Scott Horton Show - Just the Interviews - 7/11/24 Mike Swanson on the Concerning Growth of the Debt-to-GDP Ratio

Episode Date: July 15, 2024

Mike Swanson returns to the show to talk about the state of the economy. He fills Scott in on some of the work he’s done analyzing how economies fare once the national debt-to-GDP ratio reaches a certain height. What he’s found is that serious issues tend to kick in right at the level the US is projected to hit in 2026. He and Scott discuss this and other topics related to the American economy. Discussed on the show: This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart and Kenneth S. Rogoff Principles for Navigating Big Debt Crises by Ray Dalio Soylent Green (IMDb) Mike Swanson provides investment advice at wallstreetwindow.com and is the author of The War State: The Cold War Origins Of The Military-Industrial Complex And The Power Elite. He also works with the Neopolis Media Group, a group of historians, educators, authors, researchers, and free speech advocates who endeavor to provide original and engaging content, including The Ochelli Effect, and The Lone Gunman Podcast.  This episode of the Scott Horton Show is sponsored by: Roberts and Robers Brokerage Incorporated; Tom Woods’ Liberty Classroom; Libertas Bella; ExpandDesigns.com/Scott. Get Scott’s interviews before anyone else! Subscribe to the Substack. Shop Libertarian Institute merch or donate to the show through Patreon, PayPal or Bitcoin: 1DZBZNJrxUhQhEzgDh7k8JXHXRjY Learn more about your ad choices. Visit megaphone.fm/adchoices

All right, y'all, welcome to the Scott Horton Show. I'm the director of the Libertarian Institute, editorial director of anti-war.com, author of the book, Fool's Aaron, Time to End the War in Afghanistan, and The Brand New, Enough Already, Time to End the War on Terrorism. And I've recorded more than 5,500 interviews since 2004. almost all on foreign policy and all available for you at scothorton.4 you can sign up the podcast feed there and the full interview archive is also available at youtube.com slash scott horton show all right you guys on the line i got my old buddy mike swanson from wall streetwindow dot com and author of the war state and also why the vietnam war welcome back to the show how you doing

Mike. Oh, it's great to talk of you today, Scott. Really good to talk to you again, man. Hey, so I get your emails in my email here, and this one really caught my eye. U.S. debt to GDP grows in first quarter, on track to hit danger level. And then you say you read this book by this guy, and he does this survey history and says there's sort of a magic number when your debt to GDP ratio gets too dang high. and that we're close to that. Is that really true? And what does that really mean for the average goofball like me?

Well, let me back up a little bit. In 2008, you know, everything crashed. And we've gone through a bunch of downturns in the past, the 2000 bust and so forth. And in 2008, a book came out called This Time is Different. And that refers to a phrase that people that get caught up in these stock market bubbles, they'll always say, oh, the internet stocks aren't a bubble. This time's different when there's people saying it's dangerous. And what that book did was it surveyed 800 years of financial history.

And it focused on something called the current account deficit, which is the amount of money going out. out of a country in order to finance its debt, government debt, or its trade deficit. And in the 2000s, the US's current account deficit got over 5%. And this book and its survey shows that whenever a country's current account deficit gets over 5%, there's a financial crisis, and it happened in 2008.

Now, most examples that that book had, and this is written by some PhD economists, You know, most examples that crop up are third world countries. Argentina, around 2000, Turkey, I wouldn't say it's a third world country, but Turkey's been going through this the past couple years. It's going on in Argentina now. And typically what happens is the currency in a country goes down quite a bit. Inflation explodes, and this works off the debt.

Now, in the United States, 2008, that didn't happen. a banking crisis and the Fed in the government did all kinds of things in response and really I would argue you know we're still living with a lot of the effects of that so that's that keep that 5% number in mind it's now that number's at 3% now you get more specific what you're referring to the debt to GDP number so that's the U.S. federal government debt divided by the gross domestic product and typically this current account deficit and this this debt to GDP are linked together they kind of both become problems at the same time well the other book that are referred to in my email which is the one I really recommend people

look at now is called the big debt crises is by Ray Dalio has got a lot of press in the past couple years and he's a billionaire, a retired billionaire, hedge fund manager. But anyway, what he shows in his book doing a similar study of looking at not 800 user financial history in his case, but really the past 100, is that when the debt to GDP in a country, really, the number is really 140%. It's a crisis happens and typically it lasts a couple years. And the same thing, the currency falls, inflation. goes up. The economy is really crappy and so forth. But looking at his charts and data more

closely, it looks to me like, you know, yeah, the crisis is like when it hits 140 and then it'll reach a peak, somewhere between 150 and 200 and then reverse. But it looks like once it gets to a hundred thirty percent that's when signs of it becoming coming that it's about to be a problem start to crop up in the financial markets so i'm real interested in that 130 percent level because that's you know what i write about and kind of now do or have death for a living is trade these crazy markets and right now it's at a hundred and 222.76 percent and it's growing at a rate where it'll get to that 130% by, let's see, the third quarter of 2026, about two years from now, let's say.

Now, if there is a recession, that would happen quicker because the government would most likely get fewer tax receipts, and there's a good chance that they'll do more stimulus with spending as they've done the past couple years and this whole thing about the size of the debt it's been exploding over the past couple years it's you know we've been hearing about it's going to be a problem in our lives but since 2020 it's really gone up and and it's so big now that um the interest on the debt is almost uh triple which at least it's a little over double what it was in 2020 before 2020. And how much

is that? Close to a trillion dollars. It's amazing. Yeah, it's over a trillion actually. You would think if it wasn't for all the other horrible things going on, doesn't that sound like the scandal of the

century right there? That of all the, like how much do they bring in in direct IRS tax revenue from the American people every year. Oh, I can find it really quick. Can you? It's a lot.

Still a trillion of however much it is. Five trillion. Five trillion. So fully a fifth of that then is just going to pay interest to bondholders. It's more, you know, it's now bigger than Social Security. It's almost

as big or bigger than the defense close to the defense budget. And mostly that's going to pay, who are the bondholders? That's mom and pop, or that's foreign central banks, or what? Both. Most of it's in the United States. The

Federal Reserve holds a lot of it. How do you like that? People being taxed to pay interest to the Fed in what's just a bookkeeping trick, right? Yeah, yeah. But it's real money that we got to pay them. How much do we pay on interest just to the Fed? Oh, it's a lot. I'm not sure

the number of the time I have, but the thing about it. hate the government so much. Oh, well, what I was taught, when I went to college, you know, in the late 90s, that's saying I agree with this, but I was taught that Kenyanianism was great, a great, you know, I was taught that the policy of Keynesianism was taught that the policy of Keynesian's became adopted in the United States in the 1930s because of the Great Depression and the idea was that you would do deficit spending when there's recession

and bad times to help the economy and then when the good times are here you would stop and cut you know you wouldn't do this deficit spending anymore well that's not what's been happening in most of our lives right in other words it's crazy in other words Keynes is

Meese is compared to the current deal, which is just always stimulate and never stop. Yeah. Uh-huh. And, you know, we're at a point now where we have, everyone knows we have a lot of inflation. We've seen it. You go to the grocery store and everything else, the rents, and it's exploded since 2020. It's, it really took off in 2021 and 2022. it's obviously not going up as much every week or every month as it was during that period of time.

But it certainly ain't going back down again, right? Prices are never going to be where they were. It's only a ratchet, right? And two years ago, the Fed Reserve said it was going to raise interest rates and to stop inflation and make it come down. their numbers are it's currently the CPI consumer price index annualizes officially as of today 3.1% it was over 9% two years ago and the Fed Reserve's official goal is to get it to 2% well two years ago when they started to raise interest rates chairman Jerome Powell

said this is a serious problem and look it's what's probably the one factor that's killed Biden's poll numbers of the past couple years forget about the past couple weeks what's going on with him but it's what's hurt him coming into this year and so they know it's a political problem and Powell is saying look basically we got to stop inflation so I got to raise interest rates. And even if it means recession, I got to keep them up. I got to keep them up. And now this week on Tuesday, he spoke to Congress and he talked about lowering interest rates. He set the stage to lower rates. He said he's worried that the rates may be too high. So, you know, he hasn't even achieved the 2% goal yet of getting the C.P.

I had 2%, and they're already wanting to lower rates. You know, and the stock market has made an all-time new high this week. I mean, it's crazy. Is that just about the election? They just have to make sure that it doesn't crash before November, right? I suspect it is, and there's two reasons why. One, with all this turmoil around Biden, I'm reading, you know, the Wall Street Journal, the New York Times and various

mainstream political websites and the one of them I mean the stories are basically he's got a couple people really that are his close advisors for years that are you know almost got him in a cocoon

and one of the stories was saying that this was an axios that these Biden folks are contacting this reporter and telling them stuff and that feel good to talk to this reporter because they're not calling for Biden to, you know, that website's not calling for Biden to do anything.

They're just reporting the news. And in this story, it said, this was last week. This is Biden's plan to win. He's going to give appearances on TV and interviews. He's going to debate Trump again and do this and do that. last sentence was and the economy is good and we might be able to get an interest rate cut before the end of the year before the election I mean so it's like well there you are and now I went and looked at the 70s in my mind when it comes to so far the environment we're in I think

you want to look for historical comparisons. I think the 70s is probably a way to understand it because you have a lot of inflation, sluggish economic growth, and some sort of debt problem that will most likely get worked off in time. So in the 70s, this sort of debt crisis thing happened then over the entire decade, the dollar fell in value in half. inflation was very high, and I think something, you know, it doesn't have to mean everything's going to crash necessarily like in third world country here once the debt to GDP gets to 140

percent. But if you look at the, interestingly enough, if you look at the time period from 1965 to 1980 and what the stock market did, it didn't really do anything overall. over that great period of time, finished about even. But there are all these little bull and bear markets that would last two or three years. And the funny thing is that the best years in the stock market during those years were election years, just like this year. And the bull market would top out within days or 10 months after each election. I think that's kind of interested, you know. There was a famous quote of Arthur Burns, the Fed chairman, saying, look, I can't make a bad political decision now.

That would threaten the Fed's independence. Yeah, yeah. And that's the argument that, you know, when people talk about this, they'll, you know, there are people I've talked to. They'll say something like, well, yeah, it's political, but it's not about Biden. It's not about the Democrats. It's that the Fed doesn't want bad things. to happen before the election to get blamed for it.

I'm like, okay, sure. And of course, that's the whole excuse for allowing them to have this federal reserve system at all in the first place is, well, they've got to be independent from Congress. Because Congress would just want to inflate all the time if it's up to them. So you've got to have

the wise Alan Greenspan to take the punch bowl away when people are getting too buzzed, right? Except he never does that. He just pours straight tequila in the thing well that's what they really do is they come up with new phrases new theories to just justify whatever is they want to do that's that's what i've right seen yeah all right now look so the thing about all of this is i mean first of all i just think the boom bus cycle is this interesting thing

because i've just known it my whole life in texas when i was a kid i think we talked about this They built entire neighborhoods worth the streets and curbs and mailboxes and gutters and sewers and then stopped because everything froze and those neighborhoods were never built up for like 10 years. They built the entire Lake Line Mall and all the surrounding thing there in Northwest Austin was all just concrete slabs. And we used to go out there and drink and skateboard and, you know, whatever. But they never built them all for like a decade because it was. this boom bust thing and you know i guess my mom had a friend who owned a bunch of houses who was right in the middle of flipping them all and then got stuck with them all of a sudden no one was buying houses anymore and this is like circa i don't know what 1983 or four or six or something

i don't know um when i was a kid and then so i've seen this happen over and over again of course with the crash of 88 and then there's there was the recession of the gulf war era rock war one and then there was of course the famous crash of the dot-coms and then 08 and whatever that keeps happening but then that's all in cause by inflation and that's this huge key i want to beat everybody over the head with but then all along through all of that is also just the endlessly rising prices and on the margin right you're an economist of sorts in practice an investor but like on the margin this kills people the endless increase in prices, where this is like whether people can afford to eat

healthy food or not, or afford medicine for their kids or not, afford the rent for their apartment that just went up or not. And, you know, of course, it's the poorest people who work for, you know, hourly wages who are the last ones to get a cost of living increase while the cost of living is increasing, you know? And so it really sucks. for people, man, you've got people living outside. I know there are a lot of people who like being homeless or are just drunks or whatever, but there are a lot of people also who

are just screwed and just cannot afford to, you know, they were on the margin, now they're off of it. That's what I'm trying to say, right? Oh, yeah. I mean, where I live, I mean, there's hope since 2020, I see

homeless people and I never saw them before 2020 in this town I live in, you know. But, I would say that while what you're saying is true over the course of, you know, all these decades, it's been a slow inflation compared to what's happened over the past couple years. And I don't think, I certainly have not experienced anything like what happened since 2020. And it's, again, I'll go back to the 1970.

because I you know I was born in 1975 but I had no memory and there was a movie that came out in 1970 two or three called Soylent Green okay oh yeah it was 1973 and what's funny I never seen the movie and then I watched it a couple years ago and in the movie there basically the story is so much inflation and so little food that it's everyone is starving to death and um that's the main point of the movie what's funny though is I looked at the history of what was going on back then and there was inflation really starting in 1967 um but it wasn't that big you know it was like 5% a year then it would go back of CPI consumer price inflation

and then I want to go back down and it was going up and down linked to this interest rate cycle and the elections in the stock market but then in 1973 the inflation I mean I don't know I guess it was a coincidence

but just as this movie came out the prices exploded in 30 days where grocery store prices went up like 20% in a couple weeks and that hadn't happened until 1973 and that's kind of what we've experienced in the past couple years where the prices would jump in a very short amount of time and then that price movement would slow down as it is right now it's not really going up crazy but I would but if you look there's been like two periods where prices just jump in the in the past two years.

at the grocery store in like six weeks and what's funny about it is you don't always notice it until later so for example a couple weeks ago I don't really eat potato chips but I went I was going somewhere on a trip of some people and I was in the grocery store and I said well I'm going to go buy a bag of potato chips and I hadn't probably bought a bag of potato chips in a couple years and i go buy this bag of a chain ships i'm my god it's five dollars you know that so that's what kind of happens you just get shocked by how much items cost if you don't you know you've got regular buying them i mean just you just pizzas or you know how much just everything is just going up yeah no i know it's completely crazy hey y'all let me tell you about roberts and roberts

brokerage ink nobody trusts the u.s dollar anymore foreign governments are stocking up on gold instead of $100 bills. One, they know they need to, and two, that means you need to too. Interest rates are up, but for some reason not much for savings accounts. Park your money there and watch Uncle Joe Biden just counterfeit its value away. You can see how the Fed is afraid to raise rates to beat inflation for fear of popping the current bubbles, at least before the election. So more inflation it will continue to be.

Gold is your shield against monetary and price inflation. just like it always has been. Now, Tim Fry and the guys over at Roberts and Roberts are recommending gold over silver since the world's almost 200 governments are putting their own pressure on the price, which should help everyone else who make similar calls on their own.

Of course, Roberts and Roberts can help you with platinum, palladium, and silver as well as gold. Don't let the Fed and the war party inflate all your savings away. Look up Roberts and Roberts at rrbi.co. That's rrbi.c.c. Hey, y'all, you should sign up for my substack. It's Scott Hortonshow.substack.com, and if you do that, you'll get the interviews a day before everybody else, but not only that, they'll be free of commercials. How do you like that? Pretty good, huh?

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It's really great stuff. And hey, did you guys know I'm a Tuttle Twin? Or, well, I'm a character in their world now. Skater Scott, local vert dog, and anti-government know it all. They introduced me in a short book last year, and I hear they're going to develop my character's story a bit more in the future. Cool, right? Anyway, they're now celebrating 10 years and having sold millions of these books, and now they're giving away free magazine at Tuttletwins.com slash 10 years. There's no shipping charge, and they're not going to ask for your credit card.

It's just a free magazine. The gimmick is that inside the magazine, they've got a really great deal to get all the books, the best deal they've ever offered, which you will certainly want to take them up on. So go to Tuttletwins.com slash 10 years for your free. magazine and someday hopefully soon you and your kids will be reading all about the libertarian antics of cartoon me along with all my new pals that's tutel twins dot com slash 10 years you know especially just the grocery bill but everything too i told my landlord forget it dude i'm not you're not raising my rent so just take that back because i can't do it you're just going to have to suck up the difference this time you know what i mean and a huge part of that

has property taxes, too. They know that prices are highly inflated, but they still come and raise property taxes through the roof on people, man. So my poor landlord like, you know, he's a decent guy and his margins are razor thin, and he might not have a

margin at all. He's just holding on to his house for later, hopefully, or something. Because I'm not paying him anymore, and he didn't want to kick me out. But it's a standoff, man. He wants to raise my rent. He kind of has to, you know? Well, one bad thing about inflation, and a couple years ago, I've read, well, I've tried to find some books about the history of inflation, and I couldn't find any, nothing that was recently written.

I found like two books, they're both written in the 1970s or 1980 or something, when inflation, you know, had been going on for a long time. But anyway, both of them, you know, one of them had case studies. of there had been actually high periods of inflation in the United States like around the Civil War and the American Revolution and so forth and in Germany before in the 1920s you know is not worth a continental but I learned about that in school not worth the continental they would say about the dollars during the Revolutionary War but one of the trouble and things about it is that when there is a lot of inflation, very few people understand that the cause is really the simple fact that more money is being printed by the central banks, and they will

blame it on other stuff. You know, right now, I've had people at times ask me, and I see the Democrats put this out that it's being caused by corporations trying to gouge people and that's the cause inflation in fact i think biden said that a couple of times but there'll be other things you know foreigners are causing it or you know just they're just different scapegoat groups like in germany they were blamed it on jewish people they blamed it on farmers they're saying that farmers were hoarding their food and not bringing it to the cities to sell it to make to force the prices up it just people just will blame it on all kinds of things and it went in the central cause is the central banks right and look

i was going to bring this up to you i was just watching earlier today uh essentially every man in this case a woman saying that yeah there's a new study out that says that the corporations are just making it up they know that there are um you know covid era bottlenecks in distribution of some things and they know that there's been i think she may have mentioned some money printing or maybe not but like they know that they're these economic factors then they use that as an excuse and then they go ahead and they raise their prices extra beyond what they have to and so really it's at least like half their fault even if it's sort of they have

to do it to keep up with all their vendors prices and everything and labor and whatever that still they always go extra for their evil extra profits to buy yachts with and stuff so what about that is that true?

Well I I mean there can be some truth to that when you like if you look at somewhere like Las Vegas where you got all these tourists going there and they're spent a lot of money

and they can raise the prices up but then the flip side of that is the cost for all these companies are going up and there has been a big problem I mean it seems to me with just about every

business person I talk with of hiring people and so they got to increase people's pay And I think that's a bigger factor than a company just raising prices and raising prices, you know, because that can be risky too. If you keep raising the prices at some point, people will stop spending the money to pay those prices. Yeah. That makes sense when they got nowhere else to go, like you're the local electricity monopoly or whatever, right?

Oh, yeah, sure. all right well so now i mean but this is the whole point here is you're saying when we get to this magic number of the debt to GDP ratio thing here at some point the iron laws of the universe kick in and start beating the american people's ass for the trouble our government has got us in and at that point what they have to inflate away the debt by turning the money machine on full blast and then so that means is that right and that means what for people listening and what do they need to do to protect their neck yeah that's that basically what happens when you it's when you get to that i guess pivot point is that the bond market because people own government

bonds they start to worry about this in you know the coming inflation and you know my I get rid of my interest on these bonds, a good price that I paid, and they'll start to sell the bonds slowly. I'm not saying the bonds just crash or something, but the bond market actually tends to move very slow, and when the bonds go down in value, the interest yields on them go up, which that hurts the economy and hurts the stock market. And the Fed most likely would actually lower interest rates, even if they're going to, you know, inflation is coming at this point and just say okay this is just going to be what it is for the next

couple years and just going to have to inflate these debts away and go through this this is what's going on for as i mentioned before in turkey the past couple years this is just the way things happen um now but if like if somebody wants to save themselves by say buying some land because that'll appreciate that still means they got to be able to keep up with the property taxes right we were talking about and that kind of thing so you have oh yeah how do you yeah yeah well i mean i would i would say you know if you want to take advantage of it uh and i'm not doing this when i say this but yeah investing in land would be a good way to do it if you can lock it in at the current you know interest rate um but you know i'm just doing it by owning gold and silver um what i've

figured looking at this stuff is that gold and silver will go up about twice as much what the dollar will fall in value so if I just put a portion of my money or assets into that then I'm not really I assume my gold and silver will go up more than the dollar will fall in value and be fine but but one thing too I want to tell you um so Earlier this year, I started, this specific thing about the debt to GDP, it got over 120%. Now it's 122 and some change. When it got to 120, that's when I started to get concerned about it and went back and looked at these books that I got and so forth. and I happened to go to a local political meeting

where our Republican congressman he was there and some Republican that was running for the Senate was there and they both spoke and the congressman talked about this issue and then the guy that's running for office he is a his background is he's a staffer for some congress for some other Republican congressmen and it's been doing that for 15 years or something and when they were done speaking

I talked to them one-on-one and I told them I'm worried about this debt GP thing and I said I just saw what to 120 percent and I asked him how fast is it growing and they told me that they don't know that the congressional budget office has projections but they're but they've been wrong and it's growing faster than they project yeah so as soon as I heard that I went home

and the next day I bought more gold and silver man and then so what do you do just bury in the yard I mean don't tell me which corner of the yard but like you buy uh certificates in companies that mine the stuff or what do you do well you can buy i have some physical gold and silver i just have it in the bank you know safety to buys a box but yeah you can buy it's and i do too this too you can buy funds that are on the stock market exchange rate of funds that own gold and silver and i do have individual mining stocks but they're more volatile and um i don't necessarily recommend everyone go buy mining stocks I see. And so this is what you're telling your people, because you're an advice giver on this, right?

Like you tell, or at least you show people, hey, here's what I'm doing. And this is what you're doing. You're just buying metals right now because the storm's coming. Yeah, yeah. I got about a third of my money in gold and silver exchange traded funds. That's all, you know, they stole physical gold and silver. That's it. And now, would you say, like, in typical good times that there was such a thing, like, midway through on the bubble or whatever, that, like, you would have 10% and now you're extra high up at 30 or you always tend to keep it that high?

No, this is the highest I've ever had it. I had about 14% let's say in February. So I've increased it. But, you know, I've owned it, I've traded it and owned it in the past. I mean, probably more than anything else.

I've traded gold and silver. But, um, this is a little bit you know the time we're in now I think is a little different right here we pause for an ad for our RBI

gold and silver brokers oh great there you go Connor insert ad here all right now back to the show but well one thing I'll say you know about gold it tends to be less volatile than the stock market

so for example in 2020 the stock that's of P500 fell over 30%, it's like 33%, and gold fell half as much, and then came back quicker than the stock market did. Now, one thing that's happened, with people, younger people, I'll say, in the markets that started trading in 2020 or so, I'll tell people what I'm doing. You know, I mean, I'm talking about at a bar or something, right? And they have, people have in their mind that it's not just young people.

I was talking to a, I went to a doctor's checkup and he's, I had the same sort of conversation. And they got in their mind that gold doesn't move much and it's safe. So it's something like rich people buy in order to protect their money, but they don't really they're not interested in it because they want to make a lot of money and gold doesn't go up enough so it's not going to make them a killing and that's what i thought pretty much a misperception that's just been created by what's been going on in the markets the past couple years well i guess the idea kind of is it the governments of the central banks always are deliberately suppressing the price of gold because they have so much control over the price and

They artificially use smoke and mirrors and bubble gum and string to keep it from reflecting how bad their currencies really should be doing. Well, I don't know. I'm not almost, I don't think they have that much control over the price. And something interesting has happened actually the past couple months. So the past couple years, the biggest buyer of gold, in the whole world has been the Chinese Central Bank. So they've been accumulating

gold every single month and then in May they didn't do it. They didn't buy any more gold and the price dropped 100 points when that news came out and then it's stabilized and now it's going

back up. And then just last week they issued a statement saying we didn't buy any gold last month either. so for like 18 months in a row they were buying gold and then the last two months they didn't buy any and so that's sort of a maybe a manipulation where they want the you know they want to put out these statements to keep it from going up so they can buy more or something but I don't I don't really think the U.S. government is putting a lot of effort into preventing gold from going up I mean, it's gone up for the past 20 years.

And I don't think people really care that much if it goes up or down. I don't think many people even pay attention to it. And like gold going up makes them think, oh, everything's going to go under or something. Yeah. Just don't think people even nowadays, they are so obsessed with what the U.S. stock market is doing or Bitcoin's doing or many other things. Yeah. Well, it sounds like you're saying. saying it is a great insurance policy

but also you can make money trading it yeah yeah yeah and silver silver tends to move you know with gold but just is more volatile you know goes up more when gold goes up goes down

more well I know from Dr. Paul the greatest American who ever lived he had a deal with his partner the doctor when he was an obstetrician that they would take all their money that they earned you know at the end of the year they would pay all their employees and pay their offices property

taxes and all this thing settle up all their bills and then whatever money they had left at the end of the year they would half it and then they both just did this I don't know if it was agreement with each other that they both then would put all that money in gold you know because it was like their extra profit beyond their salaries that they were paying themselves for being a doctor you know what I mean it's like the extra profit for the firm at the end the year and they would put all that in gold and so that was how he built his retirement savings you know was doing that and so not that he's a billionaire but he's certainly a millionaire and and is not dependent on anyone to take care of him because he was squirreling away gold all that time

a you wow that's interesting i never knew that that's a that's a neat story yeah that's I know someone who's done that with silver and they're in their 70s, you know, it's just like... It's sort of like that Jay Leno thing where he said he always has two jobs and he always spends money from one job and saves all the money from the other job. His whole life, he's always done that. And so even like, he takes his money from touring, but he takes all of his tonight show money. He took all of his tonight show money and saved it, you know? And then so even all those cars didn't come from tonight's show money. they came from touring and stuff.

Oh, wow. Okay. So same kind of deal only in this case with gold. It's that level of discipline that, like, all the money I get from this always go straight into savings on this one shiny thing, you know, paid off very well for him. And that's beginning, you know, that was from back in the 60s. So. Yeah, that's a, that adds up. He tells the story of how he knew better when Nixon took us off the gold standard that he, he was like, oh, no, because he'd already read all the Messassians and knew.

And in fact, he had agreed with Mises that Bretton Woods, the partial gold standard, couldn't last because the way it was structured, that it was going to fail. And here was the Messassians' prediction coming true. And therefore, he was more of an Austrian than ever, then, I guess, yeah. Well, another argument, you know, about the like I talk about. China buying gold up is if you look at the Bretton Woods agreement that was created after World War II and it lasted to 72

and now the U.S. dollar has been the reserve currency of the world and people talk about oh it's going to lose that status one day but it slowly is and that's a process

that is unlikely just to be like a collapse overnight or something. The British pound didn't lose its status overnight. It took like 30 years. And it's more that it just gets less slowly used

in the global economy and it has. I don't have the figures right in front of me, but probably within the last 20 years is that if you look at all the world transactions and what currency they're in, probably it's 10%

less now in the U.S. dollar than it was. And actually the pound is still one of the biggest currencies in the world. So I'm just trying to suggest that there are geopolitical reasons for gold to be going up or for people around the world to be buying it. If you look at what happened when Russia invaded Ukraine, the U.S. basically cut them out using U.S. dollars that froze their reserves that they held in treasuries and every other country in the world saw that and now can't feel like dollars are safe reserves if they have a reason to think they may come in a conflict of the United States, which Iran could,

even Saudi Arabia, China. It's just an endless list of countries. And you don't know. It could be Brazil. You know, they could have a change in government. The United States decides it doesn't like just as happened in Bolivia. Yeah. All right, listen, I'm so sorry, man.

I'm out of time. I got to edit this show for the L.A. show this afternoon. And the clock is just killing me today. So I got to cut it short. but thank you for coming back on the show it's been great to talk to you always learn so much the scott horton show anti-war radio can be heard on kpfk 90.7 fm in l a psradyo dot com antiwar dot com scott horton dot org and libertarian institute dot org