Danielle DiMartino Booth of Quill Intelligence with Patrick Bet-David of Valuetainment

in late November word had already gotten off of the mainland that there was a virus in Wuhan six weeks later the trade truce was signed with an out clause a very clever out clause that said if there was any kind of act of God pandemic then they didn't have to make good on what they had committed to buy from the United States within days they announced the first coronavirus the World Health Organization should be held accountable for not holding China accountable to providing good valid data so that the rest of the world could prepare for fewer people to die to me these are equivalents to acts of war on the part of China what is a ripple effect what happens to people what does that go they're not working the same hours maybe one of the two breadwinners lost their job your 401k has been decimated let me get this straight you can constantly bail yourself out and you can constantly go print money with this quantitative easing why the hell do I have to pay taxes the Federal Reserve came riding to the rescue and said no no go back to your spending ways borrow and spend borrow and spend mortgaging yourself up to the eyeballs how do we give you if Donald J Trump is Steven minuchin boss then Donald Trump is running the Federal Reserve right now that's not real money that's fake money that's true and I'm sure you're not as a fake money really how many laws are being broken like I'm not an attorney but I've lost count the Socialists say that we can print as much money as we want oh my gosh I mean when does it ever end the Fed is both arsonist and firefighter this is like we need a drink like oh yeah you need something stronger than anything let me say that much 75 percent of Americans have seen their income cut by at least 25 percent these are the seeds of social unrest did you ever think you would make it I feel like it takes sweet victory I know this life meant for me here yeah why would you bet on July it but we got plenty now you came in given values contagious this world of entrepreneurs we can't evaluate a haters happy run homie look what I become I'm the one [Music] so very tenders a lot of you guys have been talking about this whole coronavirus you know path what should we be looking out for how can we be prepared for it and many of you have been talking about it from the economy standpoint so we decided to bring in economists to kind of see what the effects are going to be and the person I brought in today is a special one because she got her MBA from the University of Texas at Austin got her MSN journalism from Columbia University she was the adviser to Richard Fisher who was a former CEO of the Federal Reserve Bank of Dallas for nine years and then she's been featured on Wall Street Journal Bloomberg CNBC you name it and she wrote a book I think 2017 that was published fed up and with that being said my guest today Danielle DiMartino booth Daniel thank you for coming out and being a guest it's great to be here so so when we get into this a couple things I've seen your stuff with your book I've seen your interviews I've seen a lot of the talks you've given you can go extremely technical and speak the language of folks who are in that world and then you can also go simple sure today let's try to speak to the audience of middle to simple to get a lot of us educated on what's going on obviously some of the people that aren't here over experts in this area but most of us want to learn a little bit more on what you know so having said that we've not seen a time like this in a long time what is your biggest concern today when you see all this stuff going on well so my mother grew up in South Texas with her grandparents who survived the Great Depression so she's one of the few Americans left who remember what it means to save before you spend it is not part of the American culture anymore but nor in more than a hundred years have we needed to be of this mindset or so at least we thought there's always been access to credit there's always been a mortgage there has always been a car loan there's always been a credit card if you're kind of running straight down the middle but I think what the coronavirus is going to revive is kind of our founding fathers their philosophy you know if you don't plan ahead then you'll fail to be if you don't prepare then you feel to be prepared this is Ben Franklin I'm paraphrasing him but what we're finding out with this economic shock of the coronavirus is that so few Americans are prepared so few Americans have a rainy day fund set aside in order to weather them one or two or three months and that's problematic and it gives me great hope at the same time because I think we're going to return to some of our more frugal roots in this country which has vast implications for the US economy how do we get here though I mean you know obviously you know the the coronavirus is a form some call it white swan' some call a Black Swan because we have experienced some kind of a pandemic before so we can't necessarily call it a black smile like a 911 maybe it was a Black Swan but how do we get to this point where our habits are so much leaning towards debt and constabie and that how do we get to this point well I think it's it's been something that has been encouraged by Federal Reserve policy and by politicians in America for generations plural you know we came out of the 1980s after the stock market crash which was really just kind of a blip in a longer economic cycle but we came out of that with most of our leaders saying borrow and spend borrow and spend things really got cranked up kind of in the 80s with the yuppies and the baby boomer generation coming out and spending more than they earned you know they were the first generation to take on as much debt as they did and we kind of saw this hockey stick of increase in credit card debt for the first time that was accepted across the country and you know towards the end of the dot-com era I mean we it's hard to even think back to 1999-2000 when everybody was trading stocks and insider trading excuse me day trading and you couldn't go in a taxicab in New York without the taxi drivers saying this is I got a hot stock tip boy and you have a hot stock tip for me that kind of imploded and Alan Greenspan to resolve this took interest rates to our officialy low levels and kept them there for a long time at the same time you had financial innovation as are the words that they use and all that means is opening up the debt box to where you know what were we saying at the height of the last housing boom if you can fog a mirror you can get a mortgage there were people's dogs who were getting you know the credit card applications in the mail I remember late on in the credit boom I had a six-month-old son my firstborn received a credit card application in the mail its six-month this one got excited a card application has a mail in the mail and that was kind of the apex of people using their homes as ATMs this was this was you know what Jane and Johnny and Maria they can all go to whatever college they want to go to because I'll just take the money out of the house to send them we can go take the Disney vacation we can't afford I'll take the money out of my house and send him so the mortgage bubble kind of took debt in America to a whole new level and then that imploded and we find ourselves over a decade later and now in the current iteration in the current cycle we've bought more car than we can afford to drive buying a $60,000 pickup you don't blink an eye because maybe it's a 7 or an 8 year loan term and as Americans I think we've kind of lost our way because we don't look at what we earn compared to what we can afford we look at whether we can make the payment and just get by and that type of mindset is what has left an entire the largest economy in the world as vulnerable as it is as this Black Swan whites won't call it what you want but that's what's left us so vulnerable is that we've just done what we need to do to just get by paycheck to paycheck to paycheck and not set aside anything and now we find ourselves with record mortgage forbearance and people walking away from this and that debt because they have absolutely no choice how do we get here on this sense of when I'm when I'm asking this next question because it's the same thing as before how do we get here in the sense is this our fault of people's faults or is this the decision-makers fault on making it looks kind of like the following you know you are living in a family and your dad lowers the standards and it lets you do whatever you want to do your parents let you kind of do whatever they want to do and then a kid goes out and says you know what I'm gonna go try to smoke weed and this other girl she introduced me to this drug and I'm gonna go out there and party state till two o'clock in the morning you're sixteen years of coz no one cares but is it our fault or is it the decision-makers fault that we got here I think placing blame is is short-sighted because I think the blame has to go around I think that policymakers and the reason I wrote fed-up in the first place is that at the highest level especially if you're economically vulnerable or if you're not you don't know everything that there is to know about finance it's not as if they teach it in high schools much less colleges as a requirement so Americans aren't financially illiterate by the design of our educational system so you get the politicians and you get the heads of the Federal Reserve and they encourage this so you're saying well that's a leader and the leader is telling me how I should run my budget and so they must be right Ben Bernanke you know at the height of the housing bubble was saying that that there's no way that home prices decrease on on a nationwide basis well that's not true it did happen during the Great Depression but you're being told by people who sound really smart that you're making the right decision and at the same time though you have to go back and say hey you know you're living from paycheck to paycheck you realize it you know if you're not setting any money aside for a rainy day you know if you're sitting in the in a car dealership and you're being sweet-talked by the finance manager you know that it might not be six hundred dollars a month that you can really afford it might be more like four hundred and fifty dollars a month and you tell yourself but they're gonna let me do it and so I will so I think you have to say that it was encouraged at the highest levels and shame on them but by the same token I think households have deluded themselves for a while as well because we've become an instant gratification Society that's a multi-generational statement by the way I mean you've got an entire generation of baby boomers living in way more house than they need right now their children may need it and maybe moving back in with them but I'm not trying to pin this on the Millennials per se who are experience and spend all of their their disposable income on great vacations and the latest iPhones now I think this carries across multiple generations and I think that Millennials learned a lot from their parents who also lived beyond their means so generationally so you're not saying this is a government thing this is not us because you know how you travel and you go places I always travel when I go places I asked the driver so tell me about your house what's a house go for here this much how much you financed your house what do you mean how much is your finance you know how much you finance your house I didn't finance my house you're at the Caribbeans what do mean you didn't finance your house you can't find any stuff here what does that mean you can't find our stuff here if you buy a house you have to buy it cash yep what do you mean you have to buy cash so if you don't have yeah like my house right here fifty fifty thousand dollars my wife's parents and my parents helped us and we bought this house so you don't have any payment on it we don't have any payment on it right so that that's very normal for a lot of people in different countries that's right we're in the u.s. it's kind of like well you know I can buy that house and finance that ninety-five percent or ninety percent over back in the days mean a hundred percent you know and my payments only going to be two thousand dollars a month and I'm financing a $250,000 house that that part to me is if we allow that to be the norm well the people are gonna take advantage of it okay so you know the chicken and the egg story I'm curious to know who started this standard because there has to be somebody held accountable to this year yeah I run a company if in our company a mistake happens or we take a hit all the you know points-- you know everything's gonna be pointed at me like I say well he's the CEO what you do how come you to make the right decision right how come you didn't go raise more money out of town well you know for crisis was gonna happen that we could maintain our status and all this other stuff fair enough on the seal someone has to be held liable for the yep you're an economist you're an expert I know I read your stuff you try to be as diplomatic as possible because you're trying to respect your peers and the industry you're part of who started this I'm trying to figure out who is liable for starting this mess so you know it I would say that it goes back to a democratic or a Republican administration but the truth is when the Community Reinvestment Act was was came about first of all let's go back a little bit further we're in Texas the Savings and Loan scandal happened here in the aftermath of this great crisis where Texas was the epicenter you had homes clear at fire sale prices so you had mass foreclosures and but you also had people come in who were going to live in the homes and buy them on the cheap and then the market cleared and it was ugly and it was messy but the market cleared contrast that with politicians really enjoying saying that owning a home is the American dream and you can cross that from Clinton to Bush all the way on through Obama but the thing is they were telling Americans that owning a home was the American dream what they were really saying was more to mortgaging yourself up to the eyeballs with the assistance of a federal agency then you get to feel wealthy you're not actually wealthy you've actually become an indentured servant to this great big mortgage market which is the largest debt market on planet Earth larger than the US Treasury market I mean it's it's multiples of the size of the US Treasury market and politicians found out that people enjoyed feeling wealthy even if they weren't and again we were not a country founded on the ideals of debt equals prosperity no no you save you invest you prosper and having Fannie Mae and Freddie Mac and the FHA extend extend extend increased eligibility for mortgages I mean when my when the Vietnam War ended in San Antonio Texas you know my parents borrowed money from the parents and with the help of a VA loan they barely got a mortgage and it was known for their generation that they were supposed to strive to pay that mortgage off before they retired you certainly don't go into retirement with mortgage debt and yet here we are in America today and the majority of retirees still carry mortgage debt think about that you're in retirement and financially vulnerable I know it makes it but it is what it is and it's the culture that we have accepted and we've been told by our leaders that it's the way it should be who's questioning them oh I think right now mother nature is questioning them I think right now the coronavirus is questioning them I think that there is going to be a severe cultural backlash where families feel the pain enough to say and make decisions on their own if they're encouraged to take on debt sure we're going to go back to our ways in a in some sense of the word but there are predictions right now that unemployment could surpass that of what we saw during the Great Depression I mean these are unfathomable numbers that we're considering in America during at the apex at the height of the Great Depression one in four Americans were out of work in two weeks time two weeks time we had 9.95 nearly 10 million jobless claims in America in two weeks time we got to one in 16 Americans and what we know from studying Google Trends you can you can track any word on Google Trends right now if you track unemployment insurance it's really popular especially in Texas and in New York and in other states where there's been a tremendous backlog Florida is going to be coming up big-time because they have such an antiquated unemployment insurance system that people can't get through to file the unemployment insurance claims that they need to right now but what we know from studying Google Trends is that the third wave was even bigger than the first and the second waves as other states went in to shut down so we haven't seen the worst of what we're going to see in terms of the ranks of Americans who are unemployed they took a survey just overnight 75% of Americans have seen their income cut by at least 25% in other words even people who are keeping their jobs aren't making the same amount sure they're not working the same hours maybe one of the two breadwinners lost their lost their job you've got your kids at home online schooling and you're trying to do your job even if you are working remotely you may as well be on your roof trying to get your job done and inform a sentence I'm a writer I mean I write and conduct research and it's things work out really well for me around 4:00 or 5:00 a.m. when the whole house is asleep but this is this is a cultural shift is what I'm trying to say this is unlike anything generations have seen since those who survived the Great Depression so mother nature is holding these people accountable with coronavirus a cake or a virus which and I'm not saying it's revenge or anything about nature I'm just saying it's it's shining a very bright light I totally get it it's kind of it's it's a it's highlighting a lot of the things that they've been doing that we haven't been prepared for and now hey you're being held accountable what are we gonna do now I get that part when we read you know the articles that say unemployment is projected by the end of second quarter to be at 30% and just kind of you read it you're like yeah it's gonna be at 30% you know you know you're looking at the news it's gonna be at 30% it's gonna be at 30% let me skip the channel then I'm gonna go to this next one 30% is 30% what what does that really mean if you were to unpack so and here's what I mean by unpack 30% if we were to unpack 30% consequences so ripple effect if we go to 30% 75% is minus 25% of income right now of Americans one out of four was unemployed back in a great depression 30% means one in three point three so we're gonna go into some tough times what is a ripple effects and what industries what happens to people economy safety what does that go what could I look like so you're asking the key question here because for as large as the fiscal stimulus is and we've already got two trillion out there the Federal Reserve's going to lever up by a multiple of ten four hundred and fifty billion dollars so that they can keep a lot of businesses still in business some of which may or may not deserve to go out of business but we'll get to that but the fact is from what we know today the stimulus checks aren't going to hit until when a lot of Americans have been out of work for six weeks or more the time the actual stimulus money hits their accounts six weeks well it was three weeks from the time of the signing of when Congress passed the legislation and it was signed into law and by then there were plenty of Americans who had been in shutdown for two or three weeks so there have been a lot of people who have been trying to get by on god knows what that's why you've seen wealthy Restaurant tours in major cities open their restaurants back up on their own dime to feed people who don't have food we're talking about red lines that you read about in history class in middle school people who don't have food and let's let's stick with restaurants for just a second the the percentage of restaurants that are never going to return never is tremendous what do you mean by that never going to return never going to reopen never going to be able to find the financing your average restaurant has two or three days of cash flow on hand a great restaurant maybe has one or two weeks of cash flow on hand but they've been asked by the government to keep all of their employees employed and wait for the Small Business Administration loans to come through and float them through to the end of September a lot of business people in America did the math and said this isn't going to work and I can't tell you that the demand is going to be there at the end of the second quarter best-case scenario I don't I you can't tell me that as many Americans are going to go out and spend the way they used to you can't tell me that as many Americans are going to go to concerts go the movies go to sporting events go to music festivals get on planes you know something of this magnitude I mean there's a headline that hit today there are more New Yorkers who have died as a as a as a consequence of the corona virus then what then what died on 9/11 you know I was I was in New York at the time I worked on Wall Street at the time it's something that reshaped my life and the way I viewed the world now magnify that spread that across a nation we're gonna change the way we spend and if we change the way we spend we're not going to need to tap into as many services as we once did as a nation so what I'm trying to say is let's say we get to 30% unemployment and let's say the worst of the virus has passed that doesn't mean the economy is going to heal overnight it might take years and that's what people are not factoring in because if you have something of such magnitude that it changes the way you view the world and it changes the way you view spending 2019 was an extraordinary year in American history business investment had clamped down appreciably we had a trade war going on in the background there was a global economic slowdown China in the United States weren't there weren't Chinese people coming in and buying us home so so there were a lot of things that didn't occur in 2019 to offset it was the American consumer was the US household consumption is typically two-thirds of the US economy that's the way it's been year in and year out for a very long time in 2019 consumption was 90 percent of the US economy as the Federal Reserve did everything they could to elevate the stock market keep risky asset prices up keep people feeling wealthy because they look at their 401ks and spend and spend and spend and spend beyond their means ninety percent of US gross domestic product in 19 was consumption I can't tell you when we're going to get back to a normal world of two-thirds of the US economy being consumption because of these massive shock that this is placing on US households and the way that they're going to perceive money going forward is going to be a tremendous change so you're saying even after this we go back to business as usual the recovery is not going to be immediate because you have two camps right now right one camp is saying the moment this thing clears it up we're gonna have the economy's going to go back to $30,000 gonna hit 30th ow everything's gonna go back to you know business as usual people gonna go back out and they're gonna do what they're doing you're saying no it's gonna take a while for us to recover from this your argument on it taking a while for to go back to recovering from this is it based on the fear people now have that's gonna take a while to recover from still the concerns are being around too much traffic we're not gonna go back in the habit of going to sporting events games are you saying the habits and the fears of people's gonna take us to go back to business as usual are you saying more the financial decisions we're making right now of these businesses going out of business going to take us to recover which part are you kind of saying there's a more mindset or is there more business well you you've described waves one and waves two there's going to be an initial reticence and fear among people in terms of being in in densely populated events where whatever they may be so that's your initial fear factor but what I'm speaking of is what comes behind this is a realization on the part of your average working American that they need to save more in the future that they will never again wake up and say why am i feeding my family ramen why didn't I think to why didn't I set money aside in my last life is that a good thing oh I think it's eventually going to be a great thing but it is going to mean that there's that the coming recession the recession that we already know that we're in is going to be more protracted and drawn out than what many are right now assuming as a base case this could almost be like a filtering process to take us back to the habits that work you know it's are you saying almost two you know how you talk to the generation that came from the depression they're always a little bit paranoid they're always a little bit more worried there are always a little bit more like cautious you know when you talk to people older they're always a little bit more paranoid because they've experienced a lot more things are you saying that this generation may pick up a little bit of the habit and a mindset of the Great Depression generation of being more paranoid than before because if that's the case I actually don't think that's a bad thing I don't think it's a bad thing and I think that it's long overdue in this country but it's going to change the way the economy operates on a fundamental level you're going to perceive if you right now are stretching your dollar to fill up your grocery cart when this is all said and done even if your income goes back to what it was before hmm you might not be saying I want the high rise at Disney in the full package for the family you might get in the car and drive somewhere and go camping if you're at the store you might not say you know what I'm going to buy that lovely pork tenderloin you might buy the pork chops you might be more frugal in the way you approach everyday purchases because you were forced into being frugal because of this because you were forced to overnight make a budget and live within it how different is that then oh wait because even in oh wait if you remember guys were buying condos in Vegas for $700,000 $1,000,000 you know just put another one I'll buy another one I'll buy another one and everybody had an S 500 everybody had a nice car Porsche Ferrari danwon all wait help market tank 39% were like I'll never do this again so we kind of went back to good habits for two or three years and then we went back to our back bad habits again how different is this from that the difference is that the government then was able to come in with many programs and mortgage modifications don't go around there were ten million foreclosures in the United States it was a tremendous hit but there were still many mitigation programs at the time and the Federal Reserve had actual traditional tools the Federal Reserve was able to take interest rates from four-and-a-half percent down to the zero bound they were able to inject stimulus into the economy whereas today they're starting at the zero bound the country had never known what a printing press was the country had never known what it was for the Fed to try and inflate financial markets which they successfully did they were able to come in and keep zombie companies alive that otherwise would have gone out of business in a regular business cycle we did have our wrist slapped but the Federal Reserve came riding to the rescue and said no no we're here we're here to back you go back to your spending ways maybe you can't get that mortgage you wanted but by golly we're gonna take interest rates down to the zero bound we're gonna have private equity investors come swarm into neighborhoods buy up homes that otherwise would have gone to millennial first-time homebuyers for fire sale prices that didn't happen you had investors swarm in because anybody that had deep pockets could borrow more with interest rates at 0% you had the government borrowed a kingdom come so you had a very quiet expansion of the social safety net so you ended up keeping a large percentage of the US economy of the u.s. workforce excuse me on the sidelines years later we ended up with eight with a skills debt with a lack of skills in the US workforce but part of that was also because so many Americans were able to stay out of the workforce and even access credit all I'm saying is we have companies that are still in business today because the junk bond market opened wide back open we have a lot of the rot from the last financial crisis that we were able to basically refinance if you want to think about it that way kick the can down the road not eliminate or clean up just refunding not eliminate not clean up keep the overcapacity in the system keep more people employed than the otherwise would have been throughout the crisis but you don't come out better and stronger for it you just feel like you have because you've taken on that much more debt so that leads to a lot of different questions we're gonna go to negative interest rates because if you're gonna form four and a half to zero you know where you're gonna go from zero to what that also brings me to quantitative easing which we'll touch about here in a minute and obviously the Fed which will get to a hundred percent but before we get there you know I have a complete different thing that I was curious what you would say so pre coronavirus take coronavirus off the table right I'm at a Goldman Sachs event where the chief investment officer speak in and she's eloquently given a message of how they foresee the economy being and here's what's gonna happen we're not too concerned about the coronavirus this was at the beginning stages second week of January to give them a credit it wasn't like it was a second week of February second week of January we're not really thinking this is going to get out of control the peanut you know the are not score is not that high we're it's not gonna spread but take coronavirus out go to 2019 were in July okay us-china trade war still going on and that's what I still gonna go a little later in December Saudi Arabia and Russia is going on you know we have a wall go now we have election going on we have the divisive nests and Democrats going on we have a hundred and twenty nine months of economic expansion going on the greatest ever we've never had 120 nine-month economic expansion so if coronavirus doesn't happen set that aside we don't have anything that comes out of one we're good to go there is no coronavirus today are we going to get to where we are today regardless of coronavirus or did coronavirus have to happen for us to be in shambles that we are today with the 2.2 trillion dollar stimulus and they're projecting another ten trillion dollars that's gonna come out possibly in the next month or two so what's the difference so I think the difference is magnitude and speed we knew by looking at the data that things were getting very very stretched and we saw that if you took out fleet sales for example I'll just take one example car sales if you took out what the car rental agencies and what corporate corporations were buying for their own fleets if you took that out you saw four years in a row of declining retail car sales in America if you looked at the employment sector we got our last clean read free coronavirus this morning of job openings we were seeing weakening on every front of the job market prior to the groan of IRAs hitting this was a very slow moving slowdown but it was definitely a slowdown if we looked at data out of Germany if we looked at data out of China which pre coronavirus was was growing at a 30-year low Germany was slowing as well so and this is again this is all pre coronavirus so would the Federal Reserve have been able to float the financial markets through the election because they were so aggressively keeping interest rates and artificially low levels and they were so aggressively growing their balance sheet even though they were calling it not QE could they have floated the US economy through the u.s. election possibly possibly but we knew those of us who worried about these things knew that the bubble was getting to be so big in the corporate debt market and the bubble was getting to be so big in the stock market that the littlest thing and I've been saying this for probably a year now that we are one financial shock shy of the Federal Reserve having to come in guns blazing and give a whole new meaning one of my clients said the Federal Reserve didn't come in with a bazooka they came in with a neutron bomb I agree but that was what was required because when you try and buy time and time as the factor of time gets more expensive that's what happens you inflate bigger bubbles and we walked into this huge coronavirus event more indebted as a world and more indebted as a country more indebted as a sector 74% of u.s. GDP almost 16 trillion dollars corporate debt non-financial corporate debt in America never seen these levels consumer debt higher than it's ever been remember what we talked about earlier if you're joke you homeowner and the mortgage company says no more no mas you may not take equity out of your home cash out refinancings are over and yet as a society we're still told we better get that four-year degree so now we have 1.6 trillion dollars of student debt on our hands because something had to pay for it so student debts paid for it and now we've seen credit card debt get back up to over a trillion dollars and now we've seen car loans get back up to well over a trillion dollars so yes we don't have the same amount of mortgage debt in America as we did in 2006-2007 but boy we've met up for it big-time in other areas so whether you're talking about the world over 250 trillion dollars of debt the US government corporate America or US households we've all been up to our eyeballs and drowning in debt again that led to 15 questions but let me ask one of them just out of curiosity the world has 250 trillion dollars of debt which is a lot of it is credit but we only have around 50 trillion dollars of currency how is that possible you know what I'm asking right we have 50 trillion dollars of coins and currency we have a quarter of trillion dollars that 250 trillion dollars of debt we have a lot of good faith based on the the prowess of the US printing press I mean the United States maintains reserve currency status that's very money though that's not real money that's fake money that's to ensure you know those are fake money oh really I know but it's all based on faith how long is this - how long is it sustainable though how to go at that pace in theory and if you listen to what you're being told everything's going to be ok trillions and trillions and trillions of dollars with the United States and the lead the United States by far visa vie any other countries taking on more debt to address the coronavirus that anybody else on the planet including China that's saying something and we're being told that it's all going to be fine because you can just have the Federal Reserve which is what they're going to do this year finance all debt that's being taken on put all of it on their balance sheet we came into this with the Federal Reserve's balance sheet some are in the neighborhood of four trillion it is likely that we will get into double digits and trillion dollar that's a scary thought you know I'm looking at all this stuff and to me everything the leaders bulletin and I think someone's going to come out the winner here from coronavirus I do think oh this is showing us that we need a strong leader oh I think behind closed doors there is and I'm going to go to an empire that I'm looking at that it's gonna be crazy for me to give them credit but strategically I think they have been poised for this to come up so here's some data here China's national debt is five point two trillion dollars that's what they have right and their GDP at their debt to GDP but before I get into this how much do you as an economist look at the debt to GDP ratio is that a big factor do you look at that as a big factor or not really it's not a big concern I think it's a huge concern it is so yeah and now that we know that it's truly Milton Friedman behind me I always adhered to his philosophy that there is no such thing as a free lunch you can buy time I mean God knows we've seen a lot of time purchased bought but we haven't seen it paid for so yes I think that there will be ramifications okay so when you're saying that as an economist you do look at nations and say Japan's at 221 percent debt to GDP ratio they're about to have a massive recession taking place that's going to take them a couple decades to recover do you go to extreme measures when you see numbers like that or it's not a measure point that you look at and say that's a very big factor well it really is a country-by-country basis and I don't want to I'm not trying to back out of a question but internally in Japan they own their own debt their fates not necessarily tied to other countries which means they're not beholding to the kindness of strangers unlike the United States where Japan owns a trillion dollars of US Treasury debt China owns over a trillion dollars of US Treasury debt we assume that we can take on as much debt as we possibly can imagine in that our borrowing costs will never go up because we just assumed that we're number one it too elaborate what you just said is that is that in a sense of saying you know we're married we have a family the bed David family only borrows money from bed David family okay that's Japan but us the family here borrows money from anybody strangers whoever as I can't is that a good way of putting over Japan versus us because we're borrow from anybody and we also borrow from ourselves and we the Treasury issues it and the Federal Reserve buys it so then if that's the case let me give you this number and tell me what you think about this China's in debt five point two trillion Brazil's that two trillion Japan's got nine trillion and if you look at the debt to GDP ratio Japan's at the top of 221 Greece 179 which could pretty much know why Portugal 138 Italy 138 Belgium 115 u.s. 106 Spain 106 UK 86 France 98 point for Germany 62 you ready for this number Russia 17% and they bought 400 tons of gold the last couple of years a lot of these nations that have their gold have been sitting on the same amount of gold for a while but Russia has been coming up on the gold leaders bulletin why are they at 17% their debt by the way Russia's debt is 217 billion I don't have it written anywhere here but many billions on your page you're only after alien trillions Russia is only a two hundred seventeen point three billion dollars as of February of 2020 I believe mm-hmm are they looking at the saying we're gonna make a vertical move in the next couple years here because we're a little bit more responsible than others or no that doesn't mean anything so people ask me all the time because if you look at if you if you study the way people think and I'm talking about without naming any names the Socialists say that we can print as much money as we want that lets say that our debt right now is twenty five trillion let's round up given what we know we've just spent as a nation but the Socialists the the universal basic income say that you can easily double it and because we have a reserve currency status and because we have not seen inflation in generations we're going to get away with it in our borrowing costs are never going to rise and as long as our bar cost never rise and inflation never reared its ugly head then we can borrow to kingdom come and when these things work they work until they don't work but at some point if the rest of the world begins to push back let's say certain countries emerge stronger from this global recession than others it tends to be if you're going to make a move it tends to be he who has dry powder the least amount of debt the most hard assets is able to assume more leverage and power than they otherwise would based on looking at the size of the country's economy in other words to your point Russia has not weakened their balance sheet they've strengthened it and their long term planners China's a long term planner as well China has a ton of debt but China also has been a lender to many nations with natural resources throughout the world and quietly been colonizing a big portion of the world and they happen to have an ally in Russia so you can connect many dots no doubt about it theoretically no doubt about it but all of this debt we're taking on does weaken our position on the global stage I think you're saying theoretically because you're being diplomatic but I think that's more than theoretically by the way China's number if you can verify this guy I just want to verify this if I'm saying this if I'm incorrect please let's correct it I believe China's debt to GDP ratio is 50 point five percent which is also low with Russia of all the names I said they're low with Russia so it's interesting how the place I will push back a little bit though because if you add up all of the different sources of debt in China boy they're there 300 or above 300 percent if you if you corporate debt household debt and the fact that there's a lot of state debt that runs around in places that isn't really identified if you did that with us where would we be if we're right now 106 if you apply the corporate debt and everything what would we probably in the upper 200 so there's still higher than us if you if you take everything on voice yes okay China is still higher than us if considering all forms of death that's good to know so now 123 trillion dollars us collected liabilities that we have how do we pay that off I mean this whole thing about debt that how do you pay off a hundred and twenty three trillion all right I don't think there's any kind of an assumption about paying it off I think there's there's an assumption about carrying the debt how long is that gonna be carried I mean it's hard to say look this is you know there are there there are so many the next generation of constitutional lawyers is going to be very busy states cannot declare bankruptcy it is against the Constitution of the United States for the state of Illinois for example to declare bankruptcy and we know from what we've heard out of Illinois initially that they're going to stop making some payments that there's the potential for the first time since the Great Depression for a state to default on its debt but the federal government is not legally able to come in and bail out Illinois theoretically they're breaking a lot of laws in DC right now so I'm sure that they would just pass a special legislation of some kind and come in and do it but that would be questioned constitutionally what the Federal Reserve is doing right now is also going to be questioned constitutionally because the Federal Reserve cannot buy corporate bonds but by setting up a separate vehicle through the Treasury Department a special purpose vehicle takes me back to my days of studying Enron off-balance-sheet financing that's what the government's doing right now and by a seating control to the Treasury the Federal Reserve has has lost its independence if you want to take the argument to an extreme if Donald J Trump is Steven minuchin boss then Donald Trump is running the Federal Reserve right now and that's legal that's law because there's four point five trillion dollars that's going to be directed via the Federal Reserve and the Treasury and Donald Trump has said that he will not answer to anybody even though he has behaved and he's appointed an inspector general from his administration but there are things happening in America right now and you used it asked me about entitlement spending and that's what brought public pensions to mind so quickly and that's what brought the state of Illinois to mind so quickly there's an assumption that there will never be a price to be paid but if you think about what the average American households about to go through there are the makings of a third political party in this nation to question what is going on it's very easy to see because right now there's a large a large percentage of the US population that has no voice this has been said for a while though you really thinking we can have a third because everybody's been saying third political party third political party and by the way it'd be a great one but we've never had critical mass but you aren't you and I are talking about 30 percent of Americans being out of work critical mass right there you've never had the critical mass but you've never had this many Americans who are going to be focused on who is and is not representing their best interests how do you tell between the I mean everybody can say they have you as their best interest how do you how do you tell that apart you know because behind closed doors who's really leading these guys that you said Trump let me read something to you a tweet he sent out back on September 11 the Federal Reserve should get our interest rates down to zero or less and we should then start to refinance our that interest could be brought way down while at the same time substantially lengthening the term we have the great currency power and balance sheet and us the US should always be paying the lowest rate no inflation it is only the naivete of Jay Powell and the Federal Reserve that doesn't allow us to do what other countries are already doing a once-in-a-lifetime opportunity that we are missing because of boneheads this is 9/11 2019 this is pre coronavirus to understand that we'll go from four and a half to zero he did not know that we're gonna need more for that you read that you hear me say that what do you think about it well he's using the example of the country of Germany that is effectively paid to take on sovereign debt of course Germany is also very frugal and their balance sheet could stand up to ours and but if you think about a bank let's let's take this to its most simple terms a bank is in business to borrow at a very low rate and lend out money at a much higher rate and the difference between those two rates is where they make money and why they're a bank why they stay in business if you take interest rates to a negative level a bank has no reason to be a bank anymore the bank should just close its front doors and go away that's what you're talking about if you're talking about negative interest rates in America that's how impossible it would be that's how crippling it would be that's why the Japanese bank stock index is down 90 percent from its highs because the Japanese banking system has been crippled by negative interest rates that's why the European banking system that index since negative interest rates were imposed is down 40% negative interest rates are very much not they're anti-american they're unpatriotic they should never even be considered and 2j pals credit and those are not words that I use often he is pushed back against negative interest rates because he understands the Pandora's Box that that would open with all due deference to our president let me ask you a question President Trump obviously has never been a China fan and not in last decade he's not going to China fact he's tweeted about he's talked about it certainly said China is not a friend he's not an ally so we know that right and I think we actually know that yeah we know that well so the question I want to ask is has he been a fan of the Fed pre becoming a president as somebody who's in real estate that's how he's made as well okay is he a fan of the fad or did he always have issues with the Fed because I'm going somewhere with this mm-hmm this is he been a pro or you don't know if you don't know the answer it's fine if you know no when he was campaigning he was he was very open and adamant about saying that the Federal Reserve was inflating a stock market bubble with artificially low interest rates that's what he said on the campaign trail so that's a matter of public record so let me ask you this question is is there a possibility even a possibility that he is wanting to do whatever he can if it's even possible to bankrupt the Fed the Reserve Federal Reserve to bankrupt the Fed I mean you can't you can't bankrupt the Fed you can you can always bail the Fed out if your Treasury I know you can but to get a two point what we get is he trying to break the that's what I'm saying to go to a point where hey we learned our lesson now we have to get away from it is there any possibility that's the direction he's going again the Federal Reserve purchasing corporate bonds is in direct violation of the Federal Reserve Act of 1913 that law has been thrown away with the stimulus package because through a special purpose vehicle the Federal Reserve can through Blackrock a massive firm by corporate debt and put it onto Treasury's balance sheet if again you take this argument to the extreme the financial markets have been nationalized and if you take the argument to the extreme to the extent that the Treasury is answerable to the administration Donald Trump has broken the Fed and this is something that is extremely difficult to get your head around I need to get out more well I think we all need to get out more we disagree on that right yes we're all gonna be happy when we can get out more but even before the coronavirus I needed to get out more so I know what the Federal Reserve Act says and when I was inside the Fed for nine years in the heat of the financial crisis it was debated as to whether we could buy corporate bonds and the answer was no and yet somehow because this crisis is a severe and Swift as it is we have said we're going to set the law side look the other way and find a workaround so that we can make sure that we don't have a full-blown meltdown in the corporate debt market by the way that was facilitated by Federal Reserve policy keeping interest rates too low for too long you would not have had a doubling of us corporate bonds to ten trillion dollars if the Fed had not repressed interest rates in the first place so one of my heroes in the world of finance is Jim grant and he's always said at best you can talk about Alan Greenspan not not imposing margin requirements in 1996 when he said the words irrational exuberance recognizing we had a stock market bubble he could have done something about it then he decided not to alan greenspan again was informed in 2003 people are getting home loans who shouldn't be the subprime mortgage things going to blow up he could have made mortgage requirements more stringent lending standards more stringent he chose not to so jim grant has always said that the Fed is both arsonist and firefighter and that is that is exactly the same exact case today so you break the Federal Reserve Act you annihilate Fed independence so that you can come to rest to the rescue of the corporate bond market that wouldn't need rescuing had it not been for Fed policy this is an old strategy Awards it's a Hegelian dialectic you know this is the Hegel philosopher would talk about create the problem you know blame it on somebody else then be the one that comes and offers solution you'll be the hero oh my gosh thank you so much for coming and saving us but you're the one that originally it's very deceptive now the question you said if that's the case Trump broke the Fed was that intentional or accidental that's the real question well I will say that the disk I will say that Wall Street was that you you knew the Wall Street had its pacifier taken away and there was minded huge whining among the babies on Wall Street saying we've got a problem here in the corporate debt market we've got a meltdown we might have systemic risk which is risk you can't contain which is risk that the Federal Reserve could not do anything about and we've got to come up with a solution for this right now so you might could say that the need was there I think a lot of people who would be otherwise known as capitalists would disagree with you and they would say if they borrowed too much and they couldn't afford to service their debt then let them go out of business so I think that you will be told that the need was there but I think that's a red herring so so let's talk about my friends who are the capitalists that will say if you borrow too much that let them go out of business do you have a problem with that because the way you said it it seemed like you do have a problem with that no I'm saying that Wall Street has a problem with that Wall Street has a problem with allowing the too-big-to-fail companies to go out of business of course they do ok I'm good I'm fine with that I totally we're on the same page sir because they get to do deals regardless a hundred percent but if you take half you know they they don't want all their corporate clients to go away these big investment banks I want them to stay in business by being bailed out but then here's the problem so what kind of a habit are you teaching if it's the constant bailouts if I know my dad's gonna bail me out every time I go do some stupid he's gonna come and paid $1,000 bail and I'm gonna get go home as ok I don't worry about it just don't do it again man what's wrong with you and I don't want to do it again and he's gonna bail me out what the hell am i learning what lesson am i learning if you're not I mean if you look at the cash flow of a major American Airlines ninety six percent of it went into share buybacks and we've just wholesale bailed him out ninety six percent went into the buybacks but right now with the 2.2 trillion wasn't there closet they can't do any buybacks F if they took any money that was part of the discussion that would have that was part of the discussion we will wait and see there's also part of the discussion about not laying people off until a certain date and time and not paying executives more than some exorbitant amount who holds the federal like you know the whole thing with the odd odd odd it never took place who holds them accountable I mean we had jeb Hensarling he was in Congress at the time he left there's very little appetite during crises to hold the Fed accountable this won't come until after we're past this and the people realize what's been done but right now Congress needs to fed badly they need the Fed to keep the stock market up they need the Fed to keep these companies in business they need these companies to keep their employees but they can't address the entire problem and now the great debate is whether or not the feds going to come in and cross the final Rubicon what I'm writing about this week asks one simple question will the Federal Reserve buy junk bonds doing something that no central bank in the world has done will they go that far will they bail out companies that are completely insolvent it's another form of quantitative easing bill well it's a form of quantitative easing but in theory even under extraordinary circumstances you're not supposed to bail out an insolvent institution I give you Lehman Brothers that was what Ben Bernanke went on national television and explained they were insolvent therefore we couldn't bail them out okay he was solvent therefore the next day we did bail it out how many laws are being broken right now I you know what I'm saying I'm saying this I'm not an attorney but I've lost count okay so oh my gosh you know the longest time you know Milton Freeman one of his hiccups was that he had a challenge with another economist was the fact that he felt you can allow capitalism do its part without any laws and it later on he came back and says no if there's one thing we definitely need we need laws maybe we don't need a lot of lawyers but we definitely need lawyers because China I think back in 2004 they had only a four in 1994 thing they only had four law schools and only 2,000 lawyers in China back in 1994 so there wasn't a lot of laws okay it doesn't seem like a lot of them it was reasoning there rivers yeah and they were poisoning their rivers of course and now going back to this when we're talking about the whole Federal Reserve to go a little bit deeper into it what have they ever gotten right because if you look at internet tech boom late 90s you oh my gosh you know look how many billionaires that was going up as some people's going up you know the mortgage oh look at this stuff this is just amazing stuff interest rates you know this is great don't worry about it it's gonna be alright Bernanke you think what have they ever gotten right so there are two people who are my heroes William McChesney Martin he went through multiple administration's was famously thrown up against a wall by LBJ and refused to back down to one President after another probably the most independent Federal Reserve Chairman of all time he was the one who famously said it is the feds duty to pull to take away that punch bowl in the middle of the party in a congressional testimony and then you had great big Paul Volcker who defied defied Reagan mutiny on his own board and was tossed out on his ass and replaced by Alan Greenspan and since then basically whatever investors have wanted investors have gotten and since then the inequality divide in America has gaped out and so I guess since Paul Volcker not much has gone right at the Federal Reserve and you've had two independent chairman in its history to how scary is it to go against the Fed if somebody's running for something and you're being too vocal about it you know ki mean Ron Paul tried to do it all say I think Ron Paul he also had another book he wrote that had to do with the feds right I think yet I don't know what the title was but he was also talking about something with the feds and he got a lot of pushback and he had a lot of independence that came out you know libertarians and independents were all for him to kind of get him going but though he can create all the momentum down to to the end can you really go to the top and go against that system a lot of enemies I and I know I've met I've met Ron but I was never the opinion that we should have ended the Fed I mean we're closer to being in Banana Republic than we ever have been but if you if you contemplate what China has done with our intellectual property and then you extrapolate that type of espionage and trickery into what they would do if our financial system was unprotected good lord they would take over the economy by force so I've never been in the opinion that we should have no Federal Reserve I've just been under the opinion that if you can't have a way McChesney Martin E or a Paul Volcker running it then you should they should be fired and that they should be they should be forced to be independent it's actually in the Federal Reserve Act that you are supposed to have a Federal Reserve Board that is from individuals who are from a diversity of industries and geographies you're not just a packet full of a bunch of PhD academics who've never had to have a payroll in their life and only have theoretical models that they put in place and say I know we should take interest rates to zero and see how much that screw savers because they have pensions for life because their academics why do you have a problem with that why do you because why do you have a problem with the you know the whole 17 out of the 17 I think you said 10 are PhD to our lawyers you know what's the biggest challenge there do you think we'd have better Fed policy after a question back back you and be Socratic do you think we would have better Fed policy if the people making Fed policy understood what it was to be on the receiving end of it you don't have to sell me on that I'm asking why why is this continuously happening because for me you can also make the argument if you go in there to say how could you be the commander-in-chief of America and you've never served the military that's kind of tough for me I mean we don't have from each end was the last time we had a president that served in a military it's right it's been a long time that's how could you be too commander in chief if you've never served the military you have to know what sacrifice means so would sacrifice lives of others which one are you more comfortable with I'm I'm I look I'm a huge patriot my my my my boy I go to a military academy I mean you're I see exactly where you're going and and again I think that the Federal Reserve Act was written in good faith and that we should have pension fund managers prior successful pension fund managers and there are a few state of Indiana the state of Utah they're actually properly met despite interest rates being at the zero bound and too low they're not taking excess risk with grandma's pension there are joke you CEOs who've not spent all of the money on share buybacks despite the temptation being there and Federal Reserve policies saying don't invest in the future you're gonna make a lot a lot bigger bonus and your stock price is going to go a lot higher if you buy back your shares instead and by the way money's free bar at will and do so but you need to have people who understand the consequences of Federal Reserve policy making Federal Reserve policy and Jay Powell was actually a kind of a good candidate for that and he's buckled completely under the pressure it's funny you say that you know yesterday we had a meeting with my cf1 our board was asking me so when are we applying to get the money from the stimulus because we can apply for it and I'm sitting there and I'm saying how much is it gonna be they give me the number what's the buy back what does it look like I'm like you know what we don't really need it why why we apply for it let somebody else they get it that needed we decided to kind of get our finances in order to not have to worry about a time like this I don't have to go and apply for getting the five or ten million dollar check they're gonna send I had to okay I'm gonna give it to somebody else not me I don't need to be bailed out for it but I just think this approach we're taking a loan for a loan for a loan for a loan for a loan I mean when does it ever end so the argument then becomes about the taxpayer who's pissed off and saying let me get this straight you can constantly bail yourself out and you can constantly go print money with this quantitative easing why the hell do I have to pay taxes why do I pay taxes if you can you know no this goes to your argument over the socialism but why do I pay taxes that's slightly different than the concept of socialism because socialism is to give me stuff right but why do I pay taxes that's right for my big 40th birthday lunch there were at the time that I had lunch with Richard Fisher who was my boss there were riots in the streets of Athens and we ended that lunch with me saying what your greatest concern and his answer was I worried that fed policy is going to eventually land us in the same spot as where Greece finds itself back then with riots in the streets now take my example of the state of Illinois you're you're a Chicagoan your 401k has been decimated because you're one of millions of Americans who've been told to keep your money in the stock market no matter what and there's there's there's no other school of thought you've got countless investment advisers all giving the identically same advice to all of them so your joke you 401k holder and you're pissed off and you've lost a good chunk of your savings and you know you're gonna have to tack at least another decade onto your work life to make up for what you've lost now the city of Chicago has just bailed out its pension again so you're told that your property taxes and your state income taxes are gonna have to rise to pay for it let's just say Social Security and Medicare run out of money so you're also told by the great people in Washington that your federal taxes are gonna have to go up as well so you're bailing out the pensioners you're bailing out the federal government you're bailing out corrupt state politicians and unions who knows them who have given way too much more than they could ever afford to pay for and your next-door neighbor's a fireman who's living great and he's set for life these are the seeds of social unrest in this country you can only drive so big of a wedge between the haves and the have-nots especially when you're getting out the middle class in the process if you make very very little in America today and I'm talking about today 25% of Americans who qualify for unemployment insurance are going to make more money in the second quarter than they would if they had not lost their job that's how big unemployment that's how big the stimulus bill is by taxing that one more time say that one more time so the stimulus bill tacks on six hundred dollars for every American what they get paid by collecting unemployment insurance so 25 percent of Americans who are going to be out of the workforce okay are going to make more in the second quarter April May and June than they would have had they kept their job so if you make very little in America today you're gonna get through this if you're worth a ton of money you'd long since gone to cash let's get honest if you're part of that 1% if you're in the middle you're screwed and pissed and you're a taxpayer and that's why I say this could be such a ground roots source that this this could be a generational change that brings about I'm looking at Abraham Lincoln I'm inspired that brings about a genuine change in how we approach our leadership in America and I'm all for it I'm not all for American families hurting at all don't get me wrong but we have gone through multiple iterations of gutting out our middle class you can't do that for too long you lose loyalty you can't I mean you want me to pay taxes I don't know prom paying taxes but I mean do something with the money I'm giving you and actually deliver on your promises instead of taking what if you don't want to do universal basic income and impose socialism what if you actually hold dear to your american ideals and you want to work hard for a living then you're even more pissed off well that's the community I'm talking about I'm not talking about the community of send me free money I'm not talking about free money I'm talking about hey instead of talking about thousand dollars universal income andrew yang policy that became a hit in the democratic presidential campaign that was going on I'm talking about rather than that what about if you do something that is not paying taxes for a certain amount what for I mean I'm not anyways that's a whole different conversation I don't want to know in part but they're in mind to your point before you move on the Federal Reserve monetizing the US debt is what enables all of this Oh preciate their role I and I understand that but also at the same time I want to I want to make sure that if I am getting to work and I'm working then I'm the middle guy not the middle or the top I'm talking the person in the middle the middle person is like I can't wait to get these checks gonna be great Lots gonna be better than what I was getting paid to twenty five percent making less than fifteen bucks an hour yep so you know how that numbers gonna work out the guys at the top they're like listen I'm gonna be fine everything's gonna be cheap I'm gonna buy stuff on sale right now I'm gonna make more money today than ever before those guys are fine the middle guy that's doing his part her part that's the person that I can understand why they're pissed off why they would want to see some kind of reforms taking place by the way who the Federal Reserve Horta main shareholders right now Donald Trump but that's post legislation that's decision-maker then I guess I'm talking about okay Sachs I'm talking about there is an answer to this question there is truly an answered this question and boy I'll be waiting for the hate mail when I worked at the Dallas Federal Reserve my email address ended in dot o-r-g there are there are banks that own the twelve District Federal Reserve banks are owned by banks in the sense that they Kate they get paid a dividend from what the district banks make up 6% and then whatever money the bank has if it's a district bank whether it be San Francisco or Dallas or Atlanta then they have to pay the operating costs to operate an individual district bank and after that every single penny that is remaining is remitted to the US Treasury that is why my email address ended in dot o-r-g not dot c om because we were a quasi private public enterprise J Powell's email address ends in dot govt the Federal Reserve Board in Washington DC is a bonafide formal federal agency that is not owned by the banks there's a gray area there's a gray area and this is this is up for everybody in tin hats here you go let's plow it down the middle the government employees have permanent votes on the Federal Open Market Committee the district bank presidents rotate in every few years they do not have a permanent vote on the Federal Open Market Committee so they have less power the Federal Reserve Bank of New York however the president of the Federal Reserve Bank of New York is also the vice chairman of the Federal Open Market Committee he has a permanent vote the only one of the districts who has a permanent vote on the Federal Open Market Committee and has the quasi public private ownership which brings in the banks that sit on the board that you're getting to so there is a gray area there and the New York Fed does have extraordin power compared to any other district and that power over the years and prior to the crisis was corrupted which is documented and the reforms that should have been made subsequent to the crisis have not been and if you want to get angry about something get anger about that but understand that the bulk of the power seat is a government agency or the Treasury would not have been able to step in like it has this is like we need a drink right now so I was going to say that I can read you need something stronger than a memo so let me say that much okay so how much do you if you're an economist and you do this full-time you've been in it for a while this is your career by the way I know I'm in finance you know I'm just sure and you said something about you start out in finance I think you worked in hedge fund at one point I think you did I worked with hedge funds I worked at attrition traditional investment bank I watched what investment banks issued from the inside out both sides yeah I start off with Morgan sandy Dean Witter a day before 9/11 that's kind of how my career got started you know in Glendale California was suppose to go to New York and indeed I was short the S&P 500 on 9/11 you you what I was i I had I personally had a short position in the stock market prior oh well I felt that the market was very much overvalued ok and was still going to come down so and my clients were very defensively postured also for that very same reason going into 9/11 my birthday was on 9 17 the day the stock market reopened and I closed out my position as quickly as I possibly could because I felt like I had the blood of Americans on my hands for having profited from it small story strange but true what timing talk about oh my gosh craziness right so how much do you read into these conspiracy theories that you hear about with the feds with the creature of Jekyll Island NSF how much to go how deep do you have you ever read the book or no yeah you have to read the book world the six names they're owned a quarter of the wealth of the world etc etc on Woodrow Wilson saying what he said I get it I get it I get it I get it and back in 1907 when we had a financial crisis and when JP Morgan brought all of the biggest bankers together in his parlor and said I'm not gonna be alive forever we're no longer an emerging economy we are advancing to become a developed economy and like our developed economy peers we'd need a central bank because I can't keep bringing you all together to bailout the financial system every time there's a crisis so that was the genesis of the need for a central bank was JP Morgan saying I'm going to die one day we need independent central bank like the Bank of England we've evolved as an economy we need a central bank because of how the Federal Reserve was born and when it was born much more importantly it was born headed into a war that exacerbated and over-indebted a globally over-indebted situation and brought about hyperinflation in Germany and another excuse me a Great Depression in between that took the world down with it and brought about a war I want you to think about that and where we are today but because of the backdrop with which the Federer in to being and the fact that it had to go into DEFCON one almost immediately means that the original people who conceived it were bankers and had extraordinary powers since then the Federal Reserve has become a very boring boring boring place are there conflicts of interest at the New York Fed do big banks have more say than they should in terms of being regulated yes they do without a doubt unquestionably but the Federal Reserve of today is bad for America which is my subtitle because the people who are in charge of the Federal Reserve don't have Americans best interest at heart they've put us in a precarious position financially such that if there was ever an economic shock their policies will have left us so much weaker than we need it to be otherwise and that's a hell of a lot worse than any conspiracy theorists up in the middle of the night dreaming about a Rothschild running the world because a lot more people are gonna get hurt because you've had academics running one of the most powerful institutions in the world how deep have you studied this how deep have you gone and who have you had these conversations with for you to get a hundred percent certain to know that there is none of this Rothschild on you that kind of stuff well you just kind of haven't put a lot of time I just well I just was kind of working there for nine years and spend a lot of time the New York Fed and I saw with my own eyes what was happening I know that but I'm talking inception how it got started I'm talking that stand that part of it I mean that part of it again so if for everybody who can hear me read the Lords of Finance read one book if you don't read any other book read the Lords of finance and and it starts off kind of in 1913 1914 and it takes you through some of the biggest mistakes that were made at the Fed and other people running the world at the time in Germany for example and at the Bank of England and it and at the Bach de France it walks you through it and that is a much more valid history if you will then the creature of Jekyll Island which brings a lot of history to the fore but doesn't apply to the world we live in today but if you want to understand how the Federal Reserve evolved to become this powerhouse that it is read a different book do yourself a favor read the Lords of Finance and then you won't ever sleep at night again because of the parallels that it draws between now and then fair enough okay a couple things just just the real cool questions here since we've covered a lot of different things already crypto currency or any opinions on crypto currency is it you know you have a whole big camp right now saying this is exactly why we know we were gonna go to crypto currency this is the time to buy you know XRP Ripoll what's your opinions on crypto currencies so I think crypto currency is a modern-day reflection of the disgust that we have in a lack of discipline and monetary policymaking it is this generations gold and my issue with it is that it is much more convertible as opposed to physical gold cryptocurrency is much more adaptable on a sovereign level so you've already had the Bank of England you certainly had Venezuela Russia and China they were at the forefront of coming out and saying we're going to have sovereign cryptocurrency said that we can monitor what everybody buys in our societies it's going to be yet another instrument that we have on top of facial recognition but you've also had that United States also step in and say yes there will be a federal cryptocurrency at some point so as long as you have that ability to make it go from something that is in the private realm to being something that is sovereign I think that that takes away its convertibility to gold if you will so prou yes put a couple jobs in there or I'm very neutral on are you a Ewing but are you and I own gold but I do not know you are Goble not cryptocurrency let's talk about gold what's your opinions today on gold so gold surprised a lot of people because it got hit initially when financial markets had had their initial setback and that I would like to clarify was more a function of margin calls you come out recently I'm very recent one from fifty-three kilo down to 47 K 46 KS yes okay now it's coming back as the printing presses worldwide get revved up and people are like they're not gonna stop they're already talking about the second that they're the four stimulus bill so they're just going to print to Kingdom Come and so's the rest of the world and which country can come rollout with the biggest stimulus package so now you're seeing gold play its traditional role of the protector of the hard asset value a store of value now you're seeing gold come out and rise and I would suspect that that should continue as they try and piss all over the US dollar by printing to kingdom come you you're forcing it grow for what foreseeable future like five years ten years fifteen years because if you go to the last 30 years the last 30 years if you put it against Dow Jones Dow Jones crushed gold and last 30 years in the last 15 years it's beaten Dow Jones and SMP 500 so are you talking 10 20 years well I won't say 10 to 10 to 20 years because my crystal ball is not that good time but I would certainly say if you're talking about the next 5 years or so I would certainly think that that was going to be the case because everybody's of the opinion that the stock market's going to come roaring back and that the Fed is gonna be able to save the day I'm not so sure which means that if I'm not so sure and we're gonna need more stimulus than gold is going to be more attractive as a factor of time another crazy conspiracy theory althought you see what you think about it how much of this do you think it's coronavirus and you know whatever's going on with US and China how much it is you think is China saying you know what screw you u.s. you're playing this hardball with me I'm gonna come and bull you in a whole different way that you won't even pay attention to it how much how much credibility do you give to that 5% 1% I'm not going to answer that question but I am going to answer the question in a different way because I'm Christian at heart and I like to think that nobody would want to kill people I will say this much and if you're listening write it down in late November word had already gotten off of the mainland that there was a virus in Wuhan on January the 15th the US trade bill was signed phase 1 December the 15th excuse me December the 15th I had a whole month off December the 15th six weeks later the trade truce was signed with an out clause a very clever out clause that the Chinese made sure was in there that said if there was any kind of act of God pandemic then they didn't have to make good on what they had committed to buy from the United States within days they announced the first coronavirus so did the Chinese know damn well that this thing was running around the world for six weeks before they shut down Wuhan yes they did is that criminal yes it is does it deserve to go in front of a world Tribune oh yes it does because we know that it was the unfettered travel that made this thing a global phenomena it was impossible to contain six weeks they knew but they wanted that out clause and then they underreported what happened in Wuhan which a toddler could tell you based on what happened in Italy based on what's happened in Germany and in France and now in the UK with Boris Johnson in the ICU there's no way in a city the size of New York 11 million people that there were so few cases it's impossible with similar density to New York so the World Health Organization should be held accountable for not holding China accountable to providing good valid data so that the rest of the world could prepare for fewer people to die and that's what you're talking about to me these are equivalents to acts of war on the part of China and then equally whether you're talking about NPR or Fox News most major media outlets on both sides of the aisle came out and reassured the United States that it was just the flu within 24 hours of South Korea's first case being reported the United States first case was reported and what we did was dither we sat on it for six weeks and tried to reassure the public that nothing was happening somebody should be held accountable for that because somebody in the United States intelligence community has to have known what was truly going on in Wuhan we don't have a CIA for nothing and yet we told Americans for six weeks while South Korea was testing everybody and shutting the country down but it was just going to be the flu so there are a lot of responsible bodies right now that have taken us to the point where we're at inside the country and in China and they need to be held accountable so you don't even have to get on the discussion as to whether or not that was this was a manufactured virus and set upon the world you don't even have to go that far if we find that in future investigations then that needs to be prosecuted but if we just ascertain what is known and a known hushed up secret that the Chinese knew for six weeks about the virus before saying anything on the global stage to get a trade ill find somebody needs to look into that because countless lives have been lost as a result the damages are in the tens of trillion dollars we're not talking about small here if that's the case no we're not and we're talking about people losing their family members and we're talking about trillions of we're talking about suicides in the future we're talking about economic hardship all of this could have been mitigated had China been honest and had the World Health Organization made China accountable because at first they said it's not it's not anything to worry about one who first came I wouldn't a wh o first came out and said we don't need to stop every let me ask you who do you who do you trust Elysee you I ran Russia or China China China's got more economic power because of that or because they don't have a free press and because we can't really know what the hell is going on over there well that's just a kicker but you don't really know what's going on in Iran either you had global satellite images in Iran showing mass graves Iran under report it the same and you can't tell me that in the cold of winter that Russia has as many cases is its reporting but at last check China seventeen percent of global GDP they can throw more money around than anybody else and you just mentioned two of their allies by the way so that's why I asked it away I did and the largest contiguous land border on the planet by the way between Russia and China I worry about these things because I have four children but but China right now can throw around the most because they've got the biggest pocketbook it's gonna be a very interesting what happens the next six 12 18 months very because if China comes out guilty for having done something the trade relationships that happens with that and travel do you let anybody come in it's it's the consequences could be do you do you do any due diligence and looking at 5g or not at all you 5g is not something that you have strong opinions on my opinions on 5g are so strong that I would never let myself or anybody that I know buy a Volvo connect those dots because I don't want China listening to me while I Drive a car I trust China when it comes to 5g as much as I would trust buying a Volvo owned by China so I think it is a matter of national security do you social media a lot a lot way too much how about tick-tock my daughter daughter okay you know the story behind takaka as well don't okay got it listen I'll turn it over to your final thoughts what do you imagine the families watching right now and they're kind of listening to this and you've shared a lot we've covered a lot what words of reassurance or preparation or anticipation what could you share with the rest of us the Great Depression in America was one of the darkest chapters in US history but it also brought out the best in Americans Hershey Pennsylvania exists because Hershey himself employed Americans construction workers who are out of work to build the city this is a time that as Americans we can come together and not talk about helping our neighbor but help our neighbor truly give them what they need this is a time for America to shine and I'm involved in a fundraiser where we are procuring masks to get them to frontline workers and I'm watching people open up whether it's food to their fellow Americans this is our finest finest hour and this will make us stronger for it in the end if we open our hearts and if we have the ability our wallets to those in need and see our way through what's to come I appreciate you for coming out this has been incredible hopefully in the future we'll invite you back and you'll be willing to come back and sit I'll talk about different topics as it's formulating we're gonna put the link of her book below and also you mentioned a charity you're part of if you don't mind sharing that link with us as well look at that below as well for you to go find out what she's a part of extremely insightful I think extremely fair on the way you give your feedback and point of view and there was so much to take away again thank you for coming out and being against somebody teaming thank you thank you for what you do thank you you asked one economist we brought it for you this was a very interesting interview with the angle she took on federal reserve or her thoughts on China what she felt about China known six weeks before and should there be consequences to China anyways I want to hear for you comment below if you haven't yet I have two other videos I want you to watch one of them is with a bio warfare and a pandemic expert that talked about corruption in China if you have a watch it's like five six minutes and the other one is since I'm sitting down one an economist I thought it would made sense for you to watch the Ray Dalio interview we did because a lot of talk of China was talked about here when we sat down with them late last year 2019 having said that if you haven't subscribed to the channel please do so thanks for watching everybody take care bye bye [Music]

Channel: Danielle DiMartino Booth

Views: 509,757

Rating: 4.84445 out of 5

Keywords: Danielle DiMartino Booth, Quill Intelligence, Fed Up, Business, Economy

Id: bWobMCzu1wg

Length: 92min 33sec (5553 seconds)

Published: Fri Apr 10 2020