John Adams: Could Evergrande Be China's Lehman Moment? Australia Has Fallen - Who's Next?

[Music] hi everyone my name's darryl payne ceo old as good as gold australia and today once again i'm joined by my brother brian thank you partner at as good as gold and today we interviewed john adams chief economist as good as gold australia good morning john good morning daryl and brian how are you today very well thank you fantastic good morning john um i should say welcome back john um and because i say that because we haven't spoken for some time so far as an interview is concerned and there's a story behind that and we're going to get into that in just a moment but i thought first what i would share another story with our viewers one that i didn't really surprise me but i was surprised that mainstream media reported it but this was a gentleman who was sentenced to a jail term going back around 30 years ago and he he broke out of grafton jail apparently hacksawed his way out and had been out in the community for something like 30 years almost 30 years this is just aft after he'd served a portion of his sentence so police have been looking for him haven't been able to find him uh he's been operating as a handyman at a township called avalon or a suburb avalon which is a northern sydney suburb and getting along pretty well had a house that he was living in was earning reasonable money and was quite comfortable but then of course covert came along and the lockdown process started and he ended up not being able to find the type of work that he was used to he lost his house and he ended up uh living on the side of the road like on a park bench so he was rather distraught made a decision to go to the nearest police station and knock on the door and admit himself back into prison and this seemed to be quite amazing to the police in charge at the time and they asked the question why did you do that and he said well he said i ended up with no money through lockdown no money i was destitute sleeping on a park bench he said that nothing could be as bad as that so i do it jail with three square meals a day and a bed of my own and a roof of over my head was better than being in lockdown unbelievable right so i i think this is a pretty good indication he's not on his own there would be a number of people out there at the moment that would be finding the harsh rules that we have with lockdown um just um taking taking over taking control of their lives not a good position to be in at all in fact your story um not a lot no not a lot dissimilar to that and so i'd like to share this with the viewers that john had a major experience uh until just recently uh the australian um that we australia that we know and that we've loved for so many years seems to be changing quite dramatically and not for the better of course the delta covert 19 outbreak has shown that governments of new south wales and victoria have embraced totalitarianism with the current lockdown it's been dragging on now for something like a two and a half months now recently john you and your family were placed under house arrest by the new south wales government and you were deemed close contacts so if you could share with our viewer or our viewing audience what has been your personal experience what's it been like on the front line of the lockdown so the last two and a half months has been tough for um well we have about eight million people in new south wales but in the greater sydney region we've got over five million maybe five and a half million and it has been extremely tough for millions of people in my state um initially this was going to start at two weeks a two week sharp lockdown then it went into four weeks and then we got to the end of july then it's gone into us we'll be doing it for another four weeks until the end of september also until the end of august um and now it's uh we're dragging this all in until we hit certain vaccination targets and if we don't hit those targets uh you know the way uh our premier is speaking is that we're going to be in the lockdown for perpetuity so uh um small business in uh and in terms of my stay has been smashed uh a lot of people are facing it uh very hard um and obviously the context um the economic context is is largely what we've been discussing to date in terms of uh the biggest household debt bubble in australian history so a lot of people haven't got their finances squared away and that's caused enormous amounts of distress even though there are some uh government payments on offer it's it's nowhere near enough to actually help people get through this uh in terms of this transition so um so we're going to talk a little bit about the finance the economic impact but um but the more important impact is i think on uh civil liberties on on the freedoms that we have come to expect and understand that australia is without going to an election without any form of public consultation without even any parliamentary debates we've had the new south wales government in particular basically sign away all of our rights are using a whole host of laws and expect that the public will follow in terms of follow those laws um so yeah so a few fridays ago um there was code 19 detected at the child care center that my daughter is at and we were told the following tuesday that that we had to pick up our daughter uh because of covert so we did and we went uh so we weren't told to go get tested but we anticipate we would have to so we got it we got tested came back negative the following day so we thought we were um we were all good uh and then uh later that evening we got a phone call from the newsletter health department saying that we have been deemed close contacts and we were required to self-isolate for a week and a half and to go on um for a mention test on day 12 and um and if we didn't we would be extended for another two weeks and if we left our home we will be subject to monetary funds and arrest so um that was a particularly uh challenging uh period where you've got two little kids um and that you just have to sort of stay indoors or just stay we've got a relatively small backyard so you know we did go in the backyard a little bit but um but largely we couldn't uh sort of move and we had um i mean because the policy has gotten out of hand in new south wales whereas for example i believe in south australia where you guys are at the health department do the compliance checks to make sure that people aren't complying with these uh uh these lock down rules uh self-isolation quarantine etc um the the health department is overwhelmed in in new south wales and the police and the military have been doing the compliance checks so uh so we we did have uh the police come around um and to make sure we were self isolating we were in the home and we were and um you know they did a routine check is everything okay is everyone sick or is everyone healthy and we answered all those questions and um but that they did uh have um that they did sort of drop some information on our front doorstep uh about uh about the current rules and the risk of covert et cetera and but the police were in full you know in their full uniform with weapons uh firearms or tasers handcuffs uh and obviously had i been in the front of my home when they came around to do their compliance check i would have been subject to arrests so uh i i think a lot of people in my state have found this whole policy to be very confronting because it's not what we're used to um and things have just dramatically changed uh within weeks uh so like a lot of people have found that very hard to adjust and uh i mean there are ways to um combat that uh you know through the courts uh in terms of uh trying to engage politically on social media and and you know to some extent of the mainstream media um and obviously in the new south wales we don't have a state election for another two years so um i mean there are limited ways that we can try to um uh show our displeasure and our disagreement with the policy but um uh you know if we're gonna follow the level of law we we have a full-on totalitarian regime here in new south wales uh under the guise of a pandemic um and uh there's a lot of uh people questioning uh both um science professional scientists and others as to is the risk of cover 19 uh you know is it sufficiently higher to warrant the policy response i mean it seems to me that the policy response is is disproportionate um and it's causing more harm than benefit and that's why you know funny enough the world health organization are against lockdowns because the economic impact the psychological impact the social impact the impact on children being out of school the impact on religious people not being able to go to the house of worship there are huge impacts across society now because of the work i do with as good as gold and because of the research i've been doing for the last few years on the economy i've taken a number of precautions to give myself sufficient buffers so that we can get through a hard period like this and financially we're fine but there's our millions of uh people in new south wales who are not fine but also people in victoria and um and and and and when you have so you know financial pressure on top of other forms of pressure um that that causes a very toxic um cocktail for a lot of people are you suggesting to me john because it's not clear to me were you uh did do you have a mailbox in your backyard because you're not allowed out in the front yard so how how does one collect their mail well you're not allowed so um i mean if you are uh i mean so the theory goes is that the reason in new south wales you have to self-isolate for 14 days is that's the incubation period of the virus and there have been some instances in sydney where someone may be coming to contact with covert get tested early on comes back negative but by day 12 13 14 you actually become positive so that's why they basically tell you to self-isolate for 14 days from the point of contact and to go get a test on day 12 just to make sure that you haven't developed covered um in the later and the later part of the incubation period so um so yeah so but but all of those sort of things now we do have support network we had people come around and drop us food and and and try to do all those sort of things that uh you know to keep the household running but uh but yeah but the uh these uh um the you know the the order to self-isolate creates enormous difficulties uh particularly when you've got young children who need to be sort of educated and uh you know children you know particularly seven year olds need to be out and running around and expending energy etc and so when they're not that that creates uh tensions and stress that uh normally households don't face wow i mean the rest of the world finds this really difficult to believe don't they and you know i've i've noted uh today victoria have opened up a little bit they have more freedom now in particular for the vaccinated well then go to their letterbox can they yeah yeah um i know that they can have a picnic with five people and five five people at a picnic but if you're unvaccinated you're only allowed to have two people at the people i mean it's not bad is it increased exercise limits allowed to travel 10k from their homes now can you believe it plus outdoor outdoor gyms will reopen and you think you've got to be kidding me for those who have seen oliver twist please sir can i have another bottle of soup and the answer was no but that was just limited to that particular environment the house that he was living in this is australia isn't it yeah yeah look absolutely and it's australia-wide yeah i mean like if you're living outside of australia you couldn't believe what we're going through at the moment um one one one point that i'll probably make daryl is um and you know i mean perhaps for a lot of people in my state it's been very concerning is is that you know the premier has continued to say that um you know free you will get your freedoms back if you do this if you do that but if you don't do them you don't want you you won't get your freedom back and you know for a lot of people um uh you know we've all been scratching our heads thinking well who is it who is it for you to determine uh which frames we can have and which freedoms we can't have i mean so obviously the first fleet came into sydney in 1788 and uh you know governor arthur phil at the time basically was able to tell the convicts what freedom they could have and couldn't have and and yet that whole penal colony system continues to today so whereas um for example in america going back to the declaration of independence you know rights and freedoms come from the creator and it's not for government to dictate what freedom you can have and you can't have and yet the way the premier is speaking it is very much similar to how um uh the the early um um the the early english governors used to speak when they came to sydney incredible da um john before i answer ask this next question i'm just going to talk about a film clip that i saw that david morgan who is our advisor from the united states um he sent me a a film clip and it was a tv host it was a tv program what you know like good today tonight type situation and in this particular film clip they were showing the in america they were showing clips of what was happening in new south wales and victoria for that matter and the title that the uh presenter gave it to at the end was australia has fallen and if we all remember a film i feel quite sure the actor i can see his face but the full i think it was washington has fallen right he he actually put a name to this as australia has fallen and it just rings the bells it you know the dictatorship and the the the governors of the state and that making decisions that we don't have a say at all so you know freedom of speech is way out of the window and again before i just we'll move on to the next question i i i've said this before walking in the city of adelaide and it's a only a tiny city or the capital of a south australia 1.3 million so it's not big but you go down the arcades and they're and one third of them are closed you know so these small businesses are really feeling the effect of lockdowns so my question is really john the economic impact of the current lockdown has fallen harshly on millions of australians in new south wales victoria especially on the small business community john can you describe the economic the economic fallout from the current lockdown what do you anticipate happening with the australian economy and business community in the coming months one point i'll make is is that the um so yeah so a lot of people um have not had what i would call strong cash flow management i mean one of the points i made in an article back in 2018 about preparing for economic armageddon was to um was not only about getting out of debt and holding sound money like gold and silver but it was also about having good strong co strong cash flow management so understanding what obligations you've got coming up um obviously trying to anticipate those obligations putting money aside pre-paying obligations where you can just so that if things were disrupted you know you're not going to fall in heap and and so with the current lockdown a whole host of households and small business people and even media size companies they have fallen into immense cash flow difficulty because they haven't been able to generate an income and there's an expectation that they continue to pay all of their outgoings and a lot of people as i said before don't have a buffer and one of the reasons why they don't have a buffer is because we have the biggest debt bubble in the country's history so there are a lot of people uh now what i should say is the state government and federal government has provided a level of financial support that level of support has been late in terms of its time and coming to the party but also it's been a fraction of what it was last year with jobkeeper so while a lot of businesses were able to keep their head above water in 2020 2021 i think it's going to be a very different story and i've already hearing stories of companies going into insolvency and companies winding up um and dare i say that i think as we go forward we're going to see more of those examples more of those sort of examples happening um so um so i do expect that new south austin victoria particularly new south wales that it's going to take a while for the economy to recover um i mean even if you look at for example martin north's um from digital finance analytics his uh mortgage stress and rental stress um mortgage stress i think from memory is about 45 in new south wales and rental stress is about 50 so there's there's half the population who are struggling to pay their bills and obviously that leads into a whole host of mental health uh emotional psychological problems and those problems will continue um because the lockdown continues so now the the a couple of important points is i think the biggest point for the economy and for the business community is uncertainty i mean we keep on having particularly new south wales the government keeps on changing the rules they keep on changing um in terms of some of these restrictions their timelines that they keep on saying we're following the health advice the virus is moving in different anticipated ways so we have to adjust as the virus adjusts but that causes enormous problems with people trying to plan in terms of when that potential can open up in terms of holding on staff in terms of being able to pay all sorts of leases and for for a commercial property and um and in terms of equipment etc um so so that uncertainty is is um going to be um very difficult i think going forward um uh in terms in terms of new south wales uh the chief health officer dr chant was asked in the last week about will we ever go back to pre-pandemic australia and her view was that we wouldn't the premier has said that that this situation with delta could last for another four years particularly if new variants were to come into australia and they did say that you know while we there's a plan to open up the economy when certain vaccination targets are achieved the government reserves the right to take either uh the whole state or parts of the state back into lockdown if there are outbreaks and um and we are seeing in israel in the united kingdom with some of the highest vaccination rates in the world that um that you are you can see very dramatic outbreaks of cases um and that is resulting in countries going back into lockdown so um while there's a lot of people who are hoping that we're going to get out of this relatively soon it seems to me that the economic damage is going contin to continue and and while in the last 12 months we've been talking about the damage from last year in terms of the amount of money printing in terms of the amount of uh in terms of government spending um that we that we saw from the federal government and all the state and territorial governments in 2020 this whole new outbreak of delta and the amount and the immense cost of testing in terms of in terms of vaccines in terms of um providing financial support it has just burned you know massive new holes in our public sector finances um and the real question is can we ever get out of this um and and and the evidence to date is i don't think we can really to summarize well you said it so very well and i would think to summarize all of this is that you know people we the people ask the governments to help out to you know to help private businesses and i think that's a good question or a good statement but we've got to come to the conclusion that within a lockdown the government can print as much money as they like but doesn't produce any goods the problem is is the production of goods and services so you can print as much money as you like but there's still going to be that massive problem ahead of us so it's not a matter of government helping out it's a matter of government not getting involved as much as they are and letting business produce what they have to produce couldn't agree more john many australians have been shocked and i repeat that shocked as to how our freedoms have been taken away by our politicians so quickly and such extravagant expense unfortunately what many australians fail to understand is that this occurrence has been driven by our fiat currency system and the manipulation of precious metals john can you explain how our australia's monetary system is at the heart of the horror that we are witnessing when you look at um governments who get out of control and history is full of uh governments that go into extreme policies um uh someone always obviously has to pay um particularly when the government is running a large deficit like we are now and the question is where is that money coming from um so some of the money is some of the financing is is uh being being offered by domestic investors but also international investors who are willing to buy some of these government bonds but but to a large extent it's being printed by the reserve bank of australia and other central banks and they are buying a significant proportion of in terms of government debt so i i think we're going to by the end of um this qe program assuming we we stick to the current timetable that we'll talk about soon um um you know the 35 of all federal government debt could be owned by the rba and i think it may be about close to 20 of state government debt could be owned by the reserve bank of australia so um the only way that this lockdown and the loss of our rights um could be possible is because we have central banks printing enormous sums of money using that money to to basically buy government bonds at elevated prices pushing down the interest costs to the governments and and while that can continue for a short amount of time the chicken's going to come home to roost in terms of inflation down the track but obviously if we had a gold standard a silver standard if precious metals were fairly valued the market would basically impose market pressure on governments that they wouldn't be able to just print currency willy-nilly and just spend it like uh like drunken sailors that we are now so um some sometimes people try to say to me well you know what's the big picture so the big picture particularly as we go forward with the economy is that with the biggest debt bubble in the history of the country we can never normalize policy because if we tried to normalize policy uh the house of cards would fall and so they have to keep on injecting more debt into the system and how do they do that they they do it by printing more money getting governments to spend that money we're racking up we've probably racked up about uh you know uh with this curved response more than a trillion dollars of new um public sector debt in this country um um a lot of this is being financed by our monetary system and so uh you know i mean one of the important ways if australians are thinking well how can we ensure that that government doesn't get out of control into the future um while you can change the constitution you can change laws and parliament you can potentially do things with the courts you always you know from an economic point of view you've got to look at the financing of these activities and it goes to the heart of the fact that australia the australian dollar is unbacked it's uh controlled by the rba uh they could there's no limitations as to how much they can print um you know the inflation data coming out of the australian bureau of statistics is uh manipulated um to a to a like lower rate so the actual inflation rate is much higher compared to what it um uh compared to what the government is willing to admit to and and that's the essence of our economic dilemma that we have a a structurally flawed monetary system that's giving these politicians the ability to do what they're doing at the moment it's interesting in it i mean i think people generally tend to think not everyone but a lot of people tend to think that governments have unlimited resources and unlike ourselves of course a conventional business you end up with too much debt you go broke and there is a tendency to think that that could never ever happen to a government but the same thing has happened to governments over and over and over again which is why fiat currencies have over a 5 000 year period 3 800 fair currencies i've all gone to zero because the government's every no one learns from history or certainly governments don't learn from history they think that they're smarter and they can do it a little differently but no one's succeeded yet so we all need to understand that there is a limit to how much they can print before you go into a hyperinflationary phase and that's of course where gold and silver prevail yeah that's when nothing nothing else counts for anything that's when the streets are full of paper currency um and it's just being thrown away and shoveled down the drains so that's where we're heading at the moment it seems extreme but um quite clearly that's what we're confronted with at the moment yeah yeah well dara was talking there it reminded me of the story of the we in the wema republic in germany in in 1920 1922 the wheelbarrow of money sitting sitting outside the i think it was a butcher shop it was a some sort of a shop it will absolutely loaded with money and when the uh when the uh the owner of that money came out because he'd had to go into the shop the world but wheelbarrow was gone and the cash was left on the footpath so what had more what had more asset value was the world record so my next question uh john is really in the reserve bank of australia um i will speak about uh make a comment on the debt after after your your answer but earlier this week the governor of the reserve bank of australia gave a speech about the australian economy and how it is coping with the outbreak of the delta virus what are the key takeaways from the governor's speech which ordinary australians should be aware of first thing the governor obviously said is is you know that new south wales in particular the level and we are the biggest economy in inside australia we are basically um in in contraction um and and and so and so lockdowns do have a significant impact in terms of the ability to generate economic growth um interestingly some of the other states have actually picked up um and picked up growth say like including victoria uh so it's even though there's been some restrictions on victoria um they have been able to be quite buoyant particularly i think in the construction sector whereas um you know obviously wa continues to roar on with uh with mining and construction and a few other industries over there so um so the impact at the national level hasn't been as severe because other states have been able to pick up the slack um but uh but obviously uh now uh the so we've obviously documented in previous conversations how the rba is is engaged in very extreme monetary settings in terms of uh interest rates at point one percent quantitative easing at five billion dollars a week in terms of buying in terms of yield curve control in terms of um the the the bond that matures in april of 2024 being locked at 0.1 and all of these measures were designed to provide cheap financing to banks but also cheap financing to government so the question was always well will we ever get back to normal now there was a plan that was put out by the rba at a previous board meeting to show that there would be some form of normalization um that that it was anticipated that qe would end at the uh in november of this year um and that by 2024 once inflation starts to get between two and three percent um interest rates would start to go up once we finally come to a conclusion of qe now with the with the outbreak of delta uh that's given the rba a new excuse to continue to print um so they have said that they are going to taper their printing so up until this point it's been printing at 5 billion a week now in september or in terms of this month they said they were going to reduce their purchases to four billion and that they would be purchasing um between now through to november well they've now extended that amount of additional money printing at four billion a week rather than november it'll be through to at least um february of next year so they've kicked the kick the timeline down down the road and obviously that means that they can easily now kick the time frame as to when they're going to raise interest rates so um now there are those out there like myself peter schiff and others who believe we are experiencing stagflation and that stagflation is going to get worse well um stagflation will occur and intensify when when central banks can't normalize policy and and and that the stimulus that we've had to date uh really runs through the economy so i think even though there's been a massive amount of money printing that has happened to date um some of that money printing has been not it hasn't flowed through to the economy because because we are on lockdown so i think if we can get out of lockdown if we can um uh stay out of lockdown uh i think we're to see quite a bit of inflation start to manifest right throughout australia um whether that's picked up in the cpi or not um and obviously we've got a commitment that we're going to continue to print uh or print money on a quantitative easing for longer so um uh that doesn't bode well for in terms of uh in terms of the sound currency moving forward um and and again so the question is can we ever normalize so i mean obviously in terms of the lockdown pandemic can we ever go back to the pre-pandemic world well the other question about pre-pandemic is will we ever take interest rates will we ever take fiscal policy back to where it was prior and the reality is we can't because the amount of new debt that has been incurred in the last 18 months has been incurred at ridiculously low interest rates by governments and corporations and households and a lot of those people even if the economy is fully opened up they would struggle to repay that amount of money if interest rates would were to go up so um you know what while we while we while we see well um you know maybe maybe households could have some households could absorb another you know one person like maybe half a percent to one percent but that at least be 10 to 20 percent of the economy that because they are so leveled up if rates were to go up you know one percent one and a half percent they would struggle to make their repayments noting that even at these record low interest rates um you know we've got record mortgage stress and record rental stress according to modern north so how do we get out of this economically er there is no plan um by the by the federal government or the state governments to repay any of this debt no journalist is willing to ask the rba how do we ever shrink the balance sheet how do we ever sort of take interest rates back to some sort of normal level uh and normal would be in the order of four to five percent uh we can't so so we're stuck and we keep on playing this game of charades where we keep on coming up with new excuses as to why we can never go back to the way it was in terms of economic policy and and and that will obviously i mean at some point the public will wake up to the charade and we'll realize that we have runaway inflation and for those who are unprepared for that inflation when it really manifests itself in in ordinary goods and services that's when living standards will be under enormous pressure and when we say enormous pressure in venezuela people are struggling to eat even in lebanon now who's gone through hyperinflation in lebanon people can't poor people can't eat poor people can't get access to basic medical services obviously in terms of things like fuel and transportation people are struggling so cost living is a huge problem in this country and that's going to get worse as we go forward because the only way to fix it is a depression the only way to fix it is to shrink this debt bubble uh governments uh and bureaucrats have said you know they won't allow that to happen because of not only the economic repercussions in their view but but also the political repercussions so we are stuck on a pathway of intensified stagflation and if our international creditors lose confidence in in our economic settings it could lead to a collapse of the australian dollar and lead to runaway and hyperinflation my takeaway from all of this john is that you can't print your way out of the problem i did some figures just recently and then in fact yesterday i was working on them and i've mentioned these sorts of things before but this is the latest figures and basically debt to gdp and i've just looked at australia america the uk once we get over debt to gdp and we're talking external debt we're not talking uh local debt or fed just federal debt we're talking external debt so we have here in australia um let's start with the us 28 trillion 28.7 trillion debt it's 140 debt to gdp 140 now i go back about a year and a bit ago before corona and it was always around about the uh 95 to 100 mark now it's 140. the uk debt uh 3.6 trillion uh 325 percent debt to gdp then we come to australia it sounds small but we have a small economy um 0.7 of a trillion or 700 billion debt to gdp and it's but it's a hundred and sixty percent of of debt to gdp once you hit over 90 i've i know the economists out there world economists are saying it's no return from there once you hit over 90 percent correct so i have always come to the conclusion maybe you can enlighten me uh john that if we if we can print this so much money why do we pay taxes i mean why can't they just print them and don't worry about paying taxes just print well and the thing is that uh well i mean if we had no tax and we just printed um inflation would be a lot higher and a lot sooner than otherwise uh is the case and uh we would we would you know our economy would would fall in a tailspin like a um it would it would happen at a much more rapid rate so so that that that's why we can't but but again um i mean people have been completely misguided about the economy um you know uh people think when the house prices go up and house prices in the last 18 months in certain markets particularly in sydney have been going up aggressively uh your house is not worth more um you know the the value of your money is going down so the land is the land the house is the house and it just takes more dollars to buy that house or that land because the currency is being devalued and so whether it is the um rising price of gold or silver or real estate or the share market i mean these are a clear examples of inflation driven by central bank policy so people feel rich um um but but i i think more and more australians are waking up to the fact that um the level of debt that people are in and the level of prices um that it's not normal it's not healthy and and that it's not a function of a prosperous country but there is something else going on so so i think there are more australians waking up to that message and uh and obviously the important work that we do here at elizabeth is gold through these videos and seminars and articles is that uh we're trying to continue to waking up the public the population uh before uh before the the eventual currency collapse uh is to occur if we continue along the path we're continuing yeah yeah i'm talking about printing money um this week and i think this is big and i'm really interested in john's comments on this because this could cause the collapse absolute collapse of the house of cards this week we saw china's property big largest property developer these guys are really big time evergreen with liabilities approximately 305 billion us bro run into serious financial trouble they as they face liquidity crunch shares in the company have collapsed by 80 percent and investors have stormed the company headquarters demanding the money back some have jumped on the news and are claiming that it's china's lehman moment now i'd really like your assessment on this john i see it as a serious debacle and i don't think it matters which way the chinese government turns here whether they confront it head on and just say we're not going to do this anymore we're not going to finance you anymore because then then of course there's a whole string of other companies in similar positions to evergrand that they'd have to support it they've either got to support them or they don't if they don't then the house of card collapses and a lot of people lose a lot of money if they do support them but how much longer could they do that we're talking about hundreds of billions of dollars the government would continue to have to continue to inject into the company's coffers your thoughts on this john and what the ramifications might be i mean while in the last few years we've talked about a a global death bubble um i mean the the largest one is actually in in terms of china so so that the rise of china both as an economic and military power has been financed through debt and huge amounts of debt so no economy in the world is sustainable uh obviously in the australian context we've talked about largely household debt uh a mixture of foreign debt and now public sector debt with the pandemic but the chinese have a huge problem with um uh in terms of household debt uh in terms of particularly local government debts and corporate debt and a lot of this has been financing this huge um urbanization strategy that the communist party has been implementing so it is true that um if evergrand were to collapse in uh whole you know homeless bowls it would it could bring down the entire chinese economy and it would have massive repercussions for the world economy as well um and in terms of australia we wouldn't survive that situation we wouldn't survive it in the sense that our that that iron ore sales iron or prices would go through the floor um um so that that would mean that our mining sector would basically uh go into recession western australia would be in an awful mess and obviously the finances of the western australian government would be completely exposed but then obviously in terms of uh now when the economy opens back up we will be expecting tourists to come into australia would be expecting um foreign students coming back in uh all of that economic activity potentially could could could go south if ever grand were too uh if it were to collapse as well but also it would it would have huge political ramifications inside china uh i mean the the the scenes i mean australians are not accustomed to storming um the the headquarters of a corporation when they lose money but the chinese do this all the time so um so so i mean we saw some i saw some very dramatic footage over the last 24 hours where people are we're not talking wealthy people we're talking about ordinary mums and dad investors so while evergreen is a large property developer they have also been selling financial products into the chinese retail investor market and a lot of mom and dad investors have bought into a number of these in terms of these wealth management products so if people lose their life savings in these products or or lose their properties that are still under construction you know the amount of social and political chaos could be quite extreme now one of one of the big differences in the western world versus china is in china the communist party controls all facets of not only the political system but the economy and the and the whole objective of the ccp is to is to retain power so i think they fully are cognizant that if evergreen were to fully collapse that could the the backlash from the public with a collapsing economy could put the risk of the ccp's power in jeopardy um and that's why i don't expect um a full-scale financial crisis to occur so i think in the in the last few days evergreen has appointed some financial advisors who are who have expertise in restructuring um there will be some investors who will lose some money uh we'll have to see how that all plays out um importantly um there is some important um milestones next week in terms of evergreen paying back paying a interest coupon to investors they've already beijing has already said that that payment would not be forthcoming so they will be technically in default but uh but there will be some form of restructuring and it looks like that foreign investors in particular will suffer more of the losses compared to domestic chinese investors so they'll move heaven and earth to continue to keep the company afloat um um and that will obviously come at a cost in terms of uh the the people's people's bank of china printing more money in terms of the central bank uh sorry in terms of the central government in china providing more funds but also in terms of some of the local governments injecting more capital into the company as well so how much capital will they have to inject we'll have to see but i do expect them to um to to to keep evergrand afloat in in some restructured form but i think this whole episode of the last fortnight has exposed how uh how big and how wilty this uh chinese dead bubble um is and and if it were to ever collapse we would again it would be the the largest um uh corporate collapse um in the world and it could well be that we see not only a full scale of depression in china but a but but that cascades right through the financial system and the entire system is um coming to its knees so again i mean i mean that's why with all of these systemic risks not only in terms of australia um and in terms of new south wales and victoria but the global economy i mean uh while i've taken the precautions to insulate myself and darren brown i know that you've taken steps over the last couple of decades to make sure that you and your families are safe from um you know financial risk or disruption to the economy of the financial markets uh people need to be aware of the context in which we're living in and and people need to take a whole host of um deliberate financial steps to make sure that if the worst case scenario were to occur that they would be in a position that they would be able to withstand that pressure and uh to date um you know during uh covert 19 in uh in 2020 and 2021 i think that the three of us have been able to withstand that pressure whereas a lot of australians so far have not while um if ever grand were to pancake um the pressure the economic pressure of that event would far outweigh anything that we've experienced today from these covert 19 restrictions including the lockdowns so people need to be fully awake to what's going on fully awake to the risks and people need to take deliberate action to ensure that um you know hope for the best prepare for the worst but but if the worst does come people need to you know they need to make sure that they can survive and that they can prosper on the other side yes no sound words john and i mean i agree there's so much uncertainty out there at the moment that gold and silver more than ever before if you have gold and silver you're in a position of strength um and you can divorce yourself pretty much from all of this uncertainty that's out there but i just want to share this with everybody i want to go back to the illustration i give on gold versus real estate because every time i share this with somebody they say wow i never ever saw it that way but we need to because it's it's how it is the illustration is this and i'm basing it on the fact that gold over the last 20 years since 2000 fruit now 2021 has averaged a return of 27.1 per annum average 27.1 percent per annum so illustration you've got half a million dollars some people will say well i don't have a half a million well call it 50 000 whatever the number is but i'm comparing it to real estate i know a lot of people invest a half a million dollars into a property and they may have many of those properties so you've got a half a million dollars you leave it there for five years just you buy gold you buy gold half a million dollars and you'll leave it there for five years at the at 20 increase per annum you've got a million dollars at the end of that five year period you could liquidate at that point at 20 per annum infinitum and you would have more in your account the balance in your account would be more than it was at the beginning of the year each year after that what a wonderful retirement brian 200 000 a year you could have done that for the last 20 years based on the returns that gold has provided so no one understands that no one understands gold why do they not understand gold because no one talks about it on mainstream media but they're talking real estate all the time by the way if you had a real estate investment you invested half a million dollars and over a five year period and it appreciated and was worth a million dollars i know a million dollar property at the moment if you rented it out it was an investment property your return on that would be around forty thousand dollars a year before outgoings so you'd be looking at somewhere around twenty five to thirty thousand dollars a year in the pocket compared to two hundred thousand dollars a year with no expenses no expenses just put under the bed and leave it there and bring it out with you know 200 000 a year return yeah fantastic um just in closing got to say um egon von graz is right he's always been right and egon has said time and time again and how if someone asks him the question how much should i invest in precious metals his answer very simple as much as you can invest as much as you cannot afford to lose if you can afford to lose 50 000 that's fine don't invest it but whatever you can't afford to lose that's what you should put into precious metals jim sinclair of course brian and i are a great fan of jim sinclair and he would talk about doing what the central banks do the central banks of the world all own gold why is that you've got to ask yourself the question why do they own gold because it protects their position it protects their currency they can back their currency in a time of absolute need otherwise their currency is worth nothing in in terms of hyperinflation or in times of hyperinflation so become your own central bank own gold and silver so that you have the position of power and strength governments do not want you to own gold they know that they require it but they don't want you to have it because it gives you power and control may i also say something dara i mean in the early part of the conversation i talked about a tv program and he called it australia has fallen and i from what you just said john um with everything you've said today i wrote down something that i think is very imminent man it says getting we're getting close to the last snail in the coffin if we don't change where we're going if we don't change from fiat currency to gold back currency the night that last none other than coffin is getting very close i i'd agree reciting the words brian of the one and only peter daniels i do not care what poorly executed economic decisions are made in the world tonight tomorrow i will still be able to party so if you've got gold it doesn't matter what happens a lot of people will get hurt but you'll be in a position where you'll be able to assist and help them but you've got to be in a position first where you're in control that's right and peter daniels comments are extremely valid john just if if you would like closing comments um if there's anything you would like to add to your presentation today um please you have the floor the only thing i'll say is that if our viewers in australia or or overseas if they're not happy with the direction in which your country is going particularly we've got viewers from the united states uh i mean the only thing you can do is to get involved in the political system in the economic system [Music] now is not the time to be a spectator now is the time to stand up and protect rights that were took centuries and enormous bloodshed to establish so you know i'm definitely up for the fight i definitely don't want what we're going through at the moment to be around form four in terms of my daughters and even the possibility of of these policies going forward so um so so yes i think there's a couple of important messages one is about um you know the freedom-loving people need to come together to ensure that these policies don't uh that they go away in the short term and they don't come back in the long term but obviously there are enormous immediate and local as well as global risks to the in terms of the economy the financial markets and people cannot wait to take precautions um if you can take action take action because um uh the the fragilities of the system are being exposed um or have been exposed over the last few weeks and uh you know while they may be able to put some band-aids uh on the situation now they'll be at some point soon that they won't be able to put a ban they won't be able to put the genie back in the bottle and when that happens you want to make sure that you and your family are set up to again the first instinct is survival but then once you survive the initial onslaught you can actually um you know operate normally and prosper um on the other end um and that's and that's the the whole message of why i started this uh five years ago and while i'm still with as good as gold and while we continue to do important work going forward thanks sean no appreciate the comments thank you again john john's been a wonderful support for as good as gold australia as i keep saying wonderfully researched one of the finest economists in the country and uh we just happen to be fortunate enough to have john working side by side with us which is fantastic i'd also like to thank our viewers and subscribers who continue to support this channel very much appreciated and i guess until next time stay well stay focused and goodbye for now and goodbye for now

Channel: As Good As Gold Australia

Views: 12,857

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Id: -gaCyNO97NI

Length: 58min 30sec (3510 seconds)

Published: Sat Sep 18 2021