Sign New York Banking Forbearance Agreement Now

Industry sign banking new york forbearance agreement now

there will be more deficit spending but they're not spending it they're saving it they're either paying down debt which economically is the same as saving or they're actually saving and look if you lost your job of course you're going to save money you're not going to you know if you pay the rent or whatever but you're not going to go spend it on a you know vacation or whatever but even people who haven't lost their jobs worried that they might be next maybe their neighbor lost so they're more they're raining and they're pulling in their horns there's a name for that's called precautionary savings just in case well um so if you get savings you're in a liquidity trap nobody's spending the [Music] money it is my great pleasure to welcome someone who i've been following for many many years and that is none other than jim rickards i'm sure you have seen his work out there maybe you've read his books i've read several of them uh he is the editor of uh the strategic intelligence newsletter the best-selling author of several books including aftermath seven secrets of wealth preservation in the coming chaos currency wars the making of the next global crisis the death of money the coming collapse of the international monetary system the new case for gold the road to ruin the global elite secret plan for the next financial crisis and the new books the new great depression winners and losers in a post-pandemic world and the ravens how to prepare for and profit from the turbulent times ahead uh and he co-authored that one with robert kiyosaki who's been on the show a couple of times jim rickards welcome how are you i'm fine jason thank you great to be with you it's good to have you on you know by the way i'm curious i don't know where you're based where are you located i live in portsmouth new hampshire so that's uh our motto here is live free or die excellent well that's a that's a good libertarian motto i like it a lot and you know when i see your interview sometimes you're in a different environment uh do you have like a cabin somewhere or something where i i have a farm in the mountains uh we go back and forth excellent good stuff well just give us your overall kind of macro view if you would jim as to what is going on in the world it is certainly a turbulent time no one would deny that you know every crisis leaves open many opportunities at the same time we'll take a deep dive into that today i hope sure well that's exactly what the books about uh the new great depression and uh when i was uh first discussing with my publisher my editor uh last april when the idea came up and of course by then we were in the lockdown the economy was collapsing the stock market had just dropped 30 percent i said jim we want to book on this there'll be a huge a lot of interest in it um and we you know the economy you know uh markets you know capital market you're just the guy to do it and i said thank you and and we got going on that and they said but you know keep away from the the pandemic and and um the epidemiology because you're not um you're not a doctor and i said no i said that's like asked me to write about property damage in new orleans in 2005 and not mention hurricane katrina i said you cannot understand the economy you cannot dive into the great the new great depression without looking at the pandemic and what caused it so they agreed that that made sense uh no i'm not a doctor but i said kind of jokingly i did go to johns hopkins so i'm not i'm not intimidated by natural science um and i was able to read i did read over 100 peer-reviewed academic papers on the immunology the epidemiology and the biology that doesn't make me a doctor but the science was very accessible you know when i started i thought to myself well uh you know there's going to be a whole bunch of like conspiracy theories and fringe theories and everything over here and there's going to be good science over here so all i need to do is keep away from this and focus on the science the first part was easy you can discard the fringe theories but when i got into science what i discovered is that the scientists don't agree with each other uh and that's a much bigger challenge because you know you hear certain politicians and it's a shame the way this has all been politicized that's really unfortunate but politicians will say you know believe the scientists well anyone who says that doesn't know anything about science i mean scientists argue with each other all the time and they they debate they challenge each other's assumptions new research comes along and and the the science as such evolves but it's never settled by the way just to comment on that you're so right jim because if we believed the science in the old days we would still think that everything revolves around the earth you know i mean that was the science of the day exactly the sun the sun revolves around the earth it took uh even when copernicus said that wasn't true that the earth uh revolves around the sun that it took kepler and uh and and tycho brahe and others a hundred years to change the consensus so uh yeah even uh bad science and there's a lot of it around doesn't change overnight so that's exactly the issue i was confronting and i can show you phd peer-reviewed articles that say you know uh you have to wear a mask you're a fool if you go out without a mask it's the only way we're going to stop the disease etc i can show you other phds that say no mass don't work if you understand the virus the virus particle the virus itself is smaller than the weave and the mask masks are not well constructed people don't wear them correctly they're mostly for show so uh take your pick i i lean a little bit too you know like i have i wear a mask i'm not gonna fight with the greeter at walmart if he says you to wear a mask i'll put a mask on but i think we are right to be skeptical that they do very much good at all washing your hands help social distancing house but so so i spent several chapters on that including the origin of the virus and the effect of the lockdown but the lockdown was the segway into the economy um because this the evidence is very clear that lockdowns don't work i know that may not be a popular view but that's been true uh that the scientific consensus around that has been true for a long time lockdowns are what politicians do when they don't know what else to do this guy fauci had a lot of time for him he's a he's an over the hill bureaucrat you know the old saying if you're a hammer everything looks like a nail right well if you're an immunologist everything looks like a lockdown but the fact is lockdowns don't work well if you have an island someplace and you can only get there by boat and you close it off and nobody can come and nobody can then then unlock down more that'll work but try the united states of america or north america europe 300 million people or 400 million people in the case of europe it simply doesn't work one thing i want to say though on this is if we try to put this video on youtube there is a high likelihood it will be taken down having this blasphemous conversation i just you know want to well no you're you're right about that i always hope you can fly onto the radar screen a little bit it's one of the reasons i like writing books i think books are the last thing that are not being censored you're right youtube will take it down twitter will take it down facebook will take it down i i applaud my uh publisher and my publisher um may have other authors who disagree and they'll publish them also and that's the way it should be but jim jim we should be outraged at this this is insane i mean yesterday the president of the united states was banned from social media it's this is i mean i i can't believe we're living in these times it was like a nightmare imagine imagine you in the soviet union in the 1960s it was the same thing but here we are well in some ways and that and but they survived they had uh sami's out which were you know the kind of handwritten manuscripts and they would secretly copy them on a xerox machine and pass them around in envelopes and cafes or whatever they you know boris pasternak got dr zhivago out and turned into a pretty good movie so but you have to fight back i agree with you the censorship is oppressive uh it's uh it's not scientific based it has nothing to do with civil liberties or the first amendment it's just uh silicon valley trying to control the dialogue and you know when they ban somebody and it's kind of high profile of course you've shut down one voice but that's not that's not the worst part of it the worst part of it is millions of other people who are intimidated it's like oh gee i better say the right thing or i better not speak up because they'll do it or i'm going to get sent to a re-education camp which means i'll be banned from facebook yeah and by the way in china they're doing that they have concentration camps in china real ones and they're they're removing organs from uh political dissonance without anesthetic and then cremating the body so where we've seen that before so uh but we're you know we're not that far from china i agree that we're we're heading in the in the wrong direction um you know as far as what went on washington it's interesting um i absolutely unconditionally condemn the violence i don't think there's a place for violence uh your property damage you know etc um but having said that the behavior just as an analyst leaving aside the politics that is very much the kind of behavior to be expected as a result of the lockdown and i would say the same thing about the riots last summer you know a lot of people condemning the attack on on capitol hill and they should i i don't disagree with that but they were pretty silent all summer when people were burning down kenosha portland seattle parts of new york brooklyn et cetera if you're going to be against violence be against all the violence not just the the ones you agree with or disagree with but um but the point i make and this is in chapter five of the book um you know there's been enough talk and some science and publicity has said around the physical effects of the virus and the pandemic but i don't underestimate the mental health aspects of this and this by the way this is another reason lockdowns don't work lockdowns kill more people than they save you could probably find somebody who got locked down and said well gee she she'd be dead today if she wasn't locked down i mean that person probably exists but what about the fact that the suicide rate has tripled the murder rate has doubled alcohol abuse drug abuse domestic abuse people who skipped a cancer treatments and heart treatment started heart attacks because of the lockdown so uh and the evidence is that and this is not just speculation the a lot of data is out there we didn't necessarily i didn't have the data not all of it anyway last april and may when i started writing the book but over the course of the summer the data came in and it bears out what i'm saying so the lockdowns have killed more people than they've saved they have not stopped the spread of the virus and what you do you lock you lock the place down maybe for a very short period of time you you contain the spread a little bit but then what do you do you're gonna you're gonna martial law you're gonna be locked down the rest of your life so then they they ease up and all of a sudden there's this huge outburst an explosion of the virus and you're back where you started from probably worse and then you lock it down again you know like wash uh you know rinse and repeat so and you didn't mention that people's immune systems become weaker too that's another part that's right i mentioned in the book you're right i haven't mentioned that yet but you know we uh there's more than one virus and bacteria floating around and by just going outside and interacting going to a bar or whatever we get exposed to those other viruses and bacteria and then of course they're not as lethal as coronavirus but uh they can make you sick and and you build up immunities to those well when you're locked down maybe you're avoiding the coronavirus but you're you're weakening your immune system relative to all those other pathogens and so uh that's another problem coming out of the so-called lockdown which is you'll probably get sick of something else so look it just doesn't work and in in the book in chapter um uh two i go through the history well where did this lockdown idea come from well it was on it was in a paper in a study in the center for disease control where did that come from i traced it all the way back to 2005 during the um the avian flu when george bush was president he read a book on the spanish flu a very good book by the way called uh the great influenza by john barry um but bush kind of freaked out a little bit he said we need a plan well they uh they came up with a plan that was devised by a guy who was a modeler at the sandia national laboratory in new mexico who didn't know anything about disease and a toy model that his 14 year old daughter had come up with she won a high school science junior high school science project prize great but that then morphed into this study was carried on through the bush administration the obama administration and then when the trump administration needed it they pulled it off the shelf well it was an instant return to the middle ages and and um there's a very prominent scholar d.a henderson he passed away a few years ago but he was um credited with leading the um movement to eradicate smallpox we did eradicate smallpox in the 1970s and d.a henderson uh is giving most of the credit for that he won the national um uh sorry the medal of freedom which is the highest civilian honor you know kind of equivalent to the congressional medal of honor and was dean of the bloomberg school of public health at johns hopkins so you sort of can't get any more um credentialed or accomplished than that and he said lockdowns don't work and i quote his study in the book so so that's clear but they have they're not good at stopping the spread of the virus but they're very good at destroying the economy and that's what we did um but they caused all these other even if you don't have the disease even if you are immunized or you had it and you recovered and you got the antibodies uh the lockdown still affects you mentally it causes depression anger anxiety and ultimately violence so i trace some of the it's not all not the soul cause but some of the violence we saw last summer in all these antifa riots and the violence we saw yesterday on capitol hill in part because people's anger level is so high because of the lockdown sure um one uh thought about it i don't know if you've thought about this or really anybody has much i've never heard anybody say it but if you look back to the the spark that ignited this you look back to george floyd just think of his situation so he was arrested for counterfeiting and he lost his job because the place he worked as a bouncer was closed okay that business was closed right and so he had to have money and uh that was before any of the stimulus i think i could be wrong on that but i think it was right and so he was counterfeiting and you know there we go that led to the whole thing right it may have never happened if he had been able to keep his job right so yeah the police officers were arrested and they've been charged with um a second one of them charged with second degree murder they're going to win trial some you know you're missing so proven guilty and let justice take its course but uh but these riots many of them were justified in the name of george floyd well i could see you know peaceful protest uh you want to call your congressman you want to have peaceful march that's fine that's the american way that's the first amendment not smashing the windows and burning downs to it i don't care of course not yeah and billions of dollars worth of damage nothing compared to what happened the timing was uh had a direct economic impact because you go back to okay so march march april may was the first lockdown the george floyd death was the end of may and the riots broke out in june july and august now what else was happening in july well t at was right around the time when the mayors and governors are saying okay now we can reopen you know the worst is over that looks like we got the virus contained instead of we can reopen well no sooner did the you know the bodegas and the coffee shops and the restaurants and the bars reopened here come the riots and they're getting the windows smashed and they're they're burned out and they're um you know police in the streets and they're boarded up so imagine you're a small business person you've just gone through three months half of them are bankrupt okay but but they have to kind of survived and try to reopen now you got a crowbar smashed through your window i mean and then now today you got a second wave which is worse than the first wave again more evidence that lockdowns don't work so um and there you get into this difference between perception and reality so you look at the stock market so the stock market indices are at all-time highs i think yes i'm peeing at a new all-time high today the dow jones and nasdaq they're all close to their all-time highs and so people say well it went down 30 in in march but it's come back 70 percent it's a new all-time high my 401k is restored what's the problem it looks all good well the answer is that the stock market no longer bears any relation to the real economy the s p 500 is the s p seven and the reason is that's a cap weighted index meaning your influence on the index is a function of your market capitalization well there are seven stocks and we know what they are minus apple amazon netflix google facebook microsoft and tesla okay those seven stocks are 40 of the market cap of the entire s p right so it's best it's best understood as the s p seven and by the way those companies are also the least affected by the pandemic they're not bricks and mortar they're telecommunications they're digital they're advertising um uh they're online uh shopping etc so seven companies are forty percent of the s p market cap they're at least affected by the pandemic and yes their stocks are going up and they're taking their earnings are going up as well but that doesn't that makes that means the s p doesn't reflect the economy because that's not the real economy how are the other 493 stocks doing well the answer is they're not doing very well they're flat to down and what about the real economy why see real economy i mean restaurants bars nail salons gyms dry cleaners bodegas uh you know boutique retailers etc well it's interesting that you're calling that the real economy and i'm not disagreeing with you about this at all but just one of the terrible i think side effects of this whole pandemic is the massive consolidation that is occurring toward the top the bigger getting bigger and everybody else is going to need ubi universal basic income to survive because and this may well be very engineered or it's just a massively helpful coincidence to the central planners who like this idea no that's exactly what mark zuckerberg wants and mark zucker zuckerberg gave it i think a commencement but he got addre her degree and was a commencement speaker and he talked about ubi but that's what they want they want a world where you know 10 or 20 or maybe a couple hundred people control everything and the rest of us are just getting welfare checks and they say hey know stay home watch football play video games here's your check bread and circuses yeah correct uh except maybe let me get this yeah i guess you could bring circuses if you count the nfl so the point being um yeah that is what they want and uh you know rahm emanuel famously said never let a good crisis go to waste well this is a good crisis and they're not letting it go to waste but but getting back to the uh you know people look down their noses at small and medium-sized enterprises they say well ah a restaurant with 20 employees big deal you're not boeing you're not apple computer well i knew that those small medium-sized enterprises make up 50 of all jobs and 45 percent of gdp so individually they may be small but in the aggregate they are half the economy and you've just crushed half the economy okay so say jim say that again if you would i just want to make sure people really get those numbers in those ratios small and medium-sized enterprises um again your bars restaurants salons etc are 50 of all jobs and 45 of gdp okay so that's that's half of all jobs and almost half of the entire country's gdp correct and we've just crushed it um and then you got people like larry kudlow running around you know last spring like i was a nice guy decent person but worst forecasting record of anyone i can think of other than the federal reserve and he's saying you know pent up demand pent up demand the economy is going to come luring back in july you know et cetera well um there's no pent-up demand i mean my uh my wife and i were you know we were locked down just like everybody else in march april and may and usually we go out to dinner on a friday night and we didn't during that time period the restaurants were closed and you didn't want to go out anyway but by july you know some restaurants reopened so we went out to dinner well we didn't order nine dinners i just ordered one like i usually do right in other words there was no there was no pent-up demand i didn't get 90 i got one so notice the other nine dinners that's a permanent loss that's not a temporary loss i i mean people are thinking maybe you go out to dinner a little more often because it's like the roaring 20s you know you've been locked up and now you you're out more you know but it's never going to be the equivalent yeah first of all that's not i know people some people might suggest that larry kudlow did but that's not true number one number two by the way even if the restaurant is open and you feel like going out a lot of people are not going out right say the restaurant but you know hey the people are so afraid they're um pretty well i'm not criticizing anyone's behavior i'm just describing it for purposes of economic analysis so uh and that by the way i said the restaurant reopened some of them did a lot of them are permanently closed it's it's not first of all they will never reopen yeah correct now these businesses and again i started listening all the data's in the book you see how much working capital do they have what varies by sector but the answer is 10 weeks 20 weeks people don't have five million dollars in the bank right they've got you know they have gross revenues they pay their payroll and their suppliers and their taxes and they make a little profit that's it they don't have work yet still but if you're locked down you still have to pay the rent you still have to pay the utilities you know your money some benefits etc and so uh you're running negative cash flow and a lot of them are just going bankrupt so you go up and down i don't care where you live go up and down the streets you'll see every fourth or fifth store you know for lease closed they're not coming back there's jobs they're not coming back the equipment software at fire sale prices and by the way they're not paying the rent because they broke the lease that's the first thing you do when you file for bankruptcy well and then but a lot of a lot of places new york city is one but not the only one they have rent abatement they've told people you don't have to pay the rent and they've got anti-eviction laws they say and by the way if you don't pay the rent you can't evict the person until further notice well that seems like you know okay that's an accommodation to the economic distress what about the landlord yeah the landlord probably then the commercial mortgage-backed securities they're defaulting on i mean all those people yeah and who also well your listeners should pension plans yes well yeah pension plan what could be your pension plan not your personally but yeah right your listeners should look in their 401ks do you want a high yield commercial real estate fund that was dumped on you by morgan stanley or goldman sachs maybe uh or maybe you have an index fund that's in the index and you don't even know the point is there are ripple effects of this and they're gonna it'll go from from tenant to landlord to lender to security holder and it's going to take a year to play out so we're nowhere near the bottom of this yep i i agree i think that's a that's a huge thing so the government and the central banks all around the world have created an unprecedented absolutely mind-boggling amount of new currency gym what does that mean to us uh you know it's like money printer go burr as the saying goes right sure it actually means nothing and let me explain what i mean by that and by the way your you know your austrians and your monetarists and your neo-keynesians you're going to say inflation right well they've been wrong for 13 years that's how long this has been going on in 2008 the federal reserve balance sheet was 800 billion today it's about 7.5 trillion so they point they printed over almost 7 trillion dollars of new money where's the inflation there's no equation i don't want to like belabor the point but you know some would say there's more inflation than is disclosed of course they'd say the indices are misleading but that's fine uh but then others would say look at the asset inflation i mean there's a lot of inflating of assets right maybe not consumer prices yeah but that's not inflation i mean asset prices are out there bubbles all over the place i agree with that you know bitcoin stock market uh some sectors of real estate not all uh those are acid bubbles that's not inflation inflation is what is the consumer price index or or the uh the ppi the um purchasing uh index um a producer price index rather and and you say well i've got my own definition well fine good for you but you're not going to be able to forecast policy if you're making up definitions you got to look at the way the fed does and i'm not saying that that there's no there no problems with it i'm not saying the models are right they're not but if you're trying to forecast fed policy and forecast markets which i do you better look at it the way the policymakers are looking at it because that's going to guide their actions if you want to stay ahead of the curve in terms of policy changes you have to look at it through their eyes whether the models are i know the models are wrong i get that i can do i do my own modeling but um you can't just make up your own definition the inflation benchmark that the federal reserve uses is a pc price deflator uh personal consumption expenditure price deflator that's the one that's used to determine uh gdp and their target for that is two percent and they've hit that target about two months in the last 13 years in other words they don't know how to cause inflation we don't have inflation but just to kind of come back to your point jason so we printed the seven trillion dollars over seven trillion dollars we talked about and the monitor is like oh all that money you're going to cause inflation we have not money printing does not cause inflation what causes inflation is the velocity of money it's the turnover so you know i i go to dinner i tip the waitress uh she takes the taxi home tips the taxi driver right taxi driver puts gas in his car so in that example my dollar tip had velocity of three there was the the waitress tip the taxi tip and the gasoline three dollars of goods and services for one dollars that's velocity of three but if i stay home and watch tb and don't spend any money my money has velocity of zero so a nominal gdp is money supply times velocity what's seven trillion times zero zero zero right it knows if you don't have velocity you don't have economy so you can think of the money there is money printing for sure but think of the money printing as piling up voyages piling up piling up a big pile of wood doesn't start a fire you need a match you need a bolt of lightning you need a blowtorch you need some catalyst so if you if you're worried about inflation and actually right now deflation is a bigger problem but if you're worried about inflation don't worry about the seven trillion dollar pile of wood ask yourself where's the spark okay so could that spark come at any time right could it just suddenly create a lot of velocity and also is the lack of any significant inflation in the system how do we know that it's a result of velocity versus just technological progress that technology is deflationary i think we'd all agree with that because it just makes things better faster cheaper you know which is it and could that spark come at any time well it can come at any time which begs the next question which is okay what could it be and am i looking for do i see any signs of this i'm not saying i'm not saying let your guard down about inflation i'm just saying there's no inflation right now and there's nothing on the horizon that's going to cause inflation you're asking a good question is there something that could yeah i can tell you what it is actually i tell it i i tell the reader in the conclusion of my book what could cause inflation in fact i recommend it because um we've got another problem which i just explained why monetary policy does not work fiscal policy does not work either you can have deficit spending but stop calling it stimulus because it's not stimulus and why is that you have to look at another metric uh which is the debt to gdp ratio so how much government debt is there and what's gdp and a simple example let's say and these are not the right numbers but just as an example let's say 10 trillion dollars of debt and 20 trillion dollars of gdp well in that example the debt to gdp ratio is 0.5 it's it's 50 the debt's 50 of the sorry the yeah the death's fifty percent of gdp well um what are the actual numbers the actual numbers today are about 25 trillion of debt and about 22 trillion of gdp in other words the debt to gdp ratio is actually around closer to 130 percent now what's the significance of that other than the fact it's a bigger number there's research this is from uh number source of the kenneth roger professor at harvard carmen reinhardt who was a professor at harvard she's now the chief economist of the world bank and others and the collaborators in books papers studies numerous time periods uh emerging markets developed markets all markets etc and they show very conclusively that your your keynesian multiplier works up to a debt to gdp ratio of about 90 percent 92 percent 90 90 and we're at about a hundred and thirty percent i believe right correct so 90s in japan is it 230 percent somewhere around that correct japan is a special case and i can explain that but uh just to come back to the the the other research so what's the keynesian multiplier cancer multiplier is when you're in a liquidity trap and you want consumption and people won't spend they they save that's what they're doing today you know the stock market was up today because uh okay so biden's going to be president the republic so the democrats control the senate uh so that means we're not going to get 600 checks we're going to get 2 000 checks uh and more so the stock market which usually gets things wrong by the way but they've said all right with all the stimulus people are going to get the money they're going to spend it here's your inflation kind of what you were asking about jason here's your inflation so interest rates are going up um that's not what people do with the money they will get the money i agree with that there will be more deficit spending but they're not spending it they're saving it they're either paying down debt which economically is the same as saving or they're actually saving and look if you lost your job of course you're going to save money you're not going to you know if you pay the rent or whatever but you're not going to go spend it on a you know vacation or whatever but even people who haven't lost their jobs worried that they might be next maybe their neighbor lost so they're more they're raining and they're pulling in their horns there's a name for that's called precautionary savings just in case so if you get savings you're in a liquidity trap nobody's spending the money so what keene said is well the gover ment can spend the money if people want the government will and so you borrow a dollar and you spend a dollar and you get a dollar 25 of gdp that's and it works for a while priming the partners for a while the question is why when does it not work and the answer is it does not work at 90 percent so jim the economy turns into sort of this zombie economy with too much debt right it stops working it's sort of like uh maybe a metaphor would be look you know i woke up i didn't sleep well i had a cup of coffee it didn't do the job like usual you know one cup is usually good enough well i had three cups and you know if i have 10 cups it's not gonna make me ten times more awake right it's going to actually hurt me so what what happens with the economy though when you do that it's the same thing the concept is that diminishing marginal returns so at very low levels of development of productivity you know one guy has a bright idea like you got a bunch of farmers 5000 years ago in china and guy says you know if we got together and built an irrigation canal and brought the water over here we could all grow more rice thinking oh yeah good idea and guess what that works but uh pretty soon you need an irrigation commissioner and he hires an assistant and you know your bureaucracy builds up and the cost so we've each new investment okay you still get gains you still have gains but the curve goes up very steeply at the beginning then it flattens out and then it starts to go down and then it actually goes negative yeah because you sort of collapse under your own weight without a bureaucracy that's exactly right it's it's complexity theory and uh scaling metrics but that's where we are now when the negative return that's what happens when you go past 90 the keynesian multiplier drops below one now you borrow a dollar you spend a dollar and you get 90 cents of gdp not a dollar 25 but 90 cents or 80 cents and progressively less but look at look at the math what's happening your debt is still going up by a dollar but your gdp is only going up 90 cents so what's happening to the debt to gdp ratio it's getting worse that means the return on the next dollar is lower this is why you cannot borrow your way out of the debt crisis right you cannot print your way out of the liquidity crisis you need other solutions and i talk about the solutions in the conclusion of the book okay so i want to ask you about you know what people should do but before we get into that you i believe correct me if i'm wrong are bullish on gold and silver is that correct and and maybe your your ideas is more counter-intuitive or or there's some distinction most people would say well you know people buy gold or silver if they're worried about inflation or they're worried about a general crisis or collapse of any flavor i guess why are you saying inflation isn't the worry but still buy gold and silver because gold does very well in deflation also you're right about the inflation that's pretty intuitive and most people understand that but just again just to give like concrete data and concrete models i don't make claims without backing them up the greatest period of sustained deflation in u.s history was the great depression between 1929 and 1940 in that period gold went up 75 percent it started at 20 announced well it's 20.67 cents an ounce and and it went up to 35 dollars announced in dollar terms that's a 75 gain the best performing stock market uh sorry the best performing stock on the new york stock exchange during the great depression was homestake mining uh you know out in south dakota which uh again because they were producing gold so so gold does very well on deflation no issue why is that seems kind of counterintuitive the answer is governments cannot afford deflation because you can't tax it you can tax inflation all day long governments love it but you can't tax deflation if i don't get a raise but the price of everything goes down my standard living just went up because i my my same amount of cash is higher purchasing power so my standard of living goes up in deflation but the government can't tax it so they want inflation because they want me to get more nominal dollars they can tax it so if governments can't stand deflation and they can't and you have deflation how do you get out of it the answer is raise the price of gold raise the dollar price of gold um not to reward gold holders in fact fdr did it and he confiscated all the gold first so the government it was the ultimate front running the ultimate insight that was an absolute scam in 1933 but it was a scam but it worked it was a scam that worked the reason it was a scam was the government got all the profit not the individual investors but but his economic policy it worked because what roosevelt was saying is i don't want to reward gold holders the fact he took all the gold but what i wanted i want the price of everything else to go up in other words if gold i expect gold to go to 15 000 an ounce over the next several years but let's just take five thousand dollars an ounce which would still be a big jump the world of five thousand dollar gold is also the world of 400 oil 100 silver you know 20 wheat there is your inflation is that the price of everything else goes up i tell people um if the dollar price of gold goes up yeah if you have gold that's fine you made a profit don't pack yourself on the back because what's really happening is that the dollar is devaluing because it's not people say gold's going up yeah okay but that's not really what's going on and now it's the measuring stick it's it's the keeping pace i think of gold by weight i think of gold by weight and an ounce of gold is still an ounce of gold if you stick it in a drawer go away for a year come back guess what it's not two ounces it's still an ounce of gold but if the dollar value is higher what really happened is that the value of the dollar went down that's inflation and that's yeah my listeners get that so they're in tune with you there yeah no problem okay okay so before we get to what to do and then we'll wrap it up that question i asked you about bitcoin off air before we started yeah i found it very interesting that you said on another uh video i i saw you on bitcoin will not become well you're not a fan of bitcoin right is that fair to say yeah i have no interest in it it's tell us why uh because it's not going anywhere i mean it might go down to 200 a coin or whatever but here's the thing with with bitcoin i i know where it is it's around 35 000 so i did an interview in december 2017 um with the sarah silverman she's a a journalist and uh at the time bitcoin was going up about a thousand dollars well certainly a thousand dollars a week was almost a thousand dollars a day so it was gone at the time it was about eight thousand dollars so he had gone five thousand dollars six thousand dollars seven thousand dollars eight thousand dollars it's highly speculative and very volatile so be careful folks if you're doing it be really careful yes i agree with there's more to it than that and sarah asked me the same question you just did i said look sir here's what's gonna happen it's gonna go to twenty thousand dollars and then it's gonna crash and that's exactly what happened it went to twenty thousand dollars in early january and then it crashed about eighty percent all right so now it's at thirty five thousand dollars it's another bubble and it's going to crash a lot of people say well bitcoin's going to take over the dollar bitcoin is going to replace the dollars the global reserve currency and it's the place to be and it's the new gold etc it's all nonsense and here's why when people say the dollar is the leading reserve currency and it is 60 of global reserves are in dollars uh and by the way about 30 of global reserves are in euros a little bit less so the dollar and the euro together make up almost 90 percent of global reserves all the other currencies combined you know sterling francs canadian dollars together they're they you know they add up to maybe 40 no not 40 10 or 15 percent the dollar the dollar in the euro make up oh got it i thought you were talking everything about the dollar almost almost 90 correct so um so there's two currencies of the whole show but it's not as if the people so when you say china has 1.4 trillion dollars in their reserves in dollars which they do it's not as if they have pallets of hundred dollar bills sitting in the basement of the people's bank of china they buy securities they buy treasury bills notes and bonds so they're denominated in dollars yes but they're not dollars they're they're treasury notes they're 10-year treasury notes or five-year treasury notes et cetera you know it's the thing that makes you reserve currency it's not the currency it's the securities the liquid securities market you can invest in you need something to invest in you can't just pile up you know printed money so where's your bitcoin bond market um doesn't exist where's the chinese yuan bond market it's it's small small time but it essentially doesn't exist um chinese yuan's not going to be reserved currency bitcoin's not going to be reserve currency because there's nothing to invest in oh you think the chinese yuan's going to replace the dollar fine where where are your bonds where are your primary dealers where's your payment system where's your repo your options your when issue trading your futures your hedging your settlement clearance none of that stuff exists and even if it did which would take 10 to 20 years to build which they don't have there's no rule of law you wouldn't you wouldn't invest in a chinese bond if they can wake up and confiscate it just like that so so the only bond market so it's not about the currency i mean the currency is a is a it's a numerator it's a way to count but it's not about the currency it's about the bond market and yes the treasury uh market is the largest most liquid bond market in the world by the way there is no such thing as a euro bond uh in terms of uh yeah their dollars are nominated bonds issued in london they're traditionally called euro bonds but when i say euro bond i mean an instrument denominated in euros backed by the full faith and credit of the european monetary system that instrument does not exist if you want to invest in euros you buy buns uh italian government bonds you know good luck with the italians you can buy greek government bonds if you want to uh they're in euros but there's no unified euro denominated bond market so how many german buns are there not enough to absorb the savings of the world so when i was when i went to washington the first thing i learned it was a lobbyist my wife hates me to admit it but i was and the first thing i learned is you can't beat something with nothing in other words if you really dislike something i hate this it's awful get rid of it instead fine but you need something to replace it you can write operas and rant and yell and scream on tv but if you don't have something replace it you're not going to change things and right now there's nothing to replace the dollar i agree that the dollar has a much better future than many would say but are we asking the right question jim i mean we kind of went from you know is bitcoin an investment or should is it going to become the reserve currency of the planet no no [Laughter] okay but but i think everybody listening i don't know if they care about it being a reserve currency or not they just care if they can make some money right i guess you know like when i was said in junior high school there was a popular dance song i think it was dionne and the belmonts the song was called shout out and the refrain was shout shout knock yourself out well if you want to buy bitcoin knock yourself out i mean it's a free country you can do it but it's never going to be a reserve currency because there's no bond market okay so what should we do with all of this like sum this up for us and give out your website you know any action steps people can take in these absolutely turbulent times thanks jason it's all my new book uh the the new great depression um and uh yeah i had talked to my others said jimmy you can't write a book about a pandemic and a depression and not have a happy ending and what she meant by that was let's have some constructive advice for investors and we have that at the end of the book in chapter six and the conclusion so specifically i like gold i recommend that for ten percent of your portfolio you know people always want to put words in your mouth and say jim rickert says sell everything and buy gold never said that don't believe it ten percent ten percent okay what else um but there's uh ten to twenty percent ten 10-year treasury notes uh interest rates are going to go negative the yield to mature not not the fed policy rate that's different i think the pet policy rate will stop at zero but 10-year treasury notes in secondary market trading the minute you pay me a premium greater than the present value of the strip of coupons in principle then you have negative uh return you have a negative yield to maturity those could go negative but right now they're about um one percent take that down to negative 50 basis points they're going to have huge capital gains on your 10-year treasury notes i like cash people say well cash has no yield okay um but in a world of deflation cash can be your cash becomes more valuable well so they could actually be your best performing asset the other benefit of cash to people overlook it has huge embedded optionality so meaning look there's a lot of uncertainty right now i don't dispute that um and if you put a stake in the ground you go all in any you know aster class which you should never be all in one asset anyway but you make two or three bets on you know some private equity or some real estate or whatever and then a year from now you say you know that was a mistake i ought to go over here you might be locked in i mean good luck getting your money back from henry kravis if you invest in he's a good guy but you know he's not going to give you your money back not soon but so the benefit of having cash is it's like it's saying not the money call option on every class of every asset class in the world you're the person when we get better visibility you can pivot you're not locked in it also reduces the volatility of the portfolio to help you sleep at night this room for equities sure but be selective i like defense stocks the world's not getting safer natural resources for sure agriculture water um oil is going to do a lot better it's had a bad year well that doesn't tell you much about what's going to happen in the year ahead and i like residential real estate do not like commercial wheels that commercial real estate has not hit bottom uh you can look at it uh i couldn't agree more wouldn't touch it until late 20 probably 2022 at the earliest residential real estate's different there's a mess when i say miss i'm talking about millions of people migrating out of the cities and they're going to either the suburbs or other cities so where are they leaving they're leaving los angeles san francisco portland seattle philadelphia new york chicago uh and baltimore and a few other cities where are they going miami red hot nashville fastest growing city in america phoenix scottsdale i don't like the heat but it's a lot of people do so they're going there boise idaho so figure out where people are leaving figure out where they're going they're they're going to the suburbs i call it the suburban tsunami well there is a suburban tsunami but to the extent they go to suburbs of cities you're right there there are particular cities and i would put miami nashville and phoenix at the top of the list but there are there are other places austin is another one right um the only problem is that in that equation you've got to be able to make the rent to value ratio work and in a lot of the cities even if there's a migration in pattern you're speculating on buy low sell high rather than buy low so high and have cash flow so you know you know i agree completely look at real estate uh the way we just described it there's some simple formulas to me the differentiating factor is the management uh find a ma agement company or an investment company or a private limited partnership where people know what they're doing and have experience and you know it's not it's easier said than done but absolutely there is opportunity there give out your website uh yeah jamesrickardsproject.com but i also encourage people to follow me on twitter at james g record so here's my middle national g record says r-i-c-k-a-r-d-s so at james g rickards uh and the book is the new great depression available on amazon barnes noble we'll be in in the bookstores on tuesday good stuff well jim rickards thank you so much for joining us appreciate having you on the show and hearing some of these insights thank you [Music] you