Latest / Words & Numbers / Episode 449: The Color Of Money

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Episode 449: The Color Of Money · Words & Numbers

0:00
Today on Words and Numbers, we're going to get into a new
0:02
streaming service from Fox, the evolution of data storage,
0:07
rebranding of Cracker Barrel. Did the government run a surplus
0:11
last month? And what happens when the world
0:14
loses faith in the US dollar? Short answer, the month before
0:18
last month it did run a surplus, which makes last month really
0:23
interesting. Coming up next on words and
0:26
numbers. Hi, I'm James.
0:27
And I'm Anthony and. This is words and numbers.
0:35
What's new and exciting in your world this weekend?
0:37
This month, 43 years ago, the first commercial compact disc
0:43
was created. God, was it that long?
0:46
Yeah. What year?
0:47
What year off? What year was it?
0:49
I do not know 1982 was the 1st. Was I bought my first CD in
0:56
1985? Yeah, yeah, yeah.
0:59
I can remember listening to the first.
1:01
For those of you wondering, it was.
1:03
For those of you wondering, it was Boston's Third Stage, the
1:06
great, great sounding CD. I own that, yeah.
1:12
It's one of like 2 discs I own. Yeah, no.
1:16
And I, I had a massive collection of CDs, probably 6-8
1:20
thousand of them. And when I could fit all of that
1:25
onto a couple of hard drives and I had to move, well, the C DS
1:31
had to go. Yeah, yeah.
1:33
Well, when we moved a couple of years ago, we had same thing,
1:38
hundreds of these C DS we'd bought over time.
1:40
So we just took, I said there's no point in packing these things
1:44
up, right. We took pictures of the cover of
1:46
each one so that we could then go through the streaming
1:50
services and purchase the the albums on there.
1:55
That's crazy, you should just get yourself a Spotify or Apple
1:58
Music account, pay the cost of one CDA month and you get all
2:04
the CDs ever made. But what happened was nearly a
2:09
billion CDs were shipped each year back in the year in the
2:13
early 2000s. And it reminded me of of the
2:19
sequence that I've seen in my life.
2:22
I can remember as a as a kid when I'm first sentient, their
2:26
records, right? I had a round player.
2:28
At 33 and a thirds LP's. Yeah.
2:31
And then I can remember my parents got this newfangled
2:34
device they were all excited about a reel to reel tape
2:39
recorder. Where is it?
2:41
You know, the physical reel and the other thing.
2:43
And it goes, you have to wind it.
2:45
Then comes cassettes and I can remember my father being all
2:49
excited by cassettes and saying look at this thing, you can whip
2:51
it across the room and it bounces off the thing and no
2:55
damage, you know, and then. You play it in your car.
2:58
You play it in your car then 8 tracks, 5 and 1/4 inch disc.
3:03
I'm going to broaden my thing here from music to data storage.
3:07
5 and 1/4 inch disc, 3 1/2 inch disc.
3:11
And the same thing happened. My roommate did it with the 3
3:14
1/2 inch disc. He said look at this crew and
3:16
throws it across the room and it bounces off the wall right then
3:20
the CD, then the DVD, then for a short while thumb drives and
3:24
streaming. Now here's the problem.
3:26
There's a whole list of these things since we're so
3:29
impressive, you know, to have lived life and seen all these
3:31
things. What comes next?
3:33
I mean after streaming it, a head implant maybe, but I don't
3:37
know what can come after any of this.
3:40
You often talk about a head implant, and for me that would
3:45
be a a ferociously bad idea. I can't wait until you get a
3:49
head implant. I will find.
3:53
I will find a way to control you.
3:56
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4:10
Let let me throw out as I was thinking about this, what could,
4:13
what could possibly come next in this in this list of things?
4:16
Of course, looking back, as always, ease looking forward,
4:19
you can't figure out. So the head implant's obvious.
4:22
But then what occurred to me is, you know, particularly as as AI
4:25
gets better and better, imagine a world maybe only a few years
4:30
down the road where AI understands your taste in music.
4:36
And so you say, you know, you get on the AI and say, you know,
4:39
I'm in a good mood or bad mood, whatever it is, give me some
4:42
music and the AI will design and play the music right there.
4:47
So what you're hearing is something has never been heard
4:50
before. Yeah, that's going to be
4:53
dreadful. I mean, just dreadful.
4:56
I don't know. I don't I think that will happen
4:59
and I think people won't particularly care for it because
5:02
it it's the essential human element in music that resonates
5:07
with us. And if, you know, it was made by
5:10
a machine, I I just don't know. I don't see it happening.
5:15
What I do think is going to happen is I think we're going to
5:17
take something that looks like a backward step because as the, as
5:24
storage technology gets better and better and better and it,
5:27
it, it's unbelievable, right from our perspective of a couple
5:32
of decades, what you can now fit on something that is as big as
5:36
your fingernail. I suspect we're all going to
5:40
have a cube of some kind that contains every piece of music
5:45
ever written and recorded, every book from every library, every
5:49
movie and every TV show and every whatever else we want, and
5:54
we'd just be able to take it with us wherever we go.
5:56
Well, I mean in in effect you do.
6:00
Yeah, yeah, kind of. But that's not physical storage.
6:03
I I think it will be physically on our desks, right.
6:06
So we can move it about and it won't be messed with.
6:10
And, you know, there, there's something about having the sum
6:15
total of human knowledge online and editable that makes it
6:20
difficult to work with, let's just say, because people have no
6:25
business editing things, edit them all the time.
6:29
And, and we're going to have to get around that sooner or later.
6:32
And I think digital ownership is going to flourish again the way
6:38
it once did. I think it'll all be free of
6:41
charge, you know, as as we go, but I think there will be, I
6:46
don't know, we'll see. I'm interested to see as well.
6:49
The thing I want to talk about this week kind of butts up
6:52
against this in a very odd sort of way.
6:55
Well, let's start with this. How old do you think?
7:00
Or. What age?
7:01
Let me not bait you in any way. What age do you think the
7:06
average Fox News viewer is? Fox News, you know, that's
7:10
interesting because I bet you, I bet you it's there.
7:14
It's senior citizen level. I bet you young people don't
7:18
seem, from my, from what I have observed, young people seem not
7:22
to have time for that nonsense. And the older people I know get
7:26
completely fired up by it in the left and right.
7:29
Give me a number. 65. Very close. 69 is the correct
7:34
answer. So you were very close.
7:36
I was bowled over by that number because you have to remember
7:40
there's a cadre of young men who are very right of center.
7:47
I, I, I refuse to use the word conservative anymore because
7:51
nobody's conserving a damn thing.
7:53
They're right of center, right? They, they lean authoritarian
7:58
and you know that's going to that's going to skew the number
8:01
downward and still the number is 69.
8:05
And if you're an executive over at Fox and you're seeing that
8:08
number, you know you've got yourself a problem because your
8:13
entire viewership is going to die soon.
8:17
Once. Upon a time, Fox was for the
8:19
young people. Once Upon a time, when it first
8:23
started, wasn't making any money, right?
8:25
I mean, people forget that that's where we saw The
8:27
Simpsons. Hell, that's where we saw the
8:29
Tracy Ullman show, which gave us The Simpsons, if if I'm not
8:32
mistaken. Anyway, there's another problem
8:36
on top of that because cable viewership is declining just
8:41
broadly and generally. Yeah, I believe that.
8:44
And the people over at Fox and I'm I got this from the
8:48
Financial Times from the UK, if you want to go look it up.
8:52
The the people at Fox are betting heavily on a new
8:56
streaming service that they're going to offer.
9:00
And here's why it really, really, really pisses me off.
9:05
They're going to put their football games on this streaming
9:08
service. So I wonder if it will become
9:12
impossible to watch these games without the surface but but they
9:18
think that they can get a brand new audience for Fox News by
9:23
slipping it in this way as part of an streaming service app.
9:28
And I don't, I don't know, but they're hoping that people will
9:33
stop paying $100 for their cable and start paying $20.00 for Fox
9:37
News and just move on. I I have a hard time believing
9:42
that that's going to work, but stranger things have happened,
9:45
so we'll find out. I I am already agitated about
9:50
the possibility of not being able to see NFL games on Sunday.
9:56
Yeah, it strikes me as now I'm not a Fox News viewer.
10:00
In fact, I don't view any of them.
10:02
But it strikes me that the problem there isn't the media
10:07
that they're that they're utilizing, but rather their
10:10
content. If they're not going to change
10:12
the content, the format, they're not going to improve their
10:15
audience. That's right.
10:16
It probably isn't going to work right.
10:19
You know, just surfing up the same nonsense in a different
10:22
way. In the end, you're going to get
10:24
the, you know, the same viewers, but only fewer of them.
10:28
Anyway, this, of course, aunt brings us to the foolishness of
10:32
the weekend. And this one's kind of nostalgic
10:35
for for me and I hope for you because you and I once, and I
10:41
mean once when we were on the road together giving lectures,
10:44
we went and had dinner at a Cracker Barrel.
10:47
Do you remember that? God awful.
10:49
Night. That's right, we did.
10:52
The Cracker Barrel has is rebranding itself.
10:56
They're keeping the name, but you know, the logo has been
10:58
changed. It it's no longer, you know, a
11:03
Cracker Barrel. In fact, I, I have to throw in
11:05
here, you and I, it was only once we went to a Cracker Barrel
11:09
and we had dinner with my Uncle Jack of Alpacapoo fame.
11:14
And anyone who doesn't know we're talking about, just go
11:17
back a couple of episodes and I'll tell you the story of the
11:20
Alpacapoo. Jack was a great guy.
11:24
The Cracker Barrel sucked beyond all belief.
11:27
I mean, just just beyond all belief that they served me green
11:31
beans that were obviously from a can now, you know, you know
11:38
what's not going to help that kind of thing, A.
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Logo refresh. I heard this just today, yeah.
11:45
It's that's not going to help. You have to fix this.
11:50
For the love of God, serve up food people want to eat and then
11:55
lots of people will come to your restaurant.
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This is no different than the Fox.
12:00
News thing it no, it's really quite the same when you think it
12:04
through and, and I'm willing to say and, and look, Cracker
12:08
Barrel's CEO said. Oh, yes, we've been getting lots
12:12
of positive feedback. Woman, you're in an echo
12:16
chamber. Yeah, right.
12:18
Because this is, this is just dumb and stupid is all this is.
12:22
And, and I am willing to say to the nice people out there, if if
12:27
you need a marketing consult, don't hire marketers, give me a
12:33
call. Well, I mean, please, they think
12:36
of this is like the dark arts that nobody's allowed to know
12:39
what marketing is. That's just ridiculous.
12:42
Cracker Barrel is still going to be the same God awful place it
12:46
was yesterday. But this is interesting.
12:49
Because I've I've done in my time quite a number of marketing
12:53
studies for companies. So it's your fault.
12:57
Contractual basis. Well, it matters tremendously
13:01
what you what question you ask. I mean, there's a whole bunch of
13:03
things that matter tremendously. But if, for example, they're
13:07
showing the old logo in the new logo and asking people which one
13:11
do you like? And everybody's saying, Oh yes,
13:12
I like the new logo, they melt. May well be coming back and
13:15
saying, Oh yeah, the new logo is great without asking, but would
13:19
this make you go to Cracker Barrel more often?
13:22
That's the question that matters.
13:24
I went to Cracker Barrel that one time.
13:26
I will never go to Cracker Barrel more often.
13:30
I'm done. I'm done with Cracker Barrel and
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and and look, you know, restaurants have come back from
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the brink. Our Arby's was a a disaster.
13:40
Nobody wanted to eat at Arby's. I remember in The Simpsons once,
13:44
one of the the little twins looked at at the other twin and
13:47
said, I'm so hungry I could eat Arby's.
13:50
It was that kind of a joke. But anybody who's been to Arby's
13:54
lately knows it's fantastic, right?
13:58
Right. And they had this great
13:59
advertising campaign. We have the meats.
14:04
You can hear the guy's voice when I say it, right?
14:07
It was that kind of good. But it came with a complete and
14:11
total rebuilding of the entire brand from the bottom up.
14:17
And they they paid the price and they waited it out.
14:21
And now when you go to Arby's, God helping, the food is great,
14:25
it's clean and everybody's happy.
14:28
It's the exact opposite of my once beloved Burger King, which
14:32
is somehow going down the tubes more every year.
14:36
But we're off on a tangent at this point.
14:40
All I'll say is that this is all silly.
14:44
But even sillier was that all the MAGA people lost their minds
14:49
about it. That that this is somehow this
14:52
refresh. They took their lead from Donald
14:55
Trump Junior, who tweeted out what a travesty this was that
14:59
the Cracker Barrel logo is no more.
15:02
Don't you people have something better to do?
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For the love of God, maybe it's better that they're occupied
15:08
with this. Kind of like when Big Don big.
15:13
Oh my God. That's going to stick, right?
15:15
It is going to stick, isn't it? When when big Don goes golfing
15:18
and everybody says he shouldn't spend all that time on the golf
15:21
course, would you prefer he was at his desk governing golf some
15:25
more That that'd be great. Let's that's.
15:28
What I say, that's why I say about gridlock.
15:31
People say more than factors should work more together.
15:33
No, they should. Gridlock is great.
15:35
The party should hate each other beyond all repair.
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Anyway, let's get into it. What do you got for us this this
16:55
time around? This episode comes courtesy of
16:58
one of our listeners. Nick.
17:00
And Nick, you're out there. I apologize because I don't know
17:04
how your last name is pronounced.
17:05
Nick. Romage, perhaps?
17:08
Romage. But Nick will just say Nick.
17:11
Nick writes, he says, what would it mean if the US could not
17:15
prove to the world that the dollar is safe?
17:18
The recent big beautiful bill will add more to the US debt
17:22
while China is not buying as much U.S. debt.
17:25
Does this happen in times of war?
17:27
Does China see US as a declining civilization?
17:31
Well, I mean, let's not go crazy.
17:34
The civilization and the dollar are not fundamentally linked,
17:39
right? But this, the, the country and
17:42
the dollar are fundamentally, right.
17:44
The country, we, we cover this a lot.
17:46
If the country disappeared tomorrow, we would all still be
17:49
civilized there. There would be civil society.
17:52
It wouldn't shake out differently than it has, but it
17:55
would be OK, right? We'd have a, We'd have a couple
17:58
of bad years and then we'd be back on top in.
18:02
Smaller and there's plenty of examples of this major countries
18:06
that have gone through such things.
18:08
Think Soviet Union in most of our lifetimes, right?
18:12
But this is an interesting question, right?
18:15
Because we our debt has been downgraded by two different. 3.
18:23
Rate 3 now to three different. Rating organizations 3 agencies,
18:28
yeah. So and and look, it's down from
18:31
a lot of A's to fewer A's, right?
18:34
It it's not like it went to C minus.
18:37
That's right. It didn't go to C minus, but
18:39
here's the interesting thing that there are three rating
18:42
agencies that that rate debt on on safety and all three of them
18:48
over time. I think the first one was back
18:50
when Obama was president. Yeah, it was.
18:52
It was years ago. But the over time, all three of
18:55
them have ended up knocking the safety rating of the US debt
19:00
down from the highest level to 1 below.
19:04
And what's what's interesting about this is Microsoft's debt
19:08
is safer than the US Treasury's debt.
19:12
Yeah, I and. I have.
19:15
No trouble believing that, none whatsoever.
19:18
And and look, it matters because it the rating is going to
19:22
determine what rate of return you have to offer to people as
19:27
they buy your debt. And if if you're rated lower,
19:31
you're going to have to pay more out to get people to give you
19:36
money for a while. And that gets kind of painful.
19:39
And, you know, add that to the interest on the debt that we
19:43
already have to pay, and you can see where this is problematic.
19:48
And, and every time the Fed raises rates, it plays into this
19:53
too, right? And, and this is, This is why
19:57
Donald Trump is yelling at the Fed to lower interest rates.
20:01
Because once interest rates are lower, people can buy houses
20:05
that they couldn't buy before, they will buy cars that they
20:09
wouldn't have bought before. And then we get lots of
20:12
inflation, which he's convinced won't happen for some reason.
20:17
He's convinced about lots of things that won't happen for
20:20
lots of reasons. Lots of reasons.
20:23
But yeah, so let let me back up just a step, because we talked
20:28
about the the federal debt and we talked about the and Nick's
20:32
original question was about the the US dollar.
20:35
And the two things are related, but they are also distinctly
20:40
different. Yeah.
20:41
So you can have a situation where the federal debt is
20:45
becoming questionable in terms of of quality, but the US dollar
20:50
isn't. Right.
20:53
And, and in fact, that's kind of what's going on.
20:56
Kinda right, Kinda. Because we have to wait and see.
21:01
Everybody was all worried about the euro.
21:03
Remember? You might you?
21:04
Of course you remember this. You were probably in grad school
21:07
at the time, and they were convinced that the euro was
21:10
going to somehow knock the dollar off its perch.
21:15
How exactly? Well, nobody ever answered that
21:19
question, right? They just.
21:21
Yeah. And, and I think what people had
21:23
in mind, and I was wondering about it too, I was expecting
21:26
the euro when it first came out to shoot up in value and it
21:30
didn't. It came out and it just stayed
21:32
at whatever value it came out at roughly a euro to the dollar.
21:37
But the reason people thought it would shoot up in value, myself
21:41
included, was because we're they were Europe was forming this
21:45
European Union and it was going to have free trade amongst the
21:49
countries and things are going to run much more smoothly.
21:52
And because of that Europe. So when the the theory would
21:57
become much more productive and that that is what underlies the
22:01
value of any currency. How much can you buy with it?
22:06
But it turns out, aunt, they remained Europeans.
22:10
They did, and this is something that I discovered later as I was
22:14
going back some years later asking that question, how come
22:17
the euro never popped? Come to find out to to cobble
22:21
together those countries to get them to sign on to form the
22:25
European Union, the organization, the EU had to hand
22:29
out special favors and the special favors would come in the
22:33
form of regulatory things. So if, for example, I'm just
22:37
making stuff up, but basically this is the case, if, for
22:41
example, Italy was not nearly as good at making cheese as the
22:46
French were, then Italy would join the EU, provided there were
22:52
certain restrictions put in place that favored Italian
22:55
cheese makers over French cheese makers.
22:58
And it was all kinds of regulations like this that did
23:01
what you would imagine. They hobbled the European
23:04
economy and that's why the euro never took off.
23:07
So the dollar remains as currencies go and and that
23:12
qualifier always has to be there.
23:15
As currencies go, the dollar is very strong.
23:19
Yeah, the the dollar is doing quite well and, and I take your
23:23
point, I say repeatedly that the United States or the US dollar
23:28
is the the prettiest guy at the ugly guy dance.
23:32
Yeah, that, that's a nice. Thing, right?
23:34
Yeah. It's it's nice how you made that
23:36
about men instead of women. So now we.
23:37
Don't get hate, men. Because every man in the world
23:41
doesn't give a shit about what you just said, but every but
23:44
every woman would hate you to her core.
23:49
But here's the thing. Go go back to the question.
23:51
What is it that makes a currency valuable?
23:54
It's that you can buy goods and services with it.
23:57
And so the more stuff Americans produce, the more valuable the
24:02
dollar becomes. Yeah, that, that's right.
24:04
And it's accepted damn near everywhere.
24:07
Yeah, it is. In fact, I was looking this up.
24:09
I wanted to know what is the total amount of foreign currency
24:14
that's traded daily on world markets.
24:17
And it's about 8 trillion dollars, $8 trillion worth of
24:21
currency is traded on the world markets.
24:23
Now, to put that in perspective, that's yeah.
24:25
So that means over the course of four days, as much money,
24:30
currencies are traded on world markets as our entire economy.
24:34
But of that, and if you you have to, I'm going to put a footnote
24:39
here. ChatGPT told me this.
24:40
I've not verified it. Here we go, here we.
24:43
Go. But it it sounds a little bit
24:45
off, but it's probably directionally correct that 90%
24:49
of those transactions involve U.S. dollars.
24:53
Yeah, I think directionally correct would be exactly the way
24:57
I would. I would put that to, you know,
25:00
every now and then some crackpot idea rises up and it's going to
25:04
take the place of the dollar was the euro now it's this BRICS
25:08
arrangement. No, it's not.
25:11
Not anytime soon. Not anytime soon.
25:13
BRICS is worth mention. People often bring it up to me
25:16
because the BRICS currency in the initial stand for Brazil,
25:20
Russia, India, China, South Africa, those countries got
25:25
together and they decided they would form a common currency for
25:29
the express purpose of supplanting, or I shouldn't say
25:32
supplanting, but being an alternative reserve currency to
25:36
the US dollar. And I could tell you right off
25:39
that that currency probably has little to no chance of becoming
25:43
a serious reserve currency. Not.
25:45
Not with that crew supporting it.
25:47
Well, yeah, because of at least two of the of the names in
25:51
BRICS, Russia and China. I mean, who would invest in a
25:56
currency? And that's what it means to be a
25:58
reserve currency, that you're buying it not for the sake of
26:01
buying and selling goods, but for the you're buying it as an
26:04
investment. Who would buy a currency as an
26:08
investment whose two major backers are command economies?
26:13
Right. Oh, and let me go a step much,
26:16
much further. The Russian economy is just
26:20
destroyed by this foolish war, right?
26:24
It's been involved with in Ukraine.
26:25
Remember the one that was going to win in three days?
26:27
Well, three years later, it's costing millions and millions of
26:33
the lives of young men who will never be productive in that
26:37
economy because they don't exist anymore.
26:41
And China is losing population so fast that it will cease to be
26:46
a country in our lifetime. Yeah.
26:50
And so let me underline two of those things there.
26:53
China's population is declining. It's expected to decline by half
26:58
by the end of this century. 1/2 Russia, their population has
27:04
topped out. So stop and think about what
27:07
that what a war means. I mean, I'll put to this point
27:09
in human history. You have a war, a bunch of
27:12
people die, but a couple generations later your
27:14
population is back and even bigger than it was before.
27:18
If your population is topping out and you lose a bunch of
27:20
people, that's it. You're not getting them back and
27:24
the. People you lose are exactly the
27:27
age of young fathers. Right.
27:30
Yes, yes. Right.
27:32
So, yeah, good, good luck with that.
27:34
Well, we, we've got quite a lot going on here.
27:37
All of a sudden this conversation sprawled a little
27:39
bit. But I I wanted to get back
27:42
because we said a couple of months.
27:44
We said maybe a month ago. Oh, the the surplus.
27:47
Yeah, Hold, hold off on that just one second.
27:49
I've got one other thing that Nick touched on.
27:51
I, I want to mention, he says some.
27:55
So we've got this problem of we're adding more and more to
27:57
the US debt while China's not buying as much.
28:00
People make a big deal about this.
28:02
I've heard people say from time to time, well, what happens when
28:05
China calls in our debt the money we owe them?
28:09
You can't. Do that portions of the debt
28:11
expire every day? Right.
28:13
They they expire on some set schedule.
28:16
You can't just pick up the phone and say I want my money back.
28:20
But none the less people, people I think have an outsized view of
28:24
how much we owe China. And usually it's it's expressed
28:28
in trillions of dollars. It's absolutely correct.
28:31
I think it's orders of magnitude wrong.
28:33
Yeah, it's and actually China has been cutting back on how
28:36
much it it loans the US It used to be above a trillion.
28:40
It's now about 3/4 of a trillion.
28:43
But of all the debt, of all the money the federal government
28:46
owes, it owes 2% of that to China.
28:50
This is $0.02 on the dollar. And how much does it owe to the
28:54
so-called Social Security Trust? Fund.
28:58
Ah, there we go. Social Security trust fund in.
29:00
I have to lump in their federal employee pensions as well.
29:04
Percent, 15% of the debt is owed to them.
29:07
More than seven times what we owe China.
29:10
Yeah, in in fact, if you take all foreigners together, all
29:14
foreign countries, foreign foreign companies, foreign
29:17
people, the US owes all foreigners on the globe 22% of
29:22
its debt, which is less than what it owes Social Security and
29:28
the Federal Reserve combined. But that sounds about right, so.
29:33
So the the bulk of the debt we owe here to Americans.
29:37
So we're in a strange place, right, where we we say the
29:40
dollar is strong and it is because you can buy stuff with
29:43
it every day, everywhere. But we're under.
29:47
We ourselves are undermining the strength of our own currency
29:52
with the debt. Yeah, we, we are.
29:54
And I said a moment ago, they're separate things, but they are
29:57
related. And here's how that works.
30:00
The more debt we have, the more the more upward pressure we're
30:07
going to get on one or the other or both, of inflation and
30:12
interest rates. And the more upward pressure we
30:14
get on that, the slower our economy grows.
30:18
And what did we say earlier? The reason a dollar has value is
30:21
because you could buy American goods with it.
30:24
And if we're producing fewer and fewer American goods, the dollar
30:27
becomes worth less and less. Yeah, and if also if we can't
30:33
afford foreign goods, it's the same story.
30:36
Right. Right.
30:37
And and we had a big pop in the price of produce this last
30:42
month. Imagine that.
30:45
I wonder why? You know.
30:47
What could possibly have accounted for a massive increase
30:51
in the cost of groceries? Probably these tariffs.
30:56
I'm just going to throw it out there is.
30:57
It possible tariffs had something to do with it, right?
30:59
Yeah. No, it couldn't have because the
31:01
foreigners are paying the tariffs, right?
31:03
Yeah, that's right. Meanwhile, we can't.
31:06
We literally can't grow coffee in the United States.
31:09
What are we trying to balance exactly?
31:11
What are we trying to balance exactly with the the countries
31:14
we buy coffee from? But what the hell, right?
31:18
Why does coffee have to cost more every single piece of
31:21
produce? I looked at at the grocery store
31:23
when I went yesterday and I finally went to the you know I
31:26
don't go often, right? Because AI can't be trusted
31:30
there and BI become irate when I see what the prices have become.
31:34
But the wife's out of town for a week so I thought it would be
31:37
good if I had food. So I went to the grocery store.
31:41
This was not a good idea because I walked out just pissed beyond
31:46
belief. It's unnecessary.
31:48
It's absolutely unnecessary. Unnecessary is the right word.
31:51
We did that. We did that to ourselves, to
31:54
ourselves in the foot. And and the White House
31:56
yesterday, God help me, released an image, a meme upon the world
32:02
showing the profit made by Joe Biden with tariffs, straight
32:07
line going from left to right, meaning not so much.
32:10
And then the Trump tariffs. And it went like this, a big
32:14
line way up to the sky. And they said the numbers tell
32:18
the story. Well, I guess the numbers do
32:22
tell the story. You taxed the United States
32:25
citizens $150 billion. Right, that's where that spike
32:30
came from. It was coming out of our pocket,
32:32
came out of my. Pocket out of all of our pockets
32:35
for no good reason. And here we are and we have the
32:39
White House bragging about it and a bunch of them, their
32:43
minions, saying Hooray, do they not go to grocery stores?
32:48
Do they not see what's going on? You raised this point a couple
32:53
of episodes ago and you had, you said that the IT was all in the
32:57
news that the US had a budget surplus in June, which actually
33:01
I hadn't heard that you're hearing it from you right then
33:04
was the first I'd heard of it. But I've since gone back and
33:06
looked at the numbers and it turns out that's absolutely the
33:09
case. We did have a budget surplus in
33:11
June. And we, we talked about it when
33:14
it happened, right? And it happens after the fact.
33:16
You have to wait to July to get the June numbers.
33:18
You get the July numbers in August.
33:20
And here we are in August. And you might remember, aunt, we
33:23
promised to get back to this to see if it's becoming a trend,
33:29
right? Because we, we would love it to
33:32
be a trend. And so would Donald Trump.
33:35
So for once, all three of us want exactly the same thing.
33:40
From our perspective, he's not going about it correctly.
33:43
But you know, what can you do? So, but we promised that we
33:46
would get back to this the next month to see if a trend was
33:50
emerging or if this was one $27 billion nothing burger.
33:56
And, and I, I recall you told us how long we could fund the
34:01
federal government on $27 billion.
34:03
Do you have any recollection of what it?
34:05
Was. I'm guessing it's about 3 days.
34:08
Oh, it's that that long? Yeah, I think we we burn about
34:12
maybe it's two days. We burn about $18 billion a day.
34:15
We the federal government burns about $18 billion a day.
34:19
OK. So what's the trend look like?
34:22
Surely we have another surplus. Well, all right.
34:25
Well, First things first, we absolutely did have a a budget
34:29
surplus. In June, the federal government
34:31
brought in in revenue $27 billion more than it spent.
34:37
There's a lot in. Of course, everybody points to
34:39
that and says yeah, this is because of the.
34:41
Tariffs. But the tariffs hadn't taken
34:43
effect yet. Yeah, well some of them had, but
34:45
they hadn't all kicked in. But none the less here we are
34:48
with now this is August, so we have July figures and if if that
34:53
surplus in June was due to the tariffs, even more so, we should
34:57
see a surplus in. July because more of them came
35:01
online in the month that followed.
35:02
And the number is markedly bigger.
35:05
It is 10 times the size. June was 27 billion.
35:10
July's number is 290 billion. But it's in the opposite
35:17
direction. It's a deficit, not a surplus.
35:21
Imagine that. I I swear there were.
35:24
A couple of wise, wise ass podcasters who predicted exactly
35:29
this about a month ago. Yeah, hey, that's something.
35:33
Someone might say, well, you know, what about that $27
35:36
billion surplus in June? Certainly it can't be
35:40
coincidental. To which I reply, look, this is
35:43
a monthly thing. There's all kinds of cycles,
35:46
just like there is with your paycheck, right?
35:48
Every other Friday you're flush with cash and every other
35:52
Thursday you're, you know, eating ramen noodles.
35:55
In the same way with the federal government.
35:57
So what? What people did not say in when
36:00
they pointed to the June 2025 surplus, they did not mention
36:05
that in September 2024 we had a surplus that was 2 1/2 times
36:10
larger. No, that can't be right.
36:13
That can't possibly be right. That was Joe Biden's president.
36:16
That was the other guy, right? Yeah, yeah.
36:18
That that I've heard that that that's impossible.
36:20
Well, the The thing is, we say this often.
36:23
It's not always the case, but it's the case more often than
36:27
people would think. The stuff that goes on the
36:29
economy has little to do with whoever's in the White House.
36:33
Yeah, or, well, let's let's put it differently, less to do with
36:36
people in the White House than you might think.
36:40
Than you might think, yeah. Right, because I'm seeing people
36:44
all over social media literally thanking Donald Trump for lower
36:49
gas prices. Yeah, No, no, punk.
36:52
And that's not how that. Works.
36:54
Yeah. Now, you know, you caught me off
36:56
guard with the gas prices, but I can tell you there, I mean, they
36:59
go up and down all over the place, right?
37:01
This has nothing to do with Donald Trump in fact or in fact.
37:04
Very little. Let's just say.
37:06
Very, very little. Very.
37:07
Little I'm in if if pressed, I'm sure I don't have the numbers in
37:11
front of me, but I'm sure I could pull up Joe Biden's term
37:15
of office in fine periods when the price of gas was lower than
37:18
what it is now. And that didn't have anything to
37:21
do with Biden any more than this has to do with Trump.
37:24
Yeah, that, that's right. So, you know, the presidents
37:27
always get way too much credit for a good economy, and they
37:32
don't get near enough blame for the nonsense they do.
37:37
Yeah, in the nonsense typically comes in the form of structural
37:43
stuff. So a president who makes some
37:46
fundamental change that persists.
37:49
So I'm thinking, my guess is when the next party comes to
37:53
power, these tariffs are going to go away if President Trump
37:56
doesn't get rid of him himself. But if they were to stay, if
38:01
they were to become entrenched and all of a sudden there are
38:04
factions within the United States that are benefiting from
38:08
which some are benefiting from these tariffs and there's now
38:11
political will to keep them, then that's a structural change.
38:15
Then indeed, we can point to a president and say you did this,
38:18
but we can only point years after the fact.
38:21
Yeah, that, that's right. Years and years and years.
38:25
So where it's all going to go, I'm not exactly sure.
38:28
I know one thing for certain, the debt will continue to grow
38:34
at a higher and higher pace as time passes.
38:38
Yeah. And somebody asked me
38:40
coincidentally just today by how much I ran the numbers going
38:44
back to 2000. The federal debt has been rising
38:47
at an average of about 7%, a little bit more than 7% a year
38:51
since 2:00. 1000 expect that to get larger because they they
38:57
keep spending more money, right? There's nothing to slow them
39:00
down. So I know that for certain.
39:03
Something I know with less certainty, but with a fair
39:05
amount, is that the dollar will remain strong for years to come.
39:10
I think so. Maybe not decades, but years.
39:14
I think it's going to be decades.
39:16
It could, it could be. I'm, I'm open to the
39:19
possibility, but I know, I know pretty certainly that for the
39:23
next few years at least we're going to be fine.
39:27
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39:30
We work with Civil to advance their mission of upgrading
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40:04
Yeah, I think it's going to. I think it's going to be
40:07
decades. I wouldn't say century, but I
40:10
think it's going to be decades. And the reason I say that is not
40:13
to any credit to the US dollar, except that, again, we're the
40:18
prettiest guy at the ugly guy dance.
40:20
I think everybody else is going to remain ugly, but there will
40:23
come a time. When some other country comes to
40:26
the fore and anybody. Wants it finally gets a haircut
40:29
and cleans himself up and looks just a little better.
40:33
Yeah, if anybody wants an example of this, think about
40:36
England, Great Britain at the time.
40:39
It was at the time it commanded more of the surface of the earth
40:45
than any other national entity in the history of human beings.
40:49
The The British pound was without question the national
40:54
cur. The global currency period,
40:57
without question and. The same way.
40:59
The same way. It's dollars now, only more.
41:02
So yes, it took just one generation for that to change.
41:07
Yeah. I mean, look, the English pound
41:11
is strong. You'd be OK if you held on to
41:14
some, but it's not the dollar. Yeah.
41:18
Now, as long as we're, as long as long as we're on this topic,
41:20
James, because I have some contenders off the top of your
41:24
head. If you were to point to a
41:26
country that you think would supplant us And I, I don't mean
41:31
that in, in, you know, in the sense of being of, of, of, you
41:36
know, dominating the US by mean in terms of, of becoming the new
41:39
world leader, economic world leader, who would you point to?
41:43
That's a hard, hard question to answer.
41:47
I thought you were going to ask me, if I had to bet on a
41:50
currency, which one would I go buy?
41:53
And I'd buy whatever they're using in Argentina.
41:57
Give me that. Right with me, Lay.
41:58
Yeah. Yeah, give me that.
42:00
Because it's worth nothing now. And if they keep doing what
42:03
they're doing, it's going to be worth.
42:07
But. On to the political question.
42:10
Boy, that's a lot harder, right? Because whoever it is, it's
42:15
going to have to have a big population, right?
42:18
Because only a large population internally moves the levers
42:23
enough to become something used by other people.
42:28
It's not going to be China and Russia for the reasons that we
42:30
just pointed to. There's not enough people in
42:33
Canada or probably in any South or Central American country.
42:40
You know, Japan is out. It's too small, Which leaves us
42:45
with India. Interesting.
42:46
And you left one out that I would put on the list as a
42:49
possibility. I would say, I would say India.
42:54
I'm making a note here. I would say India provisionally.
42:59
It's got the population you need and and its population is
43:06
projected to continue to grow for the next probably throughout
43:10
half, halfway through, 3/4 the way through the century before
43:14
they start coming down. Demographically, it's young.
43:17
Demographically, it's young, but here's here's the fly in the
43:20
ointment. India is not, it's becoming more
43:25
and more free market system, but it's not a free market system,
43:28
at least not in the way that we are.
43:30
And that's it. You've got to have that.
43:31
And how is that going to make it?
43:33
And India's doing it, but they're doing it in fits and
43:35
starts when they absolutely have to.
43:38
Yeah. They should just throw their
43:39
hands up and burn the regulations and say do what you
43:42
want. They'd be better off if they did
43:44
that. Yep.
43:46
They wouldn't be well off yet, but they'd be much better off.
43:50
I'm trying to think of who you could possibly be thinking of.
43:53
And I, I think the entire Middle East is out for a variety of
43:59
just a variety of different reasons.
44:02
You know, every place else is small.
44:04
It's not going to be Fiji, right?
44:06
I mean. Well, that's see, and that's
44:07
what I've got here. I don't know what their
44:08
population is, but they're they're probably smaller.
44:11
In fact, let me just ask ChatGPT.
44:14
Let's see if we get a reasonable you know how?
44:16
Did I get replanted as best friend by ChatGPT?
44:20
It doesn't mouth off at me. OK, Yeah, this OK.
44:24
I've got a country with population of roughly 30
44:27
million. Yeah, it's which?
44:29
Is like 110th our size. The on the upside couple of
44:33
upsides. One, it's it's a western or
44:36
maybe I should say western adjacent.
44:38
We can say that and I think Western civilization matters and
44:44
it matters. It matters not perhaps because
44:48
it's Western, but it matters because it's.
44:50
It's because on it's foundational.
44:53
It's foundationally correct. Yeah, yeah, the foundations are
44:57
right. It's, as I like to say, the win
44:59
in boys magic, right It we got something right a long time ago
45:05
and built on it, and people now hate it for a variety of
45:10
reasons. Almost all stupid, right?
45:14
Because take a look around. Yeah, it well, the West Western
45:19
culture was built on, amongst other things, reason and
45:22
evidence. This is what gave us the the
45:24
Renaissance. That's.
45:25
Correct SO. So you still haven't given me
45:28
your answer. Westerner, Jason.
45:31
Debt very low. Economy strong.
45:35
Just say the word. Australia.
45:38
Yeah, I look, if, if I were, if you told me I had to move
45:42
tomorrow, but I could move anywhere, right, I I would pick
45:46
Australia. Yeah.
45:47
I I might also pick New Zealand for exactly the same reasons.
45:51
Right? Right.
45:53
But Australia is, as an economy, too small.
45:58
It is 30 million. It's never gonna, never gonna
46:00
happen. It is.
46:01
You might as well point to EU. You point to the UK instead,
46:04
right? Well, but the difference is
46:06
Australia's got the land mass. Their land mass is about the
46:09
same as I believe the 48 states here.
46:11
And nothing in anything but the coastal areas is livable.
46:16
For the moment, yeah. For the moment, yeah, he said
46:18
from Tucson, AZ. Right.
46:23
But the wild card here, I don't think they're going to make it,
46:26
but boy, it would be great if they did.
46:28
But the wild card is the continent of Africa.
46:31
Their population is Their population is projected to grow
46:34
to 4 billion in the course of the next century.
46:39
I I choose my words carefully as a rule, so listen to them as I
46:44
say them. There is no good reason that
46:49
Africa is poor. There are a number of reasons
46:53
we're all shitty. There's not one single good
46:56
reason. So there you go.
47:00
I, I'm, I am always rooting for Africa and it's on my short list
47:04
of places. I've never been there.
47:06
I want to visit. I would like to, to go to a
47:08
number of African countries. I hope you're right about
47:13
Australia. We have, we have a lot of
47:14
listeners there and and I like them when they send us emails,
47:19
right. They they've recently asked us
47:21
to do a Zoom call at 2:00 in the fucking morning for for the.
47:26
WA Libertarian Party. And you know, I'm trying, I'm
47:29
trying like hell to figure out how I can do it.
47:32
They asked us. We we were scheduled to do it
47:35
and the roof literally caved in at the building.
47:38
They were going to do it. And so we had to, we had to
47:41
postpone and unfortunately I've, you know, I'm never out of the
47:46
house, I never go do anything. But I've got plans that day.
47:50
I mean. So I'm trying to figure out how
47:53
I can do this 'cause. I was come.
47:55
I was the day we were supposed to do that.
47:57
I was flying in from Minnesota. I changed my flight so I could
48:01
get here by 11:00 PM my time so I could be online at 1:30 AM to
48:06
talk to them. Yeah, I was in Guatemala at the
48:09
time thinking, man, tomorrow's going to be a long, long day
48:13
because, you know, that was hours past you.
48:15
I think it was 2:30 or 3:30 in the morning for me to, to do it.
48:19
At least they they cancelled early enough that I didn't sweat
48:23
it out, you know, But I would love to go to Australia.
48:28
It seems like just my kind of place.
48:31
So who knows, maybe we'll go there one day one.
48:34
Thing, let me, I have a note here.
48:36
I want to say this before we close out the episode earlier
48:40
on, we're talking about the debt and I had mentioned that most of
48:44
the debt actually it's about 70s.
48:47
I'm looking at this. Almost 80% of the federal
48:50
government's debt is owed to Americans in one form or
48:53
another, to which people will respond well, but that that's
48:58
good because that debt doesn't count.
49:00
It's money we owe ourselves. It is not money we owe
49:04
ourselves. It is money that some of us owe
49:07
to others of us. And if you're going, it doesn't
49:10
count if you're not going to make the payment.
49:12
Right. If you're going to make that
49:13
argument that, well, money that America, that the US government
49:17
owes to Americans doesn't count because it's money we owe
49:19
ourselves, extend the argument. By that argument, there is no
49:24
debt on planet Earth because everybody on Earth that owes
49:27
money owes it to somebody else on Earth.
49:29
It's all that's right we owe. Ourselves, we can, we, we don't
49:33
owe anything as long as it's to other people.
49:36
Right. Right.
49:38
I mean, it brings us to the question, doesn't it, that we
49:41
always ask what, what do we owe each other?
49:44
And payment of debts has to be at the near the top of that
49:48
list, right? That's a thing that we actually
49:52
owe each other 'cause when you don't.
49:54
Pay your debt. All sorts of things downstream
49:57
happen that you do not want to happen.
49:59
You do not want and and this the sacrosanct nature of a contract
50:06
is part and parcel of Western society.
50:11
And you got time for a really quick story.
50:14
Sure, people can tune out now if they don't want to hear it
50:17
because, you know, it's just a story.
50:19
I would say that everybody's going to tune out because it's
50:20
you. Well, go ahead, but I, I'm
50:24
working with a group of people who have invested a lot of time,
50:29
effort, energy and money into a scheme to build low cost housing
50:38
in a country I used to live in Iraq.
50:40
You would think the Iraqis would be thrilled with this.
50:44
It's an American, a Kurdish coalition of, of partners who
50:50
are looking to build these apartments and they're, they're
50:52
looking to build 1500 of them. So in Erbil, which would be
50:58
outstanding, right? If people could afford solid
51:01
housing or it's not luxury housing, it's really solid and
51:06
it's gotten all fouled up. And maybe we'll do an episode
51:09
about this later where I will name names and tell you exactly
51:13
what's happened. But it's gotten all fouled up
51:16
because government officials demanded 30% of the project not
51:24
to the government, but to themselves.
51:27
Oh, bribes. It's a bribe.
51:29
Yes, they. Demanded a 30.
51:31
Percent. Bribe on a 1500 unit building
51:37
project. Wow.
51:38
And, and, and they, the builders haven't gotten all the permits
51:43
and done everything by the, the codes available to the extent
51:46
that there are laws in Kurdish Iraq.
51:51
They're ready to go. And then the politicians stepped
51:54
in and all of a sudden they had a problem with all of their
51:59
certifications that will only be solved by giving the 30%.
52:05
So now they can't build. And then a couple of months went
52:09
by and they had another meeting where the politicians decided,
52:13
you know, we really need 35. You couldn't pay the Do they
52:16
understand how negotiating works?
52:18
No. I thought you'd come back and
52:20
say 10. Well, ten, you know, you
52:22
probably just pay it needed as a cost of doing business.
52:26
But 3535 means apartment buildings don't get built, which
52:32
means that people don't have places to live.
52:35
You would think that the politicians would care about
52:38
this. Anyway, I'm I'm working on
52:40
trying to get this problem solved and I have threatened to
52:44
go public with all the names of all the people who pulled all
52:48
this shit. Why threaten?
52:51
Just let's do an episode on this.
52:55
We'll get a lot of listeners in Iraq.
52:57
We we do, and I think we probably could get a guest on
53:01
that has something to do with this mess.
53:03
Oh, I'm game, James. Let's do this.
53:06
Yeah, I think that's a great idea.
53:08
But that's the story for for this week.
53:11
I come up with one for next week too, I guess.
53:13
But until then, Aunt, have a great week.
53:16
Take a minute of every day, maybe even 20 minutes, 1/2 an
53:20
hour to sit in silence and do nothing.
53:23
Because that's when all the best thoughts come into your head.
53:26
Just let them come and be nice to each other.
53:30
If you could do just those two things, your whole life will be
53:33
better for, I promise. See you next time, Aunt.
53:37
See you next time, James.