And they're selling oil, which is a cyclical asset, so the markets are
anticipating a big slowdown. Now. If energy costs go down, that helps
the miners, other things being equal, And if the government starts cutting interest
rates, that also that helps the price of gold and silver. You're listening
to Carrie Leutz's Financial Survival Network, where you get valuable information. You just
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welcome you are listening to and watching the Financial Survival Network on your most Carrie
Lutz, It's it's eleven seven twenty three. John Rabinaz with us. Now,
hey man, John, the debt situation. It looks like we've gotten
to the point where too much of a good thing or too much of a
bad thing has become a really bad thing, right thy carry Yeah, well,
you know it could be that the interest rates finally pedat this last week,
because I mean, there's lots of stuff. I'll go go through some
of the bad things that are happening to the economy that make it look like
it's a slowdown. Plus we got, you know, a second potential world
war out there, so I think so the FED paused at their meeting and
they said some relatively dubbish things. I think a big part of it is
that they don't want to be tightening into a global military crisis, so they
want us to have the liquidity that we need to you know, to fight
a two different wars. So that's that's a big part of the rationale.
And the other part is that, yeah, you know, under the surface,
we've been talking for so long about how high interest rates have to go
before they start breaking things. Well, there are things that are breaking.
They're not the headline numbers, like they're not GDP AT or unemployment or anything.
But you know, the GDP now reading from the Atlanta Fed or the
current quarter instead of the previous quarter is like one percent room and so growth
is slowing down dramatically, which reddit card debt is soaring and personal interest expense
I didn't even know that was a staff that the said kept and I didn't
either, but it's spiked and it's up above a trillion dollars from a considerably
lower level just recently. But you know, the interest that consumers are pay
is way up now, which means consumer spending has to because of that.
And student loan payments just kicked in, and let's see, credit card delinquencies
are spiking. Home purchase mortgage applications are down to nineteen ninety four levels.
We had like two thirds of the number of people in the country in ninety
nine before that we have now, And yet the mortgage is being taken out
to buy houses today are only at that level them back then. And you
know, we Work, I didn't know they didn't go to bankrupt I thought
We Worked was already a bankrupt company, but apparently not. They just declared
bankruptcy. And that's a big commercial real estate manager. So they had oney
million square feet of all of the space. Yeah. The whole thing was
a scam, wasn't it. Do I have that run? They tried to
pretend that they were a tech company when they were really just a real estate
management company. So they got a tech and a bad evaluation. Yeah,
And so what it was was they were you know, next generation office space.
Anybody can come in and just sign up for a desk, YadA YadA,
you know, which is just sillage. But anyhow, they're bankrupt,
and what happens to all the real estate leases that they have taken out on
that twenty million square feet? And then they're already they're already basically just defaulting
on a lot of leases. A big chunk of them are in New York
City, by the way, And so that is that's another hit to a
sector that was already in trouble. Commercial real estate, especially in offices,
bad news lately, and so now it's just going to be that much worse.
There's other stuff, but you know that right there is enough to make
you wonder if next year is going to be a deeply recessionary year. And
so add in, you know, extremely high interest rates that are hitting everything
in sight, and the potential for two wars that the US could get sucked
into here still and yeah, you know, I think it's time for interest
rates to roll over started heading back down and for the FED to start easing
again. I don't think that happens right away, because inflation, at least
headline inflation is still above target. But I think bad things are bad enough
that it won't be long before the FED is forced to reintroduce panic QI.
You know when they're when they're just buying every bond in sight. So that's
a twenty four story. But yeah, it is inevitable. Hey, so
you know we're always repeating that great gats be aligned. How did you go
bankrupt? Slowly at first and then quickly? Listen to these highlights from total
debt that the Federal Reserve just released today the Debt Report. Total household debts
skyrocketed to seventeen point twenty nine trillion. Mortgage debt even though it's low,
climbed by one hundred and twenty six billion to twelve point four trillion. Credit
card debt jumped forty eight billion, which is a four point seven quarterly increase.
Student loan debt grew by thirty billion and is now at one point six
trillion, and auto loan debt is now at one point six trillion. So
there's as much student loan debt as there are as there is auto loan debt.
So it makes you think the students would have been better off buying cars
and driving for Uber, right, I think fifty percent of college students,
Yes, they would have been better off going straight to work. You know,
there's a South Park episode now, where one of the subplots is that
in south Park, Colorado, in the town that the cartoon takes place in,
all the handy men are getting rich because because all the upper class people
got all these college degrees that are completely useless and so yeah, and they
don't they don't know how to fix anything. Yeah, So the handyman or
the new one percent in that town. And if you know what I think,
you know, if you had an eighteen year old kid right now and
you had a choice of sending them to a liberal arts school or to a
plumbing you know, plumber's office where they become like a journeyman plumber or something
like that, choose the plumber and it's it's their life will be so much
better. Now I got our dex business, John, We're going to start
Handyman Academy where we're going to train people to be handyman because basically handyman's kind
of like a journeyman. He could do a little bit of a bunch of
different things. He's a uh, you know, basically an expert in many
areas, but a master of none. And you know, whether it's painting,
a little plumbing, little carpentry. They can do it all. So
we start the handyman economy because there's a shortage of them. I'll tell you
here in Florida, you get a good handyman and you want to like adopt
the person and make them part of your family. My handyman got deported and
my life has never been the same. See, that's the kind of illegal
immigrant we want. Somebody is all going to be handyman out there in the
world, who are are yet American citizens? They should just come here,
you know, those are the people we should let in that that actually is
okay. Two things. One is you should totally start that school. You
know. That would be if you had a degree in from handyman you certification,
Yeah, because one thing you're you know, you don't know how to
trust a new handyman, right they know what they're doing or anything. But
if you've got a degree in bag handyman, then that's, uh, that
gives him ten extra bucks an hour. Probably. So I have a kid
who works for something called oh what the heck not called task Rabbits. Yeah,
oh right, right, yeah, I've heard that. Yeah, it's
like it's like uber for handyman and so and he says, he, you
know, he makes forty bucks an hour putting together ia desks and things like
that because people don't know how to do that. And yeah, so he's
actually kind of like it. And it's it's you know, varied, and
it's challenging, and it's you know, the hours are basically his to choose,
and he feels like he's making pretty good money. So yes, and
and you know, I'm much happier with him doing that, and I would
be with him in you know, year three at Oberlin or someplace. Yes,
he's radical arts. Yeah, in puppetry, right, yeah, getting
is pursuing his degree in puppetry. Yeah, yeah, yeah. So anyhow,
that's well, that like are an interesting trend. Yeah, it's an
interesting new favorites Habeny. Nobody knows how to fix anything anymore, John,
You know, this is what society's devolved into, all these advanced degrees.
I was fortunate my father was a builder and was an ace mechanic, so
I was fixing stuff from the time I was a little kid. But even
still, there's certain things I don't like to fix. Like I don't like
to fix grout and tiles because you're on your knees and you're bending over.
And I tried fixing a toilet the other day and the hose disconnected and I
had two inches of water on the floor. I would have gladly just paid
a handyman one hundred bucks to just take care of it for me. And
then when your toilet leaks, you don't want to calling a plumber because it's
a little too extreme. But a handyman who's trained by Kerrie and John's a
Handyman academy. I mean, that's a guy you can trust. You should
totally found that school. You know, you would take that thing public five
years after foundings and you'd be a billionaire. I think we can do this,
man, I think this is a business model that'll work because nobody can
fix anything, especially here in Florida. They're all old, so even if
they used to know how to fix stuff, they've probably forgotten. The younger
people never knew how to fix anything anyway, and the people in the middle
just can't be bothered. Right, Well, what's the generation that comes after
the millennials? Is that Je lub Ay or the Zeemer? Can you imagine
what it's going to be like when the zoomers are the homeowners. These kids
who have played video games their entire lives, never really even interacted with other
people face to face, but definitely never fix a leaky toilet or anything.
It's just going to be this white, a little bit market. Yeah,
oh yeah, yeah, forget it. You know. They they will,
they'll happily hire somebody and pay him a hundred bucks to do stuff like that.
Actually, I gotta say, I'm not handy. I'm one of those
those guys. And we had a handyman back in Idaho where we lived before,
and I literally offered him to come live in our spare roodom. I
was. I was only partially kidding, you know, I said, good
stuff, if you want to live here, you know, we have a
bedroom you can just move in, because you know, we would get like
a leak and I would think, oh my god, it's in the walls.
We're gonna get mold, and I'd freak out, you know, and
the plumber, plumber and the handyman would come and they would say, oh,
yeah, we just need to put this little knob right here and it's
fixed, you know. And so yeah, those guys were incredibly parts of
our lives back then. Yeah, Hey, you've got to have a good
handing man, and they're becoming harder and harder to find. And and that
also fits in with probably if you get a hire a handyman, you're going
to need to learn a foreign language, right because he's probably not going to
be from the United States, so you know, wherever he might come from,
you're going to have to if you want to communicate, Well, I
guess you could use Google Translate, right, Well, no, you're your
handymank college is going to have to have English as a second language department where
you just thrill them and you know, what, how do you say facet
and how do you say Philip said screw driver and stuff like that. You
know, yeah, yeah, I think all right, So you need a
little language arts in there, or at least you've got to teach them to
use Google Translate. Well see, And then you know, if you're teaching
them English, you get government money for that. The government will subsidize your
English language programs for immigrants. So there's your second income stream. I love
it, then, you do. You know the way the way a lot
of coding boot camps do is they don't charge you anything to do the boot
camp, but you will on one third of your salary for the next five
years or something. Totally servitude while we're right. Yeah, yeah, you
know, I totally do that with your handyman student. Oh I love it.
We're onto something here, man, Like we just need to franchise out
our brains so we don't have to do anything, right, But there's like,
you know, there's really a need for these people, and and we
haven't been doing anything to make sure that they actually you know, it's like
nurses. I mean, all these different jobs we just can't keep up with.
And you would think it a market economy we supposedly used to have.
We would the market would be producing these people, right, Yeah, that's
the weird thing. Things on being balanced buy the market like they used to
be. Do you know what a traveling nurse is? Have you heard of
it? Yeah? Yeah, yeah, do you know about that? That's
the weirdest thing. There are these nurses that travel around. They take like
six months condirect gigs, but for crazy money. I met one who makes
five thousand dollars a week in a cent Yeah is right, five thousand a
week? Did you five thousand a week? Oh my god? Yeah?
And and and it's a six month contract. He does that, and then
he moves on to another place and you get Yeah, he gets to live
in and it's a guy. And get this, his name is Possum.
Yeah, he's a he's a country boy. He looks like a Texas biker.
But he's got it. He's an ICU nurse and they're they're in such
shortage that he can just choose where he wants to live for six months and
and make like investment banker money while he's doing it. Yeah, it's it's
crazy that that exists. You think that the market like that would be flooded
with people wanting that job, you know, but apparently not. Yeah,
like what happened? I mean, we were getting all these is from the
Philippines. Did they run out of them? I mean, seriously, we
had a program in the United States recruiting Filipino nurses and healthcare people to come
to the United States. But I guess I guess that's over. Well,
see that the broader issue if this takes us into immigrant immigration policy, where
we should definitely have immigration, but we should we should be picking and choosing
the people that come, right, Not just that, but he who walks
across the border. It should be okay. Do you got any English language
skills to begin with? Do you have any technical skills that we need?
You know, can you program a computer? Are you a ic? Your
nurse? Come on in, you know. And if we did that,
we would upgrade our society really dramatically by you know, causing a brain drain
in the rest of the world. But that's how we should be doing it,
and we're we're doing everything wrong. Kary. You know what, never
matter what we talk about, it's it's what we're doing wrong. In the
United States. We are a dumb country. Now we've been dumbed down,
but from top to bottom. But like our leaders, you know, who
isn't dumb down. A market based economy is supposed to correct for stupidity,
and it's not happening here. That's what's really weird about this, because you
know, you would think that everything would be optimized by people making their own
choices and drawing in the talent that they need to run their industry perfectly and
everything, and it's not happening. So I can't explain it. I guess
that's a subject for a either a long and I want a video show for
you or a long substack for me. I want to know, like why
we aren't producing the people that we need. We're importing engineers, like from
all over the world, India, China, you name it. We can't
seem to produce anybody. Doctors, you know, no longer homegrown. They're
coming from all over What are we producing here? You know, we're producing
like guys, I guess we're still producing programmers and AI engineers, right,
programmers, that type of thing, But we seem to like have lost our
ability to produce the people we need to run this complicated economy. Yeah,
but see that's what immigration ideally would fix, right, that's yeah, that's
the kind of the safety VIOB When you've got some big gap in your economy,
you just look around the world and invited in the people who fix your
problem. We don't do that though. Yeah, see we could with immigration
fix all these things we're talking about that are wrong. Like, yeah,
you'd get handymen from all over the world if we need them. You know,
we could get a million plumbers to move here this week if we just
advertised it correctly. Right, they come from Dagistan and from Honduras. It
doesn't matter. If you're a plumber, you come and we could do that,
but we're not. We're I don't know, I don't know. Maybe
did they Ramaswami. We'll come up with that idea and actually fix it if
he's ever president or maybe RFK. You know, those are the kinds of
guys who seem to be thinking at least about stuff, and maybe they'll come
up with an idea that you instead of just closing the border, you use
immigration as a way to upgrade. And yeah, well doesn't sound like rocket
science. That's what we used to do, I think, But you know
it's uh, I don't get it. But hey, but odd to important
matters or other important matters. So we've already talked about the tenure has peaked.
It appears, you know, it was up I think you mentioned to
five percent. Now it's down to four point six. What does that tell
you about the economy if the rates are going down and the bond vigilantes are
thrown in the towel. Well, I think five percent is a big round
number, and you would expect, just technically a lot of selling to be
right there, because you know, people like to put there their buy and
sell orders at round numbers. So five percent is now resistance. Okay,
it's a ceiling for interestingness. And if we have a ten year you know,
spikes above it, then maybe it becomes the floor. So we don't
know for sure that interest rates have peaked, but they do feel like they
have, and it's legiti Now, there's a legitimate reason to think that they
should peak here because five percent was higher than the terminal rate in two thousand
and seven, back when we only had half as much debt as we have
now. You know, so I think we're financially more fragile today, which
means the terminal interest rate, the rate that starts breaking things, would be
lower. And you know, it could be that we're going to look back
on this and say, oh, we overshot when we got to five percent.
You know, we should have started cutting it more or whatever. But
we'll see, you know, it's there's just an awful lot of stuff going
wrong out there. I'm worried about the small banks, you know, with
the with commercial real estate tanking. A lot of local and regional banks own
that debt and so that story has yet to play out, and that's that's
a scary thing. Oh, it's a really scary in a trillion dollars a
year is our interest expense or it's going to be for the US debt,
So you knew that they're going to monetize a chunk of this death. Even
if they monetize the interest payment itself, that's still a trillion dollars of printing
out of thin air just to keep this whole thing afloat. How long can
they keep doing that for? John? Yeah, you see, there's this
big debate about why the Fed is still running massive deficits with the economy growing
and you know the last GDPRO before it was four point five percent annual rate,
So why is the deficit so massive? And the answer is pretty straightforward.
Suddenly we have a trillion dollars a year in interest expense, whereas before
it was three hundred billion or whatever. So we have this this five hundred
to seven hundred billion dollar extra bill that there's really nothing we can do about.
Brenton and printed. Well. You know what else is interesting about this
is that the federal government, and with that big deficit that they're running,
they started borrowing very short just lately. So it's like they knew interest rates
had peached. I mean, we're going to go back down. You know,
it could be that there's a there's some collusion going on there where the
Treasury Department told the Fed, you need to start cutting interest rates, and
for the next couple of months, we're going to anticipate that by borrowing three
months out, all right, and by that time those three month things,
by the time they come due, we want to be able to roll them
over at a lower rate. And so we'll see it. But it sounds
like something like that happened. Yeah, well, it's definitely it's definitely intractable.
There's nothing they can really do other than print up another trillion, buy
a trillion dollars worth of treasuries every year. But you know, like something
like seventy percent of the national dead is actually interest on the dead that has
been rolled over. At least that was what it was a few years ago,
probably even higher now. So basically the whole scheme of you know,
printing up some money and then issuing a note. So the Treasury issues a
note to the Federal Reserve. It then prints money out of thin air and
gives it to them, and then it collects interest. It sells that debt
off and the banks are printing up money to buy it, and then you
know, seventy percent. So if we just got rid of seventy percent of
the debt, that would be the interest that's accrued on the debt that we
just rolled over. You know, it's a mess. Yes, we're kind
of we're kind of doing modern monetary theory already. Yeah, we had Well,
why are the gold miners so cheap when all this is happening? You
know, that is an interesting question because they are ridiculously cheap right now.
If you look at for instance, GDX, the big gold mining ETF yeah,
versus say the NASDAK or something like that. The ASDAC went up mostly
in the past year. GDX went down, and then there's like a twenty
five percentage point gap between their performance. GDX is very early up for the
year and the NASDA action is up, you know, twenty percent or so.
Why is that? Who knows? I think one one part of that
is that mining became a very hard business. In the last couple of years.
Oil prices went up and labor costs went up, and those are the
two main inputs in a mine, or two main costs of running a mind.
So mining margins were squeezed by that. But now oil is down.
It's in the seventies again from the low nineilies not too long ago. Yeahotead
of the seventies today, you know this. Yeah, at last I saw
it was like seventy eight dollars a barrow or something. So it's getting whid
seven forty four according to kid Go. Okay, So this is inflation anticipation
or on recession anticipation behavior, right. I seen people buy long bonds and
they're selling oil, which is a cyclical asset. So the markets are anticipating
a big slow down. Now. If energy costs to go down, that
helps the miners, other things being equal, And if the government starts cutting
interest rates that also that helps the price of gold and silver. Yes,
well, miners are looking really cheap at these levels, and even the royalty
streaming companies, which are normally the closest thing to risk free in that space,
have just gotten whacked lately. So yeah, I think it's possible that
we're nearing a bottom, a cyclical bottom for prison with the golden's over miners,
and so if the FED is back to easing, they go up unless
the industry just ceases to exist. It can't get any cheaper than it is.
Well, there's a lot of political risk out there. All of a
sudden, the thing happened with frank and Nevada. It's ps WE where they're
literally their biggest royalty streaming deal is with this gigantic copper gold mine in Panama
that was going to send a torrent of cash to Franko Nevado over the next
twenty or thirty years. But people started protesting that mind because of its environmental
impact, which is, you know, a real thing. And the government
in Panama that just threw up its hands and said, okay, on December
seventeenth, we're going to have a referendum and if people vote to close the
MIND, so be it. We close this mine. And so that's a
big hit to Franko Nevada. It stock went down probably more than the hit
that it's going to take if that MIND closes. So it actually became a
better buy at its current price than it was before this bad news. But
this means that political risk is an even bigger deal for the commodity space than
it was before. You know, we had a revolution in an African country
that was a big uranium producer, and we got this thing in Panama.
And there was one more I forget, but there well, Chile, which
used to be a rocket olid capitalist stream market Latin American country upon you know,
is kind of talking about nationalizing some of its living minds and things.
You know that they're thinking of doing things that would be very bad for mining
as as a concept, you know, as a capitalist enterprise. So what
that means is one, mining is suddenly a riskier business than we've got and
two North American assets should be trading at a bigger premium than previously because it's
it's less likely. But Canada and Mexico in the US, we're going to
start nationalizing minds. It's not no guarantee. I think Biden would do that
if you have the choice, and Trudeau would too. Look to Trilogy basically
put that company out of business almost with the you know, they'd gotten the
permit to build this road in the Arctic in Alaska, and then he revoked
the approval and then they just filed a bunch of the projection metal objections and
this is like hundred wilderness and it's a road that you know, is essential
to come up with all these battery metals, there's cobalt, there's copper,
all the things in the IRA Act, and they've defeated one of the largest
potential copper producers in the world and unquestionable environmental grounds. So mining is not
safe anywhere, John, is what it comes down to. Yeah, And
okay, here here's what that means from an investment piesis standpoint one is that
you want to lighten up on the actual miners and increase your exposure to the
royalty streaming companies, which are really diversified, so they could be hurt by
one mind having trouble, but they can't be killed. And then the third
thing you want to do is emphasize physical commodity et apps. Yeah, sprought
uranium right, Yes, For instance, they just go out and they buy
uranium and they take it off the market and they hold on to it,
so it doesn't matter what happens to that African uranium mine or anything. And
it actually it's good for the physical atfs if there's stuff like that out there,
because it makes the price of the commodity to go up, which makes
the holdings of the physical ETF become more valuable. So I think that might
be the play in the commodity space, right now, just load up on
those physical ETFs and just let the market play out then, you know.
And so actually the government will go to Sprout and say we need you uranium.
Here's a check. Yeah. See, that's that's the big risk is
that they expropriate what's in the vaults of the of the physical ETFs and then
you know, we can't control that. But that's that's a little further down
the road than mining nationalization. But you're right, nothing is saved, you
know. The only thing that well, you want to store things involved in
other countries just to spread your risk around, and you want to own physical
stuff yourself because yeah, going back to our initial thesis, if you invest
in human capital, meaning you learn how to fix stuff, because you won't
be able to buy as much new stuff. We've already seen that from the
pandemic, you know, so more stuff is going to have to be fixed,
and we have less people who know how to fix it than ever before.
So there's the play. Invest in the handyman academy, right, get
a sort of get your handyman certification, and put your excess profits into physical
metals and the ETFs. Yeah, that's that's probably going to end up end
up being the portfolio that we look back on as the big winner. Right.
You invest to yourself, Yeah, train yourself to be a handyman.
You invest in whoever else trains the handyman, and then you get physical with
your investment and that's probably the thing that works. You know, I'm kind
of convincing myself. Now. I got the name too, for the for
the Handyman Academy. Remember Three's Company, That guy Schneider in the Three's Company,
he was a goofball. We call it Schneider's Handyman Academy. Okay,
I remember the hot blonde in threes Company? Yeah? I do not remember
a handyman or maybe yeah, I think it was with the moment Suzanne Summers.
That's all I mad. Maybe I'm the wrong show, but hey,
that's what memory does. All right. Well, that is it for this
week. Make sure you go over to John Substack rabino dot substack dot com
sign up subscribe to his newsletter because you will be learning about the handyman and
the acute shortage raving. I have a feeling there'll be an article coming out
shortly. Hey, sign up, for a free newsletter Financial Survival Network dot
com. John, we will talk to you in a couple of weeks.
All right, Kerry, thanks thanks for listening to carry Letz's Financial Survival Network,
your solution to today's trying times. For the latest, go to Financial
Survivalnetwork dot com. Financial Survival Network now more than ever,