Latest / Financial Survival Network / No End to Election, Fiscal & Economic Insanity with Michael Pento #6135

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No End to Election, Fiscal & Economic Insanity with Michael Pento #6135 · Financial Survival Network

0:00
Speaker 1: My home prices are going up. I'm doing fantastic. But
0:04
Speaker 1: the renter and those who are working, you know, in
0:06
Speaker 1: the lower class jobs, blue caller jobs, they're really really
0:10
Speaker 1: hurting because their incomes are so far behind inflation and
0:13
Speaker 1: they don't have the asset price appreciation that we have.
0:17
Speaker 1: That's the problem.
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Speaker 2: You are listening to Carrie Letz's Financial Survival Network, where
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Speaker 2: Survival Network now more than.
0:41
Speaker 3: Ever, and welcome. This is Financial Survival Network. I'm your host,
0:49
Speaker 3: Carrie Letz. Michael Pentapentoport dot com is with us now.
0:54
Speaker 3: Any questions comments kl at Carrie Lutz dot com. Michael
0:58
Speaker 3: one of my favorite guests, not just because so many
1:00
Speaker 3: thousands of people listen to our sessions, but because you've
1:06
Speaker 3: been spot on about exactly what's happening. I mean, our
1:09
Speaker 3: interview about that the bond market basically doesn't exist anymore,
1:15
Speaker 3: garnered so much attention I couldn't even believe it. But
1:18
Speaker 3: now we're entering the next phase, and we got election
1:21
Speaker 3: insanity going on here. What is your take? Does it
1:25
Speaker 3: make any difference who gets elected?
1:27
Speaker 1: Of course, it makes a difference who gets elected. I'm
1:31
Speaker 1: not sure if either candidate gets elected. And I'm talking
1:34
Speaker 1: about Donald Trump. He's by far the better of the
1:37
Speaker 1: two choices, but he's not a libertarian and he's not
1:40
Speaker 1: a sound money guy. So if you're asking me if
1:42
Speaker 1: the all our problems will be solved by the election
1:44
Speaker 1: of Donald Trump, no, I mean I just laugh at
1:47
Speaker 1: people say, oh, you know Donald Trump, But well, yeah,
1:50
Speaker 1: I'm voting for him again. I could promise you that
1:53
Speaker 1: I'm not.
1:54
Speaker 4: I'm not.
1:54
Speaker 1: I call Kamala the Kamala the cackling communist.
1:59
Speaker 3: But but you find your kind. There's some other choice
2:02
Speaker 3: whords we could come for her.
2:04
Speaker 1: Right, Here's here's here's here's here's where I am so
2:08
Speaker 1: despondent about Kamala Harris. Her idea to make home prices
2:14
Speaker 1: affordable is to give everybody who's a first time home
2:18
Speaker 1: buyer twenty five thousand dollars to buy a house. And
2:22
Speaker 1: I'm like this, this, this is who we elect economic illiterates,
2:28
Speaker 1: This is who we nominate as a president. Now I'm
2:31
Speaker 1: thinking about government subsidies for housing or government subsidies for education.
2:37
Speaker 1: Did government subsidies for college bring down the cost of
2:42
Speaker 1: college tuition?
2:44
Speaker 4: Yeah?
2:45
Speaker 1: I mean, I mean he talked about if you really
2:47
Speaker 1: want to goose the price level of a thing, of
2:51
Speaker 1: an asset, how the government get involved and give a subsidy.
2:56
Speaker 1: But here's here's the only that I worry about. What well,
3:00
Speaker 1: what wasn't one mention of how we're going to pay
3:02
Speaker 1: for it? No, we don't think about those things. But
3:06
Speaker 1: she did. Well, the government doesn't have any money. They
3:08
Speaker 1: have two choices. They can either steal it from the
3:10
Speaker 1: people who have it, or they can print it. Those
3:14
Speaker 1: are the two options unless you can you am I wrong?
3:18
Speaker 1: Is there a government like cash stash of cash somewhere
3:22
Speaker 1: in the ethernet or the nether world where?
3:26
Speaker 4: And I don't know. I think they're holding a lot
3:28
Speaker 4: of bitcoin though, Oh.
3:30
Speaker 1: Okay, we let's go to the government could hit the
3:33
Speaker 1: bit on bitcoin. That would be fine with me.
3:35
Speaker 4: I wouldn't care.
3:37
Speaker 1: But then now they listen. The government doesn't have anything,
3:41
Speaker 1: has nothing that they don't and they have assets they
3:43
Speaker 1: could liquid eate. But when they liquidate assets. They're taking
3:46
Speaker 1: the money from the public, so they're just shu playing
3:49
Speaker 1: money around. So twenty five thousand dollars per person, everybody
3:55
Speaker 1: wants to new a house can get one. That's going
3:58
Speaker 1: to drive the price of houses, especially you know, starter
4:00
Speaker 1: homes through roof and it'd be a massive hole in
4:04
Speaker 1: our in our debt and deficits. That's that's that's their
4:07
Speaker 1: prescription to fight inflation. Here's another one for you. I
4:10
Speaker 1: don't want to talk about too much about politics, but
4:12
Speaker 1: I'll get you one more. What is the reason why
4:14
Speaker 1: we had inflation, Carrie, We asked Kamala Harris. Oh, it
4:20
Speaker 1: was corporate greed. Corporate greed suddenly sprouted up out of nowhere.
4:26
Speaker 1: Suddenly corporations had this epiphany and got greedy around twenty twenty.
4:31
Speaker 1: That's her version, corporate greed. Even though if you look
4:33
Speaker 1: at actual corporate profit margins, they're pretty much unchanged in
4:38
Speaker 1: twenty and twenty, so they they haven't been some price
4:43
Speaker 1: gouging from corporations. Maybe carry had something to do with
4:47
Speaker 1: the six trillion dollars of helicopter money deployed upon the
4:51
Speaker 1: population by the government, by both Trump and by especially Biden,
4:56
Speaker 1: who is spending trillions of dollars after the gold you know,
5:01
Speaker 1: craze was over. Maybe has something to do with the
5:05
Speaker 1: fact that the Fed printed five trillion of that six
5:09
Speaker 1: trillion helicopter money. How about the M two money supply
5:12
Speaker 1: went up by six trillion dollars. So you told people
5:14
Speaker 1: you couldn't go outside and produce things, You couldn't make things.
5:18
Speaker 1: You could order things from Amazon though if you wanted to,
5:21
Speaker 1: or from the ups man. Every day was Christmas for
5:24
Speaker 1: those people. Yeah, and you gave them trillions upon trillions
5:28
Speaker 1: or trillion dollars in mortgage for barons and enhanced unemployment
5:32
Speaker 1: and helicopter money checks in the mail. That's why you
5:36
Speaker 1: had inflation. But Powell doesn't say it. That's how you
5:38
Speaker 1: got inflation. Trump wlanes the price of oil, which is
5:41
Speaker 1: a symptom of what I just said, and Harris Waan's
5:45
Speaker 1: corporate greed. My god, are we living in a world
5:48
Speaker 1: of economic illiterates?
5:50
Speaker 4: Yeah, totally.
5:51
Speaker 3: Like, Hey, I you know, when the pandemic was going on,
5:57
Speaker 3: I knew it was going to happen to housing prices.
5:59
Speaker 3: I'd been renting because I sold the house and I
6:03
Speaker 3: was kind of in between, and I went on a
6:05
Speaker 3: desperate search to find a house, and surprise, you know,
6:09
Speaker 3: at least, and it's in the nominal price doubled, you know,
6:13
Speaker 3: in just two years.
6:15
Speaker 4: And I'm not alone in that.
6:18
Speaker 2: You know.
6:18
Speaker 3: Back in Germany in the wey Maar Republic days, basically
6:24
Speaker 3: people borrowed as much money as they could and then
6:26
Speaker 3: when the when the mark collapsed, their predators were hiding
6:31
Speaker 3: from them. They didn't want to get paid back in
6:33
Speaker 3: the fully depreciated currency. I wonder how far we are
6:37
Speaker 3: from that?
6:40
Speaker 1: Well, I never I don't know if we're there. We're
6:41
Speaker 1: certainly not there yet or were I never thought in
6:45
Speaker 1: my wildest dreams, you know, when I was a kid
6:48
Speaker 1: getting into this business in the early nineties, that a government,
6:54
Speaker 1: our government would print trillions of dollars per year. So
6:57
Speaker 1: from nineteen thirteen to two thousand and eight, the government
7:02
Speaker 1: printed eight hundred billion dollars. The Federal Reserve printed eight
7:07
Speaker 1: hundred billion dollars from the formation of the Federal Reserve
7:09
Speaker 1: all the way to two thousand and eight. And then
7:12
Speaker 1: and then in those ensuing so was that, you know, uh,
7:17
Speaker 1: fifteen years fourteen fifteen years later, the balance she went
7:22
Speaker 1: to nine trillion dollars. So so you know, that doesn't
7:29
Speaker 1: sound like America, That doesn't sound like sound money. Of course,
7:33
Speaker 1: we had our excuses. We had the onesell lifetime global
7:36
Speaker 1: financial crisis and the one set a lifetime virus which
7:40
Speaker 1: you know didn't really turn out to be the pubonic
7:43
Speaker 1: plague one offs. But really, I mean, besays buying Morgan's
7:49
Speaker 1: backs to juries in twenty twenty two, what does that
7:52
Speaker 1: that the hell is that do with COVID? Then you
7:54
Speaker 1: wondered why home prices went up and that people blame
7:57
Speaker 1: corporate greed for inflation even though their margins haven't improved.
8:01
Speaker 1: So yeah, I mean the lunacy out there is over
8:05
Speaker 1: the off the charts.
8:08
Speaker 3: Well, one thing I will say is certain companies. I
8:11
Speaker 3: remember the last round of inflation we had and had
8:15
Speaker 3: a printing company, and when we would raise prices because
8:19
Speaker 3: there was inflationary expectations built into the system, we try
8:23
Speaker 3: to add a little more and try to expand our margins,
8:26
Speaker 3: but that is limited.
8:27
Speaker 4: Fast Food has.
8:28
Speaker 3: Done it, McDonald's has done it, but now they're feeling
8:31
Speaker 3: the pain because they expanded their margins by three or
8:35
Speaker 3: four points. But now for the first time, sales are
8:38
Speaker 3: down because people. Have you got that thing called the
8:43
Speaker 3: substitution effect?
8:44
Speaker 1: Right, Well, the truth is carried that the middle class
8:47
Speaker 1: has been wiped out in this country. If you look
8:51
Speaker 1: at the bottom four quintiles, they're really, really hurting. And
8:55
Speaker 1: the fact that what I find so disturbing is at
8:58
Speaker 1: the price level. The price level is so high that
9:02
Speaker 1: they can't afford. You know, you look at a house.
9:04
Speaker 1: The price of the house, the insurance, the taxes, the maintenance,
9:09
Speaker 1: the fees, everything associated holding the house is unaffordable. And
9:13
Speaker 1: we don't need the price level to do anything but
9:16
Speaker 1: go down. The price of homes, the price of food,
9:21
Speaker 1: the price of new cars, the price of insurance, taxes,
9:27
Speaker 1: those things have to fall. The price level has to fall.
9:31
Speaker 1: In economic speak, that's deflation. In Powell's mind and the
9:35
Speaker 1: mind of the Fed, they're dicilary victory. Not that the
9:38
Speaker 1: price level has fallen enough. It's the fact that the
9:41
Speaker 1: price increases the rate of change has fallen enough. In
9:45
Speaker 1: other words, the Fed is saying, I don't care the
9:48
Speaker 1: middle classes has already been wiped out. The prices are
9:50
Speaker 1: too high. I only care that instead of going up
9:52
Speaker 1: by nine percent a year, they're going up by three
9:55
Speaker 1: percent a year, and three percent a year is just
9:57
Speaker 1: fine with me, even though it's not true.
10:00
Speaker 4: I know, is that possible?
10:01
Speaker 1: I mean, you're you're, you're, you're, you're wringing your hands
10:04
Speaker 1: about a slight uptick in the unemployment rate because the
10:08
Speaker 1: solid rule has been triggered. Oh you know, I mean,
10:11
Speaker 1: unemployment is what four point three four point four percent?
10:15
Speaker 1: It's still relatively historically very low, and we're ready now
10:19
Speaker 1: to start cutting interest rates to try to get inflation,
10:23
Speaker 1: you know, back up again. And I think that's so disgusting.
10:28
Speaker 1: I think it's so disgusting, and I think the middle
10:30
Speaker 1: class in this country gets it.
10:32
Speaker 3: Yeah, so money printing is not the solution here, but
10:36
Speaker 3: the stock market seems to have liked it.
10:38
Speaker 1: Yeah, the SoCon well, and that's the thing, you know,
10:41
Speaker 1: the thing that the thing that they said purports to
10:43
Speaker 1: care most about is uh, the poor, the poorest among
10:47
Speaker 1: us in the minories they care. Oh yeah, well I'm
10:50
Speaker 1: looking at let me say, I own, I own multiple homes,
10:56
Speaker 1: a pretty big stock portfolio, doing fine, doing great. Yeah yeah,
11:00
Speaker 1: But if I rented and I have a manufacturing job,
11:06
Speaker 1: I'm getting wiped out because I'm spending most of my
11:09
Speaker 1: income if not all, or maybe even in some cases
11:12
Speaker 1: more than my income because the credit card balances are exploding.
11:15
Speaker 1: Oh yeah, I'm paying I'm paying, you know, fifty sixty
11:20
Speaker 1: hundred and ten percent of my income on the stuff
11:23
Speaker 1: that I need to survive, shelter, clothing, at food costs.
11:28
Speaker 1: But the richest among us are paying very small percentage
11:32
Speaker 1: of our income. This way, inflation doesn't really affect us,
11:36
Speaker 1: because my portfolio is going through the room, my home
11:40
Speaker 1: prices are going up. I'm doing fantastic. But the renter
11:44
Speaker 1: and those who are working, you know, in the lower
11:47
Speaker 1: class jobs, blue collar jobs, they're really really hurting because
11:50
Speaker 1: their incomes are so far behind inflation and they don't
11:54
Speaker 1: have the asset price appreciation that we have. That's the problem.
11:58
Speaker 1: So true, true, so true. And and then the idea
12:02
Speaker 1: of price controls that's going to fix it? And uh,
12:07
Speaker 1: you know, because it's just complete divorce from reality here.
12:10
Speaker 1: That's never happened. There's never been of an instance in
12:15
Speaker 1: this country or other countries where they tried wage and
12:18
Speaker 1: price controls. Have they get Oh wait, they have, they have,
12:22
Speaker 1: And how do they work? Well? When you tell me
12:25
Speaker 1: as a corporation that I can't produce this good or
12:29
Speaker 1: service for the price that I need to charge to
12:32
Speaker 1: actually make myself solvent, to make it a profit. Guess
12:36
Speaker 1: what I do. I stop producing those things, and that
12:39
Speaker 1: means you have shortages, and that means the prices actually
12:42
Speaker 1: go even higher for those things that you want. This
12:46
Speaker 1: has been proven throughout history in this country, in other countries.
12:50
Speaker 1: I mean, if we want to look like Venezuela follow
12:52
Speaker 1: cackling Kamala's the economic plant. It's just it's just disgusting
12:58
Speaker 1: that I hear on here. Where is the candidate that
13:01
Speaker 1: says RFK I guess you could say that is the
13:04
Speaker 1: only person that was even alluding to it. It's like,
13:06
Speaker 1: where are the people out there saying we need to
13:09
Speaker 1: put the handcuffs on the Federal Reserve stop their madness?
13:14
Speaker 4: And why in.
13:15
Speaker 1: The world are they going to start to They're going
13:17
Speaker 1: to start to expand their balance sheet. I mean that's
13:19
Speaker 1: how you get I mean, the FED gets the inter
13:24
Speaker 1: bank lending rate down by printing money, right, That's how
13:27
Speaker 1: they do it. They flood the banking system with reserves
13:29
Speaker 1: they don't even need anymore. I think there's like three
13:31
Speaker 1: point three trillion dollars in reserves in the banking system.
13:34
Speaker 1: Now they're good, they're they're flooded with reserves as it is.
13:37
Speaker 1: They don't need anymore. But we're gonna now try to
13:41
Speaker 1: get borrowing costs down so so the country can get
13:44
Speaker 1: more in debt. Well, I'm looking at I pull up
13:46
Speaker 1: some numbers recently. Uh, if you'll get us total non
13:50
Speaker 1: financial debt to GDP. So that's every everything, corporate, government, business,
14:00
Speaker 1: individual debt, personal debt that is now two hundred and
14:04
Speaker 1: sixty percent of GDP. Do you know what it was
14:07
Speaker 1: in the year two thousand and eight, two hundred and
14:12
Speaker 1: forty percent of GDP. Year what was it in the
14:15
Speaker 1: year two thousand It was one hundred and eighty percent
14:18
Speaker 1: of GDP. So we have more total non financial debt
14:22
Speaker 1: in this country than ever before. We have the most
14:25
Speaker 1: leveraged we have ever been. If you look at government, corporate, business,
14:30
Speaker 1: and the household debt, why don't we do in lower
14:33
Speaker 1: interest rates to get people will take out more debt?
14:35
Speaker 1: You want? We do want people to get more you
14:37
Speaker 1: load up on more credit cards and order loans. Is
14:39
Speaker 1: that what we want in this country? It's just it's insane.
14:42
Speaker 1: You know, We've gone so far off the reservation with
14:46
Speaker 1: asset prices and credit bubbles that I think they I
14:51
Speaker 1: think the FED has realized they've reached an epiphany. They
14:54
Speaker 1: have no choice. They have to keep this bubble going
14:57
Speaker 1: because if it collapses, If and when it collap absence,
15:01
Speaker 1: you're talking about a devastating depression.
15:03
Speaker 3: Oh yeah, there's no question about it. And they kind
15:08
Speaker 3: of caught between a rock and a hard place.
15:10
Speaker 4: Right you know.
15:11
Speaker 1: I I did some more research tonight said when so,
15:15
Speaker 1: now the Fed's about to cut interest rates. The FED
15:18
Speaker 1: is about to ride to the rescue. Let's do Let's
15:20
Speaker 1: go looking back in time. Let's see. Do you know
15:22
Speaker 1: when the FED started cutting rates leading up to the
15:24
Speaker 1: global financial crisis which started in two thousand and at
15:29
Speaker 1: the end of it started the end of two thousand
15:32
Speaker 1: and sound it, yeah, December of two thousand and seven.
15:36
Speaker 1: Do you know what they know when they started cutting rates?
15:38
Speaker 1: Wasn't It wasn't in two thousand and eight. It was
15:40
Speaker 1: July of two thousand and seven when they started slashing
15:43
Speaker 1: slashed the interest rates. They took interest rates to zero
15:47
Speaker 1: percent from five and a quarter. Mister Bernanke did that
15:51
Speaker 1: didn't stop the S and P five hundred from crashing
15:54
Speaker 1: my fifty percent, and the housing market from losing thirty
15:57
Speaker 1: three percent of its value. So do you know, and
16:00
Speaker 1: the Fed started cutting rates in the year two thousand,
16:04
Speaker 1: that two thousand NASAC bubble, right, you know when they
16:07
Speaker 1: started cutting round I don't remember, Okay, So it was
16:10
Speaker 1: the start of the year two thousand, that's when they
16:12
Speaker 1: started cutting rates. It was December. It was actually, I'm sorry,
16:16
Speaker 1: the end of the year two thousand, December of the
16:18
Speaker 1: year two thousand. By the end of twenty twenty two,
16:24
Speaker 1: the S and B five hundred was down fifty percent
16:26
Speaker 1: and the NASDAK lost eighty percent, and the FED took
16:30
Speaker 1: rates from six I think it was like six and
16:32
Speaker 1: a half down to one percent. What what did we get?
16:38
Speaker 4: You know?
16:38
Speaker 1: The fact that the Fed is going to start cutting
16:41
Speaker 1: interest rates is like, oh yay, the Fed is going
16:44
Speaker 1: to the rescue again.
16:46
Speaker 4: Happy was here again?
16:49
Speaker 1: You know, if the FED cuts interest rates, there they're
16:52
Speaker 1: the effective FED funds right now is five point three
16:54
Speaker 1: percent carry. If the FED cut interest rates by a
16:58
Speaker 1: quarter of a percent or fifty basis points or even
17:01
Speaker 1: seventy five basis points, you're still going to have an
17:05
Speaker 1: interest rate that's around you know, say say four and
17:07
Speaker 1: a half percent. Let's say they cut interest rates to
17:09
Speaker 1: four and a half percent by the end of this year,
17:13
Speaker 1: they're still way above the rate of inflation. The way
17:15
Speaker 1: they calculate it, inflation is two point nine percent, so
17:18
Speaker 1: you still have a real FED fund rate. That's that
17:21
Speaker 1: means the FED is still very, very restrictive, which is good.
17:24
Speaker 1: I'm so glad that the FED has at least try
17:28
Speaker 1: to bring some reality to this market and to these
17:31
Speaker 1: asset prices and to the credit bubble. But they're going
17:33
Speaker 1: I think they're if the Fed, unless the FED slashes
17:36
Speaker 1: interest rates trenchingly, significantly, acutely right now, I mean, bring
17:42
Speaker 1: them down to two percent as fast as possible, which
17:45
Speaker 1: will be devastating for the long end of the bond market.
17:47
Speaker 1: I'm not saying this is the right thing to do.
17:49
Speaker 1: I think that would save the stock market for a while.
17:52
Speaker 5: Maybe maybe, maybe maybe, But that's saying that it's if
17:56
Speaker 5: the stock if the long end of the yield curve
17:58
Speaker 5: didn't spike, which is very probable that it would.
18:02
Speaker 1: But by going by, by going slowly now and reducing
18:05
Speaker 1: indust rates, I don't think that's In other words, history
18:08
Speaker 1: says it's just not enough because we still have a
18:12
Speaker 1: lot of like I should total non financial that to
18:16
Speaker 1: GDP is two hundred and sixty percent. That's a record
18:19
Speaker 1: amount of leverages in this economy. Are you ignoring you
18:22
Speaker 1: have to ignore the leading economic indicators which say that
18:25
Speaker 1: GDP growth should be about zero percent going forward. Zero
18:29
Speaker 1: percent handle. That's really not much in the way of
18:32
Speaker 1: getting earnings per share growth at fourteen percent fourteen percent
18:36
Speaker 1: EPs growth priced in for twenty twenty five. Do you
18:40
Speaker 1: think you think we're going to get there with nominal
18:42
Speaker 1: GDP growing at like, you know, almost nothing. I don't
18:46
Speaker 1: think so you have you allso have to ignore the
18:48
Speaker 1: inverted Ye'll curve, the Yal curve. The Yale curve has
18:52
Speaker 1: been inverted for the longest duration in history ever, right ever,
18:58
Speaker 1: and it was one of the steepest and versions by
19:00
Speaker 1: one hundred basis points. Should we throw that? Since nineteen
19:03
Speaker 1: fifty five, every single time we've had an inverted Yeal curve,
19:07
Speaker 1: we had a recession except for one time when and
19:10
Speaker 1: that was in the mid sixties when GDP went from
19:13
Speaker 1: ten percent to zero percent. So the inverted Yell curve, Yeah,
19:18
Speaker 1: I'm not going to ignore that. I'm not going to
19:20
Speaker 1: ignore the leading agonogam index. I'm not going to ignore
19:23
Speaker 1: the fact that the real FED fundrate has been positive
19:26
Speaker 1: two percent for a very long time. I'm not gonna
19:29
Speaker 1: I'm not going to ignore the overleveraged debt and the
19:32
Speaker 1: you know, situation in the economy. I'm not going to
19:34
Speaker 1: ignore the acid bubbles that we have. I'm not going
19:36
Speaker 1: to ignore the Fed's balance sheet that's shrinking. There are
19:39
Speaker 1: many reasons not to believe. Even if you say, Michael Pento,
19:44
Speaker 1: you're a Cassandra, You're full of it. You're a permit bear,
19:48
Speaker 1: even though you know I'm we're making money this year.
19:51
Speaker 1: I mean I only lost money one time one year
19:55
Speaker 1: in twenty twenty two. We lost about three and a
19:56
Speaker 1: hare percent in the portfolio. So I'm not a permit bear.
19:59
Speaker 1: It was always short the market. Sometimes I'm massively long
20:02
Speaker 1: and very profitable. I'm just saying that if you're if
20:05
Speaker 1: you're going to believe and get ready for this massive
20:08
Speaker 1: rebound in stocks and massive rebound and asset prices and
20:13
Speaker 1: a releveraging of an economy and a rebounding in economic
20:17
Speaker 1: growth from here, you are insane. That's not gonna happen.
20:22
Speaker 3: Hey, So what about the budget which is out of control?
20:25
Speaker 3: You know, I ask CHAT GPT to analyze every line
20:31
Speaker 3: item in the budget for twenty twenty five and cut
20:35
Speaker 3: to two to three trillion dollars. So the first thing
20:38
Speaker 3: it does is come back and start. You can just
20:41
Speaker 3: see how crazy it is. It says, well, if we
20:44
Speaker 3: increase the corporate tax rate to twenty eight percent, and
20:49
Speaker 3: it gives like all these tax increases. So I say,
20:53
Speaker 3: you know, perform the above analysis with no tax increases,
20:57
Speaker 3: get rid of corporate welfare and all other government wasteful spending.
21:02
Speaker 3: So chat GPT in like thirty seconds cut the federal
21:06
Speaker 3: budget by three billion dollars, you know, but of course, yeah, yeah,
21:11
Speaker 3: Like we say four hundred billion on corporate welfare, we
21:15
Speaker 3: say five to six hundred billion on so called defense,
21:19
Speaker 3: and it says we should get rid of the F
21:21
Speaker 3: thirty five Joint Strike Fighter program. Healthcare, we say four
21:27
Speaker 3: to five hundred billion. By getting rid of Medicare overpayments
21:32
Speaker 3: drug prices, will save two hundred billion. On Medicaid expansion reform,
21:37
Speaker 3: we'll save one hundred and preventive care expansion, which is
21:41
Speaker 3: the one thing I really appreciate about RFK Junior is
21:47
Speaker 3: actually making our poison food supply a national issue, which
21:52
Speaker 3: it should have been all these years, but it's been
21:54
Speaker 3: swept under the rud by big pharma and big AG
21:58
Speaker 3: and the big big healthcare.
22:03
Speaker 1: And you know, I just came back from it. I
22:04
Speaker 1: just was. I just came back from Italy not too
22:06
Speaker 1: long ago, and I ate like a pig every every meal,
22:08
Speaker 1: was eating in a restaurant. Yeah, and I put I
22:11
Speaker 1: poured pasta in my in my in my belly, and
22:14
Speaker 1: I ate like a pig, drank every night a bottle
22:17
Speaker 1: of wine. And you know what, I came back and
22:19
Speaker 1: I didn't gain an ounce my game back. I didn't
22:22
Speaker 1: out Now I go out to eat here one one restaurant.
22:25
Speaker 1: I gained three pounds because our food, our bodies are
22:28
Speaker 1: not able to tolerate the food, genetically modified grains and
22:34
Speaker 1: corns that we that we put in our.
22:36
Speaker 4: Body, franking food. They call it fight soul.
22:39
Speaker 1: Fights, and our wine. It's just yeah, they don't. They
22:42
Speaker 1: don't eat that way in Europe and much healthier. But
22:45
Speaker 1: but when you said you said three billion for I
22:47
Speaker 1: think you meant three trillion. You get three trillion so
22:50
Speaker 1: three trillion, kerry, did you ask chat GBT? If you
22:54
Speaker 1: cut three trillion dollars off the budget, what does it
22:57
Speaker 1: do to the revenue that the government? Yes, is get
23:01
Speaker 1: chat GBT?
23:02
Speaker 4: That I will you will. I will ask you.
23:06
Speaker 1: To ask it because I guarantee you in reality, I
23:10
Speaker 1: don't know chat GBT would know this, and I don't
23:12
Speaker 1: claim to be smarter than chat GBT. But if you're
23:15
Speaker 1: going to cut three trillion dollars off of I think
23:18
Speaker 1: we have a budget of six or seven trillion dollars, Uh,
23:22
Speaker 1: your revenue is going to plummet short term. It's the
23:25
Speaker 1: right thing to do, but your revenue will plum it
23:28
Speaker 1: short term and you will have a dipression.
23:30
Speaker 4: I'm asking it right now.
23:32
Speaker 3: Reducing the federal budget by three trillion three spending cuts
23:36
Speaker 3: would have significant effects on government revenue and receipts.
23:42
Speaker 4: How this is some good?
23:44
Speaker 1: What did it? I mean? Does it put a number
23:46
Speaker 1: on the on the significant?
23:48
Speaker 3: Mm hmm, I would say it would be, well, it doesn't,
23:53
Speaker 3: it won't go all right, So let's say, UH, give
23:58
Speaker 3: specifics of the It likes to talk in generalities like politicians,
24:03
Speaker 3: you know.
24:05
Speaker 1: So we have we have about five trill So revenue
24:07
Speaker 1: is about five trillion dollars. What would the revenue be
24:12
Speaker 1: under your very very austere but very very appropriate budget plan.
24:20
Speaker 4: That's what civix.
24:21
Speaker 3: Of the revenue reduction froum above. Okay, let's see man,
24:28
Speaker 3: I'm just curious. I don't think it has a clue,
24:31
Speaker 3: but of course it doesn't want to do.
24:33
Speaker 4: It now, Yeah, all right, here we go.
24:38
Speaker 3: Reduce borrowing could have a contractionary effect on the economy,
24:43
Speaker 3: particularly if they reduce government of consumer spending and investment.
24:48
Speaker 3: Consumers don't invest, I just spend. This could lead to
24:51
Speaker 3: a slight decrease in tax revenues if economic growth slows. However,
24:56
Speaker 3: the stabilization of federal finances could improve long term economic confidence,
25:02
Speaker 3: potentially offsetting these effects.
25:04
Speaker 1: So Chat, I agree. Would CHAT GBT completely except for
25:08
Speaker 1: when it says maybe and possibly it would be the
25:12
Speaker 1: you would have long term massive benefits from doing what
25:17
Speaker 1: you just have slashing government spending. In the short term,
25:21
Speaker 1: we would we would wipe out GDP.
25:23
Speaker 4: Be a disaster, it would It would.
25:25
Speaker 1: Be disaster revenue wise in the and avery otherwise, yeah.
25:29
Speaker 3: And the global economy and all the debt, all the
25:32
Speaker 3: debt that's out there would have to be marked to
25:35
Speaker 3: its true value, right, so it would shut down the
25:39
Speaker 3: financial institutions of the world. We'd have to read you
25:42
Speaker 3: couldn't do it without a recapitalization plan where the banks?
25:47
Speaker 4: Right?
25:48
Speaker 1: Yeah, yes, you're right, Terry. You know, just to give
25:51
Speaker 1: you an idea of how fragile and how stretched the
25:54
Speaker 1: financial evation of this world is. You have the the
25:57
Speaker 1: the slight unwinding of the end carry trade, which is
26:01
Speaker 1: where you know, you borrow yend it. You go to
26:04
Speaker 1: the bank Japan say how much yen can you give me? Well,
26:06
Speaker 1: I give it. You give as much as you want,
26:08
Speaker 1: no interest, you know, I'll tell you, and I'll take it.
26:11
Speaker 1: And I'll go to Mexico and buy you know, Mexican
26:15
Speaker 1: bonds and get ten percent, or Brazilian or you know,
26:18
Speaker 1: even the US bonds and get five to five point
26:22
Speaker 1: five point three percent. And then you get the kicker,
26:26
Speaker 1: which is, you know what, since you everybody's doing this,
26:29
Speaker 1: the yet is falling in value. So I get the
26:31
Speaker 1: currency appreciation, and I got the interest rate differential, and
26:35
Speaker 1: I'm you know, hedge funds love this. This is a
26:37
Speaker 1: great thing to do. And then all and then all
26:40
Speaker 1: of a sudden, the back of Japan says, uh you
26:43
Speaker 1: ate a Governor Raia says, you know what, I'm going
26:45
Speaker 1: to raise interest rates all the way up to one
26:48
Speaker 1: quarter of one percent.
26:49
Speaker 4: Oh damn.
26:53
Speaker 1: And that sent the yen carry traders scrambling to sell
26:57
Speaker 1: their bonds, sell their stock, sell their crypto, sell everything,
27:02
Speaker 1: sell that currency and buy back the end to close
27:05
Speaker 1: out their short, their synthetic short.
27:08
Speaker 4: Of the end.
27:09
Speaker 1: And then you know what happens. Then the I think
27:13
Speaker 1: it's the fourth or fifth largest economy on the planet,
27:17
Speaker 1: had its stock market. The nick iy Dao dropped twenty
27:21
Speaker 1: percent in like five days. Him one fifth of the
27:26
Speaker 1: entire value of the country's stock market plunged because a
27:30
Speaker 1: little tiny corner of the financialization of this world started to,
27:35
Speaker 1: you know, have little cracks in it. So just think
27:37
Speaker 1: about what's going to happen when reality hits. There is no,
27:41
Speaker 1: like I said, there is no easy way out of this.
27:44
Speaker 1: Even if you did exactly what you said, we slash spending,
27:48
Speaker 1: or the FED fed with the slash interest rates, the
27:51
Speaker 1: long end of the bond market has no damn business
27:54
Speaker 1: being at anywhere near three point eight percent. It just
27:57
Speaker 1: doesn't belong there. It should be close to the double
27:59
Speaker 1: digit because when you factor in inflation and credit risk
28:03
Speaker 1: of this country, it should be much closer to you know,
28:06
Speaker 1: seven percent eight percent. Yeah, So if the Fed we
28:10
Speaker 1: get out of it, get out of the way, the
28:12
Speaker 1: market would send rates much much higher. You know, we
28:15
Speaker 1: should with thirty five trillion dollars in debt, unfunded liabilities,
28:19
Speaker 1: over one hundred trillion dollars, two trillion dollar deficits in
28:22
Speaker 1: in peacetime and in prosperity time, one trillion dollars in
28:25
Speaker 1: interest payments, and you're going to lend lend money to
28:28
Speaker 1: this government going out ten years at three point eight percent.
28:32
Speaker 1: Count me out on that calculation.
28:35
Speaker 3: Hey, you know what does some people called unfunded liabilities
28:40
Speaker 3: and obligations of the government, others called social security and
28:44
Speaker 3: medicare right, Yeah, try to.
28:46
Speaker 1: Get rid of them. Try to get asked you that's
28:49
Speaker 1: the check. That's what you pretty much do with Chad GBT.
28:51
Speaker 1: You know that getting rid of government obligations is wiping
28:56
Speaker 1: out other people's income streams. Yeah, and that has a
29:00
Speaker 1: massive I mean you can't do that. I mean seniors
29:03
Speaker 1: since paid into it, you know, they paid into it.
29:05
Speaker 1: They expect a certain amount to survive. So you know
29:10
Speaker 1: there's major changes have to take place. I mean I
29:12
Speaker 1: would start by raising the retirement age now. But we
29:15
Speaker 1: who's talk which kick?
29:17
Speaker 4: Kerry?
29:18
Speaker 1: Tell me maybe I'm wrong because RFK Junior is dropped out?
29:22
Speaker 1: Which candidate? Which one of the two candidates is talking
29:24
Speaker 1: about saving Social Security and Medicare by putting in programs
29:30
Speaker 1: and plans in place now to keep them solvent.
29:32
Speaker 3: Well, you know they're going to do it anyway, because
29:36
Speaker 3: touch comes to shove right.
29:38
Speaker 1: Print. They're gonna do anything. They're gonna print, Kerry. They're
29:40
Speaker 1: gonna print it, Yeah, will print it. They will give
29:44
Speaker 1: These programs will always be solvent. This is my opinion. Yeah,
29:48
Speaker 1: in the business thirty three years. I'm sixty years old.
29:50
Speaker 1: I've done this long enough. I've seen enough. There's those
29:53
Speaker 1: programs will always be solvent. But they're not gonna be
29:56
Speaker 1: solvent in the way you want them to be. They're
29:58
Speaker 1: gonna hand you a check for one hundred percent of
30:01
Speaker 1: what they owe. The purchasing power of what you're going
30:04
Speaker 1: to get is going to be vastly attenuated.
30:08
Speaker 4: All right, So it's a house of cards. What do
30:12
Speaker 4: you do?
30:12
Speaker 3: How do we defend our own personal finances against this.
30:17
Speaker 3: Do we buy insurance, do we buy credit default swaps?
30:22
Speaker 3: Do we get out of the stock market and get
30:24
Speaker 3: a get a bigger mattress?
30:26
Speaker 4: What do you do?
30:27
Speaker 1: Well? That's why that is the genesis, the progenitor of
30:31
Speaker 1: the inflation deflation economic cycle model that I created. I
30:34
Speaker 1: look at those components. There's twenty components. They look at
30:38
Speaker 1: the second derivative of inflation in the context of the
30:41
Speaker 1: growth of the economy to let me know when I
30:43
Speaker 1: should get out of the stock market. Right now, it's
30:45
Speaker 1: telling me you could still invest in the stock market
30:47
Speaker 1: and make money. But when the red flag start to fly,
30:52
Speaker 1: and the red flags would be credit spreads, they'd be
30:54
Speaker 1: financial conditions. They would let me know in advance when
31:01
Speaker 1: I need to get out and be more defensive. In
31:03
Speaker 1: the meantime, the way I'm making money, and the way
31:06
Speaker 1: a lot of people are making money is they're buying
31:08
Speaker 1: goal I'm buying. I have a good, healthy position in
31:11
Speaker 1: the precious metal. I have low volatility. I have low
31:15
Speaker 1: volatility stocks. So think about consumer staples, utilities, those things
31:21
Speaker 1: are I think of what you have to own as
31:23
Speaker 1: we enter into what I think could be a really
31:26
Speaker 1: really challenging twoententy and twenty five, both politically and economically speaking.
31:31
Speaker 3: Sustained period of economic contraction. Here, I'll tell you this summary.
31:36
Speaker 3: The chat GPT said total indirect revenue impact the combined
31:41
Speaker 3: impact of these spending cuts could range from eighty five
31:44
Speaker 3: to one hundred and sixty billion dollars annually due to
31:48
Speaker 3: slower economic growth, reduce profits. But we know that corporations
31:53
Speaker 3: don't really pay any taxes anyway. But it said, well,
31:58
Speaker 3: these reductions are significant. They are outweighed by the direct
32:02
Speaker 3: savings achieved through three trillion in spending cuts. And I like,
32:07
Speaker 3: I want to find the politicians got the balls to
32:10
Speaker 3: actually do this. You know, that's the guy I want
32:13
Speaker 3: to vote.
32:13
Speaker 4: For it, I know, but where?
32:14
Speaker 1: But where is it? Where is it he or him?
32:17
Speaker 1: Will her? Where are they? It's not cackling Kamala, And
32:21
Speaker 1: it's not Donald Trump unfortunately, although again he's far better
32:26
Speaker 1: than the other alternative, and.
32:27
Speaker 3: He might surprise too, because it's going to take a crisis.
32:30
Speaker 3: What we're saying is nobody's going to do this proactively.
32:34
Speaker 3: Nobody is going to take the steps to avoid the
32:37
Speaker 3: inevitable crisis. So the crisis hits, and then hopefully everything
32:43
Speaker 3: will be on the table.
32:46
Speaker 1: I think it's going to be on the table, you
32:47
Speaker 1: know where I you know, the Pavlovian reflex action on
32:52
Speaker 1: that's going to be on the table. Unfortunately, he's going
32:54
Speaker 1: to be helicopter money, part due and ZERP and Q.
33:01
Speaker 1: That's what they do. That's all they know. No one,
33:04
Speaker 1: no one thinks long term, because what is the politician,
33:07
Speaker 1: who is the central banker, and who is the politician
33:10
Speaker 1: who's going to stand up and say, listen, what we
33:12
Speaker 1: need to do is let markets function. We need to
33:16
Speaker 1: bring down the level of these asset prices. We have
33:19
Speaker 1: to let banks fail. We have to let let pension
33:21
Speaker 1: plans and investment banks and insurance companies fail. We have
33:28
Speaker 1: to let people fail, corporations fail. We have to bring
33:32
Speaker 1: out all the excesses in the economy. It's going to
33:34
Speaker 1: be a depression that lasts for a few years. They'll
33:36
Speaker 1: be brutal. But on the other end of that, we
33:39
Speaker 1: were going to have stable prices, a sound dollar, a
33:42
Speaker 1: sound currency, low taxes, low interest rates, low inflation, and
33:48
Speaker 1: you know, prosperity for a very long time. Who is
33:52
Speaker 1: I mean, I don't know who's going to do that.
33:55
Speaker 3: But you know, Michael, it's like when you have a kid,
33:58
Speaker 3: all right, and the kid is hungry and say, but
34:02
Speaker 3: I've only got chocolate to give him, and that's really
34:05
Speaker 3: not good because hey, like RFK Junior, We'll tell you,
34:08
Speaker 3: I've only got chocolate and seed oils. What am I
34:12
Speaker 3: going to do here? But but the kid's going to
34:14
Speaker 3: stop crying, all right, give him a little piece, and
34:18
Speaker 3: then that shuts him up for two seconds, all right,
34:21
Speaker 3: and then he comes back screaming worse than ever. And
34:24
Speaker 3: then he had shoved the whole candy bar in his
34:26
Speaker 3: mouth and shut him up. And that's what our politicians
34:29
Speaker 3: do here.
34:31
Speaker 1: I think. I think it takes a lot of education
34:35
Speaker 1: that has to be A education has to be and.
34:39
Speaker 4: The real education, yeah, education.
34:43
Speaker 1: Education, economic education for our politicians and economic education for
34:48
Speaker 1: our population. Not you know where is that? How can
34:54
Speaker 1: we transmit that? That's what we should be focused on.
34:57
Speaker 1: And that's why I come on programs like yours. If
35:00
Speaker 1: enough people see and hear the truth, maybe they'll say, Hey,
35:04
Speaker 1: for the sake of my children and my grandchildren, I'm
35:07
Speaker 1: willing to suffer like this because there's no other alternative.
35:10
Speaker 1: And it's never gonna happen. Carry, it's not gonna happen.
35:13
Speaker 1: What's gonna what's most likely going to happen, unfortunately, is
35:16
Speaker 1: we're gonna have a like I said, qe zerp helicopter money.
35:22
Speaker 1: It's going to cause the long end of the bond market.
35:25
Speaker 1: The bond market is going to go in full revolt
35:28
Speaker 1: mode because of inflation and insolvency concerns. When you have
35:33
Speaker 1: interest rates spike to that level, when you have interest
35:37
Speaker 1: rates spike to that level where an inflation and interest
35:41
Speaker 1: rates cause utter economic chaos, then the people will say,
35:46
Speaker 1: let's try something else. They'll demand another plan of action.
35:51
Speaker 1: The only problem is as bad as things are right now,
35:54
Speaker 1: it's going to be even worse by the time we
35:56
Speaker 1: get to that point.
35:57
Speaker 4: Yeah.
35:58
Speaker 3: And the bankruptcies, let's not forget. It'll be cities and
36:03
Speaker 3: states as well. Ten states will go bankrupt they can't
36:06
Speaker 3: under the existing law.
36:08
Speaker 4: It'll have to be amended. Well, they won't call it bankruptcy.
36:11
Speaker 4: They call it a reorganization or something.
36:13
Speaker 3: And the New York City, Chicago, La San Francisco, you know,
36:20
Speaker 3: all these failing cities, excuse me, are all going to
36:24
Speaker 3: go you know, Detroit. Well, they already did go bankrupt,
36:27
Speaker 3: and they're actually on the upswing, interestingly enough when I
36:30
Speaker 3: talk to people there. But and how you're going to
36:32
Speaker 3: pay these cops? And we got a prescription for anarchy here,
36:36
Speaker 3: don't we.
36:37
Speaker 4: Yeah?
36:37
Speaker 1: Well, I think hyperinflation would be or at least intractable inflation.
36:42
Speaker 1: Multiple years of double digit, near triple digit inflation, that's
36:46
Speaker 1: going to be enough to cause that's going to be
36:49
Speaker 1: the catalyst for change, and that will cause bankruptcies. You'll,
36:54
Speaker 1: you know, investment banks will go bankrupt, banks, hedge funds,
36:58
Speaker 1: pension funds. Yeah, that's that's that is what you're going
37:02
Speaker 1: to need, I think, to bring some reality to this market.
37:07
Speaker 1: It's not going to come volunteer voluntarily.
37:10
Speaker 4: Where's our Javier in Mille? Right? That actded I don't
37:16
Speaker 4: see him on the horizon.
37:17
Speaker 3: He's unelectable and it's only look okay, look it took
37:22
Speaker 3: Argentina to hire that guy, right, a century of failure, Michael.
37:28
Speaker 1: Finally, Yeah, even even in Zimbabwe, which is a serial
37:33
Speaker 1: hyperinflationary economy. Even in Zimbabwe, they said, you know what,
37:38
Speaker 1: let's just link our currency to gold. They have linked
37:42
Speaker 1: their currency to gold, and I don't know if they'll
37:45
Speaker 1: stick with it. I don't know if it's going to work.
37:48
Speaker 1: But it took you know, a series of hyper inflationary
37:53
Speaker 1: debacles where the currency was completely wiped out along with
37:56
Speaker 1: the economy. They said, let's just let's try something new.
37:59
Speaker 1: Maybe we'll get there someday, maybe you and I will
38:03
Speaker 1: see it. I'll mean, it would be nice to see
38:07
Speaker 1: the definancialization of this country.
38:12
Speaker 4: Edit world and the world.
38:14
Speaker 1: Yeah, correct, And it would be nice because you know what,
38:17
Speaker 1: that's how you get the most freedom and prosperity in
38:20
Speaker 1: a nation. A viable and healthy middle class is that
38:23
Speaker 1: we're looking for. And I maybe something will happen.
38:27
Speaker 3: A remember, for forty fifty some ideas the country got
38:31
Speaker 3: along just fine without a central bank.
38:35
Speaker 4: Think of that.
38:36
Speaker 1: Not that we got along fine. It was the period
38:39
Speaker 1: of greatest pop prosperities nation has ever seen.
38:43
Speaker 3: Yeah, all right, I think we'll leave it at that.
38:45
Speaker 3: Pentoport dot com make sure you go there. Sign up.
38:49
Speaker 3: The link is in the show notes to this interview
38:51
Speaker 3: on Financial Survival Network dot com. Please sign up for
38:54
Speaker 3: your free newsletter. Michael will talk to you in a
38:56
Speaker 3: month and see what further madness has unfolded.
39:00
Speaker 1: Ah're looking forward sway, Carrie, take care.
39:02
Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your
39:06
Speaker 2: solution to today's trying times. For the latest, go to
39:10
Speaker 2: Financial Survivalnetwork dot com. Financial Survival Network now more than ever,