Harry Dent Fights Peter Schiff

hello everyone welcome this is greg owen from the gogo group i'm the ceo and i am so thrilled to be bringing to you harry harry dent and peter schiff with this heavyweight debate listen these two talented men are wanted by fox by sky by cnn but guess what we have them today for you in a debate with some tough questions coming up a little later on what we're going to do gentlemen the way the program will go is that we're going to have a opening argument by you by you both and then we've got some questions after that and i'm going to ask to kick off peter yourself so let's uh hand the show over to peter while he gives us his opening comments thank you peter all right well thank you everybody for attending this virtual event and yeah harry and i have basically looked at the world from a similar vantage point but we've seen uh opposite uh results and so i'm gonna state the case for an inflationary collapse of what is probably the biggest bubble the world has ever seen the epicenter of this bubble is the united states and the reason that the bubble emanates from america is that america is the creator of the world's reserve currency and it's that currency the dollar that has enabled this bubble and even though the bubble has been inflated from the united states because the us dollar is the reserve currency the rest of the world has basically you know inherited this bubble in order to maintain their relationships of their currencies to the us dollar of course all of this has its start in brenton woods you know prior to bretton woods prior to the second world war all the nations of the world backed their paper currencies with real money gold and so exchange rates were very stable because everybody was tied to gold then after the war ended and of course the united states emerged as the dominant economic power at the end of the second world war and we had almost all of the world's monetary gold in reserves and of course the american manufacturing industrial economy was intact of course you know that wasn't the case in europe and japan so all of the goods all of the manufactured goods that the world wanted to buy were made in america and we had all the wealth america at that time 1945 we were the world's biggest creditor nation americans were so rich and we generated such massive surpluses in trade that we were able to invest our surpluses all around the world so we had all of the assets around the world we were collecting all this income on our overseas investments and of course we had almost all the gold and and so what we were able to do was convince the world that rather than being on a gold standard they could just adopt a us dollar standard and at the time the dollar was as good as gold because not only was the u.s dollar backed by gold but it was redeemable on demand in gold so it really was a warehouse receipt for gold in fact the the dollar was gold i mean that was the definition of a dollar it was a a weight of gold the federal reserve note was just a piece of paper that evidence that you own gold and that it was on deposit at the federal reserve but the reason that the world accepted this was that when each country was holding its own gold it earned no interest on those gold holdings the gold just sat there in a vault but by holding u.s federal reserve notes countries could then loan those federal reserve notes to the u.s treasury and earn interest and of course back then the interest rates were quite a bit higher than they are today and so this enabled foreign central banks to really have their cake and eat it too they had their gold to back up their currencies but now because they can invest federal reserve notes in u.s treasuries they can earn interest on their gold reserves something that they weren't doing in the past all they had to do is trust the us government to make good on its commitments uh to redeem its ious in gold and of course that's where the world screwed up is they trusted the united states because once we con the world into going on the dollar standard we proceeded to abuse that privilege and what happened is the us government began to create more liabilities for gold than it actually had gold and that was great for u.s politicians because now the u.s government could run deficits without having to raise taxes and promise all sorts of goodies uh to voters in exchange for their votes this of course came to a head in the 1970s or early 1970s as a result of the 1960s that's where we really abused this privilege when we had the big expansion of u.s government spending we had the guns and butter policy we fought uh the the war in vietnam we funded a mission to the moon we fought the war on poverty as these great uh society programs uh you know we did all sorts of spending but we didn't raise taxes sufficiently to cover the cost and so we printed up the difference and then the world got wise and started to redeem their dollars their ious for gold because they realized that there was too much paper and not enough gold and so the u.s began to lose its gold and initially there was a couple of devaluations of the dollar where we lowered the official price but the devaluations weren't nearly enough to compensate for how much money had been printed and so the government had a difficult choice either they could have had a substantial devaluation uh or dramatically cut government spending uh which they didn't want to do nixon didn't want to do that so he you know basically defaulted on our obligations and in 1971 we closed the goal window which was in effect a default i mean we had promised uh to redeem our notes in gold and then we told the world we're not going to redeem our notes in anything you have the notes you can circulate those notes among yourselves but we're not going to give you any real money for that paper it's just a piece of paper now the dollar lost a lot of value during the 1970s i mean that's when the price of gold went up from 35 an ounce where it began the decade went up to about 800. um the us dollar fell precipitously against other major foreign currencies uh the dollar used to buy four deutsche marks it went down to about one and a half the dollar was buying about 360 japanese yen it went down to about 150 uh the swiss franc you could buy a swiss franc for about 20 cents 25 cents it went up to i think 75 cents at that time of course it's higher now uh so the dollar really got marked down but it didn't you know didn't go to zero and of course prices went up i mean consumer prices went up throughout the united states oil in particular oil went from three dollars a barrel to 30 dollars a barrel now it wasn't really oil prices going up it was the dollar going down because when oil was three dollars a barrel and americans were buying oil from saudi arabia we were paying in gold but all of a sudden we told the saudis we're not going to give you any gold for your oil we're just going to give you these pieces of paper and so then the oil became more expensive because now they we needed more paper to buy their oil but by 1980 thanks to paul volcker and ronald reagan the big decline in the dollar came to an end and the rally in gold was capped and the world continued to operate under the dollar standard where the dollar was the reserve currency except it was no longer backed by gold now we never would have been able to con the world into accepting the dollar as a reserve currency if it wasn't backed by gold initially but by 1981 or then they were willing to accept the dollar despite the fact that it was backed by nothing and that was the beginning of the massive global economic imbalances uh that have produced all the bubbles that we've seen in the u.s economy from the dot-com bubble to the housing bubble uh to the everything bubble that we have now americans really raised living beyond their means uh to an art form i mean our whole economy the whole us economy the nature of our economy changed because we no longer had to produce anything you know we didn't have to have the factories we didn't have to make all the capital investments all we needed was a printing press and if we had a printing press we could have whatever we wanted and the rest of the world was content to use their scarce resources their land labor and capital to manufacture goods for americans because they wanted our dollars even though they were worth nothing intrinsically just a piece of paper uh it was a reserve currency so that was the trade we gave the world our paper and they gave us their their stuff of course americans are on the winning end of this exchange because the paper cost us nothing to create we print it you know we generate it on a computer but consumer goods require real capital investment real resources real labor and so america went from running big trade surpluses to running huge trade deficits today we run the biggest trade deficits in the world america is no longer the world's biggest creditor nation as we were when the dollar became the reserve currency america is now the world's biggest debtor nation in fact the united states owes more money than all of the other debtor nations of the world combined right now of course the whole global economy is replete with mal investments and misallocations of resources as a result of the excess consumption and profligacy of american consumers we're out there buying all sorts of stuff but we're not producing we're borrowing all kinds of money and we're not saving and the u.s government is now enormous uh it has tremendous debts the funded liability of the united states the national debt is about 27 trillion uh but that's just a tip of an enormous debt iceberg because in addition to treasuries which we're on the hook for the u.s government has all sorts of unfunded and contingent liabilities u.s government guarantees other debts mortgage debts student loans government uh guarantees pensions guarantees bank accounts mortgages then of course the us government has all sorts of commitments uh to retired government workers to pay pensions to every american citizen to pay social security benefits medicare obamacare but nothing is funded the u.s government doesn't have any resources in these so-called government trust funds all they have is their own ious they've got us treasuries but those treasures are worthless they have to sell them into the market and and find a buyer and at this point you know we after we had the uh the 2008 financial crisis and the fed really started to blow up its balance sheet a lot of people were convinced that this was temporary that qe was just an emergency measure and that as soon as the financial crisis was over the fed would be able to normalize interest rates and shrink its balance sheet of course i was warning at the time that this was impossible that it was qe infinity that the fed had checked us into a monetary roach motel well then uh as the fed tried to normalize rates as i said it wasn't able to succeed it had to abort the journey the highest we got rates up to was about two and a half before the wheels came off the bus in the fourth quarter of 2018 the fed had to stop the rate hikes on a dime by early 2019 the fed was back to quantitative easing even though they didn't want to admit that that's what they were doing that was exactly what they were doing and then came covert 19 uh and then we went all the way back to zero and now the fed's balance sheet is at 7.2 trillion and rising but the problem was not the virus the problem was the fact that we were broke when the virus happened and then we had to go even deeper into debt to prevent all the defaults and a financial crisis that would have been worse than the one we had in 2008 and i think the reason that the u.s dollar didn't collapse following qe1 2 and 3 is because the fed was successful in convincing the world that it could reverse policy that it did have an exit strategy that it was temporary that was a lie but the world believed it well the fed can't even tell that lie with a straight face anymore and even if it tried nobody would believe them i think everybody now believes that interest rates can never go back to normal because of the abnormal amount of debt see the problem isn't the cover disease but the covert cure all the extra debt and money printing that uh we we had to fight covet is now a much bigger problem than the covet itself and even if we have vaccines that manage to cure this disease we're not going to cure the economy of what really ails it which is all the debt and all the money printing so this is going to continue long after the disease comes to an end and since i believe that people realize or will realize uh that there's no end in sight to the money printing and the debt i think the bottom is going to drop out of the dollar and you know where i agree with harry is that we are going to see a massive deflation of this bubble right all bubbles have to deflate the air is gonna come out but the reality is we're living in a fiat world this is not the 1930s the dollar is not backed by anything the dollar is not gold and so what the us government is going to do to keep the air from coming out of the stock market bubble the real estate bubble to maintain the illusion of a sound economy and to facilitate u.s government spending because the government can only spend if it can borrow and the only lender is the fed because the world now no longer wants to lend the u.s government money at a rate that the u.s government can afford to pay there's so much debt now that rates have to be zero in fact in many cases zero is too high you have a lot of calls for negative rates but the only entity dumb enough to loan money to the u.s treasury at such a low rate is the federal reserve because it just creates the money out of thin air it doesn't have to work hard to get the money right it just creates it so it doesn't matter so it's willing to buy u.s treasuries but as the world realizes that the fed has gone from the the lender of last resort to the lender of only only resort the bottom drops out of the dollar and so the government is willing to sacrifice the u.s dollar in order to prop up all these bubbles and in order to uh to allow the u.s government to continue to spend money so if you want to measure assets if you want to take a look at real estate prices if you want to look at stock prices bond prices all prices are going to collapse if you want to measure them in terms of real money that real money being gold so if you know a stock is you can buy a stock for a tenth of an ounce of gold if that's how much a share costs well maybe you'll be able to buy that same share for a hundredth of an ounce of gold right you can see a 90 decline in the value of u.s stocks priced in gold i mean we've had that before we had that type of decline in the 1930s and in fact we had that type of decline during the 1970s measured in gold now the 1970s we had all this inflation because we were no longer on the gold standard so you didn't see that type of decline nominally but measured in gold prices that's exactly what you saw and i think we're going to see the same type of decline again because the united states is in far worse shape economically now than it was in 1970 and so this bubble is far bigger and you have to have a much bigger adjustment in fact what i think is going to happen at gold is that i think gold is going to end up being remonetized i think as we have a loss of confidence worldwide in this fiat system because all the currencies that are backed by the dollar are also going to be in trouble when their backing is collapsing i mean if your currency is backed by the dollar and the dollar is backed by nothing and now the confidence has been lost in the dollar then there's nothing backing up these other currencies so i think just the way the world or the u.s rather led the world off the gold standard and got the world to adopt the dollar standard the world is going to reject the dollar and return to gold and once again gold is going to be the primary uh reserve for all the world's occurrences and that's going to be a big monetary reset and i think that the country that has the most to lose from this transition is the united states because the united states gained the most from the dollar being the reserve currency we got to live beyond our means and we have an economy a service sector economy that can only survive so long as the dollar's the reserve currency but once americans now have to abide by the same rules as everybody else once americans have to produce if they want to consume once they have to save if they want to borrow it's a whole new ball game but there are going to be changes throughout the world i mean this is going to have ripple effects there's going to be winners and losers in in every country the key as an investor is to understand what this means how asset prices will change relative to one another and so you need to know which assets to own and which assets to avoid and again if i'm right on the inflationary nature of this collapse where it's the currencies that collapse in value not the real assets although the the real value of those assets priced in gold is going to go down priced in dollars or other currencies that's not going to happen so what you don't want to be is a creditor because inflation wipes out creditors not only is it a tax uh that governments impose uh you know surreptitiously on on the population right rather than taking their money through a legitimate tax governments just create money out of thin air and spend it and so they're robbing the citizens of their purchasing power but when they do that they also wipe out debt and of course the biggest debtors on the planet are governments the biggest government debtor is the united states which is one of the reasons why it creates so much inflation is it's the only way to pretend to repay the debt because actually repaying it is impossible defaulting is not politically viable so there's only one alternative if you can't pay your debts and you don't have the guts or the honesty to default on your debts well then you have your central bank inflate them away and that's what's going to happen but that means all the debts denominated in that currency get inflated away no matter who's uh the lender and who's the borrower so you want you don't want to be in paper you don't want to be a creditor you want to own real assets you want to own real things like you want to own gold or you want to own uh property you want to own shares of companies but it's not all going to be equal some property is going to do much better than other property some stocks are going to do much better in the economic environment that's coming so you have to understand where in the world you want to invest which particular currencies you want to own what sectors do you want to invest in what stocks within uh those sectors uh and and and and the various commodities that you want to own up anyway there's i had my timer there's my 20 minutes so uh i'll turn it over to harry thanks peter thanks greg um i'm gonna make the argument for the deflationary scenario and i'll tell you right now because i do study history as anybody knows and when you have major uh um debt in financial asset bubbles like this depending on how they're created and how they work out it can be an inflationary outcome like weimar germany or or hungary or yugoslavia and and third world countries do this all the time now what i find real quick in these inflationary blowouts uh christ which actually are worse in the end is that it usually comes either because uh you borrow a lot of money from foreign banks and stuff and third world countries do this more um or a first world country will do it to fight a war like germany mark uh uh back then and then when you misinvest that money and it's worthless well then your currency goes down not only do you have to repay with penalties but then your currency collapses and then that exponentially makes those payments to foreigners more expensive that's why mark germany you you go to world war one you have to borrow from foreign you can't do that all domestically you lose badly and then for the first time as the allies put huge reparations now you magnified the repayments and and of course the currency collapses when the world sees that like peter says people run markets and people aren't stupid and now that does it actually and then you get hyperinflation and you know hungary was destroyed by world war ii and they come out of and they said well guys we got to rebuild everything and we got nothing so they just funded businesses just through money businesses like they're doing with copa today and then that money gets malinvested and they have to double down on that that money went through the banking system multiplied by that bad loans causes inflation when you have bad loans and then then you got to fight the inflation more and you get hyperinflation what happens in a good old fashion deflation now let me just i mean throughout i mean the 1800s was full of it 1837 to 1842 was the biggest that was the westward expansion a huge bubble in land and in stocks but more in real estate massive bust particularly real estate and when all that real estate and all that lending defaulted and all that money disappeared from asset prices falling and loans it took money out of the system and it was a deflationary crisis that was the great depression before the great depression and then in 29 to 32 we had a bubble in the early 1900s and that was centered even more so globally in the u.s we were the emerging country coming up like china today in east asia and and we had a great bubble in financial assets more in stocks in that case and in farmland more than residential real estate because lending wasn't easy there in commercial stuff and then that burst and it was deflationary so that's an old-fashioned debt bubbles lead to financial asset bubbles and then both of those get way overvalued but when they collapse especially if it's not because of runaway deficits and people having to deal with inflation there was no inflation hardly any inflation coming into the 30s downturn there's almost no inflation coming into this downturn either 2007 or now so it's a different scenario most inflationary scenarios start with high inflation from malinvestment and huge deficits and misinvesting and then they have to create more money to make up for it and double down and double down and that's different what i'm going to show real quickly and i'm going to run through some slides very quickly and you're going to get these slides to go over them later so so don't worry if you don't get everything i just want to show factually how this sort of things happens now first of all a lot of people have heard me before know i put the economy in a four-season cycle mild inflationary spring boom high inflation with wars and and things like new generations entering the workforce at great cost in this case and a recession when a first generation stop spinning and then disinflation which everything all financial assets real estate stocks to my all of disinflation you get a big boom this is when technologies do the best this is when immigration flourishes in countries that attract it and you get a fall bubble boom with falling inflation almost all the bubbles in history come there and all the high inflation comes at times when there's wars and and and and male investment and that sort of stuff that does not pay off but the bubble booms end in deflation that's the important point here it disinflation turns to deflation when when financial bubbles unwind and that destroys money again stocks just went down 40 percent in five weeks that's just one hit imagine that around the world that was about 25 trillion destroyed around the world and of course debts go down and and and that sort of thing now real quickly i'll show when we came into 2007 it was it was real estate and bad lending there that triggered real estate went down first and then the economy got weak it was also baby boomers i predicted that 20 years in advance peaking and declining and spending and then the economy went down and then stocks went down and then you had a deflationary spiral especially with lehman brothers where gold went down rapidly only in that phase um and the dollar went up in that phase and then when it got nasty the fed stepped in and central banks around the world and they've been we've been living off of quantitative ever since so i'm going to make a point here and look for it quantitative easing is a different way of dealing this than just more deficit spending and more money through the banking system this money goes directly into financial assets so that in in the scenario where you get a debt bubble leading to financial asset bubbles the financial asset bubble has been the focus since early 2009 because of quantitative easing most developed countries didn't borrow a lot more emerging countries borrowed with our cheap euros and dollars as peter would say and that's caused a whole nother crisis but it's the financial asset bubble that is the biggest danger now and when that deflates i'm going to show you a slide 200 trillion minimum globally gonna disappear in real estate uh stocks commodities all that sort of stuff that can only cause deflation so that's a different scenario there are deflationary crisis in history there's inflationary everything i see says this is a deflationary scenario other things so that's an 80-year cycle over two forty-year generation cycles that's the old condrative wave revived with demographics driving it here's the other big big cycle i study 90 years super bubble cycle it's technology driven every 45 years steam ships you know railroads automobiles jets that sort of stuff but every other one they combine together and you get bigger bubbles this happened technology cycles got elevated by the industrial revolution ever since 1830 you see that first bubble peak 1837 crashed into 1842 next one 90 years later approximately 1929 peak crashed into late 32. the bottoms were exact and now i've been saying for a long time between 2019 and 20 in late 2022 we should see the next major crash and deleveraging and these bubbles on this 90-year cycle are always deflationary and this is shifting the 80-year downturn that started in 2008 to where the worst bubble will happen at the end other than the worst bubble at the beginning in the early 30s on that 80-year cycle so we got an 80-year cycle and 90-year cycle the two most powerful playing together real quickly from ray dalio this is private debt it's private debt that deleverages government debt only grows in a crisis to support it and deal with the deficits and all this sort of stuff and then it only gets bailed out by better economy later if they don't screw it up and we didn't screw it up in the great depression we de-leveraged we came out and became the greatest country in the world but you'll see here real quick the first red circle on the left we see a peak in private debt it deleverages into the 30s and 40s 62 of private debt was wiped out that's a good thing all the unproductive debt is wiped out leaving productive debt and freeing up resources to reinvest productive again but look at the circle on the right 2007 top we go into the winter season on my 80 year cycle oh we didn't deal the debt started deleverage we stopped it that crash from 2000 uh to late 2007 to early 2009 was 17 months half the 34 months from 29 to 32. central banks cut that in half as soon as they saw deleveraging they didn't want deflation they know what depressions look like the worst scenario for politicians so they've been printing ever since as peter said and that's not the right solution never has been never will be real quickly peter's been saying this i've been saying it too when you start printing money like this you have to print more just like any any drug addiction or anything it takes more and more to to to create less and less and and to keep from coming down and and what we just did here with with the federal reserve printing which started in early in late 2008 early 2009 we printed the same amount starting with the repo crisis and the covet as we did in the entire build up over 80 months and eight months were printed the same amount that's exponentially that's a tenth of the time that's an exponential increase so that tells you is peter and i have both been warning you got a crisis coming and this is not going to be sustained what are they going to do next time you know like you say just the feds up to 7.2 trillion globally they printed 25 trillion so here's here's the whole the three big central banks and of course that doesn't count everybody you can see the big spike to start to get out of the recession on the left and the bar on the right this final big spike this is an exponential chart so this spike is way way bigger than it looks so we're getting in that exponential stuff which means they're running out of images what again what are they are they going to print 20 trillion next time in in the uh you know after 3.4 they're going to print 10 and the world's going to print another 20 or 30 that's how you lose confidence and and that's when people start running from financial assets now real quickly all of this has been happening we had this you know all this money for this downturn and all this money printing and money creation and look at interest rates the u.s euro zone and japan they're just going sideways and stayed low there's been no inflation he got a little bit when abe threw his three arrows and that was very aggressive fiscal stimulus on top of monetary i'll show later japan's out printed us so far you can't even compare it but it has not caused inflation to go up why think back to that first chart we're in the winter season which is already a deflationary scenario we would have been like the 30s in deflation and deeper unemployment and collapsing economy if it hadn't been for printing 25 trillion dollars 7.2 cumulatively u.s alone as peter said and again another crap here's this thing for this whole recovery inflation's just going up on a 1.3 percent very low trajectory with two percent the lowest recovery in history with all this stimulus doesn't that tell you the recovery is this week and inflation is this week it says the economy's dead which peter would agree with both of us agree we basically kill this economy with endless money printing and debt it's dead but just enough to grow a little bit with that much stimulates but it's taking that much stimulus not a good sign but again where's the inflation here's the the printing in the u.s here's the red line inflation now look at it now okay inflation peaked just before the big surge in money printing and after that that big surge what inflation just goes right same loan doty doty doted up and then you have the next big surge you know 2012 to 2014. inflation just doted doesn't even react and then you plateau and you think inflation would go down or it goes like no it just keeps dribbling up and then you get the huge divergence when they finally taper and actually sold off bonds pretending as peter was oh we don't need this i mean you remember i agree with peter 100 they said in 2008 now oh this is going to be temporary just to get over this little crisis no it's not a crisis peter and i agree on this 100 percent we have been we've got demographic problems for a long time we've got debt off the wazoo and we were already a weak in economy 2008 brought that out and then cove had come that out it's not those are triggers they are not the underlying problem and we're not dealing you can't deal but but even when we taper inflation keeps going up about the same rate and then when we explode in in march april where's the inflation after that now you you know it takes lag six eight nine 12 months but i'm not seeing any inflation i don't expect to but no inflation even this is not causing inflation because the money's not going into the banking system being multiplied which with bad loans will cause inflation and good loans will cause a good economy now here again here's the u.s dollar in red here was the same printing okay it will it will tend to go up more when we're flattening or printing less but the truth is if i look at this graph closer which i don't have time to do tonight it's the dollar is going to go up when we're printing less relatively it's we're it's a game between us and japan and the ecb in europe and china doesn't print money like we do they have a different game they just print condos direct okay that's even more damaging because you're creating malinvestment in bad investment excess capacity and that's really deflationary even more so but again you see this this rise it goes up and up the dollar and this is this is my big argument with people who say the dollar is crashing the dollar has gone up it bottomed in the early in the first few months of the 2008 recession and is generally although up and down has gone up ever since and has been 40 percent higher and is still after a big downturn recently short term now it is still up dramatically so now here's all here's the central banks okay who's the bad house in a bad neighborhood now forget demographics you've seen my presentation before east asia and japan and china are toast worse demographics worse than europe europe mostly except for northern nations terrible demographics northern nations okay but not great us north america okay but not great okay but we're still way better in demographics but look at money printing as a percent of gdp the green line is bank of japan 126 cumulative balance sheet money printing compared to gdp europe you see the blue line up up to 53 us is only 33 even after this explosion so we're all doing the wrong thing this is all the wrong solution but we're the best house in a bad neighborhood demographics and i'll show you know other things later in my summary now here's the other thing and this again we're peter and i have been looking at this trend for a long time any economy that expands debt way faster than gdp and in capital investments that's never going to end well never does in history just a question again inflation or deflation we've gotten up global debt recently i think there's about a late 2018 255 trillion so it's a little higher than it's over 300 percent of gdp and and it's more than that in a lot of developed countries and less than emerging so so this this is off the charts we've never we were 160 percent i think in the us at the top of 1929. okay so that's horrendous oh but look at this chart financial assets this is as of late 2017 477 trillion that is over 500 now if i could update it and it's not easy to do it with the same numbers twice the debt now normally financial assets will be higher than that but not twice again it's been quantitative easing where they put money directly into buying financial assets from financial aid it doesn't matter if it goes into bonds at first and of course japan buys everything that money goes into the same pool of assets and then all those assets go up and stocks benefit the most but again what i'm saying if i look at past deflation deleveraging scenarios like the 30s or the 18 30s the 40s and stuff these are the types of ways that stocks and real estate and bonds stocks and bonds i mean bonds and real estate don't go down as much as stock but if i look at this we're going to lose about 200 trillion just to get back down to reasonable and it could be more 200 trillion that's 2.4 times the gdp of the world and develop in the us is going to be six times gdp this is just crazy okay and in the developed countries in general now so what happens what has the monetary base the money printing done it has it look at m2 money supply doty doty dot gdp laden less joke you wouldn't even know there was a giant money printing oh until you look at the stock market financial apps that's that purple line this money has created a financial asset bubble debt bubbles always feed financial asset bubbles in good time too but this is a financial asset bubble off the charts never before seen global and in all asset categories and again here's the s p 500 one of the most global um national indices ours um and with the three combined printing banks this is the biggest correlation it's just the stocks just follow money printing not the economy stock now here's my what i call my perfect chart we've already been in a bubble since the early 80s something i predicted would happen back in the 80s because of demographics and technology cycles but but this has really been the bubble of all times if we take a trend line through the tops for the s p 500 and then take the trend line from the extremely exponential rise this is the greatest bubble this makes every other bubble in history look like nothing because quantitative easing is massive and it particularly pushes up financial assets you don't have to be increasing debt it just goes in financial assets these two lines are intersecting right here in this september to october november december time period i think this is the end i think this is finally where financial assets get so high that they you basically run out of the ability to keep driving up and look this just gets steeper and again look at the it's since the great the great recession into now look at all financial assets and you know at worst what goes down the most it's always commodities and then it's stocks but and then it's you know um high-yield bonds and then it's better bonds and then it's short-term stuff okay look at gold here in yellow gold has been almost as volatile on the downside as stocks actually in the middle of stocks and gold went up between 2005 and 2011 for six years about the same size as most stock bubbles five and six years is much more than than the great stock bubbles 6.6 time gold bubbled up because gold was part of the commodity boom in bubble and gold saw money printing and said oh my god there's going to be inflation and gold's been tapering off until recently because they didn't see it and again 2008 basically most financial assets go down the black line is treasury bonds in u.s dollars they went up the most and look at gold gold panicked in the middle of the crisis when lehman brothers going down went down 33 silver down 50. us dollar was up 28 so when when the things really got bad gold was not protected but gold went up in the early stages and came back gold was that was one of the better places to be but it's not going to be oh this is going to create 5 000 gold gold just basically more held its value while everything else went down treasury bonds and aaa bonds were the best here we see the recent short crash okay in five weeks look again here the blue line is stocks at the end the s p was down 34 what was down the most bitcoin in this case because it's a big bubble and it's a big crasher it is a bubble thing whether you like it or not and i happen to like it long term i don't like it as much short term but it that's what it does and but you see the big look at the red line at top that's the treasury bonds they were up 18 at best and still at the bottom of stocks up 14 when stocks were down 34. the big surprise was the green line investment grade bonds went down almost as much as junk because the covid took normal 10 20 declines in sales and turned them into 50 to 80 for a lot of companies so again different scenario but and again look at gold gold went up in the early stages when it sees a crisis when it gets nasty it goes down but gold came out of its second best gold is not a bad place to be and it's a great diversifier i'm not seeing gold is the safe haven and what you make money on in downturn but it's not the worst place to be long term in this 80 year cycle interest rates go up for 41 years the greatest bond bear market in history and then down and i don't see them bottoming until the end of this crisis i expect stocks to bottom late 2022 and bonds to uh the the treasury bonds the high quality bonds the safe haven in us dollars to be at their best and then they'll have a 20-year bond bear market and china's rise will take down the dollar and our bonds but in the crisis i still say the bonds are best here's the difference if you buy a 10-year bond today recently and we get a deflationary crash and those assumptions very similar to the recent crash only a little deeper for this downturn the 30-year does four times as well as the 10-year if you want to buy a bond for safe haven the 30 years are going to be your best bet here's my chart for gold and notice that i'm saying gold is going to go higher gold tends to go up early stage of the crisis if i look at long-term trends through the tops back of that 80 top that peter talked about when it got over 800 bucks and and then the top here uh in 1934 and stuff now it's at new heights i'm expecting it to go to about 2200 and then gold will settle down the bottom trend lines here this is called a pitchfork charcoal i'm not going to get in that would come in just under a thousand that has been my target for gold gold's going to hold up way better than most commodities way better than stocks but it's not going to be i think it's going to get a hit harder this time okay thank you harry thank you peter now what we're going to do is get straight into the questions and i'm going to give you the first question so um here is our first question to uh peter are you there peter yeah before we do that i just could i i made a couple of notes at least uh you know talk about inflation harry just inflated a 20-minute talk into 40 minutes so but i did make a couple of notes before we hit the questions so let me just comment on a few points that harry made before we take this question okay take it away um so one of the points harry made was that we had this big rally in the dollar since 2008. well first of all the us dollar index was at an all-time record low in 2008 it had collapsed in the years leading up to 2008 really an unprecedented decline in the dollar so the dollar was really at rock bottom but if you look at where gold was in 2008 gold peaked out at a thousand and then pulled back to about 700 gold is at 1900 today so in terms of gold the dollar has lost about half of its purchasing power since 2008 so the dollar has not gone up the dollar has gone down but the dollar has gone down less than other fiat currencies who that have lost even more value relative to gold so don't make the mistake of thinking that the dollar has gained value it hasn't it just it's just relatively lost less value but that's going to change now also harry pointed out that we haven't seen a lot of inflation at you know since uh you know coveted all the qe well there are many reasons for that right one is that he's looking at the official inflation numbers cpi those numbers do not really uh pick up the true extent that prices are rising they were deliberately designed to understate inflation and that's exactly what they do so consumer prices are rising more than what the government admits but if you think about what's happened since covid i mean you had all this collapse in demand the fact that prices didn't go down they actually went up it was all that inflation that prevented prices from falling falling prices would have helped the economy we need prices to come down but the government through inflation prevented that from happening but the other reason that inflation didn't manifest itself in a bigger way was because of the dollar the dollar did initially gain some strength early into covid and that that is what kept the lid look at our trade deficits the u.s has now had record trade deficits unprecedented trade deficits particularly in manufactured goods in merchandise so all these goods have flooded into the u.s economy that's kept a lid on prices but that was only possible because of the reserve status of the dollar if americans had to consume only what americans could produce we would have seen a much bigger uh rise in prices than we have and the other point is that harry mentioned that the stock market went down 40 very quickly as a result of covid which is true but i have to point out that the stock market is at record highs right now so that 40 decline means nothing because it's been completely eradicated what did the federal reserve do to save the stock market it printed a bunch of money it created inflation and it's going to continue to do that when harry is talking about these 80-year cycles and he's looking at what happened in the past that was with real money that was with sound money we don't have a precedent in the united states with fiat currency and when you have a currency that could just be printed the u.s government the federal reserve will print as much money as it takes to prevent these bubbles from collapsing you know there's an old saying don't fight the fed and i'm not i'm going to bet that the fed continues to do what it's been doing it's going to keep printing money until it's worthless and the irony of it is you know harry and i both agree on where we're we're we're going to end up we just disagree with how we're going to get there for some reason harry thinks we're going to take a detour on the road to hyperinflation and a crashing dollar and skyrocketing gold prices where u.s treasures in the u.s dollar go up i think he's wrong and i think it's it's foolish to bet that way because if i'm right and we don't take a detour uh to a stronger dollar in rising u.s treasury prices and we just go straight to inflation or hyperinflation and you follow harry's advice you get wiped out i mean you're completely broke because you're holding on to a bunch of worthless paper i think it makes a lot more sense if you know where we're going to end up just position yourself for the end game right now then it doesn't matter how you get there even if harry is right i'm still going to end up making a lot of money in the end maybe i would make more if i followed harry's advice but at least i'm certain to win at the end but if you follow harry's advice and i'm the one that's right you get wiped out so to me uh the risk reward isn't there it makes a lot more sense uh to invest for a collapse of the dollar and for much higher price gold prices than to assume that everybody is going to rush towards the epicenter of the next crisis rather than away from it thank you thank you peter now i know harry you'll want to jump in there but i think we better go straight to the questions um uh okay this is this first question um peter i want you to go first on this question jim jim rickard the financial commentator from the usa which i'm sure you both know very well recently quoted the gold price would hit 15 000 usd by 2025. now of course it's currently around 1900. so peter i want you to say do you agree or disagree and also will this mean going back to gold standards but i want to add to that if gold price is rising is there something very sick in the world economy to suggest that this is happening over to you pay them first of all remember the price of gold doesn't really rise or fall i mean gold is what it is uh what is happening is that fiat currencies are losing value gold is staying the same and so you just need more and more paper to buy real money and and i think you know fifteen thousand dollar gold uh could easily happen in the next five years it could happen in the next five months i i don't know i don't have a crystal ball i know that in order to go back on a gold standard which i believe we're headed to i mean what we're doing now is unprecedented it can't work uh and so history shows that whenever you leave the gold standard you eventually return to it and and so i think we're going to remonetize gold and we can't do it at the current price i don't even think 15 000 is high enough we probably have to have a higher price and of course it's a moving target because we keep printing more money now you know either you can deflate the the rest of the world right the price of everything can collapse and i guess that's what harry thinks is going to happen and the price of gold can stay where it is or just go down less but the price of everything else implodes or the price of gold goes up and everything else stays the same or goes up a lot less but i think that's more likely that it's gold that goes up rather than everything else that comes crashing down uh but yeah i agree with rickards or he agrees with me however you want to look at it in that perspective we're heading for a fiat currency crisis the epicenter of the crisis is going to be the u.s dollar uh and as the dollar collapses i think confidence will be lost in fiat currencies in general and what will restore that confidence will be you know re-establishing the link to gold you know putting that's what people will trust when you have real money as opposed to just a fiat and uh i mentioned also do you think there's something sick happening out there for for this to be taking place well we're already sick i mean the disease is the central banking and all the money printing and all the manifestations of that uh and so the cure you know is the recession you know the the markets keep trying to cure us of the disease that government and central banks have created but the governments don't want the cure because the cure involves a lot of short-term pain and they don't want to get blamed for it so all they do is sell a snake oil they want to pretend uh that they've got a cure uh when they're just you know you know liquoring us up with a bunch of you know monetary alcohol so we don't realize how sick we are right they don't let us sober up or they keep giving us uh more and more drugs but you know eventually we have an overdose you can't keep doing this uh without killing the economy and i think what we end up killing is the currency and and then the question is you know what happens next you know where do various countries go uh in the aftermath of this crisis because you know you have a a a big rise now in the popularity of socialism a lot of people want to blame the problems we have on capitalism uh when capitalism has nothing to do with these problems these problems are created by government essential planning central banking and so maybe some countries will learn that lesson and they will you know emerge from this uh freer and therefore more prosperous they'll understand that it was government and their central banks that were the problem and that the free market is the solution but then there could be other countries that end up making the wrong conclusion that the problem was you know too much capitalism not enough government regulation not enough central planning and those countries end up you know going to totalitarianism and of course to that and that that road leads to disaster so just before i go to harry let me get this clear so you agree with the regard now of course you actually alluded to them that it could even go higher higher oh sure look there is look gold can go to infinity i mean the paper currencies can go to nothing i mean that's their intrinsic value so since there's no floor on the dollar there's no ceiling on gold all right thank you peter harry your reply okay first of all they're not going to go to nothing they haven't this is not why mark germany as i said before that was an extreme example of money printing and and mal investment and debts gone bad and currency uh collapsing this has not happened yet we've already printed massive amounts of money for 10 to 11 years now and we don't have the inflation yes i agree consumer inflation is understated but it's consistent it does go up and down in line with real indicators i have that drive inflation so so it's still the direction is right and gold has not been able to go up that much without and it did go up when it first saw money printing coming in 2008 and into 2009 11 after two and then it came down when it started going down peter in 2013 when the inflation wasn't there japan tripled its money printing there and inflation kept falling so so so gold even started to get well wait a minute i mean gold still does hold up better than other commodities and things it has more intrinsic value but it's not i do not see any chance that gold is going to go to 25 but i'll tell you one thing i i am flexible and i'm looking at all angles if i what i would see would get me to start worrying about inflation is to actually see inflation started to get up in eight or ten percent something more most every hyperinflation i studied started already from high inflation from malinvestment and massive deficits usually in third world countries or in war countries and then got accelerated by more money printing and bad reactions if i see inflation go up more than we've seen then i would say well maybe that's a possibility but if we don't even see inflation i mean they're going to we we're going to get we see it if they're rigging the numbers by if i see inflation i'll start to think like you more i don't expect to see it expect to see 2 000 gold either but you did oh well i i'm predicting 2 200 now so i'm not anti gold it's got to be a reason for it well did you did you did you just start buying it then no i i got i i see other things better gold to me is only a short-term thing i'd i'd be buying 30-year treasury bonds here not gold that again that's the defla if you're a deflation guy that's what you buy you don't buy gold because gold does and gold is not just a monetary metal it is an industrial and a commodity and it's in jewelry and all types of stuff so it is more than that and that indians and chinese buy it like crazy they're the biggest consumers of it not central banks or investors so it's not just a monetary medal and it stopped being in 71 and i see here's my problem here you got to be in a currency i can't take a krugerrand down to the convenience store and buy a loaf of bread i can't take bitcoin either for that matter okay those are those i'm not saying about it i want to be in the us dollar if i got to be in a currency that's what i'm saying and i'm willing to stand by that forecast first of all harry you don't have to be in any currency you only need the currency that when you want to spend it when you're saving it you can certainly save it in gold and then convert it to whatever currency uh you want to spend but at some point in the future it's possible that a lot of merchants will want to be paid in gold they won't want to be paid in dollars or other currencies but also i do own currencies i think the dollar is not the cleanest dirty shirt in the hamper i think it's one of the stinkiest shirts in the hamper and the only thing that smells worse than us dollars are u.s treasuries because they're just promises to be paid dollars in the future so i mean if you're buying u.s treasuries i'm glad you're not doing it with my money because i don't even know anybody that's going to lend the u.s government money for 10 years at less than one percent of your interest i mean even the 30-year bond is barely over one and a half percent i mean even the government's harry even the government's official inflation numbers are higher than that but don't you know you have to triple or quadruple the cpi i didn't know what the actual inflation is you keep saying you don't see inflation i mean go to the supermarket look at what stuff costs the cost of living is going that's a minor amount of what we spend money on now no yeah not the not the average person well look at health insurance look what premiums are doing look at other insurance rates look at costs for education i mean look at complicated housing what's happening to house prices look at house prices here in puerto rico they're going down my condo my condos tripled in value since i bought it price i mean you don't think there's inflation there's so much cheap money pushing up i'm saying good luck on that condo i want to see how it's doing two years from now we just differ on that peter it's that simple i see this asset bubble is the craziest it is crazier than a debt bubble and the debt bubble was already crazy this financial you said it the financial asset bubble has to deflate that takes money out of the system that the the banks created that's the way to defeat the central banks is let the bubble burst let the recession cleanse the economy de-leverage but de-leveraging always cause inflammation also not a bull on the u.s dollar or treasury bonds long-term i'm not a bull only in the downturn i'm a bull on asian currencies in the future and on demographics for the country but in the downturn i'm in this right now right now i'm in the dollar i would buy the dollar emerging market currencies asia southeast asia harry to you the u.s the u.s dollar okay how does the us dollar now go in the future what's the time frame of its movements and some people have asked could the us dollar lose its position as a back currency in many with many nations could it lose its fight could it fall off the cliff okay long term there's no question there's no way the u.s dollar is going to be the reserve currency because asia is where in the merging world where all the growth is so it's been the reserve currency we've been the leading developed country all developed countries are slowing and and will slow more even in the next boom except for a few like australia and you're not big enough to be so i don't see the dollar lasting a reserve currency it just is the best house i i said it before we have the far less money printing compared to our economy than japan and a good bit less than europe we have less trade exposure than most those nations when the and in a downturn everybody contracts trade and protects their own markets so we've got all the things we have better demographics we don't go down as low in the downturn or and we're not as we're much stronger coming out of this and we're still not anywhere going to be as strong as we were in the past coming out of boom so the u.s dollar for now is the best currency i i have that for a couple years i think it's going to go up 30 percent maybe 40. that's it and i think it'll decline for decades i think treasury bonds will decline in in a rising interest rate world in an increasingly asian world this is a short-term thing i'm talking about here i i think that that's not a bet worth uh taking i think the the the risk is far too great if you're wrong i think the dollar already had its bounce it had that bounce in 08 off the lows uh if you look at how pathetic the dollar rally was during the covent crisis everybody was expecting a much bigger rise in the dollar it barely rose and now it's well below where it was uh before covid so the dollar is already a falling and i think the reason that the us has come through other crises better was because the strength of the dollar in the past acted as a buffer that propped up our asset prices that propped up our bond market that kept interest rates low that enabled over leveraged consumers and governments to keep on borrowing but what is going to happen with the final crisis which is the one we're coming is when the dollar crashes and now we no longer have the benefit of uh falling interest rates and a lit on consumer prices all of a sudden we have a recession in america where interest rates are rising where consumer prices are rising this is going to be far more disastrous and then when the fed goes back to its old tricks of money printing all that money printing is going to do is throw it fuel on the inflationary fire so instead of getting any kind of short-term bounce in assets all they're going to do is put even more downward pressure on the dollar and more pressure upward on long-term interest rates and consumer prices okay look i i just want to change gear again a little bit there look i've spoken to a few people over the last two weeks preparing for this and one particular commentator is an american commentator who i had the pleasure to speak to he said this he said a leading u.s economist said to me actually under yesterday that you're both dangerous and people could lose fortunes if they listen to you both this economist believes that the crash has already happened in the share market and the share market will now have a 10-year boom so peter i'm going to ask you first and uh but you're both saying that the share market's going to crash you're saying you're both getting to the same position in the long run my question to you is do you believe what this um commentator is saying and if there is a crash coming when is it what are the signs what's the time frame well first of all real booms don't start from this type of valuation if you look at the current valuation of the u.s stock market we are right now at record highs right as far as price to earnings dividend yield at record lows the value of u.s stocks has a percentage of gdp all-time record high so you don't start long-term booms from this excess level of overvaluation big bull markets start when stocks are really cheap and there's no one who can argue that stocks are cheap right all you could do is say well on a relative to bonds they look okay but bonds are in a bigger bubble than stock so that that analysis uh fails but where i do agree is that in nominal terms right if the fed prints enough money well sure the price of everything is going to go up look the zimbabwe stock market was the best performing stock market in the world as the zimbabwe dollar was becoming uh confetti because you know that you were pricing the stocks in a worthless currency so if we get hyper inflation sure stocks will go up who cares it's not going to mean anything because the real value of those stocks is going to go down when you sell the stocks and try to buy something you're going to get less real value when you try to take your dividends to this supermarket you're going to get less food with those dividends because the value of the money is going down so it doesn't matter right it's the real value that counts so in real terms stocks are going to crash they may crash in nominal terms but they're definitely going to crash in real terms and the way you see it in real terms is you measure the price of stocks in an ounce of gold and there you're going to see a crash and i do think that u.s stocks could go down in terms of australian dollars but they can still go up in terms of u.s dollars because of the the decline in the u.s dollar relative to the australian dollar harry yeah i have a hard time measuring things in something like gold that now goes up and down as much almost as stocks or anything else other than bitcoin because it was 250 dollars in in in the boom coming in 2007 then it went up to 2000 then it went down to a thousand now it's back up to two thousand so i'm pricing that in that volatile commodity the us dollar hasn't gone up and down anywhere near that much is more stable and and peter actually said something correct earlier that the dollar crashed from 1985 from 160 on the dollar into down to 71. you know it crashed more than half and it's been coming it was overvalued in 85 from a long boom and undervalue and yet we still had a boom we still had falling inflation things were not sorry you can over you know estimate what currencies do they do move long term and the euros moved i've been in europe with a dollar sixteen i've been in australia 43 cents to 1.8 just in the last decade i don't look the currencies i look at demographics urbanization economics relative inflation and growth and if that's working and something where's not happening i do 100 object to endless money printing it's like it's like drinking more to cure a habit or taking more heroin to keep from going it's it's idiocy you never solve a problem you solve a problem by delay if you've over borrowed overspent malinvested you got to wring out that investment it is painful that's why politicians don't want to do it it is deflationary that's why i'm looking for deflation peter's 100 every financial asset is at its highs okay bonds are at their highs real estate second bubble stocks fourth bubble at their highs even though it cracked you do not start a bug you agree with them 100 you do not start a bull market you start a bull market after 14 years of downturn from 68 to 82 or 29 to 42 that's when a long-term bull market starts and you ring out a problem it doesn't have problem now harry harry you would be correct if politicians and central bankers were going to admit that everything they've done in the past is wrong and completely turn on a dime and of course for harry to be right the u.s government is going to have to sit back and watch the whole collapse take place i mean much worse than 2008 they're going to have to watch banks fail and not only let shareholders get wiped out they're going to have have to let depositors lose their money they're going to have to let people who have bank accounts lose their money because they're going to have to say hey the bank just failed and you know the fed's not printing money anymore so you've lost your bank deposits and in fact they're going to have to let interest rates go up and then the u.s government's going to have to default on u.s treasuries the u.s government's going to have to tell our creditors hey you loaned us money but we can't pay you back and in fact if harry's right the u.s government's gonna have to let give the bad news to all the people who are expecting social security checks and tell them you know what we don't have any money we're broke so we can't give you social security we can't give you medicare the u.s government's gonna have to tell all the people expecting government pensions you can't get any money right i don't think any of that's going to happen i just think the politicians are not going to let the banks fail they're not going to let the pension funds fail they're not going to let the market collapse they're not going to let everybody default they're not going to let all these voters lose money they're going to print up all the money they have to print to make sure that this doesn't happen and they've already said this i mean that was one of the ben bernanke quotes we have a great invention the printing press and we can print unlimited amounts of money we will never allow deflation to happen and take them at their word they will not they will destroy the dollar before they let that happen because they don't know it's going to get destroyed they'll just hope it goes down 50 percent 80 percent you know because that's better than having to deal with reality because inflation always enables them to kick the can down the road a little bit further and they can only see as far as the next election that's all they care about they want to get past the next election because maybe it'll be the other guy's problem nobody wants the crash to happen on their watch so that's not they're just going to keep printing and the only thing that's going to stop it is a crash of the dollar you know that's what's going to put it into it and and that's why i don't own dollars that's why i own gold that's why i've got all these foreign assets foreign stocks real stuff because the only way this can end is with a monetary crisis with a dollar and sovereign debt crisis in the united states the very asset that you want to hide out on hired out in that is the riskiest asset of them all that's the worst place to be harry did you want to make one last comment there yeah you guys can still hear me yeah yeah here's the problem peter and this reminds me of my favorite little story i was in dubai in late 2007 lecturing to a big audience back then big conference and and dubai was the biggest real estate bubble then just like japan was in 89 before all these other bubbles and i said this is a bubble and it's going to burst and they said harry and same thing australia and so you don't understand dubai real estate the government props it up the government will buy the government buys and the government will buy it but they will not let it go down now see here's the problem with the argument you can prop up failing companies and debts you just you just refund the money and you keep putting in you can't just like you can't stop a currency from collapsing when people say these people are going crazy because they're printing money and running deficits out a lot the currency will collapse because investors exit well this financial asset bubble which i showed that's why i put out the facts 500 trillion versus 250 trillion in debt that's what they can't control it they created this monster like the dubai government created that real estate bubble and then when people said well they won't let it crash they couldn't stop it when investors lost face and it dubai real estate and this is big dropped 50 percent in one year after that talk one year from there and real estate 50 drop is like stocks going down 80 percent and everybody said the government will stop it no the government created the if you create a monster then that monster bites your own ass yeah the monster they created right is is this is the us dollar and it's gonna you know it's it's gonna end up destroying the economy uh just like frankenstein's monster it's that's where the confidence is gonna go confidence in the dollar is going to be lost worldwide where is it going to go the only thing that gives the dollar value is confidence that's it there's nothing substantial or real behind it it's just faith people have to believe that the dollar is going to be worth something in the future and the minute they start to realize that it's going to be worth less in the future than it is in the present no one is going to want to hold it in the present because no one's going to want to ride it down to the future and then all of a sudden you have a mass exit of dollars and the bottom drops out and the whole thing implodes that's where we're headed if i see that starting to happen the dollar starts eroding more than a little bit which you've had in the past or inflation starts to go up instead of two three percent 10 8 12. you're then i see okay that trends bullying and i could start to believe i don't see that happening and i don't expect it to happen where can they go the u.s dollar again i've got so many charts on this i could be an hour is the best house between europe all china china the us is only the best house so long as people are loaning us money and buying our currency that we don't need we don't borrow money overseas like zimbabwe does or other countries we don't bother sure we do the world has to hold our currency and hold our bonds they're doing it less now than they were in the past uh but they haven't exited but that's why i mean right now you know so i i think we're at the end of our rope here i don't think the chinese are going to keep financing our economy i don't think the russians the saudis the world is going to keep lending us money i think it's more and more relying on the fed and it's money printing and just like you know the dollar hit a record low in 2008 it would have crashed uh but it it actually got saved by the financial crisis and that gave us a reprieve but i think the next time the dollar starts to fall they're it's not going to stop it it's it's going to implode i mean we almost got there in 30 000 peter we're going to get there next time tell me what they're just getting they're good well they're gonna go back into their own currencies and they're gonna go into gold they're just gonna get out of dollars now of course a lot of the money in the dollar just disappears right it doesn't go anywhere i mean let's say somebody is in australia and they they put a million australian dollars into us dollars and the u.s dollar crashes and loses 80 percent they don't get their million australian dollars back they only get 200 000 australian dollars back so that money doesn't go anywhere it just disappears in the in the money heaven right a lot of others is going to get lost when the dollar crashes ah it hasn't happened if it starts to happen i would look at that more seriously it's going to happen in deflation with your eyes open let me just say one thing one thing you said earlier that the solution is the markets the governments are fighting the markets i agree within that this deleveraging letting these debts fail in these financial asset bubbles would solve all these problems and take all this excess out and then you wouldn't even be able to create a bubble again that's the solution i see i'm a free market capitalist here harry and peter if i can just jump in there and i just want to stay on this printing of money for a moment because harry and i have had many discussions about this and all of this printing money over the past 10 or 11 years has completely messed up harry's charts and his research and whatever absolutely smashed it so really we are putting our finger on the nerve here and the next question is because the u.s government has printed something like 28 30 trillion dollars of printing and australia even got into printing money and around the world they've printed 80 trillion now look um could it be that if the government keeps printing money could we see no collapse over the next 10 years they'd just be like that movie called feed me seymour they just keep printing it and printing it and printing it so what i'm saying is if they keep will they keep printing it how long can they continue to print it because it's going to mess up your charts harry so harry you can answer that first by the way they did the first time they really did do quantitative easing substantially was after the 32 crash when stocks had deleveraged and we got a second bubble but the bubble didn't last you can't keep getting something for nothing bubbles don't laugh if you keep printing money and mal investing encouraging that when you have interest rates at zero it means people can get money cheap and they're going to misinvest it when things are free it'll be abused whether it's a currency or loan or anything so what we're both saying you can't do that forever it's never been done forever every government's tried this from rome to everybody else you yugoslavia you either end up in a deflationary spiral that takes out the excesses that way and all the bad debts and bad investments and bad companies and bad loans or you get an inflationary spiral that actually does it if what peter says haven't that is the more painful way in the end because it a inflation you can't even calculate your money to spend 10 minutes from now how can you even have an economy you see venezuela right now people don't even know how to buy stuff so that really deflation to me if it's not done excessively makes an economy healthier because it gets rid of bad loans and debt and ridiculous we all peter and i agree these financial asset bubbles and the debt is ridiculous not sustainable but you can also get it from hyperinflation so that is a real scenario i just don't see any signs of it and when i do i'll worry about it i don't see it yeah i'm trying i've expected more so i agree with harry that a hyperinflationary collapse is far worse uh than deflation and in fact even for creditors if you're a bondholder and we go through a legitimate deflation and there's a restructuring or a default and you get paid 50 cents on the dollar 40 cents on the dollar 30 cents on the dollar you know you're getting something but if inflation wipes out the value of the money you may get all your money back but none of your purchasing power back so creditors do worse under inflation than under default but the politics of of default are so much worse in the short run because that means you have to admit you did something wrong and you have to actually change uh your policy and you got to be the bearer of bad news and deal with the consequences if you decide to postpone the consequences indefinitely that's when you end up with out of control inflation but i think that's the direction that the united states is going to go in i don't think that's the direction the entire world is going to go in they may have some different uh uh you know situations where they have the ability because once all this inflation that everybody is crating it's not just america all the governments nobody wants their currency to go up i mean this is the most ridiculous thing but the reason that australia wants to print money and lower interest rates is because they don't want the australian dollar to go up i mean that's absurd what's wrong with the strengthening currency that means that your cost of living goes down that means your standard of living goes up but all these central bankers are competing with the us to have the weakest currency so everybody's printing money but when all this inflation starts showing up in a bigger way in at the supermarket not the stock market when the inflation moves from financial assets to consumer goods that's when the public outrage is gonna is gonna develop and you're gonna have people protesting the rising costs of living and a lot of governments are gonna do something about that they're gonna let interest rates go up they're gonna raise rates uh they're gonna let their currency strengthen because they can but countries like america that are so massively in debt we have no we can't our politicians will never do that right we can't fight inflation like we did under paul volcker in 1980. we had to let interest rates go up to 20 to finally put that inflation genie back in the bottle to stop the price of gold from going up it took 20 interest rates america has much more debt now than it did in 1980 so the rate of interest that would be required to prevent hyperinflation would be much higher than 20 but the whole economy started to implode when rates got to 2 so america does not have the ability uh to to do anything to save the dollar so i don't expect it to happen that's why i think that hyperinflation is a real risk in the united states i think the risk is significantly lower in other countries but they will experience elevated inflation that they will be forced to fight it's just that the u.s will not fight inflation we will just surrender to it now look i've got another question i know harry you'd like a lot of reply but i want to get through a few questions here warren buffett warren buff buffett's dumping banking shares i can understand him dumping airlines and cruise ships dumping banking shares he's buying gold and silver and of course he's just dived into the farmer the pharmaceutical shares why is he dumping banking shares harry okay what saves you kills you okay if you get something for nothing it kicks you on the other side it was the banks that had to be bailed out in 2008 2009 the most that the central banks hoped by making reserves to them they would lend money and get the economy going but people didn't need to borrow because consumers and businesses were already over in debt so the banks got a free work and expanded again and now guess what's killing them zero interest rates hey if you're a gas station and oil goes from uh 80 bucks a barrel down to 20 aren't you gonna make less margin on that well when loans are so cheap and spreads are so cheap and a zero kind of like like like peter said what's the difference between a 10-year treasury and a 30-year treasury bond it's like 60 70 80 basis points that's ridiculous so so it hurts banks and banks have been the weakest sector in this rebound that's why warren buffett is selling them he'd rather buy consumer goods or something else even if he thought we're going to recover from this but it also it's the same thing what creates the bubble or the bad thing is not the cure that did when when peter said oh well governments will admit they're wrong the dubai government didn't admit they were wrong and stopped supporting the real estate market investors saw how ridiculous it was getting and deserted them just like you can desert the dollar or the euro or the zimbabwe dollar currencies or anything investors it's this blowing up this financial asset bubble so big i think and again i'll admit i'm wrong six months from now i think by say the second quarter you're going to see another big crash bigger than the last one 40 in the s p more in the technology and i think that'll be the final blow because they keep printing more and the stock market keeps going to lower lows there's a point where investors and particularly the smart money just say this ain't working the game's over and then the financial asset can collapse at the speed of light compared to bank loans failing in chapter 11 chapter 7 this financial asset bubble is the most dangerous thing it's worse that debt is dangerous financial asset bobbles of this level deflate much faster and governments can't control it if you screw with the markets the markets kick your ass like peter said it took this high inflation to get us to do the right thing before the markets will win in the end i'm saying the markets in this stage call for deflation not inflation that's the only difference here it needs a cure i say deflation's the cure and that's why i'd like i welcome it i don't say protect yourself from it yeah protect yourself but it's going to be the best thing that happens so the the the big problem for the banks and and the reason i think buffett is smart enough to get out i mean first of all the banks are holding on to all the bad debt i mean think about what's happening in the commercial real estate market look what's happening with office that was first of all way overbuilt but now in the area you know the age of covid and now that we have a new normal with all people you know working from home a lot of these businesses don't need anywhere near as much office space as they had people are renewing their leases so a lot of these loans are going to go bad the same thing with shopping centers and malls all this bad debt we had too much retail space in the united states even without you know the competition from amazon and other you know online retailers but uh so all the retail stuff is collapsing the office space all these loans are going to be going bad these are huge losses for the banks the value of the collateral is going to go down but what's ultimately going to be the final straw to kill these banks is when interest rates eventually go up because when eventually rates have to go up the banks are sitting on all these loans that they own that are that are paying them you know one percent two percent whatever even if they have a book through it full of treasuries what happens if all of a sudden the fed has to let interest rates go up you know and they go up to five percent 10 20 now the banks have to pay depositors that much money well what they're they've locked in these long-term loans look at all these mortgages everybody keeps refinancing their mortgages everybody now you get a 30-year mortgage you're paying uh you know two and a half three percent i mean how is the bank gonna survive if it's paying depositors ten or twenty percent and its assets are paying three percent so the banks have put themselves in a position where if interest rates ever go up they're all out of business which is another reason why the federal reserve can't let interest rates go up because they'll crush all the banks but if they keep interest rates down in the face of rising inflation then it turns into hyperinflation so either way the banks are going to get killed which is why buffett is sold you know he started buying barrett gold but i think the political pressure became so strong he actually just reported that he sold 40 of the position that he just bought you know i mean and you know buffett's not a short-term trader so i think you know he kind of got embarrassed because they were doing the right thing selling the banks and buying the gold stocks and so he's you know he he now started selling these gold stocks but i think he's doing berkshire hathaway investors a disservice he should be buying more of these gold stocks while he can thank you for that i'm a bit worried about that question you too much agreeing now in in australia we're very fortunate in australia in that with covert 19 we've we've got it pretty much under control but you know we had one case in south australia recently or two and we thought the world was coming to an end but we've had three days but i know in america it's not so sweet in fact today 176 000 new cases in america 176 000 new cases they're predicting you're going to have 3 300 000 new cases before christmas i might want to what i hear your comment what's going to be the fall out here that's just this massive problem harry real real quickly i always said and i think peter agreed this too like you say covet was not but things things like this happen a weak economy can't take the shock we got 19 zombie company these are pub these are not small businesses these are public companies that are not paying their interest or their principal and they keep afloat because nobody has to foreclose because the fed's giving the banks all the money and and so yeah the banks i say i agree that the banks are screwed either way my solution is let's get rid of them and start with something better that's why deflation works now this this pandemic we you know in this case have a president who said hey you're a if you wear a mask okay i'm sorry that's what he said and all of his people do it and all of his people are infected and they have rallies with people right next to each other and europe similar we're individualistic cultures in europe and us the asian cultures are much more collective do the right thing do what the government said they licked this thing hunkered down and we're having explode this pandemic alone is going to keep causing problems that will unfold and keep causing the economy and loans to weaken and businesses to fail before this virus can come and really make a big difference and and hey all those people that didn't wear masks maybe they won't take the virus because that would be so so anyway we have not handled this well and that's another reason how can the stock markets be assuming we should be at new highs and get back to normal 20 of our economy not going to get back to normal for a year or two if ever both like you know what i think never when it look when it comes to covet i i don't even know how much worse it is than the flu but what i do believe is that it is the excuse that keeps on giving i think the government wants to keep covert alive because they need covid to explain why things are bad and covid is how they get new spending approved more government control uh they they convince americans to surrender more of their individual liberties and their freedoms so i think the threat uh is from uh that the government is creating is much greater than the the actual medical threat of of the disease but the real threat again is not the disease but the government cure right it's everything that they're doing to fight covid that we have to fear it's all the mandated shutdowns and all the bailouts and all the money printing and in fact the democrats now here are using this this is now you know taken global warming a climate change and totally kicked it away i mean now everything is based on the pandemic and fighting covid and they can use that as a wedge uh for all sorts of you know universal basic income and medicare for all and forgiving student loans i mean every new government giveaway program is now being justified based on covid and of course anything bad that happens in the economy hey it's not our fault i mean we have to fight covid we can't help that we're in this massive recession because it's all about covet i mean if it wasn't for covet everything would be great so don't blame us meanwhile we'll just print more money and we'll give this and i think the public they've created a big constituency that has reaped a windfall you know there are a lot of americans who love covet because they're not working and they're getting more money not working than they when they had a job and they don't have to wake up early in the morning they don't have to get dressed or do their makeup or you know if they're a woman and their hair they don't have to get in traffic and go to a job they don't like and then come home late in traffic they can stay home and enjoy all this leisure and just cash a big government welfare check you know so there are a lot of people that never want the economy to come back because they're living better now than they were before us one of the reasons retail sales are up because people have more money to spend because that you know their welfare checks are bigger than their paychecks so this has been great for the government uh and and their ability to get more people to want to depend on government so they can buy their votes so that that is the crisis and that's one of the reasons that it may never go away because it helps serve the political ends of a big you know constituency in washington thank you now just a last question gentlemen and of course we've just had the elections of all elections in your country and everybody around the world has been watching television i've been watching your election and it's had me mesmerized now obviously well it looks like biden's got the job but of course assuming that biden's got the job and i assume you're both going to say that how's the economy now look what's going to happen over the next one year um is is america in good hands harry look it wasn't in good hands uh in trump's hands i think it would have been in worse hands had hillary been the president rather than trump um and you know i voted for trump uh the first time he ran i couldn't vote for him this time neither harry nor i can vote we live in puerto rico so we're not able to vote so nobody can blame us for for the outcome of the election uh but i do think that uh the economy will fare worse under under uh biden than might have been the case under trump i think that you know we were heading off a cliff either way uh you know it's just a question of how quickly we get there uh you know biden will step on the gas so maybe we'll go over the cliff faster uh than than that had trump uh stayed at the wheel but look you know trump didn't really change the policies that he inherited uh from obama who didn't really change the policies he inherited uh from from bush and of course the main policy drivers are coming from the fed and ben bernanke just continued and expanded the failed policies of of greenspan and then yellen expanded and continued to fail policies of bernanke and now powell is doing the same thing so it's the pencil bank that's really uh driving the bus off that cliff but yeah we're gonna have more regulation more government spending bigger deficits under biden than we would have under trump and of course if the democrats win the special elections both of them uh in georgia in january and end up with a razor thin majority in the senate by virtue of the vice president if the democrats have the congress then it'll be even worse i mean to the extent that the republicans hold the senate which looks likely some republicans will find religion and push back a little bit against government deficit spending but not significantly we're still going to get it just not quite as much as if you know the democrats didn't have to negotiate at all uh but you know we're definitely in worse shape and that's just going to put even more downward pressure on the dollar even more reason not to invest in the u.s even more reason not to own uh dollars or u.s treasuries and buy gold and keep your money in foreign assets harry am i on you uh okay uh i don't think it makes that much difference at this point when a bubble gets to this level just like just like that bubble in in dubai it's so far stretched there aren't any ease and easy options okay if you keep printing that causes further imbalances in the markets to lose faith and and again i just think that all we these zombie companies came since the gfc we should have gotten rid of zombie companies we didn't do that and we built many more we've created this thing that's just going to limp and get worse like any any exponential habit gets worse until you either die or you fall over and go into rehab i'd see the deep the deflation is the detox rehab okay the hyperinflation is you die that's the only two that's why you're at least listening to the right two people here is the only two ways once you the problem is letting a bubble get this far natural bubbles already occur in good times with falling inflation and strong i mean people just get greedy and they get more confident and over invest but when governments push it like this or like in dubai or in certain places they create a monster i my thing is i certainly wouldn't want to be the incumbent in this scenario trump may be lucky i would not have run invited advising trump i would say run away from the election get you got plenty excuses don't run and but don't be sitting there and then the new person can come and say well i'm do all this stuff i don't know what biden's going to do to fight this i think he's got his hands tied especially if the republicans retain the senate and and he wants to raise taxes and that would not that would be a real bummer for the financial bubble who owns all the financial assets top point one percent one percent and 20 owns 88 of financial assets out of out of your own home a a big tax raise but if biden had that that'd be a big bubble killer but i think i don't think you can stop this thing i just think a lot i think government should fund deflation they should help they should give banks support only to the degree in a proportion that they write down loans for businesses or consumers and deflate this bubble rather than keep cranking up the bubble until it just fails and you end up passing out and ending up in detox we're me we're gonna end up in detox but if i see signs of hyperinflation i'll be right there i just again i've seen signs of detox every downturn stocks go lower even if they go higher that is not a good trend that's why megaphone patterns are almost always topping patterns we got megaphones everywhere terrific now uh gentlemen thank you very very much i'm going to ask you for one last comment before we finish and uh peter i'll have you go first but first of all thank you for participating in this event i can see the australian people are going to love you you have a great way about you promise me you'll come back and we'll do something like this again real soon um because i've i've loved listening to you you've been fantastic and i just know many many australians will fall in love with your the way you handle yourself but uh could you just give us your your last thoughts before i hand over over to harry to close the program down over to you peter well look my advice and again i mean harry and i agree on the enormity of the problems and from my perspective i only see one uh way that this is going to be resolved see i don't think u.s politicians are ever going to act responsibly unless they have to and the only thing that's going to force them to be responsible is a collapse of the dollar now it's possible and i i hope that this happens that we do avoid hyperinflation we just have very high inflation we have a big decline in the dollar maybe the us dollar index which right now is around 92. maybe it drops to 60 or 50 or 40 something like that the record low is around 70. but maybe it gets down there and we have you know inflation is measured by our our consumer price indexes in the double digit range uh you know and and finally we do the right thing you know and the dollar doesn't go to zero we do have the type of collapse that that harry is envisioning uh when interest rates ultimately are allowed to rise and all the defaults take place but i think that is going to happen when from a position where the dollar is already much lower where the price of gold is already much higher because that's when the government's back is to the wall and now they finally have to do uh make the hard choices that they have been uh reluctant to make as they've been kicking the can down the road when it gets to the point where okay we kick that can we're gonna break our foot now we've got to deal with the can but of course they may not they may never do the right thing they may just have to print print print and then we end up with the hyperinflation but either way the dollar is going down anybody that holds u.s treasuries is going to lose because all you have is iou dollars and even if the fed keeps buying them to prevent the market price from falling and preventing rates from rising your purchasing power is going to go away look the american public is broke the american government is broke we cannot repay our debts so the people around the world who have loaned us money are going to lose one way or another either through default or inflation or a combination they're going to lose so the best thing you can do if you've loaned money to america is sell that loan to somebody else who hasn't figured this out yet and get as far away from the us dollar as you can the antithesis of the us dollar is gold and then you can also own real assets you can invest in good companies that have tangible assets that generate good earnings that pay good dividends i agree with harry southeast asia china these are the up and coming powers these are the countries that have the most to gain from the demise of the dollar a lot of these countries they have been bearing the lion's share of the subsidy to the united states they're going to be able to invest their savings productively in their own economies their currencies are going to rise their citizens are then going to enjoy the fruits of their labor as opposed to making those fruits available to americans and investors can profit if you know what to do again you know my company your pacific asset management we have accounts for people all around the world we manage portfolios equity portfolios invest in emerging markets invested gold mining stocks invest in all the assets that are going to gain value during this crisis so rather than suffering losses if you understand what's going to happen and you position yourself right not only do you preserve your wealth but you actually have a great opportunity to significantly enhance your wealth thank you peter harry over to you for the um closing remarks thank you yeah i agree that this there couldn't be a more important time we are at a critical point in the greatest ball there has i can't compare this bubble to pass bubbles in its global scope in the extent that stock bubble has been 11 years i've never had a major stock bubble last more than six five is typical so this is unprecedented and so you have to i'm just saying i've studied this this is classic like the major bubbles in the past debt and then financial they've been de-leveraged every single time that 90-year chart i showed you earlier is the most important chart i have right now nobody's going to see that because nobody's even seen this in their lifetime what typically had the deleveraging only ends up all of those 90-year cycles have ended up in deleveraging and deflation and it's the worst downturns other than hyperinflation runaway inflation they make the economy healthy again even though painful just like detox does and then you go and grow again so that's the scenario just like peter sees the inflation that's the scenario i see but i'm not stuck on any scenario i've had to learn everybody knows with government stepping in but now i said they did this from 32 to 37 minor quantitative easing this is this is off the charts of anything in history and i of course have been warning this bubble would burst years before it did in real estate in stocks and have to change those forecasts and when trump got elected in late 2016 and i was predicting he was more likely to win than not when the polls just like today said no chance i i became full out bullish i've been bullish since because you can't argue with tax cuts is better than quantitative easing direct impact on corporate profits and things like stocks and in real estate and stuff like that so you have to adjust to so so like i'm saying i expect i know on my newsletter i always have two scenarios in the short term one long term and even willing to change that i expect another crash pretty soon because i think this one's gone as far even because of the massive money printing and not much happened despite that and the pandemic getting worse and these zombie companies growing small businesses i just got showed a chart that they on their ass not not rebounding at all like the bigger companies i think we go into downturn no matter who president what congress does what money printing and that loses confidence and that will happen if i'm right in the next three four five months if that does not happen because xyz or this policy then i'll have to shift my policy again but my long term has not been the same thing money bubbles up and then it deflates deflation i'm still seeing every sign of that they're just putting it off as long as they can but like past bubbles no government decides to end about very rare the bubbles in them they create the bubbles and the bubbles become a bigger monster 500 trillion dollars in financial assets says oh go ahead i'm feeling lucky lucky punk that's what i say these central banks these guys never had sex or run a business most of them okay they could lose credibility fast academically great they've done some they call it an experiment it is an experiment history says it will not work out and history says to me it's going to be deflationary but as i said earlier if i see signs that inflation is doing more than creeping then i'm going to be have my antenna you know if i see you know certain things i see i'm just i i keep myself saying my god this much money printing there's got to be at least three or four percent we can't get over two percent inflation no matter what we do japan is printed four times as much as we are they've been in a coma zero inflation growth which by the way proves long term the policies don't work if you need proof japan so i see the deflationary scenario but i am willing to switch my strategies if i see otherwise it may or may not switch my long-term view but it certainly will always switch my short-term view i always have two scenarios right now i say within three to four months we see a lower low in stocks and that's when people start to say okay that's four in a row now after print print pop-up fiscal stimulus everything we keep going lower there's something wrong here in denmark paladin at least know we're in a major crisis what the message is whether you lean more towards peter or more towards me there's one thing that's a hundred percent sure here we're going to see more volatility in markets and investments not less we've seen it ever since the first tech bubble peaked in 2000 we've seen bigger crashes every time there was 34 then 54 in the gfc and then i think we're going to see 80 percent plus so there's going to be more volatility and i've been telling people for a long time other than some kind of safer investments and some kind of leaning one direction the best way to make money in a volatile market is to find traders and trading systems who know how to make money whether the markets go up or down and of course we're seeing both and and you know we've had a somebody that we used to promote in the us that sean is that god sean has a system for finding things that are going to go just for two or three months at a time whatever it's six months that's what you need in this sort of thing if we go more deflationary well that's going to favor this but then if there's a big and we go more inflationary it's going to favor that people like sean don't live in the long term they constantly calibrate risk and use options people say oh options are so risky but no no paul tutor jones says what i do is not risky because he knows what he's doing he's always playing risk and hedging himself and he uses options and leverage but he knows what he's doing so what shawn does is find ways to give you simple trading strategy you're not day trading every day you find pockets of opportunity you get in there you when you win you run when you win it and when something goes wrong you cut your losses that's the discipline it takes a system and i'm gonna tell you right now if you got a son or daughter or a friend or something and they're going to e-trade or ameritrade or whatever you have in australia for for you know online brokerage and stuff and thinking they're going to outsmart the smart money in this market they don't have a chance period unless they're just unbelievably gifted okay so i say just like i said say put some of your core money in this fund we're going to play shifts sean takes certain amount of money that you can afford to have higher risk and returns and follow a system like sean it's that simple and again you know it you can and number two advice if you get on a system like sean's which i think a lot of people should consider follow this system what people do the biggest mistake is they second guess it the best traders are right two out of three times you're a hero and again losses less let the uh winners run longer so you have to follow the system even when it loses short term but again sean we've been promoting him he's been the most popular speaker on our tours in australia will introduce you and i i ask people to sit through this presentation you will at least learn a lot [Music] [Music] foreign

Channel: Goko Group

Views: 252,072

Rating: 4.8881373 out of 5

Keywords: harry dent, peter schiff, gold, economy, bitcoin, debate, fight, finance

Id: TIw-rO2ooIQ

Length: 111min 3sec (6663 seconds)

Published: Thu Nov 26 2020

Reddit Comments

[u/vaporware808]

I would rather see them in an actual cage match.

[u/WonderfulCheck621]

That's not a fight, Peter is way ahead of dent

[u/Quant2011]

Please remember Peter got a jab It will be hard for him to see bitcoin fall to zero, as it will happen after 2026, when the peak insanity will burst