative conservatives, you know. Anyway, I think we have to face up to the idea that, you know, our congressional staff is not up to the job of really doing what's best for the country. Individual sectors aren't anymore, right?

And so that's why I think people need to be ready for the idea that when we look back at this chart again here, let's take just one second because I have to change screens. But when we look at this, everything has to go exactly right for this chart not to turn into another complete disaster. And by the way, Paul, I will be a big bullish buyer again when we're back down into this long term historical range again. You know, if if other things like if we have a smart energy policy in our country, which I'm not sure we're going to get. I hope we do. You know, I wanted that energy secretary position because I thought, I have a plan, but hopefully the new guy's got a great plan. I can't wait to see what it is. But man, we need some sense of togetherness in this. I think America first.

Again, I was disgusted. I've been disgusted the whole way through. Trump is elected in the Biden administration has been doing everything possible to screw that up. Right. Long range missiles into Russia, you know, a Georgian color revolution, a Romanian election overthrown and now Syria. What?

At any rate, it's been a never ending disaster. But on top of that, I saw Biden come out just two days ago and he said, well, now we're going to help, you know, the Syrian people rebuild billions of dollars for them. And we got people freezing to death in North Carolina. And I'm just I'm sickened by it. Like it just shows they don't care about Americans. They don't care about middle class. They don't care because they've, they've forgotten their weak men ball. They have forgotten why this country is great and why they even have a

billion dollars to give to Syria or whatever, whatever next project you got to take care of your own house first. This is what a parent needs to do. You know, you understand this. If you don't have a solid home, all the rest is for naught. Make sure your home is solid. So I'm kind of hoping we get back to some basics here over the next few years. I'm hoping we will. And we will, Chris. I mean, we will. We just don't know when that's going to occur, but something is going to change.

And then, because that's that cycle, you know, Bible front to back, we can see it. Good men create good times, good times create weak men, weak men create hard times. I mean, that's embedded in our human psychology. It's embedded into our historical books. It's embedded into everything, but our human nature and the psychology that we have and our inability to really pull ourselves out of our dream for the future, anchor ourselves in the present, and learn from the mistakes of the past is a weakness that we have in our human makeup that causes us to continue to repeat these cycles over and over again. And I think that's so important. The Bible says there's a way that seems right to a man, and in the end, it leads

to death. And that can be applied in all aspects of our lives, but more so on a societal level, because we see that as a people, as nations, and as countries over longer periods of time, but we see those same short cycles in our own lives. I mean, we all can think back throughout history, through our own lives and go, wow, it's by God's grace that I didn't die because of that decision. Or, you know, had I made a different decision back then

and been seeking wisdom instead of instant gratification, I'd be in a better situation today. Or, hey, if I'd have made a few sacrifices back then, I would have more fruit today. That's one of the great things and great honors of what I do in working with people. And I've got people, Chris, that I've worked with for 26 years. I've got people that I've worked 20 years through the end of their lives. And we build these relationships where I've earned their trust. And I hear these stories, especially towards the end of their lives, about, they can look back and realize that, hey, you know, I didn't quite build the foundation for my kids that I really wish that I had. I just couldn't

have seen it at the time. And that's where we are in society right now. We have narcissistic leaders that are serving their own desires at the expense of the American people. And there's a way that seems right to them that's already leading to death in our society through the demoralization that's out there. That's why our drug addictions are so high. That's why our suicide rates are so high. That's why there's so many things where these people or the addiction levels are so high because they've absolutely removed the ability for the American people to be creative and pursue their desire because they've got this administrative state that's locking out the average individual.

And I've got one chart that I've got to show here, Chris, because it came to mind just a minute ago about the administrative state. Elon Musk reposted this. You know, this is a big part of the reason your children are not getting a good education from the rabbit hole. But look at this, growth in administrative staff, principals, teachers, and students in U.S. public schools. Now, my wife is a teacher that cares about her kids. And I've noticed years ago, why in the world

do you need so many people at the Board of Education main office, administrative staff since the year 2000 is up 95%. Principals and assistants are up 39%. You've got, and then principals alone are up 10%, and then teachers, right, which are what matters the most within the system, are only up 5%. And our education system is not getting better, but those that have been educated in the halls of power are so self-serving that, hey, I'm going to stack more papers and more requirements and more measurements on top of the teachers instead of get rid of these people and get the teacher-to- to student ratio way down a lot.

And now we're doing what's better for our future generations instead of our bragging rights of those of us who were fortunate enough to know that a college degree can open doors that you otherwise wouldn't have. Well, to say nothing of local property taxes, right? Yeah. have. Well, to say nothing of local property taxes, right? It drives me nuts that we have all that administrative staff and they're all earning $200,000 salaries up there. You know, the superintendents and the associate deans of diversity or whatever they got going on in all these things now. And by the way, those people could go away entirely and a whole year would pass. And you know what happened to the educational standards for our kids? Nothing. Probably better. Probably would improve. It would actually be better. Just teach yourself one more time teaching instead of

pushing papers to justify some ridiculous administrator's $200,000 salary at the main office when they wouldn't survive six months in the classroom on a regular basis. Some of them got there from the classroom. I'm sorry. Well, if it turns out AI can replace all those administrators, now we're talking. Yeah, that would be an actual great use of AI. And now the teachers can actually do their job, discipline the students, spend time with the students and point them in a better direction and get that ratio down where now these teachers can build relationships with the students, get to know those individuals and help overcome their behaviors to make them wiser, stronger, better citizens in the future and help, you know, make America great again. Yeah. Now that whole, the whole administration staff, all that, I think that's the tyranny of the experts that we've just come through this whole long reign where, oh, you need experts, expert this. And you still watch the New York times trying to like, sort of defend like the

expert class, you know, experts say is if that means anything to me, as soon as you say experts say, Paul, immediately I discount that I'm suspicious of it. And I think you're probably just blowing smoke. I no longer trust experts. I don't trust them at all. Right. No. On, on pretty much anything at this point. So, because we've been lied to comprehensively about a lot of stuff, right? So, is a quick aside, and this is astonishing to me. You know, we have experts have said that, let me get my pull-up. Yeah, it's not that. That's closer. All right, we'll start here. So, these experts have said, you know, oh, we need to go into green energy. And they did this heavily in Europe. And they did it particularly in the UK and in Germany. In the UK now, they're

so far down the experts say class that they're feeding an additive to cows called Bovira that stops cows from farting. And everybody has to accept that. And they're going to, and people haven't been, that milk is sitting on the shelf. So the UK Parliament's considering a law that maybe they have to pass a law now to force everybody to drink that, in essence, that you're not allowed to sell non-treated milk, because experts have said, this is how you have to attack climate change. But it's gone all the way down to this crazy thing. Nobody's ever over there looked at um how much what is the total contribution level of cow farts relative to china putting in two new coal plants every week right it's just

stupid right but that's where experts get you over time it's like they they start debating angels dancing on the head of a pin kind of stuff right meanwhile nobody's looking at the fact that because they've pursued these green energy policies the UK energy prices are high, ridiculously high, and they are now hemorrhaging industry. And that's making everybody poorer. Right. But the experts, man, they are on undissuaded. Right. By all this, they they they are more certain than ever that we're going to put this

additive into its cow farts it's gotten to that point where i think you know i'm hoping that now we have this new era where people can back up and say okay i see all these administrators in schools point to how that's made our our students stronger it has contributed to a better outcome how would we know that this has helped? And the answer is you can't. It's just more expensive. In fact, it may have been unhelpful. And that's what I'm hoping we can start getting back to. I want common sense. I actually trust the guy up the street who's the plumber a lot more than I trust a Federal Reserve official to understand and diagnose what the problem is.

Oh, absolutely. Because I talked with him just last week, and he's like, yeah, the government's sprinting and spending too much money. Like, there you go. That's it. That's the whole thing. Yeah, that's right. And he understands reality far better than those that are in the halls of power and completely

detached from it. You know, it's just amazing how foolish that they are. And the reality is the average individual has ridiculous amounts of wisdom, and I love common sense. And, Chris, that law forcing people, making it a law that you can't sell this milk, that's tyranny, right? Like the law that you shall not murder, most people are not going to murder, but that's going to happen within society. So you have to have consequences.

That law is in there. It says, if you do this, here's what's going to happen on the other side of it. So that law is establishing protection of the people. But a law to force you to drink something that the market is not choosing is tyranny and common sense. I don't know if this is true or not, but I saw somewhere on Twitter, and I'm sorry I can't give the credit. It's buried in one of my bookmarks somewhere. But supposedly Bill Gates comes out and says that cows produce more damage to the climate than what cars do. And somebody responded and said, okay, if you believe that,

I'm going to go lock myself in a garage with a cow overnight, and you lock yourself in the garage with a running car, and let's see who's alive the next day. I mean, it's just so ridiculous what they're doing. I don't know if that's true or not, but that's common sense that the plumber is going to have that Bill Gates obviously doesn't. But, you know, people will rationalize anything. We're not rational.

We're rationalizers. Right. Right. And that's what we've been talking about is this whole idea that people are trying hard to rationalize this bubble that we're in, our set of nested bubbles, the super bubble we're in, right? And eventually you say we're at a permanently high plateau of prosperity. These earnings are sustainably, you know, great forever. And, of course, you know, when you look at history, it says, no, things come, things go, cycle up, cycle down.

The problem for me, Paul, the reason that I preach my resilience so hard is I'm worried, and maybe I just worry too much, but I'm worried that, you know, normally it used to be that animal spirits would take over, little bubbles would develop, and you'd fall and it would hurt, right? You were three rungs up that stepladder. Man, that hurt when you fell. But the Fed's been there just putting more rungs on and i'm worried we're like 12 rungs up now and it's going to more than hurt this bubble burst well it's a high wire act i mean this is evil kenevil territory you know what what is it the guy that stretched across uh the two skyscrapers in atlanta not atlanta new york you, during the 1920s and does the High Wire Act. Was it the Walensky brothers or something like that?

I think it was. I say I think it was, and I'm just trusting that you know. Flying Walenskys, I might have that right. I don't know. But, you know, we've seen that throughout history. That's really what we are. We're in the midst of an Evel Knievel Act or a High Wire that the consequences of failure are going to be too costly to bear. And that's the hard part is the average individual has just been doing what they've

been told to do. And they've been looking in the rear view mirror and going, wow, if I'd have just been a passive investor to begin with, but we're not passive drivers. The best drivers are defensive drivers. And there's a time to be offensive. We look at sports because there's offense and defense. You know, if you've got a better offense than a defense, you know, some teams are over others. So there's, we have tousion, we completely walk away from the foundation. And just think about, you know, the story of the three little pigs. What does that tell us and why do we tell kids that story? You know, a straw house is where we are right now economically. Some companies are in the wood house and we need to be building brick houses that can withstand the inevitable storms that come. And our weak leaders, because of their greed, are allowing the administrative state and surrounding themselves with weak individuals that are serving money. They're not serving the people.

That money is their God is setting up temporary benefit to the people. And I think that's the reason why when things get bad, because money is their God, they're like, here, let's give everybody money because that's the answer. But that's not the answer. It's a fundamental foundation and building our nation with a strong middle class is a solid foundation, and that's a brick house that good things can happen in the future. And we're a straw house now because it's all the wealth is held to the very, very small amount. And if you're fortunate enough to be in that class, then your job is going to be to protect it going forward by making different decisions and pursuing wisdom. And if you're outside that class, we've got a society right now that makes it nearly impossible for you to get there because you're coming out of school with massive amounts of debt.

You're having to buy homes that are ridiculously affordable that the likelihood of you getting that paid off is very slim. And yeah, there's opportunity for advancement, but it is far fewer right now and far more rare than what it was 40 years ago. And this path is unsustainable. And it's my job to help people recognize that, play the game by the rules that are forced upon them and have strategies that can give you the opportunity to limit the damage done to the portfolio when reality comes home to roost. Well, very well said. And that's our time for today, Paul. So if anybody's interested in working with Paul and his team, please go to peakfinancialinvesting.com, fill out a simple form. Somebody will be in touch with you within 48 hours. And it is time to both understand when to drive offense and when to drive defense.

You got to drive both ways these days. And that's what a risk-managed portfolio does. It's a rarity in these times, Paul. I think most advisors today are kind of advocates for the passive. And they play a very passive game. So they will passively diversify you into a variety of passive vehicles. And if you understood the charts we were showing, this time is not different. You're going to need a risk-managed approach to this whole thing to come out ahead. And on the other side of it, there'll be a period of time where we won't have to manage risk. And I'll spend a lot of time saying, don't worry about the volatility. The fundamentals look good.

The path of least resistance is higher. People are going to be like, who are you? It'll be a fun time. Yep, indeed. All right. Well, with that, Paul, thank you so much for your time again today. And thank you, everybody, for being here with us. We'll be back with you next week.

Bye for now.