2020 Economic Crash Predictions with Peter Schiff - EP3

we are fortunate enough to get to hang out with peter a few times a year but for the last eight years in a row he's been with us for the investor summit which is extraordinary and he speaks every time without notes up next episode three with peter schiff our next guest has been talking about the inevitable crash for some time we first read crash proof his excellent book back in 2006 where he warned of the housing crisis and sure got that one right and then of course the real crash his book that came out to say we haven't seen nothing yet we're about to find out if this is the real crash let's say hello to our good friend peter schiff hey peter hey how are you guys we're good how are you and how are things in uh your beautiful part of the world well it's getting warm here in puerto rico so uh next week we'll be heading north back up to connecticut they're just starting to open things up puerto rico really went off the deep end i think when it came to the shutdowns and the quarantine we actually still have a curfew in effect we're not allowed out after 7 p.m yeah it really it's really been a bit crazy over here but at least the weather has been nice well that's good you know puerto rico's had a rough couple of years and this certainly hasn't helped but it's good to hear that they're i guess being cautious how's commerce and the economy and all that oh it's pretty much shut down it's hard to get anything done as i said they're gradually starting to open up uh businesses but you know i mean this is true all over the country and you know when i wrote a book the book uh the real crash i had assumed that the real crash would have come sooner yeah but it's now going to come later and but th this is it i think that uh coven 19 is the pin that is really putting a gaping hole in in this bubble which got a lot bigger than i imagined it would when i first wrote crash proof and i warned about the then bubble in the housing market and the financial crisis that would result when it popped my forecast was that the monetary policy that would be pursued in the fiscal policy in the aftermath of that to try to stimulate the economy out of what i said would be the worst recession since the great depression i believe that that monetary and fiscal policy would cause a dollar crash and that would ignite uh massive inflation and then the economy would collapse well that didn't happen because instead of just attempting to reflate the bubble they succeeded and and so that bubble really began to leak air in the last part of 2018 in fact the air started coming out in 2016 but then donald trump kind of threw it for a loop by winning and and and that really postponed the recession because it created a lot of false optimism and in that environment the fed was finally able to raise rates from a quarter of a percent which is where it still was when trump was elected remember before trump was elected the fed had managed just one rate hike that's all it had from zero right despite all this talk about how they would normalize rates they never actually tried to do it until trump was elected and then you had all this enthusiasm and so during that you know euphoria the fed was able to get rates up to about two and a half then all hell broke loose in the fourth quarter of 2018 we had the biggest decline in the stock market since the great depression and that's when the fed did what i was warning they would do on pretty much every summit at sea i was at i said they would have to abort their attempt to normalize interest rates they could never shrink their balance sheet if they tried they would fail and all of a sudden the feds stopped hiking rates they cut rates three times in 2019 they restarted quantitative easing they stopped quantitative tightening they started expanding their balance sheet again so this was already happening before covet 19 came along then clover 19 happens and that accelerated the process right a much bigger hole in the bubble and the the point that everybody is missing is that covet 19 is the pin right the problem is the bubble that the pin pricked because everybody thinks we had a great economy before covet 19. we didn't we have a bubble we had a bubble and so they think all we have to do is like turn the economy back on and everything will go back to being great well we can't go back to the way we were because we can't reflate that bubble so there is no turning the economy back on because we can't reflate a bubble so uh people are wrong if they think that well you know this is going to be a quick you know self-inflicted wound and we're going to heal it's not i mean yes covet is making it worse but the problem is the economy that existed before covid and not only is the disease going to make it worse but the government's cure is far worse than the disease itself and not just to shutting down the economy it's the financing to shut down with budget deficits and printing money i mean it'd be one thing if we were using our savings right to get us through this storm but we don't we don't have any savings thanks to the fed we're all broke right everybody is living paycheck to paycheck everybody is levered up and so while everybody is sheltering at home and not working not producing goods not providing services the fed is printing all this money and in fact there's a lot of people today that are sitting at home getting bigger checks from the government than they got from their employers except when they were working they were contributing into the economy now they contribute nothing but they're trying to take out by spending the government money so we are creating an inflationary nightmare right all this government right this huge increase in government people are not asking how are we going to pay for this the government is spending trillions and trillions more than it was the government is now actually spending more money from debt than taxation i just looked at the numbers today 51 and a half cents out of every federal dollar spent has been borrowed so this the national debt is 25 and a half trillion and and skyrocketing the fed's balance sheet is 7 trillion so we're getting this massive increase in government spending and no one's getting a tax hike in fact people are getting tax cuts so how are we going to pay for all this government we're not getting it for free so it's inflation it's going to be a destruction in the purchasing power of the dollar so all the problems i was worried about a decade ago are now much bigger than they were then and so the inflationary consequence the real crash is going to be far bigger now than it would have been had it come sooner well that's one of the things you've talked about on the summit and certainly a conference is the fact that the longer we wait the worse it is in this case you know peter you referred to uh covid as a black swan with teeth like it's bad because not only is it trick to the bubble but it's lingering and it's taking time and we've got unemployment we've got businesses closing and all that stuff that's going on what do you see that eventuality like well look this is another financial crisis only much bigger than 08 i mean it doesn't even matter now about the pin the pin is irrelevant at this point because the bubble's already been pricked right and so what was the pin in 2008 it was real estate prices falling right because once real estate prices fell then real estate loans went into default and then the lenders lost money so it turned into a financial crisis and also uh people now had less wealth because the recovery was kind of powered by the wealth effect people living in appreciated homes not only felt richer but they can actually borrow the equity out of their homes and spend it so you had a lot of spending that was a function of the real estate wealth which all went away when the real estate wealth went away but this is a much bigger financial crisis because it's just not just uh the mortgage borrowers who aren't paying their loans it's everybody think about all the businesses that are defaulting now right not just homeowners that are defaulting i mean this is not just a residential real estate crisis this is going to be a commercial real estate crisis i mean commercial real estate kind of got a pass you know 8 because when the fed slashed rates that kind of propped up the commercial market but this time around rates were practically at zero before the crisis so it's not like going from two to zero is that big a deal in in in real estate compared to the loss of rental income right you got the office buildings people are not paying their rents or companies are going bankrupt and other companies are deciding you know my people are working from home anyway what do i need all this space you got like wework and companies like that that have all the space for subletter or gone bankrupt and then you have the nightmare in uh retail which you know these companies were on life support before kovit they were they were hanging out by a string and now the string is gone so the stores the department stores in the malls and the shopping centers these guys aren't paying their rent but it's not just you know the stores gyms aren't paying their rent right look at now the rental car companies are going under avis just filed you know that auto bubble is now popped look at all the americans that have borrowed money to buy cars what's gonna happen to the used car market when you have all these cars that the rental companies hey they're not even buying new cars they were big buyers of cars now they're going to be big sellers of cars uh so the bubble air is coming out of the auto bubble so this is the financial crisis on steroids as far as the amount of debt that can't be paid and so the loans that are going into default the losses that are going to be spread over the economy and so in order to try to you know prop everything up the fed is having to act on a much bigger scale so everything it did wrong in 08 it's doing wrong now only on a bigger scale it's having to print way more money it's having to bail out way more companies right the deficits that we had back then are far bigger now and people think well we got away with it back then right we printed all this money and we didn't have to suffer any adverse consequences the dollar didn't crash bonds didn't crash we didn't have the inflation right we had a slow recovery but it was a long the longest one ever you know we had a recovery and look real estate went back up stocks went back up so people think that because we got away with it before we're going to get away with it again we're not right people have been lulled into a false sense of security complacency in thinking that we can print all this money and not have any negative consequences well they're going to be even worse now than they would have been had we had them a decade ago so peter let's talk about that because there's all this money printing and we did see that movie before and you brought our attention to that several times several times on this show we've talked about the latest round of twist or qe or whatever they were calling it at the time and now more money printing than ever it's actually working or something that's working its way into the hands of people who are spending it on rent or food or whatever they need where does that all show up eventually i know you have opinions on gold on the dollar what do you think this looks like in a year or two well it is going to show up in consumer prices in a big big way uh because you know there are two things that are going on now in the economy on the supply side we're having a reduction in supply right because if fewer people are working well they're not producing products that they produced in the past they're not providing services that they were out there providing in the past so the supply of stuff is going down right and certainly you know a lot of the stuff that we were importing from countries like china were they're not making as much stuff anymore to export to us they might consume it themselves so we're not going to be able to import as much stuff we're not going to make as much stuff so there's less stuff at the same time there's more money right people have more money now in many cases than they had before when they were making stuff right now they're getting checks for doing nothing so you have more money and less stuff right obviously consumer prices are going to go way up and you know a way to look at that kind of in a microcosm is look what happened to airfares right in the weeks that immediately followed covet 19 ticket prices collapsed i mean you that the airlines were selling tickets i remember a guy was working for me was looking at tickets from san juan to boston it was three dollars to get a ticket now that's less than the uber ride to get to the airport i mean they were it's like this is crazy because nobody was buying tickets so they were just giving them away because the planes were going to fly anyway and the seats were empty well anyway now i just looked we were looking at buying tickets to go back to connecticut right i've never seen them this high now because what's happened is the airlines canceled a bunch of flights so now there's the supply of flights is down right delta which used to have flights every day now there's only a few a week so a lot of days a lot of you know they're jet we used to have a flight directly to hartford which sometimes we could take cancel that so a lot of times you have to have uh you know you have to go connecting but i used to like to fly delta business they had the best business class seat non-stop and i looked the last ticket i bought non-stop was 343 per ticket which is not a bad price and the coach the coach was only like 125 150. when i went back online on delta the cheapest business class i could find one way was over eighteen hundred dollars and on those flights even the coach seats were sixteen hundred ten times what they were before coveted so what happens is even though the demand to fly went down right not as many people were buying tickets the supply of seats went down even more so then if you really wanted to fly it cost you and so that's what's going to happen in this recession yes demand is going to go down everybody is focusing on that people are going to be unemployed people aren't making as much money people have to start rebuilding their savings now that they had a wake-up call hey i'm broke i can't pay my rent right my so people are going to cut back on their spending and so demand will be down but supply is going to go down even more so prices are going to rise even as demand falls we haven't experienced that before well we did it in the 1970s but we haven't experienced it recently that's what's been able to mitigate every downturn now as far as the finance is concerned see i think this is the straw that breaks the camel's back for the dollar that the reason we were able to get away with these monetary mistakes in the past was because the dollar survived as the reserve currency and it's still surviving today that's why we've been able to print trillions and trillions this year and we haven't seen the dollar tank but i think we're going to you know cross the line right on on how much debt the world is willing to allow and continue to accept the dollar as the reserve see the problem is you don't know where that line is until you've crossed it right because it surprises me that we haven't already crossed it but i think we're going to do it in this cycle and it may be early in this cycle it may be before the end of this year who knows but we are going to pass the point of no return and then the dollar is going to collapse and then all the inflation chickens come home the roost the prices really skyrocket uh interest rates soar and you know right now um interest on the national debt is about i don't know 350 billion a year because we're paying one and a half percent right what happens when interest rates go to five percent we'd be paying more on interest than we pay on medicare and we're so in fact if interest rates went to 10 by the time the national debt was at 30 trillion which is probably next year i think interest on the national debt would be more than the national defense medicare and social security combined in fact we could be at a point where 100 of our tax revenue would be needed just to pay the interest on the national debt we'd have we'd have to shut down everything else government did which obviously we're not going to do so we're going to default right either we do it honestly or we do it through inflation my bet is through inflation uh so all these dollar denominated assets become worthless and and so people need to you know do what i've been advocating as quickly as they can i mean i was telling people to do it too early but better than too late because people are about to get wiped out who you know don't have gold don't have silver don't have mining stocks right don't have overseas assets where income streams are coming uh in currencies that are not the dollar the currencies that are going to gain the purchasing power that the dollar loses well that's something you've been teaching us about for uh quite some time looking at companies that are in other places that aren't as beholden to the dollar or don't have the same concerns all currencies are fiat so that's you know the back to the you know cleanest dirty shirt in the hamper it's been the dollar but there's been moves already right china and russia and lots of folks out there who are holding these dollars as they go down in value they're looking for an alternative what do you think that how does that manifest how does the dollar get knocked out of reserve of the reserve currency and what takes its place yeah well remember i mean we're only the cleanest dirty shirt in the hamper by default right and it's only because that we are the reserve currency that our shirt looks less dirty right because it's almost like the worse things get around the world the more money comes into the us and so as things get bad we get more money to borrow and spend so we actually benefit from everybody else's problem because when everybody has a problem they lend us more money right but what that means is that we're able to make our own problems worse because the more money we borrow the bigger our debt bubble gets so that's the paradox is the worse things get the more money the world wants to loan us which only allows us to dig ourselves into an even deeper hole than the one that everybody is ignoring so we're actually in worse shape we're actually the dirtiest shirt in that hamper except no one smells it yet right because we're the reserve currency so but at some point right the stench is going to be so bad that you know i mean how big can these deficits get right we're at what three four trillion a year i mean we're about to find out right because we're going to pass that point but you know other people make the mistake they say well the dollar is always going to be the reserve currency because there's no other currency that can take its place and i would agree in that there's no other currency that deserves to be the reserve currency but then neither does the dollar right so if there are no currencies including the dollar that should be the reserve currency then why should the dollar continue in that role when we have a perfect alternative gold right gold was the reserve asset before the dollar it wasn't the british pound it was gold the pound was the dominant currency but gold was the reserve right we created this situation where the dollar became a reserve instead of gold only because the dollar was as good as gold because at the time that we got the world to accept this arrangement if you had 35 dollars you had an ounce of gold you could get it whenever you wanted we had all the gold we were the world's richest creditor nation we had these huge trade surpluses i mean everything that was manufactured was manufactured in america if you wanted to buy anything you needed dollars so we had all the gold we had all the stuff it made sense and we told the world hey if you hold dollars i mean if you hold gold you don't get any interest on your goal but if you let us store your gold in fort knox whatever and we'll just give you dollars you could buy us treasuries and you're gonna get what seven percent eight percent whatever the yields were back then and that was like a good deal because the world got to have their gold and interest too right hey why hold the gold and get nothing when we can get these treasuries and get all this interest we get our goal whenever we want so that's the reason that the world went on this standard of course they would never agree to it based on today's terms you take these dollars that are backed by nothing and by the way you buy treasuries and you're going to get no yield nobody would do it right so we would never have the dollar as the reserve if we try to go on it now it's only because it's left over from what we started with right so there's a lot of inertia to giving it up we went off the gold standard in 1971. the dollar tank lost two thirds of its value gold went from 35 to 850 but even though the dollar was marked down it stayed as the reserve currency at a lower exchange rate and that's what really led to these big problems because once we realized that we could just print money without having any gold to back it up that's when we really started to grow government and grow deficits but the world went along with it and now we're in a situation today where you know we're you know completely run amok because we've been able to do this for so long but i think what happens is when the world says enough they don't try to put the crown of you know a king on another currency because again no currency can offer what america offered at the time of bretton woods after the second world war there's nobody that can equal what we were and you know look at all the damage that was done to the world by giving the us the power to print the reserve currency why you know bestow that power on the ecb or on japan or on china who wants to give that power to the chinese nobody so we want to take the power away from everybody and go back to real money right which would be gold so that's where we're headed gold's going to be remonetized all the central banks already have gold in reserve they just need more of it and of course when the price goes up to 10 000 or 20 000 that will accomplish a lot of it because they don't have to buy it what they own just gains in value and so now their composition of reserves is much higher in gold just simply by market appreciation which is going to happen but of course other central banks are going to buy more gold but this is going to be the big game changer for the us right because if your country is not a reserve currency if you're new zealand if you're sweden right i mean there's no change for you you're just having gold as reserves instead of dollars i mean the new zealand central bank can't print dollars just like they can't print gold so to them it's like okay we're just going to use gold instead of dollars right it doesn't change for them the big change is for america because see we used to be able to print dollars we can't print gold right so now all of a sudden we're the country that goes from living beyond its means to living within its means right now if we want to import something we have to export something to pay for it so it's a whole new game so america has the most to lose short term right long long term i think it's a win for everybody to go back to sound money but in the short run the pain will be felt most intensely in america because americans experience the gain of being the issuer of reserve currency being able to create into thin air money that cost us nothing to produce in the way of resources and just exchange it for all the goods that other countries produced at great expenditures to their own economies right so we've lived beyond our means we consume what we don't produce uh we borrow what we don't save all that's going to come to an end this whole phony economy that was built on the foundation of the dollar being the reserve currency is going to implode and so it's going to be a big game-changer for us it's going to be a big game-changer for american citizens we're going to get wiped out people who are retired who are going to watch their money retire and now they're going to have to go back to work doing who knows what uh but it's more important for americans to understand this and and prepare for it in advance because americans are going to suffer in fact there's going to be a lot of people in the world who are going to benefit from this because if america was living beyond its means that's only possible because the rest of the world is living beneath its means if we consume more than we produce that must mean that the rest of the world produced less than it consumed if we're borrowing more than we save the rest of the world saved more than they borrowed so our loss is somebody's gain right well if you're an american citizen but you own foreign assets then you gain two right because you also gain the purchasing power that the americans who have dollars lose peter i'm i've i just been following for the last 10 years uh china and russia and you know the rumors that china has a whole lot more gold than they're saying they do and you know they've overtly called for a dedolorization of the world they put into place the asian infrastructure rank the shanghai gold exchange you know so i i guess my question is do you think that we go straight from a u.s dollar reserve to gold or do you think that china is in a position to step up and introduce a goldback yuan with the strength of their manufacturing economy and the size of their population and really a knockout punch to america as things heat up well that would be the same thing so if what you're saying is the chinese decide to do what america did once before right hey we're going to peg our currency yuan to gold we're going to have make it convertible into gold we're going to take the hong kong dollar now and decouple it from the u.s dollar and we'll link it to the yuan or something like that and then they create a yuan that's backed by gold right well obviously a yuan backed by gold is better than a dollar backed by nothing the question is will the world trust the chinese to live up to that commitment right because america didn't i mean we did for a while but then we abused it so if you're gonna if you're gonna go away from the dollar do you necessarily go to the yuan backed by gold why not just get your own gold i mean what would be now again they can make the same deal that we did we'll pay you interest right you could you could take your yuan and buy debt but that very well may happen and maybe some central banks will hold some yuan in reserves for that reason but i think a lot of central banks will say why have that added counterparty risk we can hold our own gold right but either way you're talking about gold becoming the reserve because even if uh the yuan ends up being more of a reserve if the yuan itself is backed by gold then the world is still on a gold standard i mean even when we were on the dollar standard we were still de facto on a gold standard because if the if the mark was backed by the dollar and then the dollar was backed by gold you know by the associative property the mark was backed by gold they just did it through the dollar right that was where the world screwed up everybody trusted america to be honest and the minute we got the world's trust right well we screwed everybody right we squandered that we because the politicians couldn't resist and we could just print money we can we can give voters all this free stuff right and we don't have to pay for it so but even if what you're saying happens that's the same thing right what i don't think is going to happen is you're going to get some other fiat currency that just is going to take over for the dollar because the world is not going to buy into that hey we just lost everything in the dollar so let's put our faith into the euro or the what's the difference it's just paper so i think once the dollar goes then it's like okay any currency can go right i mean because right now let's say some south america currency collapses right people are like oh that's okay it's just a peso right because you know the dollar is still steady so you can see like a hyper inflation in some smaller countries where the overall confidence in fiat money in general doesn't go away right it's still there for the larger economies even if you have some small you know like a zimbabwe or something where there's hyperinflation but if you have that in the u.s dollar i don't think that's an event that can just happen and people say okay well that's just a dollar the euro's fine no we need to worry about that right no need to worry about the yen i mean if the dollar collapses i mean all bets are off right so i think then you're gonna have to see a move to gold i think that's the only thing that people will trust now you know i know there are some people out there that are like well it's going to be bitcoin right oh bitcoin is what but you know i just can't see that happening either right you know i just don't see people are going to go from putting their trust in uh something that's intrinsically worthless like a piece of paper and then put their trust into something else that's intrinsically worthless like a string of numbers that that only exists in cyberspace so i think that the world is going to need to go back to something that has proven that it works that has worked uh in the past successfully uh for not only hundreds of years but thousands of years um and something that central banks already own which is gold they have gold right you know it's a gold is a monetary asset right now we just have to utilize it more and we utilized it in the past we do it again you know and i don't think it's a big game changer because i don't think it means that people are going to start transacting directly in gold coins they don't have to you just need something tangible to back up your paper because then it's real currency when currency is backed by real money it's legitimate currency it's only when it's backed by nothing that it becomes fiat so that's actually a really good point because when you think about it the concern is that uh that somebody else would come along and supplant the dollar but it really doesn't matter who it is if it's gold then the dollar still goes south and the americans are really the ones affected by it now now jim rickards has been for a long time talking about the whole idea of sdrs special drawing rights and the idea i guess behind it is that uh the the federal reserve and then the international monetary fund the imf behind them not going to want to let go of the ability to control everything through the issuance of paper currency do you think that where we're headed now with the way the u.s has handled the dollar and kind of de facto with the imf being kind of an extension of the us do you think the world is going to trust the imf and an sdr for international trade or do you think it just goes right through that directly to gold i mean i don't i don't think so would you would you trust a a a special drawing right i mean who the hell even knows what that is i mean that seems to me to be more murky than a dollar or a euro and and all the sdrs are are just paper issued by the uh the imf that are backed by those other fiat currencies the biggest one being the dollar i mean so i mean if the dollar is no good what good is a special drawing right backed up by dollars so i just don't see that i mean i i see the logic where the government doesn't want to give up that power to the market you see because when the government gets people accepting fiat then um you know they have more control over real money which puts controls on government keeps government honest but there are a lot of countries that are using this system where they still have controls because they don't print dollars right there are a lot of countries that still have to live by economic rules if they run big deficits if they print too much money their currencies go down inflation goes up if their trade deficits get too big their currencies go down so you still have countries that are still having to live by these rules so for them right you know going to gold doesn't mean that they've surrendered any power because they didn't have it anyway right it is the big countries right the ecb to an extent or some of these big banks but nobody benefits more from this current system than the united states at least in the short run i mean nobody has probably done more damage to their long-term viability as an economy than the u.s you know because we've lived with this system for so long we're ill-prepared to live with a real system right it's like you know if you take a a you know a village and let's say they all used to you know fish for a living and i mean that's how they fed themselves they went out fishing and then you start giving them free fish and and generations go by and then nobody even knows how to fish right and then you take the free fish away you know well now what happens they're all going to starve to death i mean you know they had it good for a while uh but but you know then the gravy train came to an end and so we've kept this phony economy going for so long where we didn't have to make stuff because we could just import what anybody else made didn't matter we could have a service sector economy we didn't need the production and all the pollution that goes along with it and we didn't have to save money right we could just have whatever we wanted we can indulge ourselves right now i mean we can just go out and buy stuff on credit cards who needs to save up for the stuff that we want let's just buy the stuff we want right now right so we built this you know just in time crazy bubble economy and so because we've kept it going for so long uh you know we're going to suffer dramatically when it goes away so you know american politicians obviously want to keep this going as long as they can uh but this exacts a heavy burden on the rest of the world that has to you know subsidize it that has to shoulder that burden and you know at some point it's you know no moths we're not doing it anymore and you know until the world does that we will continue to go deeper and deeper into debt why should we ever do the right thing when the world makes it so much easier to do the wrong thing right why bite the bullet why cut government spending you know why raise somebody's taxes why eliminate a program if the world will just let us keep printing money and i think now that we've been able to get away with what we've just done people are even asking that hey why even have taxes what's the point if we could just print money then why do we have any taxes right why don't we just print it all i mean we're printing more than half of what the government spends right now why not just print the other half right i mean so we're already saying this and the world is like oh my god look what we've done right they're like frankenstein and and we're the monster yeah i think that's where you know people don't understand that where where the role of manufacturing comes in because if you're not producing anything then you don't have anything to sell you can only be a buyer and you can only get away with that as long as you have an unlimited checkbook if the dollar america loses the dollar as a result world's reserve currency basically that's like cutting off the credit line and now you've got to get back in the business of actually making things so you know let's assume that all of this plays out as you're saying the dollar dies or is a very limited role now is no longer a reserve currency the path forward for the united states if i'm hearing you correctly is is that manufacturing we've got to get back into the business of manufacturing and selling goods to the world again well if we want to consume we're going to have to produce you know so unless we want to give up all these goods we're going to have to make them now we don't have to make all the stuff we consume but we have to make something because if we want to import what somebody else consume produces we need to export something for them right so we're gonna have to have a comparative advantage again in certain things so that we can export to import other things uh and so in order to make that happen i mean we're gonna have to reverse policy we're going to have to dramatically shrink the size of our government huge cuts to government spending so that we can return those resources to the private sector we're going to have to allow interest rates to rise substantially which means a lot of existing debt is going to default a lot of bankruptcies a lot of failures a lot of people are going to lose money but now people are going to have to start working again but not spending everything that they earn they're going to have to start putting money aside so that that money can now be invested productively in new plant and equipment in new machines in training new workers so that we can do this stuff and so what that means is in the short run our standard of living has to go down right as measured by our consumption our current consumption we have to consume less and we have to produce more we have to uh spend less we have to save more and so but a lot of losses a lot of people are going to have to wake up to a you know crude reality a lot of people have been promised something that they're not going to get there are a lot of people that think they're going to retire they're not going to the government has no money to pay social security and their portfolios are going to get wiped out so we're going to have to come to terms with economic reality and and stop looking for an ex an excuse like a government bailout like oh like you know we have this coven 19 problem and everybody thinks okay this is bad so the government needs to make everybody whole the government can't make anybody whole because the government has no money the government relies on the people you know this is one of the most startling aspects of this but you know they keep evoking world war ii like oh this is like world war ii right we we have to sacrifice like world war ii well we're not during world war ii the government came to the people and said we need your money to fight this war and so taxes tripled right in 1941 fewer than three percent of the american public paid the income tax by 1942 better than 30 percent of the american public paid the income tax they introduced the withholding tax for the first time in 1942 there was no withholding tax until 1942. so all of a sudden people started having taxes taken out of their pay that weren't even paying the income tax and then on top of that the government said you know we just tripled your taxes but that's not enough to pay for this war we need you to really step up and buy these war bonds we need you to loan us all this money and so the american people stepped up to the plate and loaned the u.s government the equivalent of trillions of dollars out of their savings that they had and of course other things that they did is they stopped going out they didn't go to restaurants they didn't take vacations they took all their income and loaned it to the us government so we could fight the war so it could take 15 million americans and clothe them and feed them and supply them in europe and japan right that's what we did so the people supported the government now what's happening now the opposite the government is saying we have a crisis so we're going to cut everybody's taxes nobody has to work any harder we're going to print all this money right nobody we're going to bail out all these businesses if it was that easy why didn't we do that during world war ii you know why didn't roosevelt say hey we the japanese just bombed pearl harbor so we're going to cut everybody's taxes right yeah we don't need you to buy these war bonds we're just going to print all this money you think we could have won that war by printing money we'd have lost in a heartbeat you know you can't print those tanks and and bombers and all the stuff that we had all those resources that see the resources needed to be freed up for the government to use them so the private sector had to give up the resources so the government could have them it's the same thing now the government cannot support the people that's what americans are everybody is looking to the government to support them and so that attitude has to change people have to realize things are really bad and there's nothing the government can do about it they can't make it better they can't give us checks they can't bail us out we have to roll up our sleeves and bail ourselves out by working hard right by saving and producing but that's going to be a bitter pill that the public has to swallow and there's not a politician in america that is going to ask a voter to swallow it so the real problem we have now is that capitalism has been so discredited over the years by the damage that socialism and central banking have done when we get this massive inflation and dollar collapse you know the politicians are going to say this is why capitalism doesn't work those greedy speculators those evil corporations have jacked up these prices they're profiteering they're price gouging we need the government totally to take over the economy this isn't fair this isn't right right and it is a rallying cry to go all in on on socialism and for the united states to come to become a complete totalitarian state right where they're not just ordering us to stay at home because of the covet virus right because now they because they've already basically established that precedent right hey they can they own us they tell us what to do uh so i mean i mean we were primed for that so it's a very very scary uh uh you know circumstance that we're heading to right now not just you know as an investor but as an american as somebody who likes freedom uh because you might not just lose your money but you'll lose your freedom too well the purpose of this whole series is to flatten the economic curve by getting more people informed about what's going on i think a lot of people when that world war ii argument comes up the idea we weren't the world's reserve currency back then that happened after world war ii and the thing that empowers all of this government bailout is that world's reserve currency status and i think that we've made that clear that if that changes america changes dramatically and i think a lot of americans don't understand that okay so that's what russ it's not about if that changes it's about when right it's going to happen at some point because the longer it is the reserve currency the more unsustainable the imbalances get because the longer we have the ability to do that the the the longer we kick the can down the road so instead of solving our problems they get much worse and so inevitably there has to be a crisis that is precipitated by the dollar losing that reserve status because until we lose the status we will never act preemptively to preserve it because there is no motivation for the powers that be to ever do that right because all they can do is see to the next election and so why should they precipitate a crisis that might not happen until after they're re-elected and so there is no impetus to do anything about it it will not end until there's a crisis that is caused by the dollar losing that reserve status so it is inevitable it will happen right the only question is how much time do we have right so it always reminds me of you know the clint eastwood's line you know do you feel lucky yeah because that's all it's about right do you feel lucky do you want to take a chance and hold on to your dollars right all right well there's peter's ship we're gonna hear more from peter when we get to our panel discussion at the end but uh great stuff as always my friend thanks for being with us today all right hey appreciate you guys having me and of course remember i got my own podcast people could check out the peter schiff show at shiftradio.com i've been doing more podcasts you know put them up on youtube uh audience is growing there i got about i think uh 340 000 almost uh youtube subscribe follow you know subscribers uh people listen on shift radio uh but most importantly is do something you know don't just listen to what i'm saying but act on the advice that i'm giving and don't worry that i've been giving it too early right just make sure that you're prepared uh because if you wait too long then that's it right once the dollar collapses there's no turning back the clock so you know contact me at europe pacific capital shift gold to get your gold and silver uh you know if you're outside the united states you can go to europefunds.com and you know you can contact us we do the asset management from puerto rico i've got my five mutual funds by the way there people can buy them at schwab fidelity e-trade all these different brokers have my funds on my on their platform including my gold fund which you could buy so you don't actually have to set up an account with my broker dealer although we're happy to have you as clients and work with you directly or set up separately managed accounts and manage portfolios directly of foreign stocks with dividends or gold stocks but you can buy those funds at your discount broker right now and i would suggest that you move uh quickly to do that or you know discuss it with one of my representatives get the phone number and everything at the website at your pacific capital it's your pack.com is the url all right that is perfect there's peter schiff peter as always thank you for your time and your gigantic brain always good to see you thank you well there you have it we warned you what a fire hose the amazing peter schiff yeah peter's great and i think one of the things about peter is peter thinks in terms of principles he understands the mechanics of the financial markets he understands when they aren't functioning right even though some of the outputs can be manipulated or some of the reporting can be spun to try to hide the reality but he has the ability to cut through all of that and see the foundation see the structure and he as you heard is convinced that the structure has some fundamental weaknesses that are going to be exposed under the pressure of this crisis time will tell whether he's right again this time but i think he's somebody that you definitely need to pay attention to and consider what he has to say and more than that think about how you can organize yourself so that at the very least you have a plan b just in case peter schiff is right again boy i sure wish we had listened more intently to peter in 2006 but i'm sure glad we're listening now you also want to tune in in our final episode when peter's going to share some other pretty cool ideas hey episode four is up next and it's gonna be a great one our friend nomie prinz is going to be with us and she is a prolific author but she's also a bank insider she's worked with chase manhattan bank bear stearns and goldman sachs and got out she has a lot to say she's got great books including collusion it takes a pillage and all the president's bankers you're gonna learn from her like we learn from her in the next episode next up know me prinz hey everyone thanks for watching before you go three things number one click the subscribe button because when we have more subscribers it makes it easier for us to attract better guests to share great content with you number two is click the notification bell to be sure that you're notified when we put up new content this is obviously an ongoing situation we're going to have continuous discussions about it you're going to want to make sure that you're kept up to date and then number three is make sure you share it tell a friend help us flatten the economic curve by getting more financial education out there to people who need it okay so you know what to do click the subscribe button click the notification bell and we'll see you in the next video systems break and suddenly your family friends and neighbors are distracted with wall street stock indexes and washington political pandering many are unaware and unprepared like cova 19 ignorance of looming financial perils is also a disease and the system is fragile but you can help financial education is the vaccine share this free video series while there's still time alert people to these serious issues if things turn quickly the financial support system could be overwhelmed to the point of collapse help flatten the curve and reduce the impact on the financial system wake up more people to prepare you have nothing to lose and a lot to gain share this video directly or invite people to visit crisisinvestingseries.com

Channel: The Real Estate Guys Radio Show

Views: 868,774

Rating: 4.7601242 out of 5

Keywords: Robert Helms, The Real Estate Guys, COVID-19, coronavirus, covid-19 investing, covid-19 investment opportunities, post covid 19 investments, 2020 economic recession, 2020 economic crisis, 2020 economy, 2020 economic crash predictions, covid real estate investing, coronavirus crisis, Peter Schiff, the gold standard explained, reserve currency history, inflation, schiff radio podcast, ecomonic crash predictions, 2020 ecomonic crash predictions, Russell Gray

Id: 7hJC-OZI6PA

Length: 50min 53sec (3053 seconds)

Published: Mon Aug 10 2020

Reddit Comments

[u/ErdoganTalk]

Just ignore his bitcoin comments