Well, you know that since the last time you and I talked, the
CPI and the PPI both came out, and the CPI was much lower than
anybody expected. The PPI was actually negative. There was actually deflation in commodities,
and so all of a sudden, it seems like inflation is and you
know, you and I talked about this. There are so many recession indicators
out there that we would expect lower inflation and maybe even deflation in the year
ahead. You are listening to Carrie Leutz's Financial Survival Network, where you get
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I'm their host, Carrie Lutz. John Rabino is with us. John,
Hey, I just came back. I got to share with you.
This just came back. I was in LA for conference in Woodland Hills,
which was pretty Tony neighborhood, and I mean I could not believe, like,
right in the center of town, there's a homeless encampment. They're supposedly
building the La RAMS training center there, but they got ghost malls, they
got ghost buildings that have been empty for ten years. Remember that electronics chain
Fries, which was a marvelous chain, the best chain out there, way
better than any of the big boxes. Now that's been empty for about ten
years. I just could not believe. And then I go to the airport.
All right, I know, like newcomer to the drug scene. But
in front of the airport last night as I'm leaving the night before, there's
like people all over the place smoking marijuana in front of the airport. John,
what is the world coming to here? Well, you know what,
maybe that's where they put all the sand for Cisco of homeless people when they
cleared them out, just lay a good thing for presidents to come visit.
So yeah, because they you know, they're somewhere, So maybe they just
dumped them in some other homeless encampment. So you saw, you saw it
double the normal number. But I can't go. California is a nightmare.
Yeah, I haven't newsome. It is very likely going to be the Democrat
nominee this time around, or possibly no not guaranteed, but I think,
you know, possibly good pump, but he's so easy to run against.
All you need to do is run video of California right now, almost random
video. You don't even have to curate it or anything. Just drive down
the street and post the video and then say do you want this guy running
the country? You know? And that seems like that's all you would have
to do. Man, I'm like, all for legalizing, liberalizing all these
drug laws. It's a mental health issue. It's not a criminal issue.
But because the cost gets so high, people have to steal to support their
habit, it becomes a criminal justice issue. But in places like even New
Jersey and numerous other states, the deal is you got to go for treatment
if you get arrested for crime, and if you don't, then they'll send
you to jail. This is what we need for the rest of the country.
You know, you get arrested for drug crimes whatever, or you're a
criminal because you're involved in drugs, you need mandatory treatment get off of it.
And you know it's doable, but there's no will to do it.
You know. Have you had Michael Schellenberger on your show because he wrote a
book about this called San Francisco, Sico, San Francisco, San Francica.
Yeah, and that's basically the conclusion that he comes to in that book is
that most of the people in the streets are drug addicted or mentally ill,
and therefore you can't fix their lives by giving him a little apartment or something
like that. The rent's not too damn high. Is that that's not the
call of it? No, no, he yeah, he actually said the
idea of the normal middle class person who loses their job and ends up on
the street is a myth. Yeah, it's not what's there? So,
yeah, and so you basically have to have some kind of a some kind
of what you know, a liberal person might call coercive. Yeah, there
has to be some kind of coercion involved in here where they there's some behavior
that's expected and if they don't behave in that way, then there's a consequence,
you know. And so we'll see. I think it's a self correcting
thing, luckily, because different states have different policies, so we know what
works and what doesn't. And yeah, could not they got it more.
Yeah, the guy the guys who implement what doesn't work just get kicked out
of office. Hopefully, that's so easy to happen. One's upon a time
that happened. But now they get they get kicked up for higher office,
right, yeah, you just move them up to president or sent there's something
like that. I mean, look at our president now. He was basically
a failed politician, and he failed his way to success. You know,
the way it's happening now is that people are voting with their feet in states.
They're moving out of states that are badly run and into states that are
perceived as being well run. And there's a nasty side effect to that,
which it leaves all the people who like the way the badly run states are
being run at home to vote and people don't like it leaves so you don't
get any pressure on the mayors and the governors to do a better job because
they get reelected no matter what. So anyhow, that's that's a long that's
a sessions worth of yeahs So, but in the meantime, we got plenty
of issues here. So what's with inflation that just disappeared? Happy days are
here again. Rates are going lower and pretty soon before you know it,
banks will start making loans again. Who could believe that could happened. Well,
you know that since the last time you and I talked, the CPI
and the PPI both came out and the CPI was was much lower than anybody
expected. The PPI was actually negative. There was actually deflation in commodities,
and so all of a sudden, it seems like inflation is and you know,
you and I have talked about this. There are so many recession indicators
out there that we would expect lower inflation and maybe even deflation in the year
ahead, and that's starting to kind of play out. And so the question
is is it good for the stock market? Because stocks rocketed on this,
We had this big relief rally, Yeah, and huge ract you know.
The implication, well, disinflation is good for stocks when when the inflation rate
is positive, but declining stocks usually go up. But deflation is bad for
stocks when when prices actually go down. And I kind of think that that's
what we're going to see in the next year, just because there's so many
really major signs of weakness out there and zero heads. Today they just said
that the index of leading economic indicators went down for like the sixteenth month in
a row. You know, those are things that point towards future economic activity,
the things that make up that index, and you know, there's all
kinds of other things that you and I have talked about that indicate recession is
coming. So if we get if I'm not here already, yeah, yeah,
if they don't go back and revise everything and say, oh, it's
starting in October, which is usually the way it works and the way it
could work this time, but that's not good for stocks because an actual recession,
especially if there's deflation during the recession, really lowers corporate earnings and that's
bad for stock prices, and yeah, yeah, it's bad for the banks,
and it also blows up a lot of the leverage speculating community. There
are huge sections of the financial world that can't function in deflation. They need
inflation and interest rates to be doing what they're supposed to do and instead of
just plunge it, so you know, you you end up with lower corporate
earnings, falling stock prices, and then a bunch of crises that governments have
to step in and bail out. And I kind of think that's Petsil's coming
based on a lot of commous leaders. So this relief rally was probably kind
of a delusional and it's probably going to be reversed out pretty soon. That
that would be my prediction for the next few months. All right, Well,
it'll be interesting to see, that's for sure. I mean, uh,
it definitely, it's definitely we're at a real pivotal point here. We
don't know what's going to happen, but if these banks don't turn around fast,
I don't see how that's going to help. And kudos to you for
that great article in zero Hedge today by you, and we'll put a link
in the show notes to that about inflation just up and disappearing. Yeah,
it's nice when zero hedge kicks up your stuff, you know. That's uh
that that site is a giant compared to most of the regular sites up there,
so very cool to see that happen once in a while. Hey,
So, you know, going back to the recession, the phenomena, you
know, the leading economic indicator is down for the nineteenth straight month. Do
we not have a recession? Now? How is there not a recession?
Well, there's been all kinds of indicators like that, Like remember how long
the yield curve was inverted for and it didn't cause a crash or anything.
So there's a lot of stuff out there that, you know, the indicator
happens, but the economy doesn't follow along the way it has historically done.
And there are reasons for that, and one of them is all those stimmy
checks from Yeah Trillia. We basically said, Okay, you don't have to
go into work, so you stay home and work from home. You don't
have to pay rent, you don't have to your student loans, yeah,
or your mortgage or your student loans, and then we're going to send you
checks at least every two months. So people ended up accumulating what they call
excess savings, and they've been spending those excess savings for the last couple of
years, and that's kept the economy going when a lot of those indicators said
that it shouldn't anymore. You know, the yield curve goes inverted. So
you know, we've got plenty of money, and now people have used up
their excess savings, but they're putting everything on plastic. So credit card debt
is soaring, which is another negative indicator. You know, when you get
a trillion dollars of credit card debt and rocketing delinquencies on credit cards, then
you know, consumer spending has to decline because all those people who are now
having to pay on their student loans but they're already maxed out on their credit
cards. They're not going to go out to Costco and spend five hundred dollars
this weekend. It's just not going to happen. So that's another recession indicator
and possibly deflation indicator of many, Yeah, of many or sure, and
you just, uh, it's this lead living in this world of illusion of
delusion, because I think the argument is there quite persuasively that we were been
having a recession for the past year. It's just that the some of the
traditional indicators tend to lag anyway, and real estate's been good, the job
numbers have been okay, so we hang our hat on that. But the
reality is if you just printed money and nobody had to do anything, you
know, it would look it would look even better. Yeah, oh,
the modern monetary theory thing would look great for the first few years. If
we just just printed money and gave it to everybody, cut everybody's taxes and
stopped borrowing money, and just finance the government with newly printed currency. That
would work until why yeah, until inflation spiking the dollar tanked, because that's
that's the logical conclusion of a product, you knows, where you just finance
yourself with newly created currency. So you know, we kind of did that,
really and we got a pretty good economy out of it, at least
in terms of headline numbers superficially. You know, you mentioned real estate and
what was the other thing you mentioned something else that labor, the labor market,
and both of them under the surface are horrendous, but the headline numbers
are okay. But you know, in the labor market, you get you
get these big jog job numbers now and then after the number comes out and
everybody gets excited about it, people dig into it and say, oh,
one hundred and seventy five percent of the new jobs were we're part times.
That means we're losing full time jobs at the same time people are having to
take on, you know, third jobs in order to make ends meet.
That's not a good job's number after all. But by that time, everybody
saw the headline number and came to their conclusion, you know, and same
thing with real estate. Link criss are elevated still, but The reason they're
elevated is because nobody's willing to sell because the mortgage rates you're so high now
that if you sell a house with a three percent mortgage and you have to
take on an eight percent mortgage to buy your next house, that doesn't work
for you, you know, but exactly the case. Your mortgage, your
low rate, cut rate mortgage has become a major asset. But it's also
to become a millstone around your neck because if you need to finance your next
home, it's going to cost you to double and you'll buy half the house
that'll wind up costing you the same. Why bother moving? It's like a
rent controlled apartment in New York City, isn't it. You get it?
You never leave. You know, you're ninety six years old, you're still
walking up those stairs to that rent control department. So I think that's true
with a lot of houses now that are you know, McMansions. They're completely
inappropriate for the sixty nine year old baby boomers living there because they've got three
stories and the boomers have bad news, but they can't leave, you know.
Yeah, So I think there are three big sources of homes for sale.
Inventory come in pretty soon, and when they come, it's going to
be a deluge. And that is the boomers who are going to finally have
to sell they can they can't get upstairs anymore. And the Airbnb guys who
are terrified that the other Airbnb guys are going to sell a bunch of their
inventory and push prices down, so they're going to start selling. And then
the Wall Street guys who bought up entire neighborhoods at bubble prices, and they're
going to behave like Wall Street always behaves when they figure out they're in the
wrong asset class. You know, they're going to just sell everything at whatever
and just take the losses. So we'll see a lot of private equity companies
go bankrupt and dump their inventory. And so those neighborhoods that got bought out
for twenty percent over the market are now going to be sold at forty percent
under the market. So you know howling is going to crash. There's just
no way around it. All that is and we've already seen we've already seen
commercial crash. That's a basket in case, no end in sight. Eight.
So bitcoin is up over thirty seven thousand bucks, I got to admit,
I've been buying it. I'd been making some money on it because I
would just buy some every Monday, and then it would hit a price target,
I'd sell it and then I'd begin the process over again, and once
a week I would buy x amount of bitcoin. And yeah, it's been
it's been a nice little run up there. Well, those ETFs are finally
coming that people have been talking about for such a long time, you know.
And when a physical ETF comes into a market, it's usually really beneficial
for stock prices like or for the commodities price. Yeah, that happened.
There was the GLD gold ETF came out back in the day when gold was
much lower, but then it bought a bunch of inventory, got everybody excited
and gold had a nice round, and same thing with uranium and so the
as I understand that the new bitcoin and if they're in et aps are going
to come in and they'll do the same thing. They will buy a bunch
those coins and take them, yeah it spot and take them off the market.
So people are excited about that prospect. Well, and the other thing
that's nice about these ETPs is it lets enormies buy the thing like, I
don't know how to buy the bitcoin myself. I wouldn't know what to do
if you told me go out and buy some bitcoin right now. But when
that Etsy hits the market, I'll know exactly what to do. I'll just
go buy. I'll pull up that ticker and hits sen or he'll hit buy,
and that'll be that, you know. So I think a lot more
buying will come into the bitcoin market for sure, and it will probably pull
up the other crypto currencies. So I think that this is you know,
other things being equal good for cryptos. And there might it might not be
equal, like there might be a you know, huge deflation herey crash right
now that ups bitcoin and ethereum and gold and silver all down with it.
But just other things being equal, that's probably why cryptos are going up right
now. And I think he could be right hey, and miracle of the
old miracles, Argentina just elected libertarian. I didn't know that you could spell
libertarian in Espaniel, but evidently you can. Yeah, something was to do
with libertad right, you know, you're just a little thing like freedom.
I didn't think but he cared about that anymore. Well, you know,
this guy sounds like a cross between Ron Paul and Darnald Trump because he's you
know, he's really emphatic, and you know, he okay, being like
Ron Paul, he wants to close down the Central Bank, but he also
wants to make abortion illegal from the top down, you know, national law,
and he wants to close down a long list of government bureaucracies, and
he wants to cut wealth are spending. So you know, you toss all
that together and that you know, some of those policies are conservative, some
of them are populists, and some of them are libertarian. So you know
it's gonna be fun to watch. But hey, he could always move to
Chile after this fails, right, Well, you know, Chile was the
closest thing to a libertarian country that we had out there for a really long
time. And yeah, yeah, yeah, well yeah, in Hong Kong
got taken over a China, so it's no longer that and forget that.
You know, Chile had a very free market economy because of the legacy of
Pinochet, right, and so you know, it wasn't all a good thing
the way it happened, but Pinochet left Chile with a relatively constrained public sector,
relatively loaded taxes, relatively clean regulations, and so Chile was a very
successful country for a long time. Now they're kind of backsliding into socialism,
but but who knows, we'll see. It's nice to see Latin America leading
the way in that direction from once, you know, because usually that's they're
they're pulling in the other directions a lot of the time. Maybe they swing
between dictatorship and socialist dictatorship, you know, military and dictatorship and socialistic,
and it's never they never find that happy medium, and Chile was kind of
that for a while. So maybe Argentina will end up being that too.
That would be nice, and I would any man, it's going to be
down. It would be like a block of uh well maybe maybe you know,
Argentina going back to libertarian things would be enough of a push to get
Chile to go back as well. And then you would have the entire southern
tip of South America. Plus you could kind of throw Uruguay in there to
some extent, not truly libertarian, but not like the rest of the world
either. So then you'd have three major South American countries and then if it
worked, it could become the basis of a movement, right it could.
I mean, that's hoping for a lot in this world because so much of
the bad stuff that's happening out there is being blamed on capitalism, which means
a lot of people vote socialists because they perceive their problems to be caused by
capitalism. But I wouldn't call what's happening in the world today capitalism. It's
capitalism. Yeah, yeah, you know, it's an oligarchy in the US,
which is you know, it's as close to fascism as it is to
pre American capitalism because it's basically a partnership now between big corporations and loaded governments
and these guys. You know, that partnership is you know, censorious.
They do not want free speech, they don't want petition, and they don't
want clean elections. So you know, that's that's not our view of capitalism.
And so you know, I think that the best thing we could do
in the US right now would be aggressive anti trust, where we go in
and saying, you know, okay, Golden miss acts from now on,
your five smaller bags, Japie Morgan Chase twelve smaller bags, and you know,
Pfizer, Yeah, you know, right down the line, you just
go into these uh, these industries that are run by just a handful of
the companies and break them up. That's normally perceived to be a left wing
policy, but I think, you know, because it is. Well,
see, you could get pop right wing, populists and socialists to agree on
that policy and maybe you get fifty one percent of the vote out of that
coalition. So it's conceivable that that that, you know, it's it's that
the populists and socialists get to get for that one issue and then then anti
war too. You know, once they're together, they can look at the
other things they agree on and say, all right, men, and we're
going to close down the military empire. So again, that's that's asking for
a lot of today's world fantasy. It's a nice fantasy. It could happen,
you know, that's like who's been changed? Man. I don't know
that one, but yeah, or if we can, if they can pull
it off, I support it wholeheartedly. Hey, so China and Saudi Arabia
central banks sign a currency swap agreement. I'll give you my take on it.
It doesn't mean anything because you got like China with a crashing currency.
Everything's crashing in China. It's just a matter of time until three gorgeous damn
takes everything out. Well, yeah, China is not the super powerful more
to live that it seemed like it was for a long time, because they've
got a major financial crisis going right now, and they've got a demographic collapse.
It looks like they're on Their population is shrinking and aging at the same
time. So they're not going to be a manufacturing powerhouse in the same sense
that they were for the past twenty years, you know. So, yeah,
you're right. Just because China makes a deal with somebody else, it
doesn't mean what it might have meant at one time. But what a currency
squad swap means between countries is that what's the Saudia currency? Is it real?
No? No, yeah, I don't know what the sound enough currency
is. Okay, But anyhow, you China and Saudi Arabia give each other
or they buy each other's currencies, right, so then they've got some of
the other countries' currency on hand and they can use that to buy stuff from
that country without having to swap into dollars in order to do it. So
it's a it's a form of dedollarization, and it's a real thing in the
sense that henceforth Saudi Arabia will be selling oil to China for you want,
and that will do with those you want, but they'll have them. Yeah,
well, yeah, yeah, I see. That's the thing. You
got to have something you can do with that currency once you get it.
And that's that's the problem with for instance, Russia and India hutting these bilateral
trade deals because Russia will sell oil or natural gas to India and go get
rupees back, but they can't buy anything with the rupees that they want,
you know, so that that deal is not working for them. And so
that's part of the rationale for that gold backed bricks currency everybody was talking about
for a little while. But yeah, we've talked about it for a week
and now we're onto this. Yeah yeah, but you know, it's the
same process that's being worked out. It's going to happen. I don't mean
to say dollar, it's supreme supremacy forever. We pretty much abuse that position
of trust. So the world will have to find an alternative. And we
want the world to find an alternative because it's doing more harm than good to
the United States in so many ways, the unlimited deficit spending, the unlimited
military industrial expansion, complex expansion, all that as a result of the abuse
of our trust of the world's reserve currency. But hey, you know,
this is just another step along the along the path going to be interesting to
see what happens in any event. That is it for today. Make sure
you go over to John's substack. It's rabino dot substack dot com link in
the show notes, along with a link to your superb article John about inflation
disappearing that appeared on Zero Edge today that tens of thousands of you out there
have been reading. Hey, you've got any questions or comments, email kl
at Carrie LUTs dot com site Financial Survival Network dot com. Sign up for
your free newsletter, John. We'll catch up to you in a couple of
weeks. Thanks carry so Ya, thanks for listening to Carrie Letz's Financial Survival
Network, your solution to today's trying times. For the latest, go to
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