Speaker 1: I just don't see any significant cuts coming. If you
don't touch Social Security, Medicare and Medicaid, the military, interest
on the debt, it's an illusion, Carrie. There's nothing there
can they can cut the heck out of the government,
and I wish they would. It would be wonderful. You
can cut spending and the best thing we could do
is maybe cut a lot of government wasts.
Speaker 2: You're listening to Carrie Letz's Financial Survival Network, where you
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Network now more than ever, and welcome.
Speaker 3: You are listening to and watching the Financial Survival Network.
I'm your host, Carrie Letz. Hey, we're in the first
week of February. Things are happening so quickly.
Speaker 4: Here. Wanted to get Michael.
Speaker 3: Pento on pentoport dot com. Any questions for Michael and
myself kl at Kerrie lets dot com. Is the email address?
Did you ever think we were going to live through
times like today like we're living through?
Speaker 1: You know, gee, how do I answer that. I yes,
I'm surprised on some degree, but I don't think we've
seen anything yet, Kerry, compared to us coming. You know,
the fact that the bubbles in an extent haven't burst
yet doesn't mean they don't exist massive in record bubbles
in the credit markets, housing and in and inequities. And
I mean they're just floating around waiting for a pin.
And I kind of liken it to a hot air balloon.
You know, the hot air balloon tends to float when
you keep on putting hot air into it, which is
the liquidity coming into the bond market primarily. But it's
taken a long time, taken years for that the cluidity
to be exhausted. You look at what's in the reverse
rebail facility and the TGA level of real fed funds rates.
So always are pointing to the fact that liquidity the
hot air that's needed. When you have a hot air balloon,
it needs hot air to stay afloat. You cut off
that hot air and it will crash if it's cut
off long enough. And that's exactly what I see happening.
I don't know if it's gonna happen this week or
next month. I don't think so. But as we go
through the year and that TGA starts to get drained,
the reverse repail facility is already dry. We've had real
FED funds rate, a positive real FED funds rate for many, many,
many months. Now we're still heading towards that crash. And
you know what I in a comments you know where
you just said, Carrie, I don't think anybody. I haven't
heard anybody. And I love Donald Trump. I voted for
him twice. I think he's got so many great ideas.
But he's not a superman. You know, he's not infallible,
he's not omnission or omnipotent. And it's just so much
he can get done. And we can talk about this
tax cuts, we have to get into that. But people
are just sitting there and lulled to sleep by this
endless stream of hot air and liquidity. Are going to
be in for a route awakening, and when it happens,
it's going to be catastrophic, catastrophic for the markets who
have just been inculcated into the Fed's got your back,
and the government has your back, and there's a FED
put in there, and it just there is none. There
is none anymore. And they the reason why there is
none no more, there is no more put is because
we are an insolvent nation with a big problem with
inflation that has not gone away. And all government can
do is borrow and spend and print. That's all they
can do. They don't have this you know, you know
workforce or you know, manufacturing essence in another world. It
doesn't exist. They take your money and spend it, or
they borrow it, or they print it. That's all they
can do. And that's going to add to the insolvency
and inflation concerns.
Speaker 3: And when they're borrowing it or creating it, printing it
out of thin air, they're taking your money. You just
don't know it because they're decreasing the purchasing power of
that dollar. Now, Musk and Doge, they've been attacking the
blob as they call it in Washington and showing the
receipts where the money's going, and without getting into all
the specifics, it's absurd. But Musk says he can cut
four billion dollars a day off of government spending, which
comes out close to a trillion and a half dollars Michael,
which if we up our tariffs another half a trillion,
you know, the deficit, the stated deficit is gone. We
still have the two hundred trillion dollar time bomb between
Social Security, Medicare, all the so called entitlements.
Speaker 4: But hey, a.
Speaker 3: Trillion, here, a trillion, they're pretty soon you're talking about
real money.
Speaker 1: Michael Musk is far smarter than than I won't say
you because you are. You could build. You can build
a computer with your eyes closed. I mean, I just
learned that today. But I just don't see any significant
cuts coming. If you don't touch social Security, Medicare and Medicaid,
the military, interest, on the debt, it's an illusion. Carry
there's nothing there can They can cut the heck out
of the government, and I wish they would. It would
be wonderful. You can cut spending and the best thing
we could do is maybe cut a lot of government waste.
I agree, we're one in a court. But if you
don't touch those entitlement programs, you're not going to make
a significant debt in the in the debt or deficits.
Certainly not the debt.
Speaker 3: The debt.
Speaker 1: That's a that's a fallacy. We're not you know, Trump
did say in his first to Trump one point, oh
said he was going to pay off the government debt.
Ahaw did that turn out?
Speaker 3: Yeah, Well, he wasn't really running the government. Then now
he's seized effective control. And I think they'll have to
touch Social Security. Probably won't happen untill after the mid terms,
but they really have no choice. Social Security is the
biggie and the medicare not far behind. And you know,
and then.
Speaker 1: The interest, So the interest on our debt is over
a trillion dollars. The question. Trump is on record saying
he's not touching Social Security and Medicare. He's on record
saying that. Now that doesn't mean he won't. He won't
change his mind, but he's on record saying he won't
touch it. But they have to be touched. We just
don't have the money. It's not there, and you just
can't print it any longer because we already have an
inflation problem that's not going away, and you could. You
saw it today in the non farm pailery numbers. You
see wages who are up four point one percent and
they predicted to be up three point eight percent. Consumer
expectations of inflation are still way too high, and the
Fed is dithering now, and they say, you know, we're
no longer hiking interest rates, we're cutting rates. Remember we
cut one hundred basis points from September eighteenth to the
end of the year. And now we're still saying the
Federal Reserve was saying this, not me, not carry Lutz.
We're gonna still have several more cuts cuts in twenty
twenty five. I don't know if the long end of
the bond market, which is what Scott Besson said he's
most concerned about, right, if that doesn't control the long
end of the bond market directly. That's a product of
inflation and deficits. He says he wants long term rates
to fall. I don't see how you get there by
just adding to the inflation problem.
Speaker 3: Yeah, So speaking of nonfarm payrolls and inflation, those measures
are done by BLS Bureau of Labor Statistics, which I
believe is part of the Commerce Department memory serves me correct.
Speaker 1: Part Department of Labor, Department of Labor, Party labor. And
by the way, if you get rid of the l
in the BLS, I think you have a pretty good
definition of what we're looking at.
Speaker 4: Right.
Speaker 3: So musk through DOGE is trying to gain access, and
they've had several lawsuits filed by employees and unions and whatever.
But once Goage gets in there, what do you think
they're going to find about those two specific measures.
Speaker 1: Well, I'll tell you one thing. If they find out
that the government there's been lying to us? Oh carry,
would our government ever lie to us about anything? I
mean no, come on, will you give me for even thinking?
Forgive me for thinking that. But if we let's just
say hypothetically that they were playing some games with the numbers,
and I'm not I have no knowledge that they were.
I'm just saying hypothetically. And musk uncovers this conspiracy that
these birth death models were just way overblown trying to
re elect Joe Biden. Uh. You know what, you don't
trust government data any longer. And I think that's really
going to put a dagger into the bond market and
you'll see long term rate spike because if you can't
trust what the government is saying about inflation, and you'll
wait a second, I thought I was crazy. I go
to the store and I'm my inflations, you know, double digits,
and they're telling me is coming way down and they
don't take into count you know, taxes, they don't take
insurance really into account. They don't really count me the
value of the house the housing bubble, because they look
at owner's equivalent or rents. I mean, what isn't that easier, Carrie,
wouldn't it is me easier for them just to count
the increase in home prices. We have the case Shower
a home price index. Let me just use that as
as a proxy for what ome prices are doing instead
of as hypothetical, what could I rent my house out
here if I had to? You know, it's just ridiculous. Yeah,
it's nonsensical. But but they opt, you skate and they lie,
and you know the hedonics in the substitution. We all
know inflation is much higher than it's stated. But if
it was an intentional a lie cover up from the
massage data, then they have a real problem.
Speaker 3: Yeah, and I have a feeling that's going to be
based on what we've seen so far. Just today as
we're speaking, they got into the HHS computer and instantly
found one hundred billion dollars worth of fraud and waste
in Medicare and medicaid instantaneously, but until we have a
health revolution in this country, which actually might be bad
because you'd cut back on Medicare and Medicaid, but then
your social security would go through the roof because people
would live longer. Right, So, right, that's one way of
looking at it.
Speaker 1: Yeah, we would be a lot healthier if we fixed
our problem with what we eat in this country. We
have a terribly unhealthy population. And I think our Day
Junior has a shot at getting this used. Look, listen,
there's some things we can love about Europe, some things
we can hate about Europe, but you can't hate their food.
Speaker 3: And Canada too, Canada too. Canada doesn't allow you know,
the fruit loops example, there's eighteen ingredients in it, and
like all of them in the US were artificial, all
of them in Canada were natural. All the colors, the flavors,
all that and breakfast cereal, big agribusiness. It's poison. They're
just putting poison into our bloodstreams.
Speaker 1: Well, you know who the biggest contributor is to the FDA, Right.
Speaker 3: I can imagine it's a big pharma of one pizer.
Speaker 4: Perhaps there there you go.
Speaker 1: Yeah, So where the money, where the money goes? I mean,
why should you know, if we had a healthy population,
if we stopped all of the negative things that we
put in our mouths and our bodies, artificial colors, genetically
modified food, and we were a healthier nation, what would
that do to First of all, you wouldn't be able
to watch you watch TV, and there would be no
commercials because every commercial is some kind of pill you
could take for this, that or the other, which is
a product of what we're eating. You know, now you
can inject yourself with these GLP ones and supposedly, hang,
I'm losing weight. I'm also losing you know, body mass
and muscle. Is that a problem? I don't know. Maybe
I'd just better watch what I eat, eat healthy and exercise.
Speaker 4: Idea, good idea.
Speaker 1: Yeah, I don't want to get too far off of track.
But there's a lot of waste and fraud and abuse,
and it doesn't just stop at the shores of the
United States. I can guarantee you that. And the gold market, Hey, Gerry,
the gold market is sniffing that out.
Speaker 3: Yes, So what about the gold market. We're at near
three thousand dollars gold closed last month twenty seven ninety nine.
Now it's getting close to twenty nine hundred. It even
silver is starting to go up. Is that the Canary
and the gold mine here?
Speaker 1: Michael, Well, unfortunately I have I've only had about a
five percent position in gold. I sold a lot of
it not too long ago, towards the end of last year,
so I still own it, which is more than most people,
and most people don't have any exposure to the precious metal.
But there's something going on with the precious metal because
it really shouldn't be rallying here, because you know, the
gold has been rallying when the dollar goes up and
the dollar goes down, when interest rates rise and interests
race fall, I mean, it just goes up. And I
think what's happening here is that I think a lot
of nations are now have stepped up their recycling of
their trade surplus into gold, and they know they don't
they don't longer want to hold dollars. They're just done
with holding dollars. They do not want to buy our
bond market. And when you own our bond market, you
have to own dollars. So they're just done. They don't
want America's hegemony any longer. So I think that that
and that was in place before and that is only
intensified in the last few months.
Speaker 4: All right, so that's part of it.
Speaker 3: What about the Strategic Bitcoin Reserve, you're Michael.
Speaker 1: Well, yeah, don't get me started. I mean you listen.
If you listen to me about bitcoin, you were wrong
about Yeah, you could have made a fortune in a
lot of these coins. But here's my take, and I'll
give you a quick take on cryptocurrencies. They are not
digital gold. And the reason why they're not digital gold
is because there's a finite, finite amount of au in
the Earth's crust. There are an unlimited number of blockchains
and coins that could ride along that ledger. Unlimited number
carry oh.
Speaker 4: Sorry it coins, twenty one million.
Speaker 1: Becomes twenty one million. But and here's in here, and
I would love someone to tell me why I am wrong.
What is the major difference between Bitcoin and ethereum and
Solana and doge coin and fart coin and trump coin
and milania coin. They're all coins that ride along a blockchain,
a digital ledger. And it's so listen if you told
me there's another element that was discovered in the Earth's crust,
and this element was virtually indestructible. It lasted forever, and
it's in limited supply. It's not gold, but it's another
element that serves the same purpose. I need to make
beautiful jewelry out of it, and it's wonderful.
Speaker 4: It's beautiful platinum.
Speaker 1: If you discovered gold, another element like gold that serves
the same utility and functionality as gold, and you could
say to me that you can create this in unlimited numbers,
these new elements, then I would say, well, even though
it's not gold, it's still going to attenuate the value
of gold, because there's more elements that do this same
thing that's exactly the same function as bitcoin. And I'll
give you one more reason why I hate cryptocurrencies, even
though I've been dead wrong about them. Cryptocurrencies in a
pure sense are decentralized ledgers. Okay, decentralized means that Wolfstree
doesn't have their dirty, grimy fingers all over them, and
that's exactly what's happening. So the price of bitcoin is
where it is today, close to one hundred thousand dollars
a unit, because wol Street has their grimy hands all
in there. If there wasn't anything called a bitcoin ETF,
what do you think about value a bitcoin would be,
it'd be a whole heck of a lower and the
thing that gives bitcoin its value, and it does have
some value, but it's limited, in my mind, is because
they are decentralized, immutable and anonymous transactions. But once Wall
Street gets their hands on it, it's not immutable, you're
not anonymous, and it's not decentralized any longer because they
can say, oh, carry Lutz, you own bitcoin in this CTAF. Well,
guess what I am the government. I'm taking your money
from you and you don't have it anymore. But that's
why I own bitcoin in the first point. So it's
it's just antithetical to the whole creation of cryptocurrencies. So
I've given you a short treatise on cryptocurrencies because they
are not digital goal, they are not limited in value.
There's an unlimited number, unlimited supply, there's an unlimited number
of supplies of blockchains that make created. They are not
limited in nature, and they are worth less.
Speaker 3: I would just point out that this is the greatest
gold rush ever for Wall Street cryptos because there's no
due diligence involved, there's no production, you don't have to
analyze the company you just create ETFs, you create options futures,
then you go out and prop trade and make a fortune.
Speaker 4: My theory is Sam bankmin freed.
Speaker 3: He ran a leaky ship, but they had to get
rid of him in order to take over Crypto FPX.
They had to eliminate him. And because he was a
bad bookkeeper, it wasn't necessarily a thief. You can't point
to this guy where he stole the money and put
it in his account. He just didn't put stuff in
the right buckets. Now, granted you're a lawyer, you do that,
they'll throw you in jail. And he's in jail now.
But I would advise everybody to look up the law
firm that forced the whole bankruptcy and look up their
deep state past. It's the point where that law firm
has actually had books written about them that they bought
up the first edition and stop the printing. And Michael,
let's not forget the creditors. Now you know bankruptcies, the
creditors got paid one hundred and twenty cents on the dollar.
After all the grift from the trustee and from that
law firm hundreds and hundreds of millions, maybe billions of
dollars of grift. We don't even know the consultants. You know,
it's a club. The bankruptcy court is a clubhouse. And
just like George Carlin said, it's all a big club
and you aren't in it.
Speaker 4: Yeah.
Speaker 1: Well when he said some of the dollar does sound
a bit rich when you're in chapter eleven, so.
Speaker 3: Yeah, well they said, well the stuff wine up in value. No,
this guy was a genius. It's like if you had
Musk running the accounts, the accounting system of Tesla, he'd
wind up in jail. He can't do it. That's not
his yard house. He could build a system for you
to manage it, but he couldn't effectively run it day
to day. It's not in the guy's wheelhouse. This is
what Sam bankmin Free did. And when nobody loses money,
how are you a criminal?
Speaker 4: Yeah?
Speaker 1: Well, just before we run out of time, I want
to talk about that, and I love your opinion on
this carry, So let's talk about the Trump's tax cuts.
You know, everybody's what Wall Street has right now is
they're facing the tariffs. And Trump said that there's nothing,
there's nothing you can stop the twenty five percent tariffs
going on Canada and New Mexico. Nothing. He said that
on Friday, and then Saturday is supposed to go in effect.
And then of course.
Speaker 4: Magic there's a day is thirty.
Speaker 1: You know that they punted the ball for thirty days.
But these tariffs I think are necessary because if you're
going to now let's just talk about the extension of
the Trump's tax cuts. The extension of the Trump tax
cuts are supposed to cost about four and a half
trillion dollars over the ten year horizon, and that's what
OMB scores Office of Magical Budgement budget. I don't think
tax cuts really cost you anything because you're going to
get a lot of growth. But maybe they do cost
you a little bit, but it's not going to be
four and a half trillion. But you have to you
have to raise some revenue, because is if you do
this thing through reconciliation. That's I think this bill, this
big grand bill, is going to be done with the
reconsill It can't it can't add to the deficit. So
he's gonna need tariffs, and he's going to need huge tariffs.
But then I also heard that tariffs can't be used
as part of the reconciliation process. I don't know where
he's going to get four and a half trillion dollars
of new income, new revenue or in tax custs. I
don't know where he's going to get it from. But
I don't think. And and here's the thing. Even if
he does get this through, and I hope he does, Trump,
you're just extending the existing law. You're not giving any
new impetus of lower taxes to Wall Street and to
the corporations. It's it's somebody the same rate. So I
think people are underestimating, or I should say, overestimating, how
wonderful this big package is going to be. Unless he's
going to extend the tax cuts even to greater degrees,
like no taxes on tips and no taxes on Social
Security and all that stuff. And then you're going to
brow a massive hole in the budget. He just said,
Trump and bessn't the new Treasury, respectively, that they're worried
about long term interest rates they want them to come down.
You blow another big hole in this deficit, which is
already two trillion dollars plus plus a trillion dollars in interests.
I mean, you're going to have a huge problem in
the long end of the bond market, and those are
one you know, that's a lot of what I'm talking
about about this air going into this balloon spiking long
term race would cut off that supply of hot air
very quickly.
Speaker 4: So a few things on that.
Speaker 3: Right now, we have an effective do you know what
our effective tariff rate is on the import tariff rate?
Speaker 1: Yeah, effective tarraf Right now.
Speaker 3: We bring an eighty billion a year in tariffs, which
is the equivalent of two percent. Now, some things have more,
some things have less, like shoes are like could be
fifteen percent, and you know, but most things the effective
rates two percent. So if ten percent, that's uh, that's
going to be what is that going to be? Ten percent?
Five times four hundred billion, twenty percent eight hundred billion.
All right, So I think long term you got to
look at a national consumption tax sales TEX.
Speaker 4: Yeah.
Speaker 1: Also on for that. First of all, let me just
add that if you put twenty five percent taris on
Mexico and Canada, you know you're not going to collect
twenty five percent. That's not how it works. Because the
the exporting country could cut their prices, they can reduce
the value of their currency.
Speaker 3: The there's other sorry, they already have you do.
Speaker 1: Yeah, so you're not going to get you're not going
to get You are not going to get the exact
number at all, not even close to the tariff that
you put on your imports.
Speaker 3: Just laying that out there. Yeah, no question that is true.
But a ten percent tariff, nobody's going to blink about it.
Four hundred billion. There's another thing, like, there's a thing
called dominimous importation where they just mail stuff in first
class from China and other countries and they just say
it's dominimous, so no tariff ever gets levied against it.
It's a big scam and Trumpets stopped that for a
couple of days. They were freaking out in China over this.
Now he's kept it going. But they're going to eliminate that.
You know, there's a lot of things that should be
collecting tariff that don't, and so tariff's part of it,
National sales tax, get rid of the irs. The money's
got to come from someplace. We can't get it from
tariffs alone because we do four trillion a year in
imports and what are you going to do one hundred percent?
So we bring in four trillion in revenue. It can't
be done.
Speaker 1: It's just an app No, I'm all for you consumption taxes.
I've always espoused a consumption tax, and it's it's very progressive.
The more money you spend, the more money you pay taxes,
and that you I would exempt certain things like a
food and clothing rug. But if you know you can,
you can make it so that it's extremely beneficial for
the country. Consumption tax concourages the savings, encourages investment and
encourages productivity. So that's that's the healthiest thing we can do.
And just get rid of the entire irs. But welcome,
can we get back from dream lamb. This is a
quick sotic conversation because it's just never going to happen.
Speaker 3: No, no, no, But but that is the way to
do it. But a flat tax also would kind of
amount to the same thing as a sales tax, just
it's on income instead of expenditures. And you know, let's
not forget a sales tax would encourage savings because you know,
you're not getting taxed on your safe savings, you're not
getting tax on your investment income. It would lead to
a boom in this country, and you know, the ability
to get rid of our system flat tax has got
to be the way to do it. But again, you know,
it's politically not feasible because why should I be paying
the same amount as a percentage of my income is
Elon Musk. The difference is Elon Musk has the option
of paying nothing.
Speaker 4: You don't. That's the difference.
Speaker 1: There's also a lot of accountants I think would have
a problem with the and lawyers.
Speaker 3: Lawyers. Yeah, so you're giving me reasons why I shouldn't
like it. As a recovering attorney here, I think nothing,
nothing could be greater than over a profession that hasn't
hesitated to screw over the public. I yes, Trump, who's
the biggest lobby in Washington, the most powerful. You know
what he said, Lawyers think about it?
Speaker 1: Yep, I said, it's a quick sot of conversation. It's
just not going to happen.
Speaker 3: Yeah, but if you can embarrass them enough. And I
do think there's the potential for a trillion dollars worth
of savings in the budget to you know, get.
Speaker 4: Out rid of crap. We haven't even department yet.
Speaker 1: Michael, Well, here's one. Here's the one. Hope that we have.
Trump does not have to run again, and he can't
run again unless he changes the constitution. Oh, he's going
to have a scorched earth policy behind. He will make
as many changes as he has to to get this
country right. So, like I said, I'm a supportive of him.
I don't think he's superman. I don't think he's infallible.
He's made a lot of mistakes in his life personally
and in business. But he's our best shot that we have.
Speaker 3: I think what happens when they go into the voter
databases in all these states with AI, just like they're
doing with the budget. I mean, it's all going to happen.
I think every state will will be forced to implement DOGE.
Several of them have states Now. I think the federal
government will just say, look, if you're spending five hundred
million or a billion a year or more and you're
taking any federal if you take one federal cent, then
you've got to put in a DOGE and have a
procedure for appointing them. And we're off to the races.
Because what we're seeing here multiply times fifty seven. Right,
we have fifty seven states according to Obama. I think
he said one time, and all these authorities, counties, city, states,
it's all a big grift here, Michael.
Speaker 1: Yes, Well we could have Canada as our fifty first date, right, well,
you know, maybe even and maybe Palestine will be fifty two.
Speaker 3: So it could be you'll be vacationing on the Gospel strip?
Speaker 1: Who did this review this? I think the president has
been in power for or just a few.
Speaker 3: Weeks, almost three weeks on Monday.
Speaker 1: I mean just a few weeks, and it's a we're
just getting started. This has not even been a month.
Carry And if you're in that sixty forty buy and
whold you know, dollar cost average portfolio, I think you're
in a world of hurt. And that's that's just a fact.
You know, when we have when the recession does hit,
and we're going to have a recession, we have not
abrogated the laws of economics and the business cycle. I
can guarantee you that it's going to be brutal because
we have those triumvirta bubbles and if you don't have
an active money manager that can get you out of
harm's way and gets you into some protection. So that's
usually short term treasuries, You're going to have to have
some cash, the dollar could increase in value, and you
have to be able to adroitly short the market. If
you do those four things, you are going to turn
it what I believe is going to be the biggest
disaster what we've seen since the Great Depression, into something
that can really not only protect you, but enhance your
retirement lifestyle. And that's what that's what my me and
my firm are debit dedicated to.
Speaker 4: Couldn't agree with you more. And if you look at the.
Speaker 3: Great Depression, more millionaires were created then than any other
time in history. And yes, the business cycle hasn't been repealed,
not even by Trump, not even by Elon Musk. And
you know, some thing's never change, all right. So pentoport
dot com is the place to find Michael And if
you've got a question or comment, shoot me an email
kl F Carrie lets dot com and you'll find a
link to michael site. The show notes this interview on
Financial Survival Network dot com. While you're there, we just
ask that you sign up for your free newsletter, like
over seventy thousand FSN community members have in the past. Michael, Hey,
great catching up with you amazing interesting times. We'll talk
to you soon.
Speaker 1: I can't wait.
Speaker 2: Kerry, thank you, thanks for listening to Carrie 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
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