So we're here in Westport Connecticut today with the one and only Peter Schiff Peter welcome to real vision Well, thanks for having me on real vision my pleasure to be here Most people that are even casually familiar with the gold world have either come across you have heard of you But for the few who haven't if you could just give a quick little intro who you are and what you do That'd be great. Well sure. Well in the gold world. I do have a gold company shift gold we've been selling physical precious metals since about 2010 but prior to that I was a dealer for the Perth Mint and I have been and continue to sell precious metals to my Stock investors at my broker dealer Euro Pacific Capital, which is also an asset management company I run the asset management company out of Puerto Rico The BD is still based here in Westport, Connecticut, and I've been running that company since I first started it out in Southern, California back in the nineteen back in 1990s and where I kind of rose to fame was in my forecasts of the 2008 financial Crisis, I was a very vocal critic of the Greenspan policies during the 2000s In fact, I was a critic in the 1990s of Greenspan and the policies that inflated the dot-com bubble but when those same policies inflated a larger bubble in the housing market, I was a much more vocal critic of Those policies and it ended up with me writing a book called crash proof how to profit from the coming economic Collapse that came out in 2007 became a New York Times bestseller, and I follow that up with several other bestsellers and a lot of people began to know me from a lot of the television appearances that I made leading up to the 2008 financial crisis when you know CNBC labeled me, dr. Doom and everybody was laughing at me of course when everything that I predicted came to pass all of a sudden I had a much harder time getting invited on these television shows So I'm not as frequent a guest now as I used to be I used to be on pretty much every week Fact I was on so much. I have my own studio. I have one here in Connecticut I have a studio in Puerto Rico, but now it's it's it's kind of rare that I get invited on In fact, I do more television outside the United States that I do inside Yeah, and I remember after you know, the 2008 and 2009 kind of crisis hit and and came to came to be true There was the viral Peter Shiff was right YouTube video that went around for a long time has someone put that together and they kind of made a montage of a few of my Appearances in oh six and oh seven when so many people were mocking me and laughing at me most of it was on Fox Fox News and also some CNBC clips and yeah over 2 million people originally saw that and so that really helped Raise my profile a lot of people didn't know who I was Saw that video then started snooping around on the internet and you know Then I ended up getting drafted into a Senate campaign here in Connecticut. I unsuccessfully tried to get the Republican nomination in 2010 a loss to Linda McMahon who lost to dick Blumenthal Then she ran again two years later and and lost To Murphy's so she lost twice but she spent about a hundred million bucks on Those two Senate campaigns fifty million The first time in thirty million of it was in the primary, so I only spent three so she outspent me You know ten to one and that was the problem She only got twice as many votes as I did, but she also got a lot more immediate attention then I got though I did that and when I didn't win the Senate seat, I did do a syndicated radio show for about three years I did it every day for two hours, which was pretty difficult, you know, given all the other demands on my time But I managed to squeeze that show in But after a few years I realized I just didn't have the time to commit to it And since it really didn't take off, you know, it was syndicated It was on stations But none of the really big stations were carrying it and probably more people were listening on the internet maybe even then on Conventional radio I gave it up, but I still produce or do a podcast which is, you know Do a couple of episodes a week people can listen to it on Schiff radio com They can listen anywhere, you know iTunes any word that there are podcasts and I post them on my youtube channel So I still get a lot of people following me and I just don't do the the daily talk show now you touched on a couple of things that I definitely want to follow up on first is you know the whole CNBC Appearances and the fact that you used to be on a lot and then now you're not I found in the gold world You know If you say something let's call it. What? They think is outrageous. If you say Colts gonna go to two thousand dollars or five thousand or ten down whatever the number is They kind of think it's outrageous. Now. I kind of personally believe that it's outrageous that people don't think holds gonna have $10,000 but Yeah be that as it may the mainstream media thinks when somebody says like that that they're kind of crazy or something But do you even care how they perceive you or do enjoy kind of the back-and-forth? You enjoy kind of being the villain so to speak Yeah, you know, I mean the one time that people started agree with me on gold Was right near the peak when it was near like 1900 which made me a little nervous and in hindsight Yeah, it should have sold and bought everything back because all of a sudden people started believing me But you know, it's not just seeing me. See I used to be on Bloomberg Almost every week in oh six. Oh seven. They used to have me guest host some of their shows I'd be on for the entire hour. I haven't been on Bloomberg in eight nine years In fact, you know anytime somebody books me whenever there's a producer that books me they end up canceling The hit before I get on you know, because there's you know, there's some rule there that I'm not allowed on the network but not all the producers know about it, especially the new hires and And so they don't get booked but my appearances are way down. I'm hardly ever on Fox. I used to be on CNN a lot When I was very critical of George Bush CNBC CNN liked to have me on but during the eight years of Obama. They never had be on You know and so I there's some other shows I did here and there MSNBC and you know seeing the headline news but a lot of these stations basically backed away from me CNBC rarely has me on anymore every few months. Maybe I go on sometimes I go on there. They're internet You know, they let me on the internet but not on their actual Air which maybe is one of the reasons why the ratings are so bad You know if they had me on more often, they might have more people tuning in I think more people listen to my podcast then watch then watch their network But you know, I'm not really sure why the mainstream has really backed away from me when for a while They had me on a lot and maybe it was just kind of I was a novelty I was like comic relief and it let them show. Oh well, look, we have the other side But I think once I got a lot more ability having been right and having made so many people on air Look foolish You know because I think a lot of people are afraid of having me on because they know that one day they could be in another Peter Schiff was right do and A lot of people were upset being in last one, you know because they look pretty bad But you know I don't really need the media as much And when people didn't know who I was I mean they heard about me But I have a big enough following on my own now that if I have something to say I don't need television to say it. I can say it, you know on the internet on YouTube And I have enough people who are gonna hear what I have to say Well now let's let's let's change gears a little bit and let's touch back on the politics that you mentioned. Uh You know the Senate run in 2010 Yeah, you know, I don't want to put words in your mouth, but I think for the most part you lean libertarian Yeah, have you always been that way or does that something that developed over time or were you raised in a house? That was libertarian. Yeah. Well, my father was very free market oriented hard money libertarian I Rand type of guy he was a big Goldwater Republican Backlund most Republicans were Rockefeller and of course, he's Jewish very few Jewish Republicans at all. So I was raised You know in a way to understand the proper role of government and to understand Free markets and and and and why they they work and why? Socialism does and so I've always kind of known this I didn't have to come to these ideas on my own I really respect a lot of people who you know are raised You know with Democrats, I mean my father's parents. My grandparents were big Roosevelt Democrats I mean, so my dad didn't have the benefit that I did I mean his father was pretty much a socialist like all the other Jews in his neighborhood where he grew up in New Haven right, they believed in government, even though my grandfather was a self-employed carpenter and should have Been a fan of limited government You know, it's philosophically a lot of people, you know believed in government So my dad had to come to these realizations on his own he had and he did of course. He didn't learn it in school His professors were teaching Keynesianism, right? So he had to go out and learn about Austrian economics by himself I at least was pointed in that direction by my dad and I know there are a lot of other people too That have had a much harder road to travel to get to where they are I had an easy road because I was put on the right path from when I was a kid and my dad used to Tell us stories about economics in the car fact one of the books that I wrote with my brother how an economy grows and why it Crashes was based on a story that my dad wrote but he used to tell us when we were little kids before he put it into a book himself, so You know, so yeah, I I've always had these these ideas got it well, I think that's one of the reasons why I like either reading the stuff you put out or watching your interviews is because Regardless of whether I agree with what you say or not It's always based in sound fundamental analysis and you not only have the Austrian side But you understand the cases that Keynesian side you maybe don't agree with it But at least you understand where they're coming from and you can show her it's wrong and it's not just you know Somebody preaching from a mountaintop but you know stocks are gonna crash or gold is gonna go mm It's it really is based in real economic thought yeah, I mean Keynesian is is is based on emotion. It's based on feelings It's based on you know doing what sounds right and making yourself feel good, you know You can feel better about yourself. If you support all sorts of government programs without actually understanding The effect of the programs that they actually backfire and they achieve the opposite of what their intended goal is but liberals don't think these things out right they think with with their hearts and they ignore all the anecdotal evidence that shows that what they believe is wrong because there's very closed-minded and then they believe that people like myself or conservatives or libertarians that don't support these programs They just believe they're bad people that they're mean or they're evil and they don't understand that It's just their own naivete the people that don't support these programs. Don't do it out of meanness It's because they actually understand the unintended consequences that the liberals ignore Yeah, so, you know, I would agree with that It seems like most people judge a new policy on its intentions rather than the results right? Yep and you know, you know they say about Intentions and the road to hell and you know, the left has laid a lot of asphalt over the years on that road Well this kind of leads into another question. I you're you the perfect person to ask this for being such a free-market thinker and understanding the fallacies of pretend Peter the Keynesian side of it or at least as you perceive the Keynesian side to Side of it. Does it make it easier to manage money or does it make it harder to manage money? well, you know it certainly makes it more frustrating at times because You know If you're a long-term guy, and that's what you have to be to allow these cycles to play out You know in the short run it can be very difficult because you're going against the herd I mean in the short run it's not who's right, right that makes money It's just who's got the numbers right in the long run? It's a the markets or a weighing machine but in the short run they're a voting machine and if more people are fooled by government policy and Fed policy and You know They're doing one thing and you're doing the opposite because you understand the long term effect of these policies It can make it hard because you could be wrong for a long time on paper before you're proven Right and a lot of investors don't have the fortitude don't have the long term time horizon to ride it out I mean I've got the same thing going on now with a lot of my clients who you know have been closing accounts with me to invest in the US stock market which I think is a crazy thing to be doing especially since a we've outperformed the US market for all of 27 and all of 20 all of 2017 and all of 2016 but over the last five years we haven't done that and that's because from 2013 through the end of 2015 Not only did you have a you a stock market bubble, but you had a dollar bubble and so that suppressed returns on overseas investments on commodity related investments emerging markets on gold And so over that time five-year period yes People would have been better off investing in the US market then investing abroad with me, but the game isn't over yet hopefully You know the US stock market is a bubble that's in search of a pin and it should have popped a while ago the dollar is an even bigger bubble and people that understand this understand How much money is going to be made by taking the other side of this trade when that air comes out of this bubble when? The dollar reverse and surrenders all these ill-gotten gains and in fact It's gonna move to all-time record lows and when the US stock market starts to turn lower as foreign markets decouple and move higher Then all of a sudden the people who have been who have understood the error of these Policies are gonna get paid and they're gonna get paid in a big way, you know Just like we got paid for shorting the subprime mortgage market. I mean that that trade took years to play out I mean I was learning about the housing bubble since the Fed first started inflating it in 2002 I started writing my book about the housing bubble in 2005 in fact the original title of my book crash proof It was gonna be all about the housing bubble and you know the America coming American nightmare But I ended up just condensing the housing part into a chapter and make and writing a broader book But I saw this bubble from a mile away Yet it wasn't until 2007 that the air came out, right? So you had to be patient and even forgetting about shorting the subprime market I was just as an individual I was renting homes for years because I refused to buy Because I thought the market was overpriced and people used to make fun of me But you know the house that we're in now, I mean I eventually bought it But of course, you know, I'd be better off if I was still renting it But you know when I did finally buy it I bought it for half of what the guy who sold it to me paid for it when he bought it You know in 2002 and in the meantime it was for sale for a long time before I bought it I bought it for probably 70% lower than the original offer price. But all the time that I was renting people kept saying Hey, you're throwing away money on rent I was saving money by paying rent because I didn't overpay for the house but in the short run Housing prices were going up like the guy who sold me this house on paper Thought he was making a lot of money until he finally had to sell the house at a loss but for a while Right. He thought he had a lot of profit in the house because that's what the Realtors were telling him That's what the supposed market value was telling him but of course it was all on paper because he didn't sell and so right now you have a lot of people that are in The US stock market that think they have a lot of profits they don't have anything They haven't sold they have the opportunity to make a profit, but they may not then you know The Fed has actually blown three enormous bubbles right during this They blew up a bubble in the 1990s when that one popped the market lost half its value Then they blew up another bubble that popped in 2008 the market lost half its bubble half its value Now the Fed has blown a third bubble. Alright, this is the biggest one yet Now if it just repeats what the last one did it's gonna lose half its value again Now what 22,000 right now? That means 11,000 but even if the Dow goes to 3000 30,000 rather and loses half its value that's 15,000 that's still well below where we are now But the risk is what if the Fed can't come to the rescue again with an even bigger bubble What if the third time's not the charm, right? What if it's three-strikes-you're-out? Right people think all you know, the Fed is gonna make it a hat trick No, I think there's a good chance that the next time the market goes down It goes down for the count because I don't know that there's a bigger bubble the Fed could blow This could be it. This could be the last bubble they ever blow cuz it's the biggest one yet And when the air comes out, I don't think there's any way to reflate another one The only thing they can do is completely destroy the dollar and if they succeed in doing that, which means they create a currency crisis and a sovereign debt crisis I mean a crisis in a Treasury market not in the mortgage market that's gonna lead to something much worse than a financial crisis But if they don't do that because they don't want the dollar to you know, become monopoly money Then we're gonna have a much worse financial crisis than we had in 2008. So you brought up the Fed It's a perfect intro to this question I try to ask everybody who's got a firm understanding of economics and central banking the Fed our central bankers Morons who really mean it or idiots who are just putting this on. Well, I don't think they are either idiots or morons I mean the question is do they actually understand economics because there are a lot of very smart people who have high IQs, right? Who know nothing when it comes to economics? I mean, they think they know something the problem is they don't know anything They don't realize how little they know They studied so much Keynesianism that all the common sense You know went out the window and they basically been indoctrinated or brainwashed and it's impossible for them to see the truth now I know Alan Greenspan who kind of started this right after he took over from Volcker who is really the last decent Fed Chairman we had Greenspan had a lot of potential because he was a real free market guy a gold-bug and iron rand libertarian and he still is but for some reason when he became other Fed Chairman and he became the white the Maestro, and he was everybody's favorite guy and he wanted to be liked and he got corrupted by the power. Uh, He played the game and he went along trying to artificially prop up the markets to stimulate the economy to help out the incumbent politicians to help out the bankers and and and you know, he basically sold his soul and You know once he left and he's not now, he's not Fed Chairman if you hear him talk now. Yes You know he's talking about. Oh, you know we're headed for stagflation We got some problems, you know of course doesn't want to acknowledge or accept responsibility for his share because he really wrote the PlayBook that Bernanke followed and that Yellen is following and they just took it to an extreme that maybe Greenspan himself never would have gone to right. He might have not, you know gotten this far. Who knows, but I don't know if Bernanke and I've had a chance to talk to Bernanke a little bit I've never spoken with Yellen, but from the brief conversation I had with Bernanke the guy seems pretty clueless to me I think he genuinely believes that he did the right thing and that everything is fine I mean which of course is the opposite? I mean I think Greenspan understands the mistakes that he made he just doesn't want to acknowledge it publicly and he doesn't want to throw Uh, you know the current Fed Chairman under the bus he wants, you know, he doesn't want to be critical, you know Maybe because there's also an expression, you know, when you live in a glass house you shouldn't throw stones So it's hard for him to criticize Yellen because look, you know, look what he did But I think he understands that what he did was wrong and that Bernanke and Yellin have made big mistakes and that the u.s. Is in a lot of trouble and we're heading for disaster I don't think Bernanke or yelling understand that now I could be wrong Right, but you always have to figure out are these guys just ignorant or they lying because I remember them there was an interview That I listened to on the radio with Ben Bernanke a few years and the guy that was interviewing him. I don't remember who was but he played him a clip of Some, you know interviews that he gave in 2005 or oh six in which Bernanke was very sanguine about the economy downplayed the risks of the housing market. There's no bubble Everything is fine. Nothing to worry about you know, and he all the naysayers are wrong right completely The worst thing you could have said right completely wrong right before the collapse. And so the interviewer says to Bernanke How do you feel now listening to that? I mean knowing how wrong you were. I mean, you know, how do you feel today? You know hearing that and then Bernanke's answer was not yeah, you know, I really screwed that one up He basically said in all fairness. I couldn't really speak my mind Because I was a member of the administration so in other words, she's basically saying just because I said everything was okay doesn't mean I thought everything was okay because I had a talk the the Administration's line which is everything is great, which of course he's not a member of the administration That's the the central bankers are supposed to be independent The problem is they don't act independent they act as if they're part of whatever ministration happens to be in the White House so if Ben Bernanke fancies himself a member of the Bush administration and George Bush is talking about how great the economy is. Then Bernanke doesn't want to contradict that narrative So he basically said I wasn't being honest now. Maybe he was being honest Maybe he's lying now because he's embarrassed about being so wrong So he's pretending that he just you know how to cover up his true feelings But we don't know was he lying then or is he lying now? And his is Janet Yellen, is she lied? Look, you know for years she was talking about, you know, raising interest rates. Yes She only really raised interest rates once when Obama was president I mean the second time didn't count because he was you know trumpet already won The second rate hike came when Burnett Bhama was gone, and she didn't have to worry about the ramifications For Hillary Clinton because she wasn't gonna be President It wasn't until Trump became president that the Fed really started raising rates, but meanwhile they kept talking about it But yet they didn't do it So to me that that showed that maybe the Fed realized that the economy was much weaker than what they were publicly claiming That's why they were so reluctant to pull the trigger But maybe once Obama went when Trump was in office and they saw hey, we can blame it all on him We can claim everything was great and Trump screwed it all off then all of a sudden. Maybe they had You know the courage to raise rates because they thought they had a fall guy Well, it's interesting, you know, uh about a year ago, maybe two years ago Now, um Greenspan was at a conference and they asked him, you know Something regarding central bank independence and his answer was I never said the Fed was independent? Yeah Well, as I said, they're they're supposed to be in fact That's one of the reasons that they that they object to all the congressional Efforts to audit the Fed they say but if you audit us we'll lose our independence They're not independent now, right so we might as well audit them. So at least we know what's going on But yes, they should be independent. They shouldn't be subsidizing Government, they shouldn't be having meetings with the Department of the Treasury and with the President and coordinating their efforts, you know Because this is what is enabling all these deficits. I mean Alan Greenspan his entire life has been a big critic of Deficit spending and the national debt and runaway entitlements well the reason that all this is happening is because of the Fed the Fed is cooperated by keeping interest rates artificially low and by monetizing so much of this debt If the Federal Reserve did not do that if they allowed interest rates to rise The government would have had to stop the borrowing because they couldn't have afforded it So it's the Fed that has enabled all this debt so it's it's very it's very hypocritical for Greenspan to rail against the debt and then having enabled in himself and he kept saying well, you know It's you know, if they want to borrow we have to make it easy for them No They don't they could have forced a crisis Because our politicians are never gonna do the right thing unless there's a crisis so as long as the Fed gives them an easy way out, they're gonna take it and you know, That's what's yelling yelling is doing right now. I mean interest rates are still near zero Yeah, they're about one percent one and a quarter, but that's practically zero and you know, we have twenty trillion plus in funded debt Right that doesn't even count all the unfunded liabilities But that debt needs to be serviced and it's all financed with t-bills and the only reason that we can pretend that we can afford to pay the interest on the debt is because the interest is so low if Interest rates were ever allowed to normalize. The United States would be Puerto Rico there's no way that we could pay the interest on that debt if we had to pay a Historically normal rate of interest on what is a very abnormal amount of debt? I love all the points you just made but it actually goes it's a great intro to a little piece of Devil's Advocate I'd like to play with you here You've mentioned that the stock market valuations are had extreme due for a big fall. Same thing with the dollar So are you loaning gold for inflationary purposes or deflationary purposes? I have a tough time seeing how the stock market goes down 50 or 60 percent when the dollar goes to 70 Yeah, well it all depends on What the Fed does during that time and you know The stock market may not decline by 50% I mean the Fed can stop it if it prints enough money, right? right So because what happens is instead of the market falling the dollar falls and if you're measuring the value of stocks in dollars It's all relative So if the dollar is losing value faster than stocks stocks can go up in nominal terms even as they're falling in real terms So I own gold because of inflation not because of deflation it's because I don't believe that the central bankers have the guts or the integrity to allow the bubbles to deflate I Think they're gonna continue to print money I think they're gonna sacrifice the dollar To prop up the stock market to prop up the real estate market to prop up the bond market That's why we might not get another 50 percent correction in the stock markets again if we do that There's no way the Fed could reflate this bubble There's no way that they can bail us out of the ensuing financial crisis And because this bubble may literally be too big to pop the Fed may be, you know Try to keep as much air in it as possible And of course as soon as it looks like the economy is really turning down or the market starts to go down again They slash rates and they launched QE 4 and of course since they're cutting rates from a very low level There's not a lot of stimulus going from one and a quarter to zero They're gonna really have to provide the stimulus there the quantitative easing which really isn't a symptom ulis It's a sedative and I think it's gonna be a leaf lethal dose I think we're gonna overdose on the stimulus and that's where the bottom really drops out of the dollar. So the dollars down 10% year-to-date something like that had a big run in 2014 Kind of leveled off for a while. Then a big run the last two months of last year after the Trump election But then, you know late January early February it turned down you know the Trump euphoria kind of By the wayside and now the dollar went went from like 103 on the DXY - I think it's 92 today or 90 Yeah, I mean the dollar I mean the dollar was you know on its way to a collapse in 2008 before the financial crisis Ironically the financial crisis actually saved the dollar it bought the dollar a lot of time. It was at an all-time record low Right. The dollar index was about 70 and the financial crisis came and the people didn't know how to react and they all you know bought dollars But then once the feds showed its cards with QE 1 and and what they were doing The dollar started to fall and it's my opinion that the dollar would have cracked and made a new low Had it not been for the efforts of foreign central banks if you remember they called it currency wars and all these other central banks kept printing money because they were Panicking that the dollar was gonna keep falling and they were worried about their exports the United States So they they print all this money and that's what stopped the dollar from making a new low But then the dollar caught a bid from the perception that all of a sudden everything worked all the fears about Hyperinflation and all the guys like Peter Schiff. We were all wrong. You know, these guys are geniuses they saved it It's everything is perfect. You know now they're gonna unwind the balance sheet they're gonna Normalize interest rates and people started celebrating victory before it had been won the Fed was taking credit for a battle They had won but all of a sudden the markets started looking forward. Oh, everything is great. The Fed is gonna raise rates And so the dollars started to rise anticipating all these rate hikes Plus people were now worried about Europe. They were worried about China. We were the cleanest dirty shirt in a hamper So we got this big run of the dollar Then when the Fed finally started raising rates in December 2015, that's when the dollar peak That's when gold bottomed out right by the rumor sell the fact right and then of course the fact never really lived up to the rumor because we haven't raised raves nearly as much as people thought they were right and Given all the talk about shrinking the balance sheet so far. It hasn't shrunk at all So we never really had the fact to support the rumor that caused all the dollar buying so the dollar kind of stopped going up and then all of a sudden Trump won and that kind of threw the currency markets for a loop this all of a sudden people started thinking wait a minute this Is a game changer? After first being afraid of Trump all of a sudden realizing wait a minute lower taxes deregulation This is good for the market. This is gonna take the Fed away. We're gonna have fiscal stimulus this is gonna mean higher rates a stronger dollar and the dollar made a new high, right it took out the highs from 2000 and and 15 and 16 and it started the year in 2017 at a new high dollar index almost got to 104 In fact, the most crowded trade in the US was long the dollar. It's short everything else Everybody was bullish In fact that the most crowded trade a year earlier was short gold for the first time ever All the hedge funds are short gold right at the exact bottom, right so they made the same mistake Everybody came into this year long the dollar and the dollar Peaked around the second or third week of January and it fell ever since it didn't it rallied a little bit in September again on the renewed hopes for a tax cut But I think this is again the same type of nonsense that rallied the dollar before this is false optimism I don't even know if we're gonna get these tax cuts certainly not in the form that they've been proposed But whatever tax cuts we get they are not gonna produce economic growth because this is not real tax reform They don't have the guts for tax reform because for tax reform you actually have to raise taxes on Certain people you got to take away certain deductions if you're gonna have tax cuts The only way to have real tax cuts is to cut government spending but no one wants to do that They want to say we're gonna keep spending money. We're not gonna cut anybody's benefits, but we're gonna give everybody a tax cut That doesn't work. All that's gonna do is produce more inflation so we're gonna pay for the government through inflation rather than through taxation and bigger budget deficits more money printing is Negative for the dollar not positive for the dollar So I think this you know rally this, you know tax cut inspired optimistic rally that we've had You know in September this is gonna fade as well I mean, I think the dollar could easily make new lows by the end of the year for this cycle or for this move But ultimately we are gonna take out the low from 2008 and the dollar index We're gonna take it out in a big way and I think the dollar is gonna continue to fall in an orderly manner Until it becomes disorderly, right? People are gonna say it's a good thing It's gonna help our exports until all of a sudden it's gonna be a bad thing because now all of a sudden it's gonna create a crisis of confidence in US financial markets and it's gonna cause big increases in consumer prices, which are gonna be impossible to mask beneath you know the phony CPI statistics so all of a sudden you're gonna start to see Consumer prices really rising the dollar tanking yet the feds stuck You know at practically zero rates because the only tool to fight inflation Crashes the markets and crashes the economy because you know, you live by cheap money you die by it Right, if you're live by QE we die. But if we if we actually have to fight inflation. That's it They've put us in a situation where it's impossible. The Fed has to surrender to inflation not you know their Volcker I mentioned Volcker he was able to raise interest rates to 20% Is it can we do that today? Can we get anyway close to 20% We couldn't even get to 10% We couldn't even raise rates to 5% Given the enormity of the debt we have and the way it's been financed right? It's not financed with 30-year Treasuries It's financed with t-bills. So when interest rates go up, it doesn't just affect the money you're borrowing now It affects all the money you've borrowed in the past because you constantly have to roll it over at the higher market rate So you mentioned the most popular trade of 2015 with short gold the most popular trade of 2016 was short dollar But all that's reversed Now if you look at the commitment of traders now, everybody's long the euro, everybody's short the dollar so it's completely reversed I Have a hard time seeing why is the Fed going to print when the markets already doing the work for them if the dollars drop? In 20 percent annualised they don't need to print Well, they're gonna have to print be cuz they needed to sustain these bubbles And I think that budget deficits are gonna get a lot bigger Meanwhile, you know, look at all these natural disasters. We've had this year the Hurricanes the fires Where's all that money gonna come from right? a lot of lot of disaster areas, you know a lot of FEMA bailout money a lot of you know People don't have insurance and even the insurance companies I mean, where does that money come from if the insurance companies have to pay to rebuild houses? Where do they get the money they have to sell off some of their portfolio assets? So somebody has to buy that and then of course they have to raise their insurance premiums which is gonna be another big negative for the economy is gonna be the higher cost of Insurance, it's not just health insurance. That's gonna be more expensive It's gonna be property and casualty insurance and all that is gonna you know, weigh heavily on on the consumer So, you know, I think the Fed is going to be stepping it up And yes, there are certainly a lot more people now that are long the euro Then a year ago There are some more people that are long gold now, but I will not say the trade is crowded. I think more people are probably Agnostic about gold than they are long I don't see a lot of buying the gold stocks, you know are barely up this year even though the price of gold has gone up quite a bit and that would show where the speculative money would be flowing into the Miners, and it's not I can tell you at my gold business. Our sales are off about 80 percent this year from last year So the public is I sell gold to the American public and they're not buying and even in my own Asset management company, this is the first year. We've actually had net withdrawals of from my manager council. You know, we have great performance Both absolute and relative to the ESPY people are taking money out because they want to invest in the US stock market So if you're looking at the retail investor, they're not buying gold and they're buying US stocks and my clients are Republicans They're Trump voting Republicans who are now optimistic. I think I think incorrectly So I think the optimism is wishful thinking it's not, you know grounded in reality But so I see the contrarian indicator The other way right people are not buying gold when they should be they're buying US stocks when they shouldn't be and to the extent That some of the professional traders are you know bearish on the dollar they're not nearly bound bearish enough I mean, there are people who think the euro can go up a little bit They have no idea how much higher it's gonna go and it's not just the euro. It's a lot of these other currencies So I think a lot of the dollar bears are also wrong in that they're not bearish enough They're you know, they're they're just sort of bearish, you know, they need to be super bearish So if the Bears could still be proven wrong if they're not bearish enough and I think that's what's gonna happen I mean the Bulls are completely wrong, but even the Bears are wrong So it's hard to argue with anybody that says, you know equities are not at a very high or historic valuations Also the dollars been up but why do you think it is that people don't focus on the high valuations of bonds I mean you almost never hear about the high valuation of bonds a year ago. We had 17 trillion of mega No, yielding sovereign bonds what happens if it just so happens to be that the bond market breaks first Yeah money comes flowing out of bonds. Where does it go? well It won't necessarily go into stocks because there's ago well it goes into gold and it can go into emerging markets or other commodities because remember the only way you can justify the Valuation in the stock market is based on interest rates And that's what even the Bulls will say when you talk about how expensive the stock market is They'll say yes, but relative to interest rates That's the important thing and so if the bond market collapses that means interest rates are rising. That means stocks are even more Overvalued because now you have to value them in a higher interest rate but don't keep going up as the money flows out of bonds and it goes into commodities and gold and real estate and Isn't some of it gonna go into equities. Well, it depends on the socks there. Yeah Yeah oil stocks, you know natural You know raw material stocks based materials X exporters companies multinationals that would benefit from a weak dollar But it's not gonna go into retailers. It's not going to the financials. I mean, so they're gonna be certain segments of the market now the way stocks benefit from inflation is to the extent that they do have debt and a lot of US companies have dead and To the extent that its long-term debt now if it's short-term debt, it's not going to help them But if you have companies that have borrowed and have sold 20 or 30-year bonds, and then there's lots of inflation That's a transfer of wealth from the debtors to the equity holders. So companies will benefit from inflation in that they're basically Not having to repay their so the bondholders lose and the the equity holders win But when you have stocks that are at such high valuations if they're at 25 30 35 times earnings You have a lot of room for those peas to come down So if the pea comes down to ten or five right I mean so and of course as Interest rates rise a lot of companies that have a lot of debt that means their interest expense is gonna go up if they have short term debt that's gonna put pressure on their their earnings and of course if a lot of their companies or their customers rather Have debt and now their interest rate costs go up. Then they have less money to spend on their goods and services So their revenues can be going down and their costs can be going up while their multiples are going down So there's a lot of risk in the market. Also, a lot of people in America older people retired people Who? Got out of bonds because the yields weren't there, right? they couldn't live clipping those coupons a lot of risk adverse senior citizens are now loaded up on stocks and So far so good as long as the stocks are going up, but if these stocks really start to Pank, you know And they start to see their their you know, their nest egg evaporating. Meanwhile, you know, the dividends aren't there either? there's a lot of potential selling that can come there as people try to salvage what's left of their portfolio because so many people Have just been conditioned to believe well stocks are not risky as long as your your long-term investor Well, if you overpay for them, they're very risky. I mean stocks can be good investments if you get it at the right time But if you overpay for them, or if you buy, you know, you know near that the peak of a bubble, you know It could be a disaster you know now yes the Fed as I mentioned earlier has been able to bail investors out of those mistakes the last two times I Wouldn't bet on it happening again. So there there's a lot of risk there in US stocks So let's just let's assume that you know, we aired this video and a number of Fortune 500 CEOs Mid-cap size company CEOs watch this and they hear what you're saying and they say wow The dollars gonna go down a lot interest rates are going to go up. I better borrow a while I can't I'll borrow now while the dollar and as the dollar gets cheaper. I'll pay it off, right? well If so and what if they do that in the two and a half trillion that are in excess reserves at the Fed all the start and start to Be you know levered up and loaned out to these medium-sized companies. Why why wouldn't a CEO do that? Well, the only CEOs that would lever up you'd have to have the right income streams, right? You have to have the right revenue sources to be able to service the debt You know, so if you're if you're earning money internationally if you're earning money on exports Obviously you're going to have extra revenue if the dollar is weak So for that particular CEO, if you've wanted to go out and borrow in dollars and issue longer-term debt, he'll I mean if you get issue a hundred year bond do it right nice and You know because eventually, you know in a hundred years, you know be working Yeah, I mean, you know If you're mailing your check to your creditors that there's gonna be a bigger number on the postage stamp Then there's gonna be on the cheque, right? So it's so you could do that if you can lock in a really low rate for a really really long period of time But of course, you know, most CEOs are not gonna do that. I mean they're there they're there They're in the business of running a company not gambling on interest rates or currencies But I would certainly if I was a CEO and I was dependent on imports This is gonna be a big deal because if you're counting on cheap imports coming in from abroad and all of a sudden the dollar Tanks and your imports are a lot more expensive and there's the people should be really hedging their currencies and hedging their entire businesses because I think a lot of business models are gonna fail Once the dollar cracks because a lot of US businesses are based on the ability to sell inexpensive goods that have been imported to Americans you really don't have any money have low-paying jobs and And and generally have to borrow the money on their credit cards even to afford the cheap stuff that's being imported But when the dollar tanks not only will the chief stuff become expensive, but I think the consumer credit market will also dry up So not so not only will Americans have to pay double or triple for the stuff They want to buy at Walmart, but they're gonna have to pay cash Yeah, they're not gonna be able to use their their credit cards So, you know, this is gonna really change the landscape and if people think that it's you know a retail Apocalypse now, they ain't seen nothing yet. Let's say that it just so happens. That bonds do start to crack first Maybe due to counterparty risk or whatever The reason is global contagion if if and the dollar starts to really lose value, would you rather own bond their stocks? Wouldn't you rather own stocks than the bonds? Well, I mean if those were my only choices if it was US stocks versus US bonds Yes, I would take US stocks now. I would not just buy the index I would want to be selective and buy the companies that I think will do the best and That will give you a better return than bonds But the world is in all US stocks US bonds fortunately I have other choices that are much better and that I'm making but yeah, I've told people before the bond bubble is bigger Yeah, and no, there's no way you're gonna win in bonds, right? because either bond prices are gonna collapse and you're gonna have a huge loss if you sell your bonds or you're gonna have to clip a little coupon, you know for a long period of time right in order to avoid realizing that loss or There's gonna be massive inflation. That's gonna wipe out the value the buzz So one way or though you're gonna lose Either you're not gonna get your money back or you're gonna get your money back and it's not gonna buy you very much So I would rather be in stocks but again I'd rather not be in US stocks either because there are real serious Problems for the US economy that are not gonna be friendly to the real value of stocks and if you understand what's gonna happen, there's gonna be a major realignment of living standards and purchasing power The American standard of living is going to fall sharply and the value of US dollar based Assets whether it's stocks Whether it's real estate in America are going to lose value relative to assets in other countries right and so what I want to do for my clients and for myself is own the assets that are gonna gain in Relative value and get rid of the ones that are gonna lose value because the America has been living beyond its means for a long time and beyond our means meaning we consume a lot more than we produce and we borrow a lot more than we save and that's fun until the party ends but the only reason that that's been possible is because other people in the world have been living beneath their means They've been producing and not consuming. They've been saving and not borrowing. They've been doing the hard part We've been doing the fun part, right? but I think when the air comes out of this bubble and you get this major realignment and transfer of wealth Americans are gonna have to suffer for their prior profligacy we're gonna have to roll up our sleeves and you know and start working again and producing and saving and I think other people in the world gonna start to reap the rewards of their frugality of their Under-consumption of their savings and investment and that's gonna be in a higher exchange rate Which is going to enable foreign workers and foreign savers to consume more out of the global production, right? I mean whatever's produced in the world is produced and Everybody bids for it I mean Americans have been able to grab a larger proportion that they're entitled based on the elevated value of the dollar Well when the dollar collapses it doesn't do it in a vacuum It means other currencies rise of course all currencies can be falling relative to gold but what's important as far as Consumption is how the currencies do relative to one another and as other currencies rise rather the dollar Those consumers become richer they consume more and I think their assets are going to be more valuable Real estate stocks in other countries that are having appreciated currencies are going to be more valuable than real estate in the United States so this is the major trend that people have to acknowledge is coming and Make sure they're positioned to catch this wave right not to get crushed by it So you and I you know align ourselves pretty well on the long term prospects for gold maybe even the short term prospects for gold definitely the medium-term prospects for gold and I think a big part of Most people in the golden world argument is there's a finite amount of gold but there's a lot of claims on it But there's only so much physical gold that exists, right? But then there's the GL DS there's the futures contracts that aren't really backed by gold or you know, you can't take delivery the ETFs So a lot of the argument is that when people scramble for gold there's only so much actual physical that exist That'll push the price up. Yeah, it's gotta go up and of course You know gol D that is physical gold because the GLD the ETF has to buy the actual gold in order to issue the shares But yes in the futures markets They're it's a whole different ballgame because there you have people selling gold who don't have it Right and people are buying gold that don't actually want it They never intend to take delivery so you can have this paper market of basically gambling on the price of Bowl But yes, a lot of the demand that might otherwise go into real gold ends up going into futures contracts Which is not buying any actual goal But where the problem is going to set in and maybe it's not a problem it Long bold is that it's it's a it's an opportunity or a good thing, right? But at some point a lot of the the owners of these futures contracts are actually going to request delivery Yeah Because just because they don't do it now doesn't mean they won't in the future and at some point The Long's are going to want delivery and the shorts are gonna get delivered a notice that says yes You need to deliver your goal. Now the shorts don't have any goal Yeah, so now they have to go into the market and actually buy it well we're they gonna get it and that's when you have a huge move up and maybe even you know a Bankruptcy of the comb acts or does it have to be bailed out or you know? What's gonna happen or the people who are requesting their goal gonna be told you can't have it? You know, you're gonna get paid in cash even though you request in physical delivery. It's not gonna happen So this could be an explosion of real buying of gold and you know There are a lot of people that own goal that oh, it's all manipulated and all that You know, the paper markets are keeping it down Maybe so but it can't go on forever and for me They're if they are manipulating it that means the price of gold is artificially low. That means it's a great buy, right? We're gonna get paid right? When was the last time gold was really artificially low. It was when the government controlled the price until 1971 it was fixed at $35 an ounce and then Nixon devalued a couple times To about 42 before we went off the gold standard, but for years the price of gold was artificially suppressed but as soon as that stopped gold went from what $40 to 850 and so I think gold has been suppressed whether as a an orchestrated Plan to suppress it or just based on market forces of people just doing what they're doing but you have a lot of activity that I think has suppressed the price of gold, but it won't go on forever and eventually Market forces are gonna overwhelm What's going on to keep the price of gold down just like eventually overwhelmed the government's ability to keep the price down and The price is gonna find a real value and it's gonna be much much higher than it is today Which is why people should own gold now should they only own gold? No, I don't You know, I never tell people to only buy gold, but people should own gold They should own some bold and they should own gold stocks. I mean these things are dirt cheap I mean if you want to what stocks can do look at what gold stocks did in the 1970s I mean newer stocks that went up 50 a hundredfold that's gonna happen again Alright, so people just have to be in these stocks. Do you have to have your whole portfolio? No, but have some money in these stocks. Most people today have no money in gold and they have no money in gold stock So using that same kind of analysis that we just applied to gold that there's a limited amount of gold but a lot of claims On it and at some point when people call for delivery, it'll push the price up if we do that same analysis on the dollar There's only four trillion dollars of base money. Everything else is loaned into existence but we've got Fifty or sixty trillion dollars of dollar base debts in the world that doesn't include the unfunded liabilities that doesn't include the derivatives so if we do get into a deflationary Center before the inflationary Ursaring. REO comes the stock market starts to crash and we go start into another 2008 type event Doesn't that start a daisy-chain of claims on the only four trillion dollars that exists and won't for a short period of time won't the dollar have those same characteristics that we just talked about because I mean because dollars a Intrinsically have no value but B can be created into existence on a you know By the Fed they could create dollars whenever they want, but they will do it until it gets strong, right? What if it's falling why would they create more dollars? Well in order to prevent rates from rising in order to bail out the government So let's say we do have a deflation and rates start to rise And the government has to default on the Treasury bonds Is the Federal Reserve gonna sit back and allow the US Treasury to default on the Treasury bonds or will the Federal Reserve? Bail them out by buying the bonds themselves, right? Cuz that the market doesn't want them at Artificially low interest rates and the Fed and the Treasury rather can't afford to pay higher rates The only buyer is the Fed also if the government has a choice, hey we have these social security benefits that we need to pay but we don't have any money where we going to get this money or Well, maybe we're going to default and tell the people who are expecting a Social Security check You're not going to get your check or we have all these government workers who are retired. They're expecting a pension You know, we're out of money We just gotta tell them there's no check is the Federal Reserve gonna sit back and allow all this to happen or is the Federal Reserve going to create the money to make it all pop possible so that the Politicians could pay what they owe. I think that's more likely than that They just apply you know, the tough logins. It's tough love and say hey too bad You got a crisis deal with it decide what you know cut cut spending I don't think that the Federal Reserve our Federal Reserve is going to do that so gold We know if we run out of gold that's gone, right? You can't just you have to mine it it's hard to find it's expensive to get it out of the ground Right, they can put as many zeros as they want, you know on those dollars. They can push buttons and create them in infinity So it's not the same thing We did have a run leading up to it until they push the button When people are going to the banks and there's run on the ATMs and they can't get that cash in that I don't the two Days the week the two weeks it takes to pass this bill - Doesn't the dollar go up that look it went up in 2000 and that's kind of what I thought but that's because it was at an all-time record low Okay, right So it's not nearly an all-time record low now it's not even close and if there's not a bunch of people short the dollar today like they were in in 2008 and remember back then oil was 150 dollars a barrel, you know plus gold in 2008 had just gone from under 300 in 2001 to a thousand so gold had just had ten years in a row of going up and hit a record-high and Then you had that so we're not in that position now, we're not even close to that position in fact If you wanted to look at something that's similar go back to 2000 2001 because when we had the stock market bubble at that time Gold had been in a bear market for 20 years, right? The dollar dollar index was 120 in 2000 and when the US stock market bubble burst in 2001, the dollar went down gold went up So today we're similar to that circumstance and where the dollar and gold are trading, right? So right now we've still got we're gonna get movements into gold and out of the dollar Because of you know, just where everybody is aligned, but ultimately if we get the type of crisis I believe where the Fed has to allow inflation to rage out of control where they're forced to print money into a weakening Akana into a falling bond market into an inflationary environment where gold prices are rising where commodity prices are rising that's the endgame for the Fed because now Everybody realizes the Box the Fed is in they can no longer pretend that they're gonna be vigilant and fight inflation because they'll they'll obviously have surrendered to it because they they're gonna choose to fight a Recession instead they're gonna choose To bail out the government rather than defend the dollar and protect its purchasing power And then the game is over Then there's a run and then the feds gonna lose control and and at that point we're gonna have to make a very difficult Decision the Fed is gonna have to make a decision. It's gonna be okay, you know, do we now raise interest rates Dramatically Allah Paul Volcker to save the dollar from collapsing into nothing Right, which would be a complete disaster. But in order to do that, we're gonna have to bring about a crisis on our own Which is gonna be much worse than the Oh a financial crisis because all the big banks that we bailed out will fail again except there's no bailouts next time and it's not just gonna be the shareholders of the banks that lose money and it won't just be the Bondholders, but the depositors in order for the Fed to do the right thing It has to let depositor a Bank of America of Wells Fargo use their deposits because there is no money there and the Fed cannot bail out the banks if it's also raising interest rates and Shrinking its own balance sheet So all the chickens have to come home to roost the government has to fess up We have the default on our bonds. We have to tell senior citizens. You're not getting Social Security. You're not getting Medicare the hole It's all over. You know, these were promises we made to get your votes. We can never keep them And you know, this is what you get for trusting us, right, you know. John belushi style, you know you some gapped up and just admit all that, you know, or you know They don't admit all that and and and the dollar does become an opulent monopoly money. And then now we're you know Zimbabwe Yeah, but you know, we're gonna have to choose our poison, right? I hope they make the right choice. But either way the price of gold is going up just if they make the wrong choice It's going to infinity Gregor's the dollar goes to zero. Yeah, but hopefully that doesn't happen I mean I want to make money but I don't want admit I don't want to make it that badly I don't want the country to suffer to that extent You know, I know it's gonna suffer it but I hope that you know We take the right medicine so that we ultimately, you know can end the suffering and have a real recovery So Peter, this has been fascinating I knew you were the perfect guy to kind of wrap this dollars and gold story up with you didn't disappoint I really appreciate you taking the time and I think we both agree that you know You gotta own some gold in your portfolio regardless and the way to send it's not gonna be pretty Yeah, and you know one way everybody should own goal two is through a company called gold money and get to bring this up But you know in addition to owning physical gold, which I sell through shift gold But gold money allows you to own gold in a way that you can use it in commerce I mean gold money is kind of like the PayPal for gold It's a global payment system where you can earn and spend and save in actual gold and you can use gold through an app on your on your cell phone and you can you know use it in commerce so I can buy a cup of coffee and Pay for it in gold or I can sell somebody a cup of coffee and they can pay me in gold or I can buy A car or go buy a house you can you can spend you know a small amount of gold or a large amount of gold It's easy and free. You can send your gold anywhere around the world and in fact if you want to interact with The fiat world until everybody wants gold You get a free debit card and you can any place that takes MasterCard or Visa? You can spend your gold using your your debit card because you know you is so it allows Individuals on their own to put themselves on the gold standard to reject fiat money To save and gold earn and spend in gold and get out of the banking system and also as I said earlier There's a good chance that a lot of banks are gonna fail and if they don't get bailed out, you know You're gonna get bailed in right you're gonna lose money as your bank fails But if you use gold money as your so-called bank, you know, it's just as liquid as a checking account You know, you can access the money and spend it just as easily except. It's not in the bank. It's in a vault It's in a Brinks vault. It's your goal. Nobody lends it out so you can never lose it I mean, yeah, the gold price can go down, but you can't lose your ounces Whatever you have you own you can deposit money in the bank. You could lose it. All the bank can lend it out Never get it back. You're a creditor when you put money in a checking account when you have a goal money account You're not a creditor. They they're holding the gold for you. You're an owner of that gold at all times You're not loaning it to a bank that basically is insolvent and is only being propped up by the government of course if the Federal Reserve Stops all the banks from failing it's only because they wipe out the dollar to inflation Well there again if you have gold in your gold money account, you're immune to that inflation So you're protected from bank failure you're protected from inflation Because you can store your savings in gold yet not give up the liquidity So that's what a lot of people that naca get against gold was. Well, yeah, but how do I spend my goal? I've got a bar gold. How do I spend it? Well, you know, you can carry a hundred thousand a million dollars worth of gold in your cellphone in your wallet, you know you know on a debit card and it's real gold and you have access to a 24/7 so that solves the problem gold money solves that problem It makes gold as liquid is any fiat currency? Except it's a reliable store value and you don't have to trust the government and you don't have to trust the banks fascinating Peter Thanks again. I look forward to seeing you next time and I'll definitely be following you along the way great. Absolutely
15:29 ...The Fed has actually blown three enormous bubbles right during this
They blew up a bubble in the 1990s when that one popped the market lost half its value
Then they blew up another bubble that popped in 2008 the market lost half its bubble half its value
Now the Fed has blown a third bubble. Alright, this is the biggest one yet
Now if it just repeats what the last one did it's gonna lose half its value again
Now what 22,000 right now? That means 11,000
but even if the Dow goes to 3000 30,000 rather and loses half its value that's
15,000 that's still well below where we are now
But the risk is, What if the Fed CAN'T come to the rescue again with an even bigger bubble??
What if the third time's not the charm, right? What if it's three-strikes-you're-out?
Right people think all you know, the Fed is gonna make it a hat trick
No, I think there's a good chance that the next time the market goes down
It goes down for the count because I don't know that there's a bigger bubble the Fed could blow
This could be it. This could be the last bubble they ever blow cuz it's the biggest one yet
And when the air comes out, I don't think there's any way to reflate another one
The only thing they can do is completely destroy the dollar and if they succeed in doing that, which means they create a currency crisis and a sovereign debt crisis
I just found this channel recently. How about that.