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 should be worth 2 ounces of
gold. I think it would be cheap at 2
ounces of gold. I'd be happy to buy the
Dow at 2 ounces of gold. I'm just saying
that if we get the type of decline that
I think that is the Dow's going to get
very cheap. It's not going to it's not
going to the bottom of this bare market
is not going to be fair value. Stocks
are going to get ridiculously cheap at
the bottom, just like they're
ridiculously expensive at the top. But,
you know, depending on how much money we
print, I mean, if we were to go back on
a gold standard, I think you'd probably
have to have 20 or $30,000 gold at this
point to make it work based on how much
debt we have and how many dollars are
out there. Uh, and I do think the world
is right now going back on the gold
standard without us, right? I think
foreign central banks are uh you know
going to be backing their currencies
predominantly with gold. They may not
make them convertible into gold but
their primary asset that they will hold
to defend the value of their currency
will be gold, not US dollars. And what
that means is they're not buying any
more treasuries. And you know who else
is not buying treasuries anymore? Maybe
Americans. Morgan Stanley just a couple
of weeks ago their strategist said that
we should recommend instead of a 60/40
portfolio 60% stocks 40% bonds 60 2020
20 60% stocks 20% bonds 20% gold which
is a sell signal on bonds sell half your
bonds and buy gold now if if Wall Street
does that if the average American who
has a 6040 portfolio makes it into a 60
2020 portfolio. I mean, that means that
Americans are going to go on a selling
spree uh getting rid of their bonds
uh and just buying gold. So, how is the
US government going to finance these
massive deficits if nobody wants to buy
the debt they're selling? That's the
problem. That's why the Fed is going to
crank up the presses and do massive QE.
But that's just massive inflation.
That's just throwing gasoline on this uh
bonfire.
>> Yeah. The exact thing that I've been
trying to get people to hear is that
every country with the exception of
Japan that has crossed 130% debt to GDP
tears itself apart from the inside. You
end up with civil war or revolution. And
people always think that I'm being
hyperbolic or I'm just being paranoid.
But the reality is when you start
describing the mechanisms that would
have to be in place for these kind of
drawdowns to happen is I mean you're
you're not able to fund a bunch of
programs. So you literally have to go
into the government and say well these
things just aren't going to get paid.
Checks start bouncing. uh you just run
into the realities of what happens when
you can't do funny money essentially.
Yeah.
>> And that Yeah. That that is gonna get
bad and then you're gonna take the
populism that we have now and you're
going to exacerbate it a thousandfold
and that's when suddenly the left and
the right go from hating each other to
actually killing each other.
>> Yeah. And and you know, this responsible
thing is for the government to admit
that it's broke and that it can't afford
the promises uh that it's made and to
cut government spending, including uh
entitlements uh to be honest with the
voters and say, you know, we can't pay
you the social security benefits that we
promised. Uh and uh so we're not going
to we're going to either maybe we're
going to make the retirement age 85
instead of 65, right? Uh you got to keep
working. Unfortunately, you know, we
told you you could retire at 65, but we
don't have the money. You know, there's
a lot of things that America should do,
but we're not going to do that. So,
instead, we're going to create massive
inflation so that the social security
payments are worthless. So, you know, I
mean, my my my solution is means testing
it so that at least the poorest people
who really need social security could
get something and wealthy people like
like like look, I don't need any social
security. You could simply say, "Peter,
you get nothing. I mean, I don't need
the money, right?" And so, the more
people who you tell you get nothing,
then the people that really need it will
get something. But the way they're going
to do it, they're just going to wipe out
benefits so that my loss is the same as
everybody else's loss because it's all
going to be inflation. And and and this
is the worst way to deal with it. But
politically, that's what we're going to
do. We're going to we're going to
destroy the value of Social Security uh
by destroying the value of the money.
And so, yes, you're going to get your
social security check, but good luck
buying something with it. You know, what
good is a social security check that
doesn't buy anything, right? So, but the
the politicians are never going to uh
act responsibly. But also, you know, and
I got to throw this out there because I
know a lot of people are watching and
and they're listening to this. They say,
"Yeah, that's why I own Bitcoin. I'm
ready for this because I got my money in
Bitcoin." I got news for the Bitcoiners.
The Bitcoin crisis may hit before the
dollar crisis. We could see a complete
implosion in Bitcoin even before the
dollar. And I think Bitcoin right now
>> mapping it as a tech stock.
>> Well, not it's not even a tech stock
because at least the tech stock is a
business that has the potential to
generate income.
Bitcoin is nothing. It generates
nothing. It has the potential to
generate nothing. It's just a digital
string of numbers, right? But Bitcoin is
right now in a big bare market and
nobody knows. It's down more than 25%
priced in gold since August. And in
fact, Bitcoin was down again today, even
as gold hits new highs and silver hits
new highs. So, I think the narrative
that Bitcoin is digital gold is being
disproved right now. And I think a lot
of people who bought Bitcoin in the last
couple of years through exchange traded
funds are going to be getting out. And I
think what happened on Friday in the
crypto market and in Bitcoin, that flash
crash is a warning about of what's about
to happen. A and what's going to happen
next is going to be much worse. And it's
not going to be triggered by a social
media post. And there's not it's not
there's not going to be a bounce back. I
think you're going to see mass
liquidation as people try to get out of
the casino, but there's no exit. There's
not enough liquidity.
>> You've planted your flag. I'll plant
mine. We'll see who ends up being right.
I've spent a lot of time Yeah, I'll
explain it now. I spent a lot of time
listening to you, so I'm certainly aware
of the way that you perceive this. I
think the thing that
>> people who think that Bitcoin doesn't
have any value don't understand how many
subcultures exist in America. And so I
very much fall into the subculture of
people who I have um I look at Bitcoin
as digital gold. I'm far more trusting
of things that are in the digital realm
than I am of something that's going to
be stored in a warehouse somewhere that
just feels uh very sort of lead ID. Now,
I have a meaningful amount of my uh
portfolio in gold, but nowhere near
compared to Bitcoin. So, gold is my
hedge against Bitcoin, if you will, that
if I end up being wrong and the world
doesn't go for it, uh or doesn't
continue to go for it, I should say,
then cool, I've got gold. But I think
that there is a cadre of people largely
young people who have grown up so
digitally native that they don't make
the distinction that you make. Like when
I hear you tout, but gold is a real
thing. It has real value. It that
literally means nothing to me. It does
not hit me. I think of gold as being
totally worthless other than what
somebody else will pay. So for me, it's
the exact same thing with Bitcoin.
Bitcoin is only worth what somebody else
will pay. But I don't care about it's
when people tout like it's used in
manufacturing. Like get the out of
here. That is not what the price is
driven by. The price is driven by based
off of uh what people will pay for it
because they're using it as a store of
wealth. That's what drives the price of
gold.
>> Tom, I I get what you're saying about
the subculture of true believers,
hardcore Bitcoin people. I mean, I know
a lot of these people. I mean, I'm in
this world. A lot of my friends are
hardcore, diehard Bitcoin guys. So
that's why my immediate forecast is not
that Bitcoin goes to zero. No, I mean
there are people that are going to hold
it no matter what. And there are people
that will even buy more on the way down.
But my point is that over the last
several years, the main driver of the
appreciation has not been the hardcore
Bitcoiners. It's been t mainstream
investors who bought Bitcoin ETFs in
their Schwab account or their Fidelity
account.
>> Yeah. Because number go up
>> and they just bought it, you know,
because they thought it would go up and
they believed all this stuff. You know,
they're not counting their Bitcoin.
They're counting their dollars. They're
looking on their statements. And a lot
of the money that went into Bitcoin ETFs
came out of gold ETFs, came out of gold
stock ETFs. I saw it happening, you
know, in real time. And and so this is
the money that I think is going to come
out of the market. I think it's the the
speculator who's not married to the
Bitcoin philosophy, not the young kid
who's 20 years old and owns it, but the
retiree who bought a Bitcoin ETF in his
IRA or whatever, right? But more mature
people who just jumped on a bandwagon,
thought it was going to be easy money.
People were going on television,
million-dollar Bitcoin, $5 million
Bitcoin. You're an idiot if you don't
own Bitcoin. you got to get in on
Bitcoin. All the FOMO, a lot of people
got in. I just think that a lot of those
people are going to try to get out at
the same time and there's no liquidity
in the Bitcoin market to absorb it. You
saw what happened on Friday with some
selling. What can happen? The bottom
drops out. But if we get real selling,
real outflows out of these Bitcoin ETFs
and then also out of these Bitcoin
treasury companies that are going to be
dumping. I mean you have so much
speculative money that is in Bitcoin but
then also I think a lot of the uh you
know dieards have leveraged their
Bitcoin. I think a lot of people have
you know six seven figure Bitcoin
wallets who have borrowed money against
it.
>> Yeah that's
>> and you know and and those loans are
going to get called and this is just
going to be an implosion. So Bitcoin
doesn't have to go from 110,000 to zero.
What if it goes from 110,000 to 10,000?
I mean, yeah. I mean, you know, that is
a huge loss. That that is a massive
amount of people's wealth just wiped out
of existence that they thought they had.
This is what I think is coming uh in in
Bitcoin. Now you could argue long long
term maybe it'll survive maybe it'll
have another lease on life people maybe
but there is a massive crash and I
wouldn't even consider buying Bitcoin
until after Micro Strategy is bankrupt
and all their Bitcoin is sold right
because that is going to happen that is
an event that's inevitable.
>> Yeah. Look uh I I have a lot of
admiration for the size of um Michael
Sailor's testicles. They are clearly
gigantic. I would not be able to sleep
uh doing that. But you know, we'll see.
But on that one, so I'll give you one
quick story and then uh there's some
other questions I have for you. But
there was a Japanese comic book company
called Shonen Jump that made a decision
back in the '9s where the US comic book
company uh comic book industry decided
they were going to start aging up their
readers. And Shonen Jump was a Japanese
company said, "Are we going to age up
their readers or are we going to keep
making stuff for kids of a specific
age?" and they decided to keep making
things for kids of a specific age. Now,
that decision, because they're
constantly bringing new people into
their universe, that one decision has
made it such that a single title of uh
Japanese manga now out sells the entire
western comic book market. And so I see
a parallel between gold, which clearly
speaks to people that grew up where gold
was the thing where you stored your
value in times of uncertainty,
>> that's now being replaced with young
people that just grow up where Bitcoin
is just a normal thing. Like there's not
a debate for them. They just grew up. It
is a thing. It's very valuable. And so
the frame of reference that they have is
that Bitcoin is a valuable thing. And so
I think you're just more and more people
and it'll never be 100%. But more and
more people are going to go into uh
crypto into Bitcoin specifically. Now I
have the same beef that you have with
speculators and gamblers which I think
crypto has a bizarre way of attracting.
But anyway, I think there's just going
to be a constant influx of new blood.
Part of it though, Tom, is their frame
of reference, their view of Bitcoin has
been framed in this huge bull market
where Bitcoin has gone from nothing to
126,000.
>> And if it craters, then I will be
meaning if it really goes to nothing,
I'll be
>> No, I didn't say nothing. But let's say
let's say Bitcoin goes from where it is
now, 110,000 down to 10,000, which
10,000 Bitcoin was a pretty high price a
few years ago, right? Um, and let's say
it goes down to 10,000. That's going to
skew how a lot of young people look at
it because now all of a sudden, wait a
minute, it's gone down 90%. A lot of
young people who bought in at 50, 60,
70,000 and have lost 80% of their money
are no longer going to be so enamored by
it. And a lot of other young people, the
truth of Bitcoin is it must become a
commodity. If Bitcoin doesn't get
commodified and it's always this highly
volatile asset, then it's always going
to be at risk.
>> But how is it going to be a commodity?
What do you use it for? What what what I
mean I I I know what I do with oil.
>> Interesting. I'm never going to be able
to convince you because you you know
these uh you know these answers. It is
for someone like me. It is where would I
rather have my store of value? in
Bitcoin, which I feel like I control, or
in gold, which is going to sit in
somebody else's vault because I'm sure
as hell not burying it in my backyard.
I'm not putting it in a safe in my
house. that. I do not want to be a
target. So, there's no universe in which
I'm going to custody my own gold. So, at
some point, I am trusting somebody else
to hold it. So, what I rather have
>> Well, you can hold it yourself. I mean,
we ship gold and silver out to people
all the time from shift gold. But where
do you lose me?
>> I don't want to do that.
>> Right. Well, okay. But you say, where do
you want to store your value? The
problem is there's no value in Bitcoin
to store. When I'm storing gold, I'm
storing gold for a jeweler who might
need it. I'm storing it for, you know, a
a a company that makes computer chips
that might need to believe that it is.
>> No, but that's what gold is used for. Or
I'm storing it for a central banker who
may need it to back their currency.
Right. Yep.
>> That's another It stores value. And all
I'm saying is Bitcoin stores value. Now
you no it stores you can't store what
you don't have. Bitcoin has a price but
it doesn't have any underlying value. So
I don't know if this is going to be
fruitful. So I'll take three minutes
back and forth between you and I and
we'll see if we get anywhere.
>> Uh the storage of value is merely a
psychological construct. This is why we
have used shells and glass beads and all
kinds of because what people
realize is as a human I have to exist.
During that time, I can I can try to
find a way to capture my wealth. I can
go hunt something. I can build a better
trap. I can give somebody a back rub on
the promise that they're going to go
get me some food, whatever. But
I'm going to use my time to make sure
that I survive a winter, that I survive
the night, all of that. So, I'm
exchanging time for proof of work, which
we call money. And the people that get
really good at doing something super
valuable with their time to get that
proof of work in the form of value, they
store it as a thing. That thing can be a
bro, thank you so much for the will the
beast. I'm going to feed you next time.
That can be they write that on a piece
of paper. It can be a shell or a glass
bead. But I now have this thing that we
all agree if you give me that thing, I'm
going to exchange you something else for
it.
>> Yeah, but the reason hold on, it can be
a piece of paper that we call a dollar.
It can be some gold, which is amazing
because it doesn't rot. Or it can be a
bitcoin, which is the digital version of
the same thing. But I if you
can't understand that the vast and I
know you do understand it the vast vast
vast majority of the value of gold is
that we all agree oh gold is that thing
cool I'm going to do gold but maybe it
isn't because it turns into
watches
>> the reason look the reason that
seashells had value is because you could
wear them it was like jewelry they were
beautiful people liked them but let me
give you an example that is easy to
understand cigarettes have been money uh
you know they the GIS used them as money
after World War II. They're used today
as money in prison. Now, why cigarettes?
Because people smoke cigarettes. They
enjoy smoking cigarettes. Now, I may not
be a smoker. I may be in prison and I
don't smoke. But I still want cigarettes
because there's somebody in that prison
who smokes. And as long as there are
smokers, cigarettes have value. If
nobody wants to smoke, then they don't
make good money. But you need smokers uh
to give cigarettes value. Now, okay, so
one last thing,
>> Bitcoin, you can't smoke Bitcoin. You
can't you have to be smoking something
to buy it, but you can't smoke it. But
the thing is,
>> there's so many there's tens of
thousands of cryptos that you could own.
Why Bitcoin? There's so many others that
are out there. It's not like, oh, I have
to buy Bitcoin. There's all these
altcoins.
>> It's the one with momentum. So,
>> well, then what if it doesn't have Will
it still have momentum? because you
still haven't gotten to the point why
why it's like cigarettes. So, the thing
that I don't think you're being honest
about or you don't want to face or I
don't know what the it is that
Bitcoin is the equivalent of a cigarette
that I can transfer magically to any
other cell in the prison. And so, would
I rather have the cigarette that I have
to hold in my hand or do I want the one
that I can just insta transfer to
anybody without having to talk to the
guards or anything like that? It just
instantly goes to the thing. I can
instantly get it. And that doesn't mean
anything to you heard. But it means a
lot to people like me. Well, here's what
you're missing. I'm a smoker. I'm
craving a cigarette. And you send me a
digital cigarette that I can't smoke.
That ain't going to do it. I need an
actual cigarette that I can take a drag.
I can suck in all that tobacco and that
nicotine and I can feel good. I can't do
that with your digital cigarette. I need
an actual an actual cigarette.
>> That's great. And that's why Bitcoin is
never going to soak up everything. If
people think gold's going away, they're
dumb. Uh but if people think that one
day everyone is going to wake up and go,
"Wait, Bitcoin doesn't have any value. I
can't smoke it." They're out of their
minds. That that just isn't like it is
so self-evident to me that Bitcoin does
something that right now nothing other
than other sort of also ran
cryptocurrencies do that I'm like
there's nothing like this. Even USD
you've got to turn into uh a stable coin
and then cool stable coin's dope. The
problem is it's still owned by the
government and I trust the government.
Exactly. all. I don't look the only
stable coin that makes sense to me is
one backed by gold and then it's like a
real currency. Then it's not stable.
It's just backed. It's you know
tokenized gold. That's fine. I mean
>> I would be shocked if that doesn't
become a thing. Well, it already
happened to get someone like me because
I'm still like, "Yeah, but the
underlying asset is still in someone's
warehouse and I don't trust them."
>> Well, why not? I mean, there you Have
you ever heard of Brinks? Yes, of
course. Okay, so Brinks has been in
business for 165 years. They're in the
business of storing gold for other
people and transporting gold for other
people. In 165 years, not an ounce of
gold has been lost. So, not one Brinks
customer has ever lost any gold in 165
years. So why why wouldn't you trust
Brinks? I mean, they they've earned that
over 165 years of building a reputation
in a free market. Look, people buy
insurance, right? People buy life
insurance, auto insurance, fire
insurance. It's only as good as the
third party, right? People trust third
parties all the time in everything that
they do, right? So, you can still trust
the third parties to store your gold.
What I don't want to do is just trust
that people believe that that that
nothing is something. They may believe
that nothing is something for now,
right? There's an old saying that you
could fool some of the people all the
time and all the people some of some of
the time, but you can't fool all the
people all the time. And you know,
people are going to wake up about
Bitcoin. Uh and you know that the whole
thing is going to implode. But we'll see
uh how committed people are. If we do
get a real crash from these levels and
Bitcoin goes down 80 or 90%. We'll see
how popular it still is. We'll see, you
know, how many people still have have
confidence in it as a store of value
when 80 or 90% of its so-called value uh
evaporates.
>> We shall indeed. Peter, uh yeah, that
was fun. Thank you. Okay, so now I want
to get into the trump of it all. Why
does he want to uh drive interest rates
down if sort of artificially low
interest rates are a big part of his
problem?
>> Yeah. Well, he doesn't understand that
that's the problem. You know, he's
looking at the person understands,
>> you know, maybe I mean, but he certainly
does a good job of lying about it right
now. And so, you never know with
politicians or central bankers. Are they
ignorant or are they just lying? I mean,
and I and I don't know. And sometimes
it's hard to know what's worse, right?
If they're lying or just, you know,
ignorant. But Donald Trump looks at a
problem that we've got a lot of debt.
And and so we have a lot of debt. We
need low interest rates so we don't have
to default. He looks at the housing
market and sees a situation where houses
are so expensive and people can't afford
them. And in his mind, well, how do we
make these expensive houses affordable?
Well, let's make mortgages cheaper so
people can go borrow more money at a
lower rate to buy these houses, right?
But the free market solution to that
problem is lower home prices. Obviously,
houses are too expensive. Let the price
come down, right? Then people can afford
them. People won't have to borrow as
much money. So, the interest rate
doesn't have to be as that low because
your loan balance is a lot lower. So,
your monthly payments will be lower
because the principal is lower. But of
course, if we let real estate prices
fall, banks could fail, right? People's
home equity disappears. Uh and so Trump
thinks we just need lower interest rates
so we can sustain a bubble in housing.
And so the US government, which right
now we're spending, you know, a trillion
two, a trillion three every year on
interest. And by next year, we'll be
spending two trillion a year, which will
be, you know, 40% of our tax revenue.
And if it keeps going, you know, it'll
be more than that. And Trump understands
that the economy is going to implode
under the weight of all this debt and
we're going to be spending all of our
money just on interest on what we've
borrowed and there's nothing left over
to do anything else. So Trump says we
need lower interest rates so that we can
service this debt. But isn't he really
he can even get the interest rates down
for like a month and then he can just
refinance everything?
>> No, he can't refinance. That's the
problem because there has to be a lender
willing to lend the money at that low
rate. They don't exist.
>> You're saying there's just already no
appetite.
>> Not for people will buy 30-day
treasuries, maybe a one year, but
they're not going to they're not going
to lend us money at 2% for 30 years or
even 10 years. You can't do it. uh a and
so but Trump just wants the Fed to lower
rates so that we can borrow more money
shortterm uh to get the the rates down,
but that's just going to make the
problems the underlying problems worse
because it's artificially low interest
rates that are the source of the
problem. And so, you know, you can't
cure the problem by making it bigger.
But what we do need, the solution is to
let interest rates go up. The way we s
the way we solve the debt problem is we
default. That's how we solve it, right?
How does somebody if you're an
individual and you've just borrowed too
much money, right? And you can't
possibly pay it back. What do you do?
You declare bankruptcy, right? And then
you reduce your liabilities. You give
all of your creditors a haircut, right?
Hey, Peter, you everybody loan Peter
Schiff a bunch of money. Peter's broke.
He can't pay everybody back. Let's just
go into bankruptcy. Let's figure out
what Peter's got and we'll figure out
how much he can afford to pay and then
we'll figure out what everybody gets.
And and and that is the solution that we
need. We need the US government to
basically have a moratorum. Hey, we
can't pay we borrowed too much money. We
can't pay the bond holders. We can't pay
the social security. We can't pay the
pensions on government retirees. We're
basically going to have to uh give
everybody a haircut. We're gonna have to
figure out, you know, we we have a $ 38
trillion debt. We can't afford that.
Maybe we can afford a 10 trillion. We
got to we got to we got to have a
default. That is the honest way to go
about doing it. Now, you might say,
"Well, that's terrible. People that own
treasuries, somebody that has a million
dollars in treasuries, they're only
going to have $400,000." Yes, I get it.
They lost $600,000. But the way we're
going to do it, they're not going to
default. You're going to have your
million dollars worth of treasuries, but
it's going to feel like a h 100,000
because 90% of your purchasing power is
going to get wiped out through
inflation. So, a much better solution to
the problem of too much debt is default,
right? A better solution to overpriced
homes is to let the prices go down.
>> But when you do the real the good
solution, the pain is immediate and the
outrage is immediate. people are very
pissed off that they lost this money. So
the government would rather have them
lose more money slower
uh than than less money right away. And
of course then they can blame somebody
else. They can blame, you know, the
speculators or they can blame
capitalism. They can blame greedy
corporations, which of course is what
they're going to do, right? The
government never accepts responsibility
for the problems it causes. It always
blames capitalism for those problems. So
it could use that to make itself bigger
and to hold itself off as the solution.
See, this is why we got to get rid of
capitalism. This is why we need more
government because we have to prevent
these disasters that capitalism creates.
All right. You It's amazing that you're
bringing up capitalism and people losing
faith in it. The way that you first got
on my radar years and years ago was you
went down you were uh during Occupy Wall
Street and you were like, I'm one of the
1enters. Talk to me. So when I see the
rise of Mam Donnie and on my live show I
end up talking about him a lot and uh
I'm just like this people do not
understand where these kind of policies
come from nor do they understand where
they go and to me as
alarming as the rise in gold price is
seeing the rise of socialist candidates
is at least as alarming if not more so.
Um, do you think I'm crazy about that?
What do you what do you read in the rise
of the DSA, the rise of Mandani?
>> Well, it's to be expected. Um, I mean,
that is an inherent flaw in democracy as
a economic system. Uh, and and you know,
and the reason that America became so
rich is because we weren't a democracy.
I mean we were created as a republic and
the goal of the republic was to keep the
forces the evil forces of democracy in
check and you know we did a very good
job of that for for for a long time. Uh
but the country is far more democratic
today than it was you know when it was
established.
>> Can you be a little painstaking and
explain what you mean? So what's the
difference between a republic and a
democracy and uh what were the things
that we changed that made us go away
from republic and towards democracy?
>> Yeah. So I mean a very easy and kind of
you know definition is a democracy is
two wolves in a chicken voting on what
to have for dinner. You know a republic
is a well-armed chicken who challenges
the vote. So the the idea behind a
republic is that the majority can be
just as oppressive as one person, right?
So if you're in the minority and a
majority of people decide to oppress
you, right? Uh you don't really care.
That's no different than having a
monarch oppress you or a dictator,
right? And so you don't want to allow a
group of individuals to take away the
rights of a smaller group because they
outnumber them. So the whole purpose of
a republic is to protect the minority
from the tyranny of the majority. And
and so how did the founding fathers, how
did they do this, right? Well, from the
federal government and remember cuz the
the US America was initially a
collection of 13 independent countries.
So all the the initial 13 colonies that
became states, they all had their own
constitutions and their own government.
But on a federal level, right, the way
the federal government was organized,
um it was organized in a way uh to be
very undemocratic. So first of all, uh
the president was not elected by the
people. The president was elected by the
electoral college. And the electoral
college, you know, there were various
ways to uh you know, get the electors uh
other than just popular votes. But it
wasn't the people who were voting for
the president. It was the people who
were voting for electors who were
supposed to convene and uh make
decisions and evaluate the candidates
and then vote. They weren't supposed to
be a rubber stamp of what you know of
what the people wanted. They were
elected to exercise their own judgment.
Um the senators were appointed by the
state legislators. They were not elected
by anybody. They were appointed by state
legislators. Now, those state
legislators may have been elected uh but
uh the senators were appointed and they
were appointed for six-year terms and
their terms were staggered. And the
reason that they were staggered so that
only onethird of the Senate would you
know turn over was because they wanted
to make sure that if there was a popular
movement uh that at most it could
capture a third of the Senate that it
couldn't, you know, it couldn't turn the
whole Senate over. They wanted they
wanted it to be a slower uh movement in
case you know there was some crazy idea
that became popular uh it couldn't take
over the whole Senate. There was one
body that was elected
uh by the people and that was the House
of Representatives and they were elected
every two years. And they entrusted the
House with the ability to raise taxes,
not the Senate. They wanted the House to
vote for taxes because they were
accountable to the people because every
two years they had to go run for
reelection and it would be hard if they
had just raised everybody's taxes. But
the Constitution also was written in a
way to dramatically limit the power of
the federal government because the the
federal government can only do the
specific things that are authorized to
it by the Constitution. The states can
do whatever they want so long as it's
not denied by the Constitution. But the
federal government could only do the few
things that the constitution
specifically says they can do. And
there's very little that the federal
government can actually do. Uh you know
90 plus% of what the federal government
does today is completely
unconstitutional. So great.
>> You know so the constitution was written
to to prevent the government from doing
all the things that people wanted to do.
It wasn't allowed to do it. And then of
course voting was restricted right. the
states determined who could vote and and
the states had all kinds of
restrictions. You had to be 21 in most
states, right? Uh and 21, you know, back
in 1792 was a lot different than 21
today. A 21-year-old back then probably
had been married for four or five years,
had a couple of kids, and had been out
of school since she was 10, right? So,
people that were in the real world. Uh
so you know you were a lot more mature
in life at 21. Most 21 year olds today
have never had a job and they still live
with their parents, right? So you know
it's very different than a 21-year-old
back then. But of course they had they
had um pole taxes. You had to pay a tax
to vote or you had to have you had to
own property to vote. They had literacy
tests. Uh women couldn't vote. Um, you
know, not that I would necessarily have
that restriction today, but the reason
women didn't vote is because they didn't
really work. They stayed at home. They
took care of the kids. So, they it it
was assumed that, you know, they weren't
as up on the issues and they wouldn't
make as a an informed vote as as the as
the men. Um, but the whole idea was not
that everybody votes. The idea was that
we had good government. And if you
notice, if you read the Constitution, if
you read the Declaration of
Independence, uh the Bill of Rights,
there's nothing about voting being a
right. It, you know, we have a right to
speech, uh uh uh to own property, uh we
have a right to freedom of religion.
There is no right to vote. There's
nothing in the Constitution until we got
the amendments that said, you know, the
right to vote shall not be denied if
you're you're on account of sex or if
you're not 18. But in the original
founding documents of the United States,
voting was not a right. Voting was a
privilege. Um, you know, and and the
whole idea was to limit voting because
the majority is normally wrong, right?
And about everything. If you just decide
stuff based on popular opinion, you're
pretty much going to do the wrong thing
every time, right? It's rare that the
majority is right about anything. uh and
so you don't want to run a country based
on the whims of the majority and you
know the founding fathers you know
called it mobocracy that's how they
defined democracy they didn't like it
you know they had studied uh the
democracies going back to ancient Greece
where the concept originated and they
were all failures because the people
vote themselves broke and you know we're
repeating that now and that's what's
going on in New York you know the the
the promise of socialism is very
seductive
Right? Even though it's failed
everywhere it's been tried, that doesn't
prevent people from thinking that this
time it's different. That we have we
have better people. We have more caring
people. Yes, it didn't work in Cuba. It
didn't work in Venezuela. It didn't work
in the Soviet Union, but it's going to
work in New York. We're we we're going
to do it, right? But and it's very easy
to be a demagogue and to say you're poor
because this person is exploiting you,
right? this rich person is the reason
you're poor and let's just take money
away from him, right? If we just take
money from this rich person, you can
have free health care, you can have free
transportation, you can have cheaper
food, you can have cheaper rent. And I'm
like, okay, yeah, you know, but it they
don't understand that none of this stuff
is going to work, that all this stuff is
going to backfire, right? That
everything the socialist promises uh you
you you'll the opposite is what's going
to get delivered. It's an empty promise.
Uh but you know, it it sounds good. Um
you know, but it's it's not uh an
accident or that that it's that people
like it is and the the the worse you can
make the economic conditions, the more
susceptible they are
>> to believe this kind of stuff. And look
at what happens, you know, look at the
rise. Not that I'm, you know, I, you
know, when you bring up the Nazis, but,
you know, uh, it's when you look at how
did Adolf Hitler rise to power as on on
on the top of the National Socialist
Workers Party, which is what the Nazi
party was. It was a socialist party. It
was a workers socialist party. It was
because Germany was a mess economically.
They had just had hyperinflation from
the Weimar Republic, right? They had
lost the first world war. they were they
were trapped under the ownerous terms of
the treaty of Versailles. So there were
a lot of problems and and and that was a
fertile environment for a guy like Adolf
Hitler to come into power. I mean if
everything was great in Germany, he
never could have uh uh risen to power.
>> Uh but he was voted into power
democratically elected. That's he didn't
take over by a violent revolution. You
know, he was voted in. the Nazi party
was voted into power, right? So, that's
what can happen, right? When people are
voting and especially when they're
voting when times are tough, you know,
and times are going to get very tough. I
mean, they're tough now. They're going
to be a lot tougher uh soon. Yeah.
That's a thing that really worries me is
because people do not understand the
cause and effect of economies. they get
in a position where times really are
tough, things really are as hard as they
think they are, and then they vote for
the exact um economic style that will
exacerbate the problem a thousandfold.
And by freezing rents, you end up
getting the Bronx basically in the 70s
and 80s where many [clears throat]
landlords realized, oh, it's much more
costefficient to burn the building down
and collect the insurance than it is to
try to upkeep the building given that
they're making it impossible for me to
collect enough rent that I can upkeep
it. They're looking at the landlords
like their slum lords, and it's like,
well, if you've got an asset that makes
less money than it costs to upkeep, now
you're literally asking for charity. So
there's no way they're going to do it.
They're going to find a way out of that.
And given that not only have we tried
it, we've tried it in New York recently.
Like I was alive when that was
happening. And so that one to me is just
as somebody who I really feel like young
people have been done super dirty by the
accumulation of debt, by deficit
spending, by printing money, uh just
eating them alive with inflation. To
your point, the government does not want
people to know what inflation is. And
they keep voting for things that make it
worse. It is just and I don't know what
words to yell into the void to get
people to understand that okay listen
this is going to be hard nobody's going
to have a good time but at least it
doesn't get catastrophic if we I lean
more on the radallio beautiful
deleveraging side where it's not just
pure default but it's partial default
it's partial additional tax on the
wealthy especially it's partial
redistribution it's a little bit of
money printing but all sort of in
>> the problem though with taxing the
wealthy is it doesn't diminish what they
spend, it diminishes what they save and
invest. So that's the problem because we
need investment capital. We need that.
And so to the extent that we're taxing
the wealthy, it needs to be a
consumptionbased tax, not a tax on their
wealth or their assets, but a tax on
when they buy luxury goods. Uh you could
tax you could tax uh um you could tax
that. The other problem with democracy,
right, is you have so many voters that
have been bought and paid for. You know,
once the government can make you
dependent on a government check, right,
that's why the government loves to
you so they can give you a tr a
crutch that you're now dependent on. And
now you vote for whoever promises to
continue providing the crutch. And if
anybody threatens to take it away,
you're going to vote against them. So,
you have all these people now that get
welfare checks, uh, you know, housing
vouchers, social security checks, uh,
SNAP benefits from the government. And
so, they're going to keep voting to keep
getting those benefits. And there are
all sorts of government subsidies, too,
where, you know, the people who benefit
from government, even if they also
suffer, you know, from the same
government. But when you get money from
the government, you know that you've got
it, right? So, and and the people who
are benefiting from government subsidies
or programs can organize together to
keep those programs, but the taxpayers
who pay the bills, they're not in an
organized group. you know, they don't
necessarily know or even if it's not a
tax, even if it's a law or a regulation
that artificially increases prices so
that certain people can get a windfall
at the expense of others, the average
American doesn't even realize that he's
getting screwed or why they're getting
screwed. But the people who are
benefiting know exactly why they're
benefiting and they give money to the
politicians who continue to perpetuate
uh those benefits. So the people who
benefit from government are organized
and they vote and they contribute. But
everybody who pays the cost, whether
it's through taxes or inflation or
whatever, they don't know. They're
diffused. Uh a and so you end up
constantly reelecting the politicians
that perpetuate uh the system that is
impoverishing the majority of people who
don't know it and who aren't organized.
You know that's why you know when when
when you think about voting criteria
I would rather live in a country where I
can't vote but I have confidence in
those who can right so you know
>> whereas if everybody can vote like you
know I say hey let's wait raise the
voting age to 30 right and there are
going to be some young people who are
very competent and probably could cast a
well-informed good vote And let's say
I'm one of them. Let's say I'm I'm 21
and I I'm going to make an intelligent
vote. I would still be in favor of
raising the voting age to 30 even though
it means that I can't vote because it
means that all the other idiots who are
my age, they can't vote either because
what good is it if I go to vote and then
10 other people cancel out my vote with
their moronic vote, right? I would
rather have responsible people voting so
I have good government than a bunch of
irresponsible people canceling out my
vote, right? And everybody should, you
know, feel the same way about it. I
mean, it's it's not about voting, right?
It's about having good government. And
good government is limited government,
small government. Government that stays
out of the way, right? That allows
maximum individual freedom. That's what
we want from government. The government
that governs best governs least. And
that was I think it was maybe Thomas
Jefferson or Ben Franklin I forget but
it was one of the founding fathers who
said that and it's one of the the most
appropriate uh quotes.
>> How do you stop corporate greed though
from taking advantage of people
>> I love corporate greed because corporate
greed is what makes my life better.
Right? When corporations are greedy they
they want to earn more money. How do
they earn more money? provide me with a
product or a service that I want to buy
at a price that's lower and a quality
that's higher than somebody else. So
greed, right, when it's channeled into
profit maximization is a good thing,
right? Fine. Now, if you're talking
about, well, what about a corporation
that is stealing from me or defrauding
me? Okay. Well, we have laws against
>> you or giving you laws against that.
Look, look, I can't steal your money. I
can't go into your house and steal your
money, right? And and a corporation
can't do that either. I can't defraud
you and neither can a corporation. But a
corporation, if they just earn your
money honestly, right, then that's fine.
>> Yeah. I've been thinking things like
Round Up and stuff like that where
people know like these guys have a sense
that this is creating a problem, but
they're just like, "Ah, it." Like
it's a cost of doing this.
>> But look at look at what look at what
happened to Monsanto, which fortunately
got bought by buyer who had nothing to
do with Monsanto or Roundup. Uh they
sold the company to Germans and now
they've been paying out billions and
billions of dollars uh in in claims. So
you know the market is doing something
about that you know you know and yeah I
mean I yes I think that you know like
all these cigarette companies to the
extent that they knew cigarettes were
harmful and they didn't tell people that
they were harmful although I mean come
on. I mean, it's hard to believe that
you could suck all that into your lungs
and not think you're doing some damage,
right? I mean, like I mean, it's it it
should have gone like obvious that
smoking cigarettes is is is not a good
thing if you're concerned about your
health and your longevity. But, but
obviously now everybody knows that
cigarettes are bad for you. Uh, and if
you want to smoke them, then that's on
you, right? I mean, you know, they got
warnings all over uh the packaging.
There's all, you know, I mean, if you
smoke cigarettes today, uh, you've made
that choice. Um, and, uh, and that's
what freedom is about. It's about the
ability to make choices. Some of those
choices are going to be good. Some of
those choices are going to be bad. There
are some people that think, you know
what, I know that I might not live as
long smoking cigarettes, but I get so
much pleasure from cigarettes. And I'm I
you know I'm not a smoker and I've never
smoked, but you talk to smokers and how
much enjoyment they get, how much they
look forward to and like cigarette
smoking. I mean, it doesn't even make
any sense to me. And I have no interest
in in trying to pick up the habit just
so I can experience it. But for some
people, they'd rather live a shorter
life and enjoy smoking. That's their
choice, you know.
>> Yeah. No doubt. Uh what's the most
controversial belief that you have
around this kind of thing, economics,
government, etc.
>> I mean, a lot of the things I believe
are controversial. Like one of the
things I've been noticing that for the
last 10 minutes. That's what made me
ask.
>> No, I mean it's very it look to say that
I'm not in favor of democracy, right?
People think, oh, everybody should vote.
Why? You know, so we can have lousy
presidents, you know, and we can have
bad laws. I mean, look at the minimum
wage law, right? That's another
controversial thing. I mean, it's
probably the stupidest law that's ever
been invented or put on the books. The
minimum wage law makes it illegal for
certain people to have a lawful job.
Right? If you don't have a lot of skills
um and you can't find an employer
willing to pay you what the government
has claimed is the legal minimum, then
you can't get a job. Even if you can
find all sorts of jobs where the pay is
lower than the than the minimum wage,
you can't accept those jobs. Even if
those jobs would ultimately improve your
life, allow you to acquire skills that
you don't now have so that one day you
can earn a lot more than a minimum wage.
If at the beginning you can't qualify
for the minimum wage, you're legally uh
unemployable. I mean, that's a horrible
thing to do to young people to prevent
them from getting skills. at the same
time will allow them to borrow a bunch
of money to go to college and study
liberal arts and graduate with hundreds
of thousands of debts and no marketable
skills. Whereas the same person, if we
just let them work for a low wages
instead of pay money to go to college
but get money but maybe not get a lot
but after four years they may have
enough marketable skills where they can
out earn that college educated guy or
gal with no debt. [snorts]
>> Yeah. Know that that's a good one. I've
never quite understood people's take on
that to be sure. I mean I understand
their argument. I just think it's a bit
nonsensical when you really get down to
how people can get on the ladder. Okay.
Uh we got to talk about China. What I
have a very thusidities trap view of
China. I think that we are on a
collision course. I think there's just
something about the human mind where you
cannot have a rising power going against
a declining power and expect them not to
end up in a fight. I know because I'm
read endlessly about this that China is
well aware of Thusidity's trap. I know
America is well aware of Thusidity's
trap. And yet uh right now as we record
this, you've got Xi and Trump going back
and forth with who can uh hit the other
with a a restriction or a tariff. Uh and
we're headed down um maybe not all the
way to kinetic war. Fingers crossed, I
hope. Uh but we certainly are. China has
said, and I quote, "Whatever kind of war
America wants to have, be it trade or
otherwise, we are prepared to fight all
the way or to the end." I think they
said, "Where's your head on China?"
>> Yeah. Well, look, I think that Trump is
overplaying a very weak hand to use his
own analogy. I think uh China is in a
much better position here. Um you know,
China is the creditor nation. China is
the producing nation. We're the debtor
nation and the consuming nation. We
depend on China, not the other way
around.
uh there are billions of people around
the world that can buy what the Chinese
produce uh and they can pay for it and
[snorts] by paying for it I mean they
can e uh export goods to China see
people don't realize but uh exports are
a means to an end right the the the
reason that you export if you're a
nation you export to afford to pay for
your imports right the whole idea behind
trade is comparative advantage
So one nation that has a comparative
advantage meaning that they can produce
something more cost effectively than
maybe another country can produce it.
So they produce an excess amount of that
and then trade it to acquire the goods
that may that the other country produces
that it produces more efficiently than
they do. Right? So you concentrate on
what you do well. you make extra more
than you need and then you trade that to
acquire the goods that other people make
that you need, right? And then and so
everybody wins from trade, right?
Everybody gets to consume more because
everybody produces more because they
produce what they can produce
efficiently and then they trade. And but
America, you know, we import uh or uh
over a trillion dollars a year more than
we export. So we're, you know, the world
is not getting stuff from us. They're
getting paper. But I think what China is
going to be doing more is exporting
products to countries that produce the
stuff that they need, right? So they're
not just going to buy treasuries,
they're going to get stuff. And if you
look at what's happened, trade with
China year-over-year is up dramatically.
their their global trade is going way up
even though their trade with America is
going way down because they're trading
more with other regions of the world.
They're trading more with South America.
They're trading a lot more with Africa.
They're trading more uh within Southeast
Asia, trading more with Europe, right?
Because China makes stuff that everybody
wants. They make great stuff. Why do you
think we buy so much Chinese stuff? It's
not because it's crap. It's because it's
good. We need it. we want it and there
are people all around the world that
that want that stuff and and so China
will just sell it to other people or
even better they'll consume it
themselves. What's preventing the
Chinese from consuming more right now?
It's the exchange rate. So if the dollar
tanks and the Chinese R&B goes up, let's
say you double the value of the R&B,
right, relative to the dollar, now all
the goods that China produces for the
Chinese, the price is cut in half. Well,
gee, a lot of Chinese will now buy
stuff. Oh, it's I can afford it now. You
know, uh the Chinese factories, they
don't have to sell the goods to
Americans because, well, the Americans
are broke now because the dollar has
been cut in half. They would have to
double prices to get the same amount of
money. But Americans aren't going to
have twice as many dollars. Just because
the dollar lost half its value doesn't
mean we have twice as many. I mean,
that's why with these tariffs, you know,
Trump was elected promising that the the
the foreigners were going to eat the
tariffs. It was an external tax, right?
We're not going to tax Americans. We're
going to tax the Chinese. We're going to
tax the Mexicans. We're going to tax the
Canadians. That's bogus. That we pay the
tariffs. The tariffs are on American
consumers. They're not on foreign
producers. And, you know, now, you know,
it's such a hassle. Even, you know, I I
put this on on X the other day, but my
wife had bought me a couple of pairs of
shorts, and I I kind of I like them. I
really like these shorts. And I said,
"Hey, can you get me a few more in
different colors?" And she bought them
online, but the company is in France.
And they said, "Oh, we're not we're not
shipping anymore to America because of
the tariffs and we just don't even we're
not even shipping to America anymore."
And so they just said they don't even
want to deal with it. Even though the
Americans would have to pay it, just the
hassle of having the tariffs, you know,
on the po, you know, being collected and
the they just like screw it, you know,
and and and know and people were
somebody said, "Well, you know, well,
I'll just buy American shorts." Well,
no, because the shorts I wanted are not
made in America, and I don't need new
shorts. I got plenty of pairs of shorts.
I just like these particular shorts, and
now I can't have them. Now, of course,
if I'm on vacation, if I'm in St. Bart
uh over the winter, yeah, I could pick
up a couple of pairs there, right? But I
can't I can't order them here because
they won't they won't ship them in. But
to the extent that they are sending
them, the prices are going up. my my
friend here, you know, was buying these
soccer jerseys and he had to buy some
more and the price skyrocketed because
of the tariffs. They they So, it's not
like they're not just saying, "Oh,
Americans are having to pay tariffs, so
we're going to reduce our prices." No,
they haven't reduced their prices.
Americans just have to pay the price
plus the tariff.
Yeah. Now, so economically get that. I
maybe have a slightly more pessimistic,
I'm not sure if that's the right word,
uh, view of where the Chinese economy
is. I think they have their own 2008
moment happening right now, but where do
you think from uh a standoff between um
Taiwan? Like do you pay much attention
to the things that Xi says and where
they're trying to uh take the country in
terms of their first regional but then
ultimately global uh position. I
definitely look at, you know, what's
going on in Taiwan. I mean, we own, you
know, we own Taiwan Semiconductor. I own
that stock. you know, I mean, it's like
it's a key business and I have
investments in Hong Kong and and and and
and uh and so obviously that's important
there. Um but the way I think this whole
thing is going to end up, I think that
at the end of this crisis, China is
going to emerge on top. I think that um
China is going to be the dominant
economic and probably military power for
the majority of the 21st century. Um, I
think that, you know, you're going to
see a significant decline in the value
of the dollar. Uh, and that's going to
automatically mean that the Chinese
economy, their GDP is going to be much
higher, uh, than the United States. And
of course, you know, they have four
times our population, right? You know,
there's 300 million or so Americans,
there's 1.2 billion Chinese. Um, and for
most of human history, uh, China was the
dominant economy in the world. So, I
mean, it makes sense that they'll
they'll be the dominant economy again.
But if you look at what's happening
there in, you know, the demographics and
the industry and the savings, they're in
in much better shape. I they do have
problems. I'm not saying that it's
perfect in China. They got a lot of
problems and a lot of the problems are
the consequence of the dollar's reserve
status and a lot of uh malinvestments
that have been made uh based on you know
perpetuating America and vendor
financing uh the American consumer as
their customer. I mean I think they made
a bad bet. They shouldn't have done
that. Uh but I think that structurally
fundamentally the Chinese economy is in
better shape than the US economy
overall. Um, yeah, we have some great
companies here and and and and there I'm
not saying that there's no there's no
positives in America, but taken in
totality, uh, we've got some serious
serious problems that I think are even
bigger than the problems that they have
in China. And I think that's a
controversial opinion. A lot of people
think that, you know, you know, no,
China is a basket case and, you know,
and and and you know, we're we're number
one. Uh but I think this dollar crisis
and this uh sovereign debt crisis that
come is going to expose that fiction and
and people are going to are going to see
you know I think you know we're you know
we're Great Britain uh in uh you know
1900 and and uh and China is America you
know we're we're the great power that's
in decline and they're uh the rising
power that's going to going to take our
place you know now I mean that doesn't
mean all right you know We don't have to
be the dominant economy. I mean, you
know, people, you know, not everybody
can live in the dominant economy. I
mean, people live in in Germany and
people live in, you know, in in the
Netherlands or Switzerland or they live
in uh Brazil or they live in Australia
and have good lives and they enjoy
themselves and they have families. So,
it's not the end of the world if the
Chinese economy is bigger than the US
economy or if China is the dominant
economy. I mean, it's not like, you
know, the world is over, but that's
what's going to happen. M
>> uh there's no doubt in my mind uh
whether the US could ever reclaim that
uh it's hard to say but it depends on uh
the road that we that we go down. I mean
if this crisis
produces an even bigger US government
that is even more socialized socialistic
than the one we got now. If we end up
with more government, more regulations,
more government spending, more programs,
more taxes, then we're never going to
catch China. On the other hand, if the
result is a complete, you know,
dismantling of our uh big government and
our welfare state and we completely uh
free up the US economy so that we can
recreate the capitalism that we had
during the 19th century, you know, if we
can create that level of economic
freedom and completely minim minimize
the government and actually, you know,
bring it back within its constitutional
uh limit. limitations and restore the
constitution. Uh then yeah, I mean, you
know, we could easily climb back on top.
I don't know how long it'll take. Uh uh
but but you know, it doesn't you know,
the end of the day, what's going to
matter is our individual standard of
living and our individual lifestyles,
not you know, you know, which country is
richer than than than than the other
country. What do you think about the
moves that we're making now? Or I guess
I should say Trump specifically is
making to get ownership in American
companies like Intel. Do you think
that's a page out of the Chinese
playbook or are we moving in the right
direction to repairing America's
financial situation? How do you read
that?
>> Yeah. I mean, if it's a page out of the
Chinese playbook, it's the one that we
don't want, right? It's the it's the
page that we want to let them keep. uh
you know it's it's it's it's a socialist
uh concept. I mean the US government
should not be taking stakes in any
companies. Uh the US government, you
know, is not a hedge fund, you know, or
they're not supposed to be picking
winners and losers and deciding where to
allocate capital. That that's that's not
what you want government to do. You want
the free market to allocate capital
because it does a much better job. It
does it much more efficiently. You know,
everybody wants to look at, oh, the
government's going to invest in a
company. Okay, where is the money coming
from? Because the government doesn't
really have any money. It has to
redirect money from the private sector.
So, if the government's going to, you
know, subsidize a particular company or
a particular industry, it has to suck
the capital away from some other
industry that otherwise would have
gotten that capital in a free market.
And so then you have to believe that the
judgment of the government is better
than the judgment of the free market.
Well, where is there a precedent for
that? Where have we had a central
government authority that's done a good
job of allocating resources and capital?
There is none. There is no precedent for
that. Uh all of the uh uh proof shows
that it's the capital. It's the free
market. Look at East Germany versus West
Germany. Uh South Korea versus North
Korea. South Vietnam, North Vietnam, uh
Taiwan, communist China, Hong Kong, I
mean anytime you take the same people,
right? This everything is exactly the
same. And all you do is you change the
economic model from free market to
government planning, it's the government
planning that is a disaster and it's the
free market that succeeds. So everything
that Trump is doing in this respect is a
mistake, right? Uh, and it is a bad
precedent because if you approve of
Donald Trump deciding where to invest
money, well then you better be prepared
for AOC to make her investments if she
becomes president, right? Even if you
think Donald Trump is this super genius,
which he's not. I mean, he's a good
marketer, he's a good promoter, he had a
lot of failed businesses as a as a
private entrepreneur, right? He had a
lot of failures. Uh and so you know I I
and and it's nobody no government nobody
is smart enough to know where the
capital needs to go all the time. That's
why you need a free market. But if you
happen to think that Donald Trump is is
is so smart that we want him doing this.
Well, now you set the president the
president that whoever is president gets
to do this, [laughter]
>> right? And so do you really want AOC? I
mean, what kind of companies is she
going to fund, right? And and again,
when you fund one company, you deny
capital to another company that might
otherwise have got it or another
industry. I mean, case in point is
crypto. The US government, because of
Trump's policies, a lot of money is
fueling the crypto industry. That money
would have gone someplace else if it
wasn't for the favorable policies and
the direction that the Trump
administration is pushing everybody. You
know, I mean, one of the reasons is
everybody believes, oh, the government
is behind this strategic Bitcoin
reserve. Other things, you know, Trump
says, I want to make America the Bitcoin
capital of the world. Why? I mean, if
we're g Let the free market, if that if
that's what it should happen, let it
happen. But the government shouldn't
decide here's the industry that we
should lead in. No, the free market
decides that. What if he picks the wrong
thing? What if I'm right and this whole
thing is a big bubble and Donald Trump
decides to funnel all this money into
this gigantic bubble and we end up
losing all this capital, right? Blow
squandering all of our resources, you
know, because Donald Trump decided this.
And one of the reasons that Donald Trump
may be doing this is because now his
family is all in on crypto. They've
started all these crypto businesses and
so I think what Donald Trump is thinking
about is what's good for the Trump
family. What's good for my kids? Well,
they're in this business so I'm going to
I'm going to steer money into my family
business. Right. That's another reason
why you don't want politicians using the
political power to advantage their own
interests.
>> What do you think politicians should be
able to invest in?
>> Well, I think they should be able to
invest in whatever they want. They just
can't use government policy to uh then
manipulate markets to favor what they
own. See, if the government just follows
the constitution, we don't have to worry
about what they invest in because they
don't have the power to to rig the game
to to to tilt the playing field. It's
when you give them the power now you
have to worry about where they put their
money. That is the problem, you know? I
mean, it's like po when when you give
politicians a bunch of power, you're
going to expect people to be bribing
them and, you know, because they're
going to want that power used to their
advantage. That's human nature. The way
you deal with it is you take the power
away from government. You're never going
to be able to prevent uh uh corruption
in government. There's always going to
be corruption in government. So, what
you have to do is make it so that
corruption doesn't pay. you take the
power away from government to deliver
favors to the people who pay them,
right? And so if if if there's nothing
that you could do for me, then why am I
going to bribe you, right? But Trump
Trump has put himself in a power where
everybody can bribe him. I mean, would
look at the look for example with the
tariffs. Trump puts these big tariffs on
and then says, "Okay, I'll give you
exemptions, right? So what are you going
to do for me? And if you do something
that I like, the tariff won't apply to
you." Right? So you're you he's he's now
using tariffs as a weapon, right? And
and and basically to bludgeon
individuals or companies, threaten them
with this unless you you do something
that I like and that I won't I won't use
this weapon on you, right? That's why
the government shouldn't have the weapon
in the first place. They shouldn't be
able to extort companies or individuals
into doing things, you know, because
they're threatening them with this with
this weapon. When you give money to a
politician, I have a business and I give
money to a politician and that
politician now goes after my competitor,
right? Files a lawsuit against my
competitor, does something, right? That
I'm hiring the government to go beat up
my competition, right? That that that
shouldn't be allowed. You can't you
can't let the government have all this
power because the minute they do, you
can't blame the individuals for trying
to get government power used to their
advantage because if they don't,
somebody else will get the power and use
it against them. So, everybody is vying
for the government to be on their side.
>> And the only way to stop that is to take
away the ability for the government to
take a side. And and that's what the
Constitution did effectively for a long
time. But Donald Trump, like no other
president I've seen, is weaponizing the
power of government specifically to his
own advantage and to the advantage of
his friends and family. And I don't like
that. You know, I mean, I don't like it
at all. Now, Trump's policies, you know,
are helping to make me richer than I've
ever been because his policies are
driving up the price of gold and silver
and I've got a lot of money in gold and
silver and I got a lot even more money
in gold and silver mining stocks. And
so, yeah, I know he's enriching me, but
I'd rather him be enriching the country
with the cor correct economic policies
that I I constantly advocate for. In
fact, all of the things that I am
advocating
um would result in me making less money.
>> But I don't invest based on um what I'm
advocating for. I invest based on what I
think is going to happen.
And so I'm confident that the
government's going to do the wrong
thing. I'm confident the Fed is going to
do the wrong thing. And that's why I
have all these gold stocks.
>> Yeah, I hear it, Peter. Every time I get
to spend time with you, I am over the
moon. I can't thank you enough. Where
can people hang out with you virtually
and follow what you're doing?
>> And thanks a lot, Tom, for having having
me on. Always a pleasure. Uh and I'm I'm
I'm happy that you that you give me the
opportunity. Uh first of all, you know,
I do my podcasts. Uh, I usually do one a
week, sometimes two a week. Uh,
sometimes three, I mean, if I have the
time, but I I have less time uh these
days. Uh, but if you go to
shiftradio.com or my YouTube channel,
you can uh uh get my uh my podcast.
Apparently, I've really been
shadowbanned by YouTube for a long time.
So, uh the only people that actually uh
ever listen to my uh YouTube videos are
the people who are subscribed and go
there because YouTube never recommends
them to anybody. So, you got to know,
you got to find them. Uh, but you know,
uh, I I put them up there. Uh, subscribe
to the channel. I almost have about
600,000 subscribers. I've been right
below 600,000 for like three years.
That's apparently the number they won't
they won't let me cross.
>> Interesting.
>> But, um, I got 1.2 million followers on
X, so you can follow me there. I'm
constantly,
>> uh, putting my thoughts. I do all that
myself. I compose all my own, uh, posts.
So if you read something, it's because I
wrote it.
>> Um, and so so follow me there. But I
think the most important thing that
people can do other than, you know,
telling their friends to listen to me so
we can disseminate this information and
get the truth out there because when we
have this economic crisis, the
government's going to blame it on
capitalism. And I want as many people to
know that the government caused a
problem and the only solution is
capitalism, right? Not not more
government, but but less government. But
people need to protect themselves. They
need to protect themselves from the
inflation uh and and what it's going to
do uh to the typical American. So you
need to get out of bonds. Uh you need to
get into gold. You need to get into
silver. You need to own real money as
your savings, not not fiat. Um and and
go to, you know, um shift gold. And
yeah, I mean, if you have money in
crypto, you know, you could you could
take some of your crypto, as you said,
and buy some gold or silver as a hedge
just in case your crypto collapses, too.
You might as well have some gold and
silver. We make it easy to get out of
crypto at Shift Gold because we work
with Bitay. We're one of the first
companies to work with Bitay where you
can check out. You can go online, buy
some gold or silver, put in a shopping
cart, and when it comes to checkout, you
can go a pay with Bitcoin and, you know,
you can use your Bitcoin in the same
transaction and and get get gold and
silver.
>> And, you know, if you have a larger
portfolio where you just don't want to
have all your money in physical gold and
silver, you want to have stocks, you
want to get dividend income, uh, you
know, I have mutual funds, I have an
asset management company. That's really
my bread and butter is managing
investment portfolios for people. Uh we
do that at Europacific Asset Management.
So the website is europac.com and I
would encourage people to have a you
know consultation with one of my
representatives. You can just give us a
call toll-free number or just you know
sign up to have a consultation. Uh we
can talk about how we can help manage
your money. You can transfer an account
over for us to manage. If you're a
do-it-yourselfer, I've got five mutual
funds that you could buy no load at any
of the discount brokerage firms. You can
get all the information about my mutual
funds. You could get a prospectus and
all that. See the track records. All
that information is on the website at
europac.com. And in fact, if you don't
have a brokerage account, you can
actually buy into the mutual funds
directly through uh the europac.com
uh website. And then I also have a
newsletter, a free newsletter that comes
out several times a week. You can
subscribe to that at shifts
sovereign.com.
We're putting out a lot of uh excellent
content that I would encourage people to
read. It's free. Uh we do have some
premium services that you could check
out, but at least start uh by getting
the free letter uh and you know, shift
you just have to enter your email
address, some information at
shiftsvereign.com and you'll start
getting them in your inbox.
>> I love it. Peter, thank you again, man,
for taking the time. I really appreciate
it. And everybody at home, if you have
not already, be sure to subscribe. And
until next time, my friends, be
legendary. Take care. Peace. If you like
this conversation, check out this
episode to learn more. The US is adding
$1 trillion to the national debt every
100 days. And the interest payments
alone now cost more than our entire
military budget. Our rate of debt
accumulation has pushed us into
something called fiscal dominance. A