Kind: captions
Language: en
Right now, gold is at or over all-time
highs. And you've said that the rising
price of gold is a warning sign. So,
what I want to know is what is a high
gold price a warning sign of? Yeah.
Well, first of all, gold closed today
above $4,200.
It was just a week ago that it traded
above 4,000 for the first time, and now
we're $200 higher than that. Silver
closed above $53.
Uh that's an all-time record high for
the price of silver. Back in the uh I
guess the latter 1990s when Allen
Greenspan was Fed chair, he was asked
about gold. You know, when he went to
Congress to testify cuz he was an old
school gold bug. You know, he wrote an
article, the case for gold, which is in
one of Ran's books, uh Capitalism, the
unknown ideal. So he was a big gold
advocate. And so he was often asked
about gold. And
in one of these uh um questions, he said
that even though we're not on a gold
standard, he said that he uses gold as a
tool.
>> Uh and he looks at the gold price as an
indication of whether or not he's got
the correct monetary policy. And he said
if gold is, you know, up towards 400,
uh that means that my policy is too
loose. and if I see it down, you know,
at 300, then I'm too tight. Of course,
at the time it was around 350, right?
So, he said, "Look, you know, I'm
watching gold's reaction to see what it
does
>> to know if I've got the correct interest
rate because I'm looking for a market
signal." So he said, "While we're not
technically on a gold standard, I'm
using gold as as a way to conduct
monetary policy because it's a market
mechanism to let me know if the policy
is correct." Well, now gold is soaring.
And so what that would tell Greenspan,
if he was still Fed chairman, is that
monetary policy is too loose and that
interest rates need to be higher. Yet,
despite this, the Fed is poised to cut
rates even more. And and so gold is a
warning sign a that the Fed has got the
policy wrong, that these rate cuts are a
mistake, and that in fact rates are too
low and they need to be raised. But I
also think it's a bigger warning that
the world is getting rid of the dollar,
that foreign central banks, foreign
governments are losing confidence in the
dollar. as a stable long-term store of
value. Uh they have no confidence in the
fiscal responsibility of the United
States Congress or the president to get
his house in order. Uh and they're
losing confidence in the independence of
the Fed, which is being uh you know,
beat up constantly by Trump uh putting
political pressure on the Fed to cut
rates, print money, create inflation.
And so I think the world is moving away
from the dollar and we haven't seen this
kind of movement in the price of gold
since the 1970s. This is the best year
for gold. Gold's up almost 60% on the
year.
>> Oh,
>> and you you you have to go back to the
1970s to find a year where that
happened. And there were several years
during the 70s when that happened. But
the significance of the 70s is we went
off the gold standard in 1971. And when
we did that, it was a gamecher for the
monetary system and the dollar lost a
lot of value. And so gold went from $35
in Alps to $850. But what's happening
now, I think, is just as significant,
maybe more so, because now it's not the
US that's going off the gold standard.
It's the world that's going off the
dollar standard. And what this means for
America is a complete collapse in our
entire economy and our standard of
living. Because over the past 50 years,
we've grown completely dependent on the
dollar's reserve status. That's how
we're able to live beyond our means.
That's what makes these trade deficits
possible. Uh that's why we can buy
stuff, consume what we don't produce.
That's why so many Americans can borrow
without anybody saving. uh because we're
tapping into the rest of the world's
productivity and the rest of the world's
savings and the vehicle uh to do that is
the dollar and its status. Well, as the
dollar loses that status uh our ability
to rely on foreign production and
foreign savings is gone. And that means
our whole economy implodes because
without foreign production, foreign
factories, we we can't produce the goods
that we consume and we don't have the
savings to finance our massive debt. And
so we're headed for an economic crisis
uh much greater than the 2008 financial
crisis. That is what gold should be
telling everybody that a monetary
crisis, a US dollar crisis, a a a debt
crisis is just around the corner, right?
This is the economic, you know, canary
in the coal mine that's dying here. And
I think this is a a bigger warning than
the subprime blow up in 2007 was about
the financial crisis that hit in 2008.
And when the subprime market blew up, it
was obvious to me what was coming
because I had seen years in advance that
the subprime market would implode and I
knew that a financial crisis would would
follow. But most people on Wall Street,
including the Fed, actually had no clue.
Even when Subprime blew up, uh Ben
Bernaki said, "Don't worry about it.
It's contained." And I, you know, I knew
that that was nonsense. Well, the same
thing is happening now. I've been
waiting for years. I've been predicting
for years what is happening in gold
would eventually happen. It's now
happening for the very reasons I always
warned that it would happen. And now
what it is confirming is that the
currency and sovereign debt crisis that
I've been warning about for decades now,
not just years, is finally upon us.
>> Uh and it should happen maybe as early
uh as uh next year. That is a I think a
very astute prediction and you're
getting at the cause and effect, but I
want to drill into the actual mechanisms
that make this happen. So you've thrown
out a couple ideas. One is this sense we
need to get our house in order. I want
to know what that is. Uh another is that
the world is moving away from the
dollar. So there's going to be some
mechanistic reason why they don't trust
it anymore. I want to understand that.
Um but I want to frame it in the idea of
in 1971 we go off the gold standard in a
very acute moment. So Nixon goes on and
he says, "Hey everybody, I know that we
previously would give you gold for your
dollars. Sorry, we're not doing that
anymore."
um and you had a moment right then. You
could just point to a calendar and say
that's exactly when it happened down to
the minute. We don't have that same kind
of thing happening now, which I think is
a big part of why people are able to
confuse themselves or tell themselves a
story. So, walk me through the
mechanisms of how the dollar got in
trouble. Um is this just a game of debt?
So, what does it mean to have our house
in order?
>> Yeah. Well, first of all,
going back to the coinage act of 1792,
right after our republic was first born,
the dollar was legally defined as a
weight of gold or silver. So that's what
a dollar was. It wasn't that dollars
were backed by gold. The dollar was
gold.
>> The dollar was silver.
>> And of course, back then there was no
paper currency. uh but there were bank
notes that were issued by private banks
but they were just IUS for for dollars
which were uh gold and silver coins.
Now, when the Federal Reserve uh was
first introduced in 1913 as a you know,
basically a private banking syndicate
uh that issued notes, again, those notes
were not dollars. And in fact, if you if
even if you take a Federal Reserve note
today and you look at it and you read
it, it says this note is legal tender.
It doesn't say this dollar is legal
tender. It says this note. And a note is
a promise to pay. Originally, those
promises paid dollars. the dollars were
gold and silver. Now, um in 1933,
uh during the depression, Roosevelt
suspended the convertability of notes to
lawful dollars and in fact made it
illegal for Americans to to own uh gold
to gold. And so you can no longer take
your Federal Reserve note to the Federal
Reserve Bank and get gold.
>> Peter, why did he do that? Was that they
needed the gold for something or
>> Yeah. because the government,
>> well, they wanted to do a big stimulus,
but they didn't have the printing press
the way they did today. We were on a
gold standard. And so Roosevelt
basically took everybody's gold and gave
everybody $20 an ounce. And then after
they got the gold, they devalued the
dollar and said, "Okay, the gold we just
took away from you is now worth $35 an
ounce." And that gave the u the US
government a lot of extra money to spend
to try to stimulate the economy. That
was how they ran this this stimulus.
>> That's wild. So they confiscated
people's gold so that they could debase
the
>> Yes. Yes. So of course a lot of people
didn't turn in their gold. They kept it
that you know they were smart. The smart
ones didn't turn it in. Um but you know
they appeal to your sense of patriotism
like you know we need to do this to help
you know get us out of this depression.
Um, but Roosevelt didn't tell people
what he was going to do with the value
of the dollar once everybody turned in
their gold. Um, but he never did this,
you know, to foreigners. So, they never
suspended the convertability of the
dollar to gold for overseas holders of
these notes. And in fact, when we had
the Bretton Woods at the end of the
Second World War, where the world agreed
that we would have this monetary system
backed by the dollar,
the dollar, right, the Federal Reserve
notes, even though American citizens
couldn't take them to the Fed and get
gold, the Germans, the French, the
Japanese, the Italians, any other
foreign bank that owned the Fed had
Federal Reserve notes could go to the
Federal Reserve serve and if they gave
him 35
notes, $35, whatever, they got an ounce
of gold. That was the deal that we made
with the world. The in fact, it's the
Federal Reserve note was really like a
bond, a promise to pay a a quantity of
gold. And and so that continued up until
the late 1960s.
And the problem was during the 1960s the
US government really started to run
large budget deficits. Uh I mean not by
today's standards but you know by the
standards back then uh because we were
fighting the war in Vietnam. Uh we were
fighting the war on poverty as part of
the great society programs. You know we
were funding the space program.
uh you know the government was spending
a lot of money and running deficits and
um and so the Fed was printing money to
fund them but we didn't have the gold.
We didn't have enough gold to back up
the notes and a lot of foreign countries
recognize this and they said you know we
don't think America has the gold. Uh so
we're going to go get it. We're just
we're not going to hold these Federal
Reserve notes. We're not going to wait
for America to default. we're going to
take these notes to the Federal Reserve
right now and get our gold. And so that
started to happen. And so all this gold
started to leave the US uh because the
world rightly didn't trust us anymore.
>> Now Nixon had a decision to make at that
time, right? Cut back on government
spending, right? Balance the budget, act
fiscally responsible
>> so that the, you know, the gold doesn't
keep leaving. maybe devalue the dollar,
you know, to a new lower level, so make
gold more expensive because they had
printed so much, allow a deflation to
take place. You know, basically Nixon
could have done the politically
responsible thing, but why would he want
to do that, right? So, they tried to
think, how can we, you know, continue to
run these big deficits
uh and and and not have to be
responsible? And they said, well, let's
just temporarily close the gold window.
It was supposed to be temporary. Let's
stop the bleeding by like let's just
default basically what they did. We're
not going to let you get any gold for
your dollars anymore. And so that's what
he did. 1971 said you can't you we're
not going to honor these notes. Now,
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back to the show. So, if you have $35 or
$42 cuz we devalued a couple times, but
if you have $42, you can't take them to
the Federal Reserve and get an ounce of
gold. You can't get anything, right? So,
if you've got $40, all we'll give you is
220s or 410. We're not going to give you
any gold. And and so as a result of
that, the dollar crashed during during
the 1970s. I mean, the dollar lost about
twothirds of its value against other
fiat currencies.
>> What? Really? I didn't realize it was
that bad.
>> Well, I mean, yeah, it went down about
2/3 against, you know, the mark, the
frank, the yen, the pound. But um
against gold, that's where you really
saw the loss because it went from
basically $35 an ounce at, you know, the
beginning of the decade. You needed at
the peak in 1980, you needed $850
to buy an ounce of gold.
>> And that's why oil oil prices were $3 a
barrel in 1970. They went to $40 a
barrel in 1980. Now, a lot of people
back then claimed that it was the Arab
nations, right? They were the ones that
were screwing us by jacking up the price
of oil. But that's not what happened. We
tried to screw them over by giving them
paper for their oil instead of gold. And
when we were paying real money, they
were willing to sell us uh oil for $3 a
barrel. But that's when it was gold. But
when we tried to just give them paper
that we were cranking off the printing
presses, well, now they needed $40,
right? It's not their fault. We changed
the rules. We debased our currency. We
can't expect them not to raise their
prices uh to compensate for that. Uh and
and and so one of the main reasons that
so many women were working in the 80s
that didn't have jobs in the 60s was
because the 70s destroyed the purchasing
power of their husband's paychecks.
>> Uh so before the dollar collapsed, a man
was able to earn enough money to support
his wife and kids. But as a result of
the loss of purchasing power of the
dollar and higher taxes that also went
along with that decade, um most men
could no longer support a stay-at-home
wife.
>> Why didn't real wages go up?
>> Well, no, we real wages went down. They
crashed. You know, nominal wages might
have gone up, but the real purchasing
power of those wages went down. And so
now you needed a second bread winner.
>> But wait, why why wasn't the reaction?
So if I'm working at that time um and
I'm like okay the government has
inflated the life out of the money
supply doing the wars all of that uh but
now I'm going to put pressure on my
employer to get paid more. Why didn't
cuz that essentially is you're just
driving down the what you're actually
having to pay.
>> Well people did get raises yes but they
they didn't keep pace with the rise of
the cost of living. That was the
problem.
>> So, let me let me get at what I'm really
driving at. So, right now, I'm telling
myself a story, and maybe I'm just wrong
about this, that when I look at the data
and I see the reason why real wages
aren't going up right now, the answer is
because we've offshored so many jobs.
Uh, we've hollowed out manufacturing, so
there's a certain type of worker that
just doesn't even have an option to work
even if they wanted to. Um, we've pushed
everybody to get a college education,
not go into the trades. And so you've
got this thing where you offshored,
let's say, two to three million jobs.
And that has made it impossible for
those workers to have the kind of
leverage that they would otherwise have
in the job market because if I'm an
employer, I just go, "Oh, you're
clamoring for more money? Nah, I'm just
going to move my factory to China, to
Mexico, to wherever." But were we
already doing that in the 60s and 70s? I
didn't think we were.
>> No, we didn't. We started doing it. um
after that because you know first of all
back in the 60s and 70s China was still
an actual communist country so you know
we didn't get anything from China back
then um but the reason that so much of
our uh you know production got
outsourced had to do with our regulatory
and and and tax policy
uh during the the 70s and the 80s and
the '9s that drove up the cost of
production here in the United States.
Um, and and and and made it more
attractive for companies to lower their
costs by manufacturing outside the
United States. But what kept the worker
from having the leverage to say the
dollar has gone down. You can't keep
paying me this. You can't keep paying me
the same thing.
>> Yeah. Well, obviously a lot of American
workers didn't have the bargaining power
uh because they would have priced
themselves out of a market because there
was uh another option. But it wasn't
just the wages capital.
>> Well, I you you could you could use
foreign workers. You could you could you
could produce abroad. But the it wasn't
just the wages. It was the factories.
You see,
people in other countries were saving
money while Americans were just spending
money. We were spending our money to buy
stuff. But in China, they were saving
their money so they can build the
factories.
>> And so the Chinese workers were more
productive because they had the capital
investments that the American workers
didn't have because we didn't save as a
society. And so we couldn't fund the
type of investments uh that were being
financed abroad. So places like China,
they built out all the infrastructure uh
the factories, the supply chains in
order to produce. Yeah. My my mother for
one time wor you know worked in the in
the in in the in the shoe industry and
you know she's retired now but you know
almost all the shoes were made in the
United States that we that we wore but
over time
you know factories opened up in China or
Indonesia or India that could produce
the shoes uh at a lower cost even with
shipping them across the ocean. And you
know, businesses are under competitive
pressure from the customer. Cuz I'm a
customer, right? I want to buy a pair of
shoes. I'm shopping around. I'm looking
for the best deal, right? And I want to
buy the shoes that are the highest
quality but the lowest price. I'm going
to, you know, and if there's a company
that's getting their shoes from China,
and because they're bringing them in
from China, they're a lot less expensive
than another company that's making them
in America. Yeah, I'm gonna buy the ones
made in China.
>> I want to pause you for a second because
I really want to understand the
difference between what happened in the
70s and what's happening now. So in the
70s, is it that other countries because
it wasn't China to your own point just a
minute ago. It wasn't China that was
coming out of communism and developing
the goods that happens in the '9s. But
in the 70s, what it sounds like
listening to you is it sounds like there
were two things that were going on. one,
other countries, not China, but other
countries were realizing um that we can
import goods into the US. And so we as
consumers were like, "Yes, please. I'm
feeling strapped. I'm going to get
cheaper goods from outside the US." And
then the other thing is that I I am
putting forward and I would love for you
to attack this idea if you think that
it's inaccurate, but I'll put forward
that what was going on is the average
person just didn't understand what was
happening to them. They did not
understand inflation in the way that we
understand it now. Certainly not the
average person. We don't understand it
now either. Most of I mean we might
>> but and and and the US government
deliberately confuses people about
inflation. The government doesn't want
the public to understand what inflation
is because then they would know that the
government causes it. The government
creates it by design. Inflation is the
government's silent partner. Inflation
helps solve a lot of problems for the
government. It creates a lot of problems
for the people. But the government
doesn't want to know. That's why they've
redefined inflation. The actual
definition, and again, if you get an old
enough Webster's dictionary, you'll read
it. But inflation is an expansion of the
money supply or credit. Expansion of
money and credit. That's inflating.
Inflation because what's being inflated
is the money supply because the word
inflate means to expand. That's what
inflate is. Uh you don't you don't
expand a price. Prices go up and down.
They don't they don't inflate. It's the
money supply that inflates. Now
deflation is a contraction of the money
supply. Now when you expand the money
supply, a result of that is that prices
go up. So whenever the government
creates inflation, prices end up going
up. Now what the government wants to do
is call the prices going up inflation
and not the expansion of the money
supply. And the reason is now the
government can blame whoever's raising
the prices. So oh, why are prices up?
Because greedy businessmen raise the
prices. They're exploiting you. they're
taking advantage of you or greedy labor
unions demanded higher wages or
speculators drove up prices or Putin or
whatever. You know, they can always
blame whoever's raising the price, but
prices are raised because of the
inflation that the government has
created that results in prices going up.
So, they're not honest and then they
come up with these gimmicks like the CPI
that are supposed to measure inflation
based on the impact on prices. Yet, the
methodology is so flawed by design that
if prices go up 10%, the CPI says
they're up 4%. Right? So, if you if you
just look at the CPI, you have no clue
what's actually happening to prices,
right? prices are rising at least twice
as much as the government will ad admit
uh with their doctorred uh statistics.
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now let's get back to the show. Okay, so
we've got uh internationally people are
moving away from the dollar. How far
does that go given that there was no
announcement? Um, are people are are we
at the beginning of something where they
already have enough impetus that they're
just going to keep drawing down
presumably into gold into stocks um so
that they are not carrying anything in
USD or will something have to keep
ratcheting up for them to keep drawing
down?
>> Well, I think right now it's kind of a
gradual process. It's maybe speeding up
a bit, but foreign central banks are
moving out of dollars. They're moving
out of treasuries or mortgage back
securities and they're moving into gold.
Gold is the replacement asset for the
dollar. That's what you're saying.
>> That's going to be the new reserve
currency.
>> It's the reserve asset. It's not a
currency. Gold is money. And you know
before the dollar became the reserve
currency,
gold was the reserve for every currency
including the US dollar. And when the US
dollar originally became the world's
reserve currency, it was backed by gold.
And so in effect, the world was still on
a gold standard just through the dollar.
And the dollar was as good as gold. Or
at least that's what people thought
until we defaulted. It's only been since
1971 really that we've had a monetary
system without any money, right? We we
we've had fiat currencies backed by a
fiat currency. Now, of course, central
banks have always had some gold, right,
as reserve. And the countries that had
the most gold were the old uh uh
established countries, Germany, France,
right? They have a lot of gold, right?
The emerging economies like a China or
an India, they had almost all dollars.
They hardly had any gold, right? Those
are the countries now that are buying
the most gold because they want to
reconstitute their reserves to be more
heavily into gold and less dollars. But
the significance of this is that as the
dollar goes down, which it is going to
lose purchasing power,
everything that Americans buy is going
to be a lot more expensive. uh because
you know we're going to have to pay a
lot more dollars to to pay for things
and our interest rates are going to go
up a lot because what what foreigners
have been doing is they sell us goods
that we didn't produce and now we get to
consume stuff and then they take the
money that we paid and they lend it
right back to us by buying government
bonds or mortgage back securities. And
so Americans won twice, at least
initially. We got cheap goods we didn't
have to make, and we got to borrow money
that nobody saved. And those
artificially low interest rates also
caused stock prices to go up, real
estate prices to go up. So on paper,
right, we're getting richer. All of our
assets are going up. But in reality,
we're getting poorer because our debts
are going up. We're borrowing more and
more money from the rest of the world so
we can continue to consume and live
beyond our means. But the world is now
going to pull the rug out from under us
because they're moving away from this
system. And the irony of it is we chased
them away, right? It it's not like they
they did this on their own. First, it
was Biden who said, you know, who who
sanctioned Russia and sent a wakeup call
to everybody that you got to get out of
dollars or you could be next, right? we
can yank your dollars away whenever we
want if you do something we don't like.
But then Trump comes in and not only
signs on to the big beautiful bill,
which was a disaster of deficit spending
and lets our our creditors know we're
never going to get our house in order
because even the Republicans won't cut
government spending. Um they're going to
increase it. But then he uh vilified the
world and imposed all of these tariffs
uh to make it even more expensive for
Americans to buy the goods that the
world is selling us to get our dollars.
And then uh he beats up the Fed and says
you need to slash interest rates. We
need, you know, 1% interest rates or 0%
interest rates when inflation is already
rising. But he's also destroying the
perception of Fed independence. So all
of our credibility has been destroyed.
We have no fiscal responsibility
credibility, no independent Fed monetary
policy credibility. We've already
screwed over uh people with sanctions.
So the there's no reason for the world
to continue with this dynamic. And so I
think the whole thing is coming to an
end. And it's slow now, but it's going
to speed up. right now the the the
strength in gold has not bled into the
foreign exchange market. So the dollar
relative to the euro or the pound or the
yen is been relatively stable these last
few months. Uh I think that's going to
change probably by the end of the year
or next year. We're going to really see
the dollar start to come down and that's
going to really push up uh import
prices. And so the CPI is really going
to start to blow up uh in a big way.
>> What do you think is going to cause
that? Cuz given that other countries
have also been inflating their money
supply, I get why the dollar is
relatively stable compared to everybody
else. So what do you see happening that
will cause
>> the dollar is going to go down against
those other currencies. And so the price
of everything we buy is going to go up
because you know everything's going to
be more. What I'm asking is what's going
to happen that's going to cause the
dollar to go down relative to other fiat
currencies that also have their own
problems.
>> Yeah, it's well it's going to be the
holders of dollars selling them and
buying back their local currency. So
people in Europe are going to sell back
their dollars to buy back their euros,
right? They're going to they don't want
their dollars anymore. And also the
global performance like the US stock
market is one of the worst performing uh
stock markets yearto date especially in
you know if you you know adjust it for
currencies like for example we have a uh
a a fund that we manage at Europe
Pacific Asset Management it's a it's a
global dividend payers fund Europeific
dividend payers fund and we have a
separately managed strategy and that
that strategy is up almost 50% in US
dollars year to date.
>> Yo
>> um and you know triple the return on the
US stock market and the US stock market
is very expensive relative to the rest
of the world. So I think what's going to
be happening
>> what you guys invested in sorry to that
you're getting
>> dividend paying stocks you know a pretty
>> feel so safe in that that those are
climbing in value. Well, yeah, they're
people are put people are putting money
into those stocks uh and taking money
out of US stocks, you know, but I think
that trend dividend paying stock is not
a growth stock. So, I would only expect
people to go into that if they're uh
they they just prioritize cash flow, but
that doesn't explain the sudden jump and
safety though. Well, let's say the
dividend payer stock is very cheap and
it, you know, so people the price can go
up because more people want those
dividends and now the price of those
stocks uh has gone up. And of course,
you know, a lot of the stocks that pay
dividends have rising earnings. You
know, it's not like they don't grow
their earnings. They they grow their
earnings and pay dividends. So, you
still get appreciation uh in the share
price. You also get uh the currency
appreciation. you know, a good chunk of
the of the gain on foreign stocks has to
do with foreign exchange. As the dollar
goes down, uh the price of foreign
stocks in dollar terms goes up. Uh so I
I I think you're going to see um you
know, Europeans and Asians who are
getting out of US stocks, then selling
their US dollars to get back their local
currencies to invest locally.
>> Hold on one sec. That hypothesis makes
the prediction that people trust their
local currency more than the US. Do you
think that's just because the debt
spiral is going to continue? Yeah. A and
and and also, you know, just because
they're they're bringing their money
home, right? They they're going to
repatriate it. I mean, if they bought US
stocks, they, you know, they didn't
necessarily want US dollars. They wanted
to buy a US stock, but when they sell
the US stock, they want their local
currency back. Uh, and that's and that's
what they're going to get. But also with
bonds, you know, some of the biggest
selling is going to be in US bonds.
people around the world, governments and
private citizens who own US treasuries,
US mortgage back securities, they're
going to get rid of those because
they're they're losing on the foreign
exchange. The interest isn't high enough
to offset what they're losing. So,
they're going to be selling their
foreign their US bonds and then
converting those dollars back to their
own currency and that's going to put
downward pressure. Uh but of course the
other problem is as the US economy goes
into recession as a result of rising
inflation, right? Stagflation, what does
the Fed do? Prints more money. We need
economic stimulus and they throw
gasoline on the fire. They accelerate
the flight out of the dollar uh into
foreign currencies into hard assets. And
you know the US dollar is the reserve
currency. And so if the US dollar is
going to lose that status to gold, that
is a unique problem that America is
going to deal with because no other
country is going to be losing reserve
currency status because no other
currency has that status to begin with.
And that status has been responsible for
our entire way of life. It's the reason
that we can consume so much. It's the
reason that we don't have don't have to
save very much. And so that whole thing
is going to be knocked out from under
us. And we've built up this entire
economy that is based on that. And if
you take away the foundation of a, you
know, creditfueled consumer-based
economy, then that whole economy that's
been erected on that foundation
collapses. And that's what we're looking
at, a complete economic collapse, much
worse than the '08 financial crisis. And
the bigger difference is there is no way
the government can bail us out because
the reason that the government was able
to bail out, you know, in 2008 is
because people still wanted dollars.
People still wanted treasuries. So the
government could print money and, you
know, buy up toxic mortgages and send
out stimulus checks and, you know, it
worked uh in a sense. I mean, it didn't
really work. It made the problem worse,
but it it it arrested the the the
immediate problem. But when they try to
do that again, it's going to backfire
because the printing of the money is
just going to drive the dollar even
lower and and inflation is going to sore
and the the the stimulus is going to be
a massive sedative.
All right. So, what becomes the um the
unfolding of events? How do we respond
to that? We've got the debt spiral
going. More and more people are going to
pull out. that's going to uh make it
impossible for people to get their
debtfueled life going. So that's going
to start to dry up. Um what happens?
When do people stop being able to make
payments? What does that look like?
Well, you know what we need to do, what
we should do in response to this is the
responsible thing, which would be
massive cuts in government spending,
um, higher interest rates, and to allow
companies to fail, banks to fail, uh,
and not have any government bailouts. It
would be very difficult. It would be
very unpopular and painful, but it would
be the right thing. Right now, that's
not going to happen. Right? Because you
know Nixon had the choice of doing the
right thing or the wrong thing and and
he did the wrong thing. I mean when
given the choice of doing the right
thing or the wrong thing, the
politicians always choose the wrong
thing because they're always looking at
it from a politically expedient
perspective. Like you know how do we
make the pain a little bit less today?
Who cares about tomorrow? I just care
about the election that's coming up.
Right?
and and and so, you know, we're going
to, you know, just try to print money
and create government programs, and
maybe we're going to have um price
controls, uh national price controls.
They'll try to stop, uh prices from
rising by making it illegal to raise
prices. There may be foreign exchange
controls to prevent Americans from
converting their dollars into other
currencies. Um, I mean, who knows what
they're going to try to do uh to stop
the bleeding, but none of it is going to
work because the the underlying wound
that we're bleeding from is going to
just keep getting worse as they're
trying to, you know, put on all these
band-aids without getting to the the
root uh wound that that that that's
underneath.
>> Do you think I oversimplify it to say
that the underlying wound, just to be
very specific, is debt? Well, debt is
the consequence of the fact that we
don't save enough and we don't produce
enough and we don't do that because of
our reckless monetary and fiscal policy
that we've been pursuing. But the reason
we've been able to pursue it for as long
as we have is because of the reserves
status of the dollar. So, we've been
able to get away with it. We've been
able to kick the can down the road for
generations now. And just to be clear,
because I want people to be able to
follow the mechanism here, the the way
we've been able to get away with it is
we can always issue new debt. There's
always more debt to cover the old debt.
And so, never a problem. Just keep
printing money to cover the debt. People
will buy the uh debt because they want
our dollars. As soon as that stops, we
can no longer issue new debt to cover
the old debt. We can no longer issue
debt to make the interest payments. And
so, you find yourself with, uhoh, there
actually is no more source of magic
money.
>> Yeah. We've been creating inflation and
then exporting it. We export our paper.
We import real goods that we don't
produce and and then we borrow the money
back from the people who have vendor
financed the stuff that we bought. You
know, we've been riding on the global
gravy train. I mean, Trump has it
backwards. He he believes that the
world's been ripping us off. We've been
ripping them off. You know, we we've
conned them into giving us all their
stuff for just paper.
uh and and and and this is the system
that is going to collapse and I think
you know this is going to be very
liberating for the rest of the world. I
mean when Trump talked about liberation
day he wasn't liberating Americans. He's
liberating the world from having to
support Americans. Uh so the world is
going to see an improvement in their
standard of living because now the
world's going to have a lot more stuff
to consume and a lot more uh money uh to
invest and borrow uh for themselves,
right? They're not going to be shipping
all the production to America and
they're not going to be lending us all
their savings. So they're going to
retain the goods and the savings for
themselves to make their own lives
better instead of making our lives
better. So, this is going to be a rude
awakening uh for Americans. Nobody seems
to understand this in Washington. I
mean, the current administration, unless
they're all just a bunch of liars,
they're completely clueless. And
everything that they're going to do
as a result of what's going to happen is
going to make what's going to happen
worse. Okay. So, what should somebody
who believes in everything that you're
saying, what should they be doing right
now? Is gold just going to keep going up
and just dollar cost average into gold
or is there another play?
>> Yeah. Well, first of all, everybody
needs to own gold and silver. I mean,
I've been saying this for 20 years. When
I first started buying gold for my
clients, it was under $300 an ounce.
Silver was $4.5 an ounce, right? So,
both are up more than 10x, right? uh
gold and silver have beaten the stock
market over, you know, the last 25
years. In fact, 26 years ago, in 1999,
that was the all-time record high for
the US stock market. The Dow Jones was
worth 45 ounces of gold. It's now worth
11.
>> It's a 75 a 75% decline in terms of real
money over 26 years. Peter, is there
anywhere that you can go to find that
data fast? Like is there a tracker that
shows this is the average house price
compared to gold? This is the stock
market compared to gold. You could you
could plug it in because you know you
know where gold was and you know where
houses were. Just you know run the
charts. I mean everything is cheaper.
The government wants you to believe that
prices go up every year only in their
inflated currency. In real money stuff
gets cheaper every year. That's how it
works. And you know when we were on a
gold standard between 1800 and 1900 that
100red-year period consumer prices were
cut in half. So stuff was half the price
in 1900 as it was in 1800 because we had
real money. We had honest money during
the 19th century. Now prices go up
because we have fake money. We have
funny money. But if you go back and
price stuff in real money, you'll see
that prices have been coming down. And
that's the beauty of capitalism. We find
better ways to make stuff cheaper. Th
this is one thing that drives me crazy
when I try to get people to understand
that when the Fed says inflation is 2%,
they mean they've gobbled through all of
the innovation deflation. I know it's
not technically deflation, but the
innovation reduction in cost of
something
>> plus 2%. And yeah, and it's it's
ridiculous for the Fed to say that we
need prices to go up. Why? Why? What?
You know, it ne it doesn't make any
sense when you examine it like do you
want food to be more expensive or less
expensive? Right? Do you want a college
education that costs more or costs less?
Right? Do when when you go to the gas
station, are you happy when the gas
price is up or are you happy when it's
down? Right? We all want lower prices.
Lower prices are good for everybody,
including the business. Businesses are
always trying to find ways to lower
their prices. Why do you think they have
sales? They they because they know if
they can lower their price, they'll sell
more stuff, right? Because people can
buy more if the price is low. It was
idiotic for the Federal Reserve to claim
that the key to prosperity is to make
sure that prices go up every year. That
is nonsense. The only reason they
invented this BS about 2% inflation was
because we were lower than 2% the way
they measured it. And they wanted an
excuse to print money and stimulate the
stock market and artificially goose the
economy. So they came up with this
nonsense that their mandate was to have
2% inflation, which was never their
mandate. Their only mandate was price
stability, which means no inflation. But
even falling prices is better than
stable prices. Why prevent prices from
going down? Why deny people the
benefits? You know, imagine if they did
that in specific industries. They, oh,
computer prices can't come down. Cell
phone prices can't come down. If that
was the case, nobody would own cell
phones. They'd still be too expensive
for most people to buy them. The only
reason that everybody owns one now is
because the price came way down, right?
What was wrong with that? how you know
the company cell phone companies that
make cell phones make a lot more money
now selling cell phones for a few
hundred dollars a phone than when they
were 5,000 a phone and when they were
5,000 a phone that's how much a car cost
you know uh and so the price came way
down and then everybody benefits from
from from low prices but prices now
though are going to soar because the
this game is over able to you export our
inflation. All the money that we're
printing is going to stay here. And a
lot of the money that we printed and
sent abroad is going to come back here.
So all these dollars that have been
circulating around the world and that
have been invested in US assets are
going to come back here and be spent.
And so they're just going to drive up
prices for everything. You know, uh a
lot of our used cars, used car prices
are going to sore. Why? Because Asians
are going to come buy used cars, right?
You know, they'll just start buying cars
and bringing them back to China, right?
Because they'll be cheap here because
the, you know, our currency is going to
collapse. And so now they'll be able to
buy up all this stuff and so the prices
go up because now you have foreigners
coming in buying whatever's not nailed
down.
>> Yeah. for anybody listening that you're
saying that's the exact reason that the
collapse of the dollar will be good for
the rest of the world is now we're not
able to mop up all of their goods and so
that's going to be uh released into
their own country where they'll finally
be able to compete with us from
>> Yeah. You see Donald Trump he keeps
saying that Americans are so important
to the world because we consume
everything. Well, we're lucky that we
get to consume the the the key is
production. You can't consume something
that hasn't been produced. So the real
economic drivers, right? When Trump says
that China doesn't have the cards,
they've got all the cards. We got
nothing. They've got the factories.
They've got the savings. They've got the
production. Yes, we have the customers
only because of the exchange rate of the
dollar. collapse the dollar, allow other
currencies to go up, and now the rest of
the world is rich, and now the rest of
the world can afford to buy everything.
It's now Americans who are broke and
can't afford to buy because the dollar
has gone down. And and I've always
argued that the world will be better off
consuming their own production rather
than letting Americans consume it. And
we're obviously much worse off if yeah
we can print all the money we want but
if there's nothing to buy what good is
it right? So this is going to be you
know a a a a gamecher
but you know the the government is going
to try to do what worked in 2008 and
2020 and it never really worked. It just
let us kick the can down the road, but
we've run out of road, right? We can't
do it anymore. And that's again, that's
what gold is telling you. So that's why
I said, look, you people have to get
into gold and silver now. Don't think
it's expensive. And you know, Jamie
Diamond, I just just today I read a
quote. Jamie Diamond said he thinks gold
can easily go to 10,000, which you know,
can go a lot higher than that.
>> But do that is catastrophic.
>> I get his own gold. But wonderful. But
>> but here's what Jamie Diamond said. He
said for the first time in his career,
>> it's not completely crazy to have some
money in gold. Right
>> now, it's never it's never been
completely crazy. In fact, it's been
totally sane.
>> Jamie Diamond just didn't understand
why. Like when guys like me were telling
people to buy gold when it was 300, 400,
500, a thousand, right? It was because
we understood what was coming.
>> Yeah.
>> Jamie Diamond didn't get it until just
now. Now he he's starting to worry about
the stuff that I've been worried about
for 20 years. Now Diamond is finally
worried about it. But now more people on
Wall Street are starting to worry about
what they should have been worrying
about all along. The problem is now
we're so far down this rabbit hole
there. There's there's no way out of it,
right? So it's, you know, when I first
started talking about this, it was early
enough to to do something to to prevent
the crisis. Now all you could do is, you
know, buckle up, right? The crash is
coming. Um, so yeah, you got to buy
gold. You got to buy silver. People
should go to shift gold. You know, in
fact, I tell people now when I do
interviews, if you're watching this
interview, don't even wait till the end.
Put it on pause. Go to shift gold and
buy some gold and silver because if you
wait till the end of the interview,
it'll be more expensive. So just go in
there and buy it now and and and have
some real money. Uh and and and then you
know also I think people should be
investing in foreign stocks. Gold stocks
I mean gold stocks you know have more
than doubled this year. I have stocks I
own that have tripled and quadrupled but
they're still cheap. You know this is
just the beginning. Hardly anybody owns
these stocks and hardly anybody owns
gold. We are at the very early stages of
what is going to be a generational bull
market in in in in in gold and silver
and and these mining stocks. This is
really this is really the first year of
the bull market, you know. Uh but it's
not going to end in one year. It's going
to last, I think, for the rest of the
decade and probably most of the next.
>> Damn. All right. If Jamie Diamond is
calling uh 10K believable, what is your
upper bound believable number for gold?
>> Well, look, there is no upper bound
because there's no lower bound to the
dollar. I mean, the dollar could be
worth nothing, in which case the price
of gold is is infinity. Uh if the dollar
is worth zero, yeah, no matter how many
dollars somebody offers you, you won't
give them any gold. Now, you know, as
far as where I think it's going,
I think that gold is going to be worth
at a minimum half of the Dow Jones at
some point. So, I I mentioned that the
the the Dow was at 45 ounces of gold in
1999 and now it's 11. So, I think it's
going to be down to two, you know, pro
maybe lower, but let's just call it two,
right? So, where would that be? Well, if
the Dow went to 20,000 and gold went to
10,000, that would do it. But, you know,
that would be a big bare market. The
Dow's like 46,000. So, it would have it
has a long way to fall. Let's say the
Dow goes to 50,000. Well, now gold has
to go to 25,000 and now you got 2:1,
right? So, that could be, you know, a
way it happens. Or the Dow goes to
40,000, right? Uh, and gold's gold's
20,000. Yeah. 25,000.
>> Why would if the companies are still
doing fine, why would the Dow drop so
much? Is it that you think this downward
spiral of the dollar is going to cause
the companies to start having trouble?
Well, I just if you look at the the last
two major declines in US stocks, they
ended with the Dow and gold at 1:1. That
was 1932 and 1980, right? At both of
those major stock market bottoms,
uh, you could buy the Dow for about an
ounce of gold. So, I'm not saying that
the Dow s