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Speaker 1: My home prices are going up. I'm doing fantastic. But

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the renter and those who are working, you know, in

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the lower class jobs, blue caller jobs, they're really really

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hurting because their incomes are so far behind inflation and

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they don't have the asset price appreciation that we have.

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That's the problem.

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Speaker 2: You are listening to Carrie Letz's Financial Survival Network, where

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you get valuable information. You just can't find anywhere else

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to thrive in today's trying times. You need the Financial

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Survival Network now more than ever. Go to Financial Survivalnetwork

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dot com and get your free newsletter and gift. Financial

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Survival Network now more than.

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Speaker 3: Ever, and welcome. This is Financial Survival Network. I'm your host,

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Carrie Letz. Michael Pentapentoport dot com is with us now.

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Any questions comments kl at Carrie Lutz dot com. Michael

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one of my favorite guests, not just because so many

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thousands of people listen to our sessions, but because you've

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been spot on about exactly what's happening. I mean, our

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interview about that the bond market basically doesn't exist anymore,

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garnered so much attention I couldn't even believe it. But

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now we're entering the next phase, and we got election

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insanity going on here. What is your take? Does it

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make any difference who gets elected?

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Speaker 1: Of course, it makes a difference who gets elected. I'm

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not sure if either candidate gets elected. And I'm talking

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about Donald Trump. He's by far the better of the

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two choices, but he's not a libertarian and he's not

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a sound money guy. So if you're asking me if

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the all our problems will be solved by the election

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of Donald Trump, no, I mean I just laugh at

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people say, oh, you know Donald Trump, But well, yeah,

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I'm voting for him again. I could promise you that

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I'm not.

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Speaker 4: I'm not.

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Speaker 1: I call Kamala the Kamala the cackling communist.

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Speaker 3: But but you find your kind. There's some other choice

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whords we could come for her.

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Speaker 1: Right, Here's here's here's here's here's where I am so

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despondent about Kamala Harris. Her idea to make home prices

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affordable is to give everybody who's a first time home

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buyer twenty five thousand dollars to buy a house. And

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I'm like this, this, this is who we elect economic illiterates,

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This is who we nominate as a president. Now I'm

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thinking about government subsidies for housing or government subsidies for education.

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Did government subsidies for college bring down the cost of

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college tuition?

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Speaker 4: Yeah?

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Speaker 1: I mean, I mean he talked about if you really

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want to goose the price level of a thing, of

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an asset, how the government get involved and give a subsidy.

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But here's here's the only that I worry about. What well,

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what wasn't one mention of how we're going to pay

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for it? No, we don't think about those things. But

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she did. Well, the government doesn't have any money. They

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have two choices. They can either steal it from the

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people who have it, or they can print it. Those

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are the two options unless you can you am I wrong?

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Is there a government like cash stash of cash somewhere

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in the ethernet or the nether world where?

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Speaker 4: And I don't know. I think they're holding a lot

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of bitcoin though, Oh.

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Speaker 1: Okay, we let's go to the government could hit the

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bit on bitcoin. That would be fine with me.

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Speaker 4: I wouldn't care.

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Speaker 1: But then now they listen. The government doesn't have anything,

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has nothing that they don't and they have assets they

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could liquid eate. But when they liquidate assets. They're taking

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the money from the public, so they're just shu playing

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money around. So twenty five thousand dollars per person, everybody

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wants to new a house can get one. That's going

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to drive the price of houses, especially you know, starter

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homes through roof and it'd be a massive hole in

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our in our debt and deficits. That's that's that's their

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prescription to fight inflation. Here's another one for you. I

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don't want to talk about too much about politics, but

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I'll get you one more. What is the reason why

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we had inflation, Carrie, We asked Kamala Harris. Oh, it

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was corporate greed. Corporate greed suddenly sprouted up out of nowhere.

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Suddenly corporations had this epiphany and got greedy around twenty twenty.

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That's her version, corporate greed. Even though if you look

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at actual corporate profit margins, they're pretty much unchanged in

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twenty and twenty, so they they haven't been some price

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gouging from corporations. Maybe carry had something to do with

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the six trillion dollars of helicopter money deployed upon the

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population by the government, by both Trump and by especially Biden,

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who is spending trillions of dollars after the gold you know,

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craze was over. Maybe has something to do with the

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fact that the Fed printed five trillion of that six

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trillion helicopter money. How about the M two money supply

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went up by six trillion dollars. So you told people

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you couldn't go outside and produce things, You couldn't make things.

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You could order things from Amazon though if you wanted to,

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or from the ups man. Every day was Christmas for

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those people. Yeah, and you gave them trillions upon trillions

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or trillion dollars in mortgage for barons and enhanced unemployment

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and helicopter money checks in the mail. That's why you

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had inflation. But Powell doesn't say it. That's how you

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got inflation. Trump wlanes the price of oil, which is

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a symptom of what I just said, and Harris Waan's

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corporate greed. My god, are we living in a world

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of economic illiterates?

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Speaker 4: Yeah, totally.

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Speaker 3: Like, Hey, I you know, when the pandemic was going on,

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I knew it was going to happen to housing prices.

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I'd been renting because I sold the house and I

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was kind of in between, and I went on a

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desperate search to find a house, and surprise, you know,

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at least, and it's in the nominal price doubled, you know,

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in just two years.

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Speaker 4: And I'm not alone in that.

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Speaker 2: You know.

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Speaker 3: Back in Germany in the wey Maar Republic days, basically

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people borrowed as much money as they could and then

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when the when the mark collapsed, their predators were hiding

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from them. They didn't want to get paid back in

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the fully depreciated currency. I wonder how far we are

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from that?

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Speaker 1: Well, I never I don't know if we're there. We're

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certainly not there yet or were I never thought in

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my wildest dreams, you know, when I was a kid

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getting into this business in the early nineties, that a government,

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our government would print trillions of dollars per year. So

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from nineteen thirteen to two thousand and eight, the government

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printed eight hundred billion dollars. The Federal Reserve printed eight

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hundred billion dollars from the formation of the Federal Reserve

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all the way to two thousand and eight. And then

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and then in those ensuing so was that, you know, uh,

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fifteen years fourteen fifteen years later, the balance she went

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to nine trillion dollars. So so you know, that doesn't

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sound like America, That doesn't sound like sound money. Of course,

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we had our excuses. We had the onesell lifetime global

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financial crisis and the one set a lifetime virus which

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you know didn't really turn out to be the pubonic

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plague one offs. But really, I mean, besays buying Morgan's

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backs to juries in twenty twenty two, what does that

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that the hell is that do with COVID? Then you

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wondered why home prices went up and that people blame

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corporate greed for inflation even though their margins haven't improved.

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So yeah, I mean the lunacy out there is over

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the off the charts.

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Speaker 3: Well, one thing I will say is certain companies. I

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remember the last round of inflation we had and had

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a printing company, and when we would raise prices because

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there was inflationary expectations built into the system, we try

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to add a little more and try to expand our margins,

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but that is limited.

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Speaker 4: Fast Food has.

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Speaker 3: Done it, McDonald's has done it, but now they're feeling

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the pain because they expanded their margins by three or

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four points. But now for the first time, sales are

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down because people. Have you got that thing called the

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substitution effect?

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Speaker 1: Right, Well, the truth is carried that the middle class

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has been wiped out in this country. If you look

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at the bottom four quintiles, they're really, really hurting. And

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the fact that what I find so disturbing is at

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the price level. The price level is so high that

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they can't afford. You know, you look at a house.

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The price of the house, the insurance, the taxes, the maintenance,

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the fees, everything associated holding the house is unaffordable. And

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we don't need the price level to do anything but

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go down. The price of homes, the price of food,

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the price of new cars, the price of insurance, taxes,

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those things have to fall. The price level has to fall.

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In economic speak, that's deflation. In Powell's mind and the

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mind of the Fed, they're dicilary victory. Not that the

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price level has fallen enough. It's the fact that the

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price increases the rate of change has fallen enough. In

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other words, the Fed is saying, I don't care the

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middle classes has already been wiped out. The prices are

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too high. I only care that instead of going up

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by nine percent a year, they're going up by three

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percent a year, and three percent a year is just

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fine with me, even though it's not true.

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Speaker 4: I know, is that possible?

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Speaker 1: I mean, you're you're, you're, you're, you're wringing your hands

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about a slight uptick in the unemployment rate because the

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solid rule has been triggered. Oh you know, I mean,

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unemployment is what four point three four point four percent?

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It's still relatively historically very low, and we're ready now

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to start cutting interest rates to try to get inflation,

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you know, back up again. And I think that's so disgusting.

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I think it's so disgusting, and I think the middle

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class in this country gets it.

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Speaker 3: Yeah, so money printing is not the solution here, but

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the stock market seems to have liked it.

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Speaker 1: Yeah, the SoCon well, and that's the thing, you know,

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the thing that the thing that they said purports to

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care most about is uh, the poor, the poorest among

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us in the minories they care. Oh yeah, well I'm

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looking at let me say, I own, I own multiple homes,

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a pretty big stock portfolio, doing fine, doing great. Yeah yeah,

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But if I rented and I have a manufacturing job,

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I'm getting wiped out because I'm spending most of my

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income if not all, or maybe even in some cases

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more than my income because the credit card balances are exploding.

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Oh yeah, I'm paying I'm paying, you know, fifty sixty

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hundred and ten percent of my income on the stuff

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that I need to survive, shelter, clothing, at food costs.

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But the richest among us are paying very small percentage

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of our income. This way, inflation doesn't really affect us,

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because my portfolio is going through the room, my home

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prices are going up. I'm doing fantastic. But the renter

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and those who are working, you know, in the lower

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class jobs, blue collar jobs, they're really really hurting because

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their incomes are so far behind inflation and they don't

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have the asset price appreciation that we have. That's the problem.

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So true, true, so true. And and then the idea

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of price controls that's going to fix it? And uh,

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you know, because it's just complete divorce from reality here.

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That's never happened. There's never been of an instance in

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this country or other countries where they tried wage and

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price controls. Have they get Oh wait, they have, they have,

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And how do they work? Well? When you tell me

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as a corporation that I can't produce this good or

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service for the price that I need to charge to

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actually make myself solvent, to make it a profit. Guess

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what I do. I stop producing those things, and that

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means you have shortages, and that means the prices actually

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go even higher for those things that you want. This

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has been proven throughout history in this country, in other countries.

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I mean, if we want to look like Venezuela follow

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cackling Kamala's the economic plant. It's just it's just disgusting

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that I hear on here. Where is the candidate that

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says RFK I guess you could say that is the

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only person that was even alluding to it. It's like,

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where are the people out there saying we need to

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put the handcuffs on the Federal Reserve stop their madness?

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Speaker 4: And why in.

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Speaker 1: The world are they going to start to They're going

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to start to expand their balance sheet. I mean that's

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how you get I mean, the FED gets the inter

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bank lending rate down by printing money, right, That's how

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they do it. They flood the banking system with reserves

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they don't even need anymore. I think there's like three

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point three trillion dollars in reserves in the banking system.

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Now they're good, they're they're flooded with reserves as it is.

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They don't need anymore. But we're gonna now try to

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get borrowing costs down so so the country can get

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more in debt. Well, I'm looking at I pull up

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some numbers recently. Uh, if you'll get us total non

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financial debt to GDP. So that's every everything, corporate, government, business,

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individual debt, personal debt that is now two hundred and

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sixty percent of GDP. Do you know what it was

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in the year two thousand and eight, two hundred and

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forty percent of GDP. Year what was it in the

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year two thousand It was one hundred and eighty percent

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of GDP. So we have more total non financial debt

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in this country than ever before. We have the most

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leveraged we have ever been. If you look at government, corporate, business,

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and the household debt, why don't we do in lower

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interest rates to get people will take out more debt?

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You want? We do want people to get more you

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load up on more credit cards and order loans. Is

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that what we want in this country? It's just it's insane.

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You know, We've gone so far off the reservation with

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asset prices and credit bubbles that I think they I

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think the FED has realized they've reached an epiphany. They

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have no choice. They have to keep this bubble going

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because if it collapses, If and when it collap absence,

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you're talking about a devastating depression.

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Speaker 3: Oh yeah, there's no question about it. And they kind

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of caught between a rock and a hard place.

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Speaker 4: Right you know.

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Speaker 1: I I did some more research tonight said when so,

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now the Fed's about to cut interest rates. The FED

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is about to ride to the rescue. Let's do Let's

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go looking back in time. Let's see. Do you know

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when the FED started cutting rates leading up to the

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global financial crisis which started in two thousand and at

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the end of it started the end of two thousand

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and sound it, yeah, December of two thousand and seven.

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Do you know what they know when they started cutting rates?

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Wasn't It wasn't in two thousand and eight. It was

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July of two thousand and seven when they started slashing

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slashed the interest rates. They took interest rates to zero

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percent from five and a quarter. Mister Bernanke did that

278
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didn't stop the S and P five hundred from crashing

279
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my fifty percent, and the housing market from losing thirty

280
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three percent of its value. So do you know, and

281
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the Fed started cutting rates in the year two thousand,

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that two thousand NASAC bubble, right, you know when they

283
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started cutting round I don't remember, Okay, So it was

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the start of the year two thousand, that's when they

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started cutting rates. It was December. It was actually, I'm sorry,

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the end of the year two thousand, December of the

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year two thousand. By the end of twenty twenty two,

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the S and B five hundred was down fifty percent

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and the NASDAK lost eighty percent, and the FED took

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rates from six I think it was like six and

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a half down to one percent. What what did we get?

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Speaker 4: You know?

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Speaker 1: The fact that the Fed is going to start cutting

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interest rates is like, oh yay, the Fed is going

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to the rescue again.

296
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Speaker 4: Happy was here again?

297
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Speaker 1: You know, if the FED cuts interest rates, there they're

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the effective FED funds right now is five point three

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percent carry. If the FED cut interest rates by a

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quarter of a percent or fifty basis points or even

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seventy five basis points, you're still going to have an

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interest rate that's around you know, say say four and

303
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a half percent. Let's say they cut interest rates to

304
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four and a half percent by the end of this year,

305
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they're still way above the rate of inflation. The way

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they calculate it, inflation is two point nine percent, so

307
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you still have a real FED fund rate. That's that

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means the FED is still very, very restrictive, which is good.

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I'm so glad that the FED has at least try

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to bring some reality to this market and to these

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asset prices and to the credit bubble. But they're going

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I think they're if the Fed, unless the FED slashes

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interest rates trenchingly, significantly, acutely right now, I mean, bring

314
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them down to two percent as fast as possible, which

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will be devastating for the long end of the bond market.

316
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I'm not saying this is the right thing to do.

317
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I think that would save the stock market for a while.

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Speaker 5: Maybe maybe, maybe maybe, But that's saying that it's if

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the stock if the long end of the yield curve

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didn't spike, which is very probable that it would.

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Speaker 1: But by going by, by going slowly now and reducing

322
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indust rates, I don't think that's In other words, history

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says it's just not enough because we still have a

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lot of like I should total non financial that to

325
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GDP is two hundred and sixty percent. That's a record

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amount of leverages in this economy. Are you ignoring you

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have to ignore the leading economic indicators which say that

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GDP growth should be about zero percent going forward. Zero

329
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percent handle. That's really not much in the way of

330
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getting earnings per share growth at fourteen percent fourteen percent

331
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EPs growth priced in for twenty twenty five. Do you

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think you think we're going to get there with nominal

333
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GDP growing at like, you know, almost nothing. I don't

334
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think so you have you allso have to ignore the

335
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inverted Ye'll curve, the Yal curve. The Yale curve has

336
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been inverted for the longest duration in history ever, right ever,

337
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and it was one of the steepest and versions by

338
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one hundred basis points. Should we throw that? Since nineteen

339
00:19:03,880 --> 00:19:07,319
fifty five, every single time we've had an inverted Yeal curve,

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00:19:07,359 --> 00:19:09,960
we had a recession except for one time when and

341
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that was in the mid sixties when GDP went from

342
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ten percent to zero percent. So the inverted Yell curve, Yeah,

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I'm not going to ignore that. I'm not going to

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ignore the leading agonogam index. I'm not going to ignore

345
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the fact that the real FED fundrate has been positive

346
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two percent for a very long time. I'm not gonna

347
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I'm not going to ignore the overleveraged debt and the

348
00:19:32,039 --> 00:19:34,480
you know, situation in the economy. I'm not going to

349
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ignore the acid bubbles that we have. I'm not going

350
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to ignore the Fed's balance sheet that's shrinking. There are

351
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many reasons not to believe. Even if you say, Michael Pento,

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you're a Cassandra, You're full of it. You're a permit bear,

353
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even though you know I'm we're making money this year.

354
00:19:51,039 --> 00:19:55,000
I mean I only lost money one time one year

355
00:19:55,039 --> 00:19:56,759
in twenty twenty two. We lost about three and a

356
00:19:56,799 --> 00:19:59,519
hare percent in the portfolio. So I'm not a permit bear.

357
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It was always short the market. Sometimes I'm massively long

358
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and very profitable. I'm just saying that if you're if

359
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you're going to believe and get ready for this massive

360
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rebound in stocks and massive rebound and asset prices and

361
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a releveraging of an economy and a rebounding in economic

362
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growth from here, you are insane. That's not gonna happen.

363
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Speaker 3: Hey, So what about the budget which is out of control?

364
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You know, I ask CHAT GPT to analyze every line

365
00:20:31,279 --> 00:20:35,039
item in the budget for twenty twenty five and cut

366
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to two to three trillion dollars. So the first thing

367
00:20:38,200 --> 00:20:41,839
it does is come back and start. You can just

368
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see how crazy it is. It says, well, if we

369
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increase the corporate tax rate to twenty eight percent, and

370
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it gives like all these tax increases. So I say,

371
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you know, perform the above analysis with no tax increases,

372
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get rid of corporate welfare and all other government wasteful spending.

373
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So chat GPT in like thirty seconds cut the federal

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budget by three billion dollars, you know, but of course, yeah, yeah,

375
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Like we say four hundred billion on corporate welfare, we

376
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say five to six hundred billion on so called defense,

377
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and it says we should get rid of the F

378
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thirty five Joint Strike Fighter program. Healthcare, we say four

379
00:21:27,039 --> 00:21:31,240
to five hundred billion. By getting rid of Medicare overpayments

380
00:21:32,440 --> 00:21:37,880
drug prices, will save two hundred billion. On Medicaid expansion reform,

381
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we'll save one hundred and preventive care expansion, which is

382
00:21:41,839 --> 00:21:46,279
the one thing I really appreciate about RFK Junior is

383
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actually making our poison food supply a national issue, which

384
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it should have been all these years, but it's been

385
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swept under the rud by big pharma and big AG

386
00:21:58,599 --> 00:22:02,599
and the big big healthcare.

387
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Speaker 1: And you know, I just came back from it. I

388
00:22:04,640 --> 00:22:06,240
just was. I just came back from Italy not too

389
00:22:06,240 --> 00:22:08,759
long ago, and I ate like a pig every every meal,

390
00:22:08,839 --> 00:22:11,359
was eating in a restaurant. Yeah, and I put I

391
00:22:11,440 --> 00:22:14,119
poured pasta in my in my in my belly, and

392
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I ate like a pig, drank every night a bottle

393
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of wine. And you know what, I came back and

394
00:22:19,920 --> 00:22:22,920
I didn't gain an ounce my game back. I didn't

395
00:22:22,920 --> 00:22:25,400
out Now I go out to eat here one one restaurant.

396
00:22:25,440 --> 00:22:28,480
I gained three pounds because our food, our bodies are

397
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not able to tolerate the food, genetically modified grains and

398
00:22:34,599 --> 00:22:36,039
corns that we that we put in our.

399
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Speaker 4: Body, franking food. They call it fight soul.

400
00:22:39,240 --> 00:22:42,240
Speaker 1: Fights, and our wine. It's just yeah, they don't. They

401
00:22:42,240 --> 00:22:45,319
don't eat that way in Europe and much healthier. But

402
00:22:45,319 --> 00:22:47,240
but when you said you said three billion for I

403
00:22:47,240 --> 00:22:50,519
think you meant three trillion. You get three trillion so

404
00:22:50,640 --> 00:22:54,759
three trillion, kerry, did you ask chat GBT? If you

405
00:22:54,839 --> 00:22:57,599
cut three trillion dollars off the budget, what does it

406
00:22:57,680 --> 00:23:01,720
do to the revenue that the government? Yes, is get

407
00:23:01,799 --> 00:23:02,440
chat GBT?

408
00:23:02,599 --> 00:23:06,319
Speaker 4: That I will you will. I will ask you.

409
00:23:06,440 --> 00:23:10,200
Speaker 1: To ask it because I guarantee you in reality, I

410
00:23:10,200 --> 00:23:12,799
don't know chat GBT would know this, and I don't

411
00:23:12,839 --> 00:23:15,200
claim to be smarter than chat GBT. But if you're

412
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going to cut three trillion dollars off of I think

413
00:23:18,480 --> 00:23:22,119
we have a budget of six or seven trillion dollars, Uh,

414
00:23:22,200 --> 00:23:25,799
your revenue is going to plummet short term. It's the

415
00:23:25,920 --> 00:23:28,799
right thing to do, but your revenue will plum it

416
00:23:28,839 --> 00:23:30,279
short term and you will have a dipression.

417
00:23:30,279 --> 00:23:31,559
Speaker 4: I'm asking it right now.

418
00:23:32,960 --> 00:23:36,160
Speaker 3: Reducing the federal budget by three trillion three spending cuts

419
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would have significant effects on government revenue and receipts.

420
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Speaker 4: How this is some good?

421
00:23:44,799 --> 00:23:46,480
Speaker 1: What did it? I mean? Does it put a number

422
00:23:46,559 --> 00:23:47,880
on the on the significant?

423
00:23:48,519 --> 00:23:52,160
Speaker 3: Mm hmm, I would say it would be, well, it doesn't,

424
00:23:53,200 --> 00:23:57,039
it won't go all right, So let's say, UH, give

425
00:23:58,039 --> 00:24:03,079
specifics of the It likes to talk in generalities like politicians,

426
00:24:03,119 --> 00:24:03,440
you know.

427
00:24:05,200 --> 00:24:07,839
Speaker 1: So we have we have about five trill So revenue

428
00:24:07,839 --> 00:24:12,079
is about five trillion dollars. What would the revenue be

429
00:24:12,240 --> 00:24:19,680
under your very very austere but very very appropriate budget plan.

430
00:24:20,039 --> 00:24:21,519
Speaker 4: That's what civix.

431
00:24:21,599 --> 00:24:28,400
Speaker 3: Of the revenue reduction froum above. Okay, let's see man,

432
00:24:28,480 --> 00:24:31,359
I'm just curious. I don't think it has a clue,

433
00:24:31,559 --> 00:24:33,920
but of course it doesn't want to do.

434
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Speaker 4: It now, Yeah, all right, here we go.

435
00:24:38,119 --> 00:24:43,640
Speaker 3: Reduce borrowing could have a contractionary effect on the economy,

436
00:24:43,920 --> 00:24:48,400
particularly if they reduce government of consumer spending and investment.

437
00:24:48,720 --> 00:24:51,759
Consumers don't invest, I just spend. This could lead to

438
00:24:51,799 --> 00:24:56,599
a slight decrease in tax revenues if economic growth slows. However,

439
00:24:56,680 --> 00:25:02,000
the stabilization of federal finances could improve long term economic confidence,

440
00:25:02,240 --> 00:25:04,319
potentially offsetting these effects.

441
00:25:04,599 --> 00:25:08,839
Speaker 1: So Chat, I agree. Would CHAT GBT completely except for

442
00:25:08,839 --> 00:25:12,160
when it says maybe and possibly it would be the

443
00:25:12,559 --> 00:25:17,519
you would have long term massive benefits from doing what

444
00:25:17,559 --> 00:25:21,400
you just have slashing government spending. In the short term,

445
00:25:21,599 --> 00:25:23,400
we would we would wipe out GDP.

446
00:25:23,839 --> 00:25:25,960
Speaker 4: Be a disaster, it would It would.

447
00:25:25,759 --> 00:25:29,160
Speaker 1: Be disaster revenue wise in the and avery otherwise, yeah.

448
00:25:29,039 --> 00:25:32,640
Speaker 3: And the global economy and all the debt, all the

449
00:25:32,680 --> 00:25:35,519
debt that's out there would have to be marked to

450
00:25:35,599 --> 00:25:39,480
its true value, right, so it would shut down the

451
00:25:39,519 --> 00:25:42,960
financial institutions of the world. We'd have to read you

452
00:25:42,960 --> 00:25:47,440
couldn't do it without a recapitalization plan where the banks?

453
00:25:47,519 --> 00:25:47,680
Speaker 4: Right?

454
00:25:48,359 --> 00:25:51,200
Speaker 1: Yeah, yes, you're right, Terry. You know, just to give

455
00:25:51,240 --> 00:25:54,000
you an idea of how fragile and how stretched the

456
00:25:54,039 --> 00:25:57,680
financial evation of this world is. You have the the

457
00:25:57,680 --> 00:26:01,240
the slight unwinding of the end carry trade, which is

458
00:26:01,240 --> 00:26:04,319
where you know, you borrow yend it. You go to

459
00:26:04,359 --> 00:26:06,160
the bank Japan say how much yen can you give me? Well,

460
00:26:06,200 --> 00:26:07,720
I give it. You give as much as you want,

461
00:26:08,079 --> 00:26:11,519
no interest, you know, I'll tell you, and I'll take it.

462
00:26:11,559 --> 00:26:15,559
And I'll go to Mexico and buy you know, Mexican

463
00:26:15,640 --> 00:26:18,759
bonds and get ten percent, or Brazilian or you know,

464
00:26:18,839 --> 00:26:21,640
even the US bonds and get five to five point

465
00:26:22,720 --> 00:26:26,240
five point three percent. And then you get the kicker,

466
00:26:26,279 --> 00:26:29,400
which is, you know what, since you everybody's doing this,

467
00:26:29,440 --> 00:26:31,799
the yet is falling in value. So I get the

468
00:26:31,839 --> 00:26:35,079
currency appreciation, and I got the interest rate differential, and

469
00:26:35,119 --> 00:26:37,640
I'm you know, hedge funds love this. This is a

470
00:26:37,680 --> 00:26:40,480
great thing to do. And then all and then all

471
00:26:40,519 --> 00:26:43,599
of a sudden, the back of Japan says, uh you

472
00:26:43,799 --> 00:26:45,599
ate a Governor Raia says, you know what, I'm going

473
00:26:45,680 --> 00:26:48,359
to raise interest rates all the way up to one

474
00:26:48,440 --> 00:26:49,799
quarter of one percent.

475
00:26:49,920 --> 00:26:50,839
Speaker 4: Oh damn.

476
00:26:53,359 --> 00:26:57,599
Speaker 1: And that sent the yen carry traders scrambling to sell

477
00:26:57,640 --> 00:27:01,880
their bonds, sell their stock, sell their crypto, sell everything,

478
00:27:02,599 --> 00:27:05,519
sell that currency and buy back the end to close

479
00:27:05,519 --> 00:27:07,880
out their short, their synthetic short.

480
00:27:08,240 --> 00:27:08,839
Speaker 4: Of the end.

481
00:27:09,480 --> 00:27:13,240
Speaker 1: And then you know what happens. Then the I think

482
00:27:13,240 --> 00:27:16,799
it's the fourth or fifth largest economy on the planet,

483
00:27:17,480 --> 00:27:21,440
had its stock market. The nick iy Dao dropped twenty

484
00:27:21,480 --> 00:27:26,119
percent in like five days. Him one fifth of the

485
00:27:26,319 --> 00:27:30,480
entire value of the country's stock market plunged because a

486
00:27:30,519 --> 00:27:34,960
little tiny corner of the financialization of this world started to,

487
00:27:35,200 --> 00:27:37,039
you know, have little cracks in it. So just think

488
00:27:37,079 --> 00:27:41,279
about what's going to happen when reality hits. There is no,

489
00:27:41,799 --> 00:27:43,599
like I said, there is no easy way out of this.

490
00:27:44,240 --> 00:27:47,920
Even if you did exactly what you said, we slash spending,

491
00:27:48,319 --> 00:27:51,160
or the FED fed with the slash interest rates, the

492
00:27:51,279 --> 00:27:54,160
long end of the bond market has no damn business

493
00:27:54,640 --> 00:27:57,599
being at anywhere near three point eight percent. It just

494
00:27:57,599 --> 00:27:59,720
doesn't belong there. It should be close to the double

495
00:27:59,720 --> 00:28:03,480
digit because when you factor in inflation and credit risk

496
00:28:03,640 --> 00:28:06,160
of this country, it should be much closer to you know,

497
00:28:06,279 --> 00:28:09,880
seven percent eight percent. Yeah, So if the Fed we

498
00:28:10,000 --> 00:28:12,519
get out of it, get out of the way, the

499
00:28:12,559 --> 00:28:15,640
market would send rates much much higher. You know, we

500
00:28:15,640 --> 00:28:19,119
should with thirty five trillion dollars in debt, unfunded liabilities,

501
00:28:19,160 --> 00:28:22,319
over one hundred trillion dollars, two trillion dollar deficits in

502
00:28:22,319 --> 00:28:25,960
in peacetime and in prosperity time, one trillion dollars in

503
00:28:25,960 --> 00:28:28,559
interest payments, and you're going to lend lend money to

504
00:28:28,599 --> 00:28:32,079
this government going out ten years at three point eight percent.

505
00:28:32,839 --> 00:28:34,759
Count me out on that calculation.

506
00:28:35,759 --> 00:28:40,480
Speaker 3: Hey, you know what does some people called unfunded liabilities

507
00:28:40,519 --> 00:28:43,920
and obligations of the government, others called social security and

508
00:28:44,000 --> 00:28:46,519
medicare right, Yeah, try to.

509
00:28:46,480 --> 00:28:49,039
Speaker 1: Get rid of them. Try to get asked you that's

510
00:28:49,039 --> 00:28:51,319
the check. That's what you pretty much do with Chad GBT.

511
00:28:51,720 --> 00:28:56,359
You know that getting rid of government obligations is wiping

512
00:28:56,359 --> 00:29:00,720
out other people's income streams. Yeah, and that has a

513
00:29:00,759 --> 00:29:03,599
massive I mean you can't do that. I mean seniors

514
00:29:03,799 --> 00:29:05,559
since paid into it, you know, they paid into it.

515
00:29:05,599 --> 00:29:10,160
They expect a certain amount to survive. So you know

516
00:29:10,200 --> 00:29:12,319
there's major changes have to take place. I mean I

517
00:29:12,319 --> 00:29:15,880
would start by raising the retirement age now. But we

518
00:29:15,880 --> 00:29:17,400
who's talk which kick?

519
00:29:17,720 --> 00:29:18,039
Speaker 4: Kerry?

520
00:29:18,200 --> 00:29:21,720
Speaker 1: Tell me maybe I'm wrong because RFK Junior is dropped out?

521
00:29:22,039 --> 00:29:24,559
Which candidate? Which one of the two candidates is talking

522
00:29:24,599 --> 00:29:29,960
about saving Social Security and Medicare by putting in programs

523
00:29:30,000 --> 00:29:32,240
and plans in place now to keep them solvent.

524
00:29:32,599 --> 00:29:35,440
Speaker 3: Well, you know they're going to do it anyway, because

525
00:29:36,000 --> 00:29:38,000
touch comes to shove right.

526
00:29:38,119 --> 00:29:40,200
Speaker 1: Print. They're gonna do anything. They're gonna print, Kerry. They're

527
00:29:40,200 --> 00:29:43,920
gonna print it, Yeah, will print it. They will give

528
00:29:44,279 --> 00:29:48,359
These programs will always be solvent. This is my opinion. Yeah,

529
00:29:48,599 --> 00:29:50,640
in the business thirty three years. I'm sixty years old.

530
00:29:50,680 --> 00:29:53,359
I've done this long enough. I've seen enough. There's those

531
00:29:53,400 --> 00:29:56,200
programs will always be solvent. But they're not gonna be

532
00:29:56,240 --> 00:29:58,240
solvent in the way you want them to be. They're

533
00:29:58,279 --> 00:30:01,519
gonna hand you a check for one hundred percent of

534
00:30:01,519 --> 00:30:04,240
what they owe. The purchasing power of what you're going

535
00:30:04,279 --> 00:30:08,240
to get is going to be vastly attenuated.

536
00:30:08,759 --> 00:30:12,039
Speaker 4: All right, So it's a house of cards. What do

537
00:30:12,079 --> 00:30:12,400
you do?

538
00:30:12,680 --> 00:30:16,720
Speaker 3: How do we defend our own personal finances against this.

539
00:30:17,279 --> 00:30:21,119
Do we buy insurance, do we buy credit default swaps?

540
00:30:22,400 --> 00:30:24,480
Do we get out of the stock market and get

541
00:30:24,480 --> 00:30:26,440
a get a bigger mattress?

542
00:30:26,480 --> 00:30:27,079
Speaker 4: What do you do?

543
00:30:27,519 --> 00:30:31,599
Speaker 1: Well? That's why that is the genesis, the progenitor of

544
00:30:31,640 --> 00:30:34,519
the inflation deflation economic cycle model that I created. I

545
00:30:34,559 --> 00:30:38,400
look at those components. There's twenty components. They look at

546
00:30:38,400 --> 00:30:41,160
the second derivative of inflation in the context of the

547
00:30:41,200 --> 00:30:43,319
growth of the economy to let me know when I

548
00:30:43,359 --> 00:30:45,200
should get out of the stock market. Right now, it's

549
00:30:45,200 --> 00:30:47,359
telling me you could still invest in the stock market

550
00:30:47,359 --> 00:30:51,559
and make money. But when the red flag start to fly,

551
00:30:52,319 --> 00:30:54,319
and the red flags would be credit spreads, they'd be

552
00:30:54,359 --> 00:31:01,039
financial conditions. They would let me know in advance when

553
00:31:01,079 --> 00:31:03,000
I need to get out and be more defensive. In

554
00:31:03,039 --> 00:31:06,079
the meantime, the way I'm making money, and the way

555
00:31:06,079 --> 00:31:08,480
a lot of people are making money is they're buying

556
00:31:08,519 --> 00:31:11,839
goal I'm buying. I have a good, healthy position in

557
00:31:11,880 --> 00:31:15,720
the precious metal. I have low volatility. I have low

558
00:31:15,880 --> 00:31:21,039
volatility stocks. So think about consumer staples, utilities, those things

559
00:31:21,119 --> 00:31:23,319
are I think of what you have to own as

560
00:31:23,359 --> 00:31:25,880
we enter into what I think could be a really

561
00:31:26,039 --> 00:31:31,799
really challenging twoententy and twenty five, both politically and economically speaking.

562
00:31:31,799 --> 00:31:36,200
Speaker 3: Sustained period of economic contraction. Here, I'll tell you this summary.

563
00:31:36,279 --> 00:31:41,640
The chat GPT said total indirect revenue impact the combined

564
00:31:41,720 --> 00:31:44,559
impact of these spending cuts could range from eighty five

565
00:31:44,960 --> 00:31:48,279
to one hundred and sixty billion dollars annually due to

566
00:31:48,599 --> 00:31:53,440
slower economic growth, reduce profits. But we know that corporations

567
00:31:53,480 --> 00:31:58,680
don't really pay any taxes anyway. But it said, well,

568
00:31:58,720 --> 00:32:02,440
these reductions are significant. They are outweighed by the direct

569
00:32:02,480 --> 00:32:07,200
savings achieved through three trillion in spending cuts. And I like,

570
00:32:07,359 --> 00:32:09,920
I want to find the politicians got the balls to

571
00:32:10,039 --> 00:32:13,359
actually do this. You know, that's the guy I want

572
00:32:13,359 --> 00:32:13,960
to vote.

573
00:32:13,720 --> 00:32:14,720
Speaker 4: For it, I know, but where?

574
00:32:14,720 --> 00:32:17,799
Speaker 1: But where is it? Where is it he or him?

575
00:32:17,839 --> 00:32:21,559
Will her? Where are they? It's not cackling Kamala, And

576
00:32:21,599 --> 00:32:25,599
it's not Donald Trump unfortunately, although again he's far better

577
00:32:26,160 --> 00:32:27,480
than the other alternative, and.

578
00:32:27,480 --> 00:32:30,599
Speaker 3: He might surprise too, because it's going to take a crisis.

579
00:32:30,720 --> 00:32:33,880
What we're saying is nobody's going to do this proactively.

580
00:32:34,720 --> 00:32:37,680
Nobody is going to take the steps to avoid the

581
00:32:37,720 --> 00:32:43,839
inevitable crisis. So the crisis hits, and then hopefully everything

582
00:32:43,880 --> 00:32:44,839
will be on the table.

583
00:32:46,319 --> 00:32:47,799
Speaker 1: I think it's going to be on the table, you

584
00:32:47,839 --> 00:32:52,119
know where I you know, the Pavlovian reflex action on

585
00:32:52,359 --> 00:32:54,200
that's going to be on the table. Unfortunately, he's going

586
00:32:54,279 --> 00:33:00,240
to be helicopter money, part due and ZERP and Q.

587
00:33:01,119 --> 00:33:04,799
That's what they do. That's all they know. No one,

588
00:33:04,880 --> 00:33:07,200
no one thinks long term, because what is the politician,

589
00:33:07,640 --> 00:33:10,119
who is the central banker, and who is the politician

590
00:33:10,240 --> 00:33:12,920
who's going to stand up and say, listen, what we

591
00:33:12,960 --> 00:33:16,559
need to do is let markets function. We need to

592
00:33:16,599 --> 00:33:18,920
bring down the level of these asset prices. We have

593
00:33:19,000 --> 00:33:21,799
to let banks fail. We have to let let pension

594
00:33:21,839 --> 00:33:28,799
plans and investment banks and insurance companies fail. We have

595
00:33:28,880 --> 00:33:32,319
to let people fail, corporations fail. We have to bring

596
00:33:32,400 --> 00:33:34,440
out all the excesses in the economy. It's going to

597
00:33:34,440 --> 00:33:36,720
be a depression that lasts for a few years. They'll

598
00:33:36,759 --> 00:33:39,839
be brutal. But on the other end of that, we

599
00:33:39,839 --> 00:33:42,680
were going to have stable prices, a sound dollar, a

600
00:33:42,720 --> 00:33:48,119
sound currency, low taxes, low interest rates, low inflation, and

601
00:33:48,200 --> 00:33:51,160
you know, prosperity for a very long time. Who is

602
00:33:52,759 --> 00:33:55,599
I mean, I don't know who's going to do that.

603
00:33:55,839 --> 00:33:58,359
Speaker 3: But you know, Michael, it's like when you have a kid,

604
00:33:58,599 --> 00:34:02,440
all right, and the kid is hungry and say, but

605
00:34:02,480 --> 00:34:05,039
I've only got chocolate to give him, and that's really

606
00:34:05,039 --> 00:34:08,519
not good because hey, like RFK Junior, We'll tell you,

607
00:34:08,760 --> 00:34:12,800
I've only got chocolate and seed oils. What am I

608
00:34:12,840 --> 00:34:14,719
going to do here? But but the kid's going to

609
00:34:14,800 --> 00:34:18,639
stop crying, all right, give him a little piece, and

610
00:34:18,679 --> 00:34:21,400
then that shuts him up for two seconds, all right,

611
00:34:21,760 --> 00:34:24,239
and then he comes back screaming worse than ever. And

612
00:34:24,280 --> 00:34:26,239
then he had shoved the whole candy bar in his

613
00:34:26,360 --> 00:34:29,320
mouth and shut him up. And that's what our politicians

614
00:34:29,400 --> 00:34:29,880
do here.

615
00:34:31,199 --> 00:34:35,039
Speaker 1: I think. I think it takes a lot of education

616
00:34:35,639 --> 00:34:39,199
that has to be A education has to be and.

617
00:34:39,119 --> 00:34:42,159
Speaker 4: The real education, yeah, education.

618
00:34:43,320 --> 00:34:48,679
Speaker 1: Education, economic education for our politicians and economic education for

619
00:34:48,800 --> 00:34:54,440
our population. Not you know where is that? How can

620
00:34:54,480 --> 00:34:57,280
we transmit that? That's what we should be focused on.

621
00:34:57,400 --> 00:35:00,360
And that's why I come on programs like yours. If

622
00:35:00,440 --> 00:35:04,760
enough people see and hear the truth, maybe they'll say, Hey,

623
00:35:04,800 --> 00:35:07,119
for the sake of my children and my grandchildren, I'm

624
00:35:07,159 --> 00:35:09,880
willing to suffer like this because there's no other alternative.

625
00:35:10,239 --> 00:35:13,039
And it's never gonna happen. Carry, it's not gonna happen.

626
00:35:13,199 --> 00:35:16,800
What's gonna what's most likely going to happen, unfortunately, is

627
00:35:16,840 --> 00:35:22,199
we're gonna have a like I said, qe zerp helicopter money.

628
00:35:22,320 --> 00:35:25,239
It's going to cause the long end of the bond market.

629
00:35:25,760 --> 00:35:28,679
The bond market is going to go in full revolt

630
00:35:28,719 --> 00:35:33,079
mode because of inflation and insolvency concerns. When you have

631
00:35:33,199 --> 00:35:37,400
interest rates spike to that level, when you have interest

632
00:35:37,480 --> 00:35:41,119
rates spike to that level where an inflation and interest

633
00:35:41,199 --> 00:35:46,320
rates cause utter economic chaos, then the people will say,

634
00:35:46,639 --> 00:35:51,000
let's try something else. They'll demand another plan of action.

635
00:35:51,280 --> 00:35:53,880
The only problem is as bad as things are right now,

636
00:35:54,199 --> 00:35:56,000
it's going to be even worse by the time we

637
00:35:56,039 --> 00:35:56,760
get to that point.

638
00:35:57,280 --> 00:35:58,440
Speaker 4: Yeah.

639
00:35:58,480 --> 00:36:02,880
Speaker 3: And the bankruptcies, let's not forget. It'll be cities and

640
00:36:03,039 --> 00:36:06,880
states as well. Ten states will go bankrupt they can't

641
00:36:06,960 --> 00:36:08,000
under the existing law.

642
00:36:08,039 --> 00:36:11,039
Speaker 4: It'll have to be amended. Well, they won't call it bankruptcy.

643
00:36:11,039 --> 00:36:13,159
They call it a reorganization or something.

644
00:36:13,719 --> 00:36:19,840
Speaker 3: And the New York City, Chicago, La San Francisco, you know,

645
00:36:20,000 --> 00:36:24,199
all these failing cities, excuse me, are all going to

646
00:36:24,280 --> 00:36:26,920
go you know, Detroit. Well, they already did go bankrupt,

647
00:36:27,400 --> 00:36:30,320
and they're actually on the upswing, interestingly enough when I

648
00:36:30,360 --> 00:36:32,719
talk to people there. But and how you're going to

649
00:36:32,719 --> 00:36:36,519
pay these cops? And we got a prescription for anarchy here,

650
00:36:36,559 --> 00:36:36,880
don't we.

651
00:36:37,039 --> 00:36:37,239
Speaker 4: Yeah?

652
00:36:37,280 --> 00:36:41,679
Speaker 1: Well, I think hyperinflation would be or at least intractable inflation.

653
00:36:42,280 --> 00:36:46,679
Multiple years of double digit, near triple digit inflation, that's

654
00:36:46,719 --> 00:36:49,840
going to be enough to cause that's going to be

655
00:36:49,840 --> 00:36:54,199
the catalyst for change, and that will cause bankruptcies. You'll,

656
00:36:54,599 --> 00:36:58,079
you know, investment banks will go bankrupt, banks, hedge funds,

657
00:36:58,119 --> 00:37:02,159
pension funds. Yeah, that's that's that is what you're going

658
00:37:02,239 --> 00:37:07,679
to need, I think, to bring some reality to this market.

659
00:37:07,760 --> 00:37:10,159
It's not going to come volunteer voluntarily.

660
00:37:10,639 --> 00:37:16,199
Speaker 4: Where's our Javier in Mille? Right? That actded I don't

661
00:37:16,239 --> 00:37:17,400
see him on the horizon.

662
00:37:17,519 --> 00:37:22,119
Speaker 3: He's unelectable and it's only look okay, look it took

663
00:37:22,280 --> 00:37:28,000
Argentina to hire that guy, right, a century of failure, Michael.

664
00:37:28,119 --> 00:37:32,960
Speaker 1: Finally, Yeah, even even in Zimbabwe, which is a serial

665
00:37:33,480 --> 00:37:37,159
hyperinflationary economy. Even in Zimbabwe, they said, you know what,

666
00:37:38,360 --> 00:37:42,400
let's just link our currency to gold. They have linked

667
00:37:42,400 --> 00:37:45,400
their currency to gold, and I don't know if they'll

668
00:37:45,440 --> 00:37:47,599
stick with it. I don't know if it's going to work.

669
00:37:48,280 --> 00:37:53,199
But it took you know, a series of hyper inflationary

670
00:37:53,519 --> 00:37:56,159
debacles where the currency was completely wiped out along with

671
00:37:56,199 --> 00:37:59,239
the economy. They said, let's just let's try something new.

672
00:37:59,400 --> 00:38:03,159
Maybe we'll get there someday, maybe you and I will

673
00:38:03,159 --> 00:38:08,320
see it. I'll mean, it would be nice to see

674
00:38:07,719 --> 00:38:12,000
the definancialization of this country.

675
00:38:12,199 --> 00:38:14,559
Speaker 4: Edit world and the world.

676
00:38:14,679 --> 00:38:17,079
Speaker 1: Yeah, correct, And it would be nice because you know what,

677
00:38:17,239 --> 00:38:20,440
that's how you get the most freedom and prosperity in

678
00:38:20,480 --> 00:38:23,360
a nation. A viable and healthy middle class is that

679
00:38:23,400 --> 00:38:26,800
we're looking for. And I maybe something will happen.

680
00:38:27,039 --> 00:38:31,679
Speaker 3: A remember, for forty fifty some ideas the country got

681
00:38:31,719 --> 00:38:34,679
along just fine without a central bank.

682
00:38:35,079 --> 00:38:35,440
Speaker 4: Think of that.

683
00:38:36,840 --> 00:38:39,920
Speaker 1: Not that we got along fine. It was the period

684
00:38:39,960 --> 00:38:42,880
of greatest pop prosperities nation has ever seen.

685
00:38:43,360 --> 00:38:45,280
Speaker 3: Yeah, all right, I think we'll leave it at that.

686
00:38:45,719 --> 00:38:48,639
Pentoport dot com make sure you go there. Sign up.

687
00:38:49,239 --> 00:38:51,199
The link is in the show notes to this interview

688
00:38:51,280 --> 00:38:54,480
on Financial Survival Network dot com. Please sign up for

689
00:38:54,480 --> 00:38:56,760
your free newsletter. Michael will talk to you in a

690
00:38:56,840 --> 00:38:59,639
month and see what further madness has unfolded.

691
00:39:00,000 --> 00:39:02,119
Speaker 1: Ah're looking forward sway, Carrie, take care.

692
00:39:02,400 --> 00:39:06,519
Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your

693
00:39:06,599 --> 00:39:10,440
solution to today's trying times. For the latest, go to

694
00:39:10,599 --> 00:39:16,840
Financial Survivalnetwork dot com. Financial Survival Network now more than ever,