Latest / Financial Survival Network / Inflationary/Deflationary Investing with Dennis Tubbergen #5792

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Inflationary/Deflationary Investing with Dennis Tubbergen #5792 · Financial Survival Network

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  You're listening to Carrie Letts's Financial Survival Network, where you get valuable information you
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  just can't find anywhere else to thrive in today's trying times. You need the
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  Financial Survival Network now more than ever. Go to Financial Survival Network dot com
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  and get your free newsletter in gift. Financial Survival Network now more than ever,
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  And welcome you are listening to watching the Financial Survival Network. I'm your
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  host, Carrie Letts. Well, looks like a recession is baked in the
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  cake. Every day you hear more layoffs taking place all over the place,
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  especially in tech. Auto sales look like they're about to hit the skids.
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  Recession is on the way, and we're talking with financial expert Dennis to Bergen.
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  Denni's great to have you back on the show. So what's your take
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  on the imminent recession as if we haven't been in one already the past year.
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  Well, I think, first of all, Karrie, thanks for having
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  me back. Enjoyed our visit last time and was a pleasure to be back
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  on. So thank you. Yeah. I happen to be of the opinion
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  that two consecutive quarters of economic contraction does define a recession. There are those
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  in power today they say that's not necessarily a recession. I think that we
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  have been in a recession since probably January of twenty twenty one. I think
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  a lot of the GDP growth that we saw the third and fourth quarter of
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  last year can be attributed to debt accumulation. And I think a lot of
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  what you're seeing now is not only are we in a reception, I think
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  the economy is contracting, but I think this will be exacerbated by the fact
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  that credit is really really tightening. Uh. You know, we've got car
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  dealerships closing because their their floor planned financings being pulled. Car financing is harder
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  to get and in a consumer driven economy, that's going to be very,
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  very difficult to overcome quickly in my view. Yeah, I'm inclined to agree
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  with you. And the question is what are they going to do about it?
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  What could they do about it? Right? Well? Yeah, so
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  what if you're sitting if you're Jerome Powell today, you're in a pretty uncomfortable
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  seat. You have one option. You can try to save the economy and
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  provide stimulus, but that feeds this inflation monster. We've been fighting for a
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  couple of years. The other option is to try to kill inflation by raising
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  interest rates, and that exacerbates a recession. So you've got two choices,
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  and they're both bad choices. So the question is, you know, what
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  will the fat do. I think we'll probably end up in stagflation, as
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  we discussed before when I was on the program. I think you're going to
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  see prices rise and things that you have to buy, and I think you're
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  going to see prices fall in things that you own. Right, So,
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  are you thinking that the Fed's going to start cutting at some point to the
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  pivot, the Powell pivot? Is it coming or are they just going to
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  stay the course and the economy be damn. I don't think they're going to
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  stay the course. I think that they're going to go back and you the
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  only tool that they probably have left, and that is even more easy money,
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  and I think that will be difficult for inflation. You know, we
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  can just go back carry and look at the recent bank failures Silicon Valley Bank,
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  Signature Bank. You know, the FED came out and openly stated we're
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  going to make all depositors whole, even on uninsured deposits. They added four
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  hundred billion dollars to their balance sheet in two weeks to be all out the
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  banks in the midst of what is supposed to be a taper. So I
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  would argue that we're already starting to see the pivot the taper caper is over.
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  Huh. I would I like that terminology, but yes, I would.
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  I would certainly think that that's a case for my view, And certainly
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  precious metals are flashing the warning signs. And the dollar, which had had
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  a major rally, you know, was over one hundred for the first time
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  in twenty thirty years, twenty something years, and then it hit one hundred
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  five and even higher to the confidence out there, and then you got the
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  d dollarization trend, which I know you've been covering, where a lot of
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  countries are trying to switch. I mean, I think it's I think eventually
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  it's going to happen, But for right now, if you've got a lot
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  of hash, a lot of funds in the treasury, you're not going to
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  trust a Chinese bank. You're certainly not going to trust a European bank.
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  So the place to part the money is still going to be in the dollar.
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  Yeah, although you know there was an interesting development last week I talked
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  about this week on my Headline round Up podcast, and that is that the
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  yield on a one month tea bill was bid down to just under three and
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  a half percent. A two month tea bill was still yielding five point one
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  percent, So there was this disparity in yield between a one one bill and
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  a two month te bill at one point six four percent. So I don't
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  know the answer to this question. But the natural question that I liked,
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  that I think everybody should consider is why are why is it all this money
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  saying, you know, I'll put my money in the dollar for a month
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  and take a much lower yield than if I put it in there for two
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  months. What's going on behind the scenes here? So I don't know the
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  answer to that question, but I think you're certainly seeing significant cracks in the
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  foundation of the dollar being the reserve currency. In the latest stats I read
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  or that the dollar has gone from seventy three percent use in all international transactions
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  at the turn of the century to forty seven percent today. So that's a
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  that's a significant loss. So I think this whole thing could accelerate maybe faster
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  than people think. Hey, if that happens. We're going to have a
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  global depression, aren't we. Yeah, and I you know, I think
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  that you're going to have to see that. Up in my main newslet,
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  I wrote about the fact that there's so many parallels between now in nineteen twenty
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  nine, but arguably today you've got conditions that are much more severe. Private
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  sector debt today is about one hundred and fifty five percent of the economy,
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  which is about where it was in nineteen twenty nine. You know, the
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  difference is, of course, we've got twenty five trillion dollars in economic output
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  today. We had one hundred and five billion in nineteen twenty nine. But
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  private sector debt's really on par when you adjust the numbers. Government debt in
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  nineteen twenty nine was sixteen percent of GDP. Today it's one hundred and thirty
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  percent. And in nineteen twenty nine, nobody knew what a derivative was.
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  And you know, Egon von Greater it says we've got two quadriff. You
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  can get your arms around this, two quadrillion dollars in derivatives. If even
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  a small percentage of that turns into debt, yeah, we're going to see
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  a global depression. That's just it's the numbers are unbelievable, and international banking
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  collapse, which we're already starting to see the beginnings of credit Swiss and deut
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  Chip Bank and a host of others. I think the situation in China could
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  be even more dire than that been printing money. You know, Powell could
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  take some lessons from Shina as far as money printing goes. Yeah, I
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  mean, I agree with all that, and I think that you know,
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  when you go back and study history and look at the panic of eighteen thirty
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  seven in the U as, the Long Depression of eighteen seventy three, the
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  Great Depression, the canary in the coal mine has always been banking failures,
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  and now we're starting to see that. So so in my view, we're
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  following that same pattern of inflation followed by deflation, and I think that this
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  time the inflation is going to potentially be allowed worse simply because there is not
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  a currency in the world that is tied to anything tangible. Every currency in
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  the world is a fiat currency. That was not the case in these prior
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  instances. Yeah, And this is the first time in history that we've been
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  on a global Fiat standard, and it kind of started in the early seventies
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  with Nixon's closing to the Golden window, and then seventy three was the final
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  nail in the coffin. So we're looking it. We got a fifty year
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  ride off of this phony money, and there were times during that fifty years
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  where things were pretty good. You know, the Internet came in mainly tied
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  to I guess technology and localism, but it worked really well. We're a
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  large part of that time. But like all good things coming to an end.
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  Well, and you know, when the United States, and you know,
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  I think Henry Kissinger may have been the mastermind behind this. You may
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  have a different perspective, but you know, when the gold link was eliminated
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  in nineteen seventy one, it only took a couple of years, and all
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  of a sudden, the United States as an agreement with Audi Arabia to sell
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  all their oil and US dollars and put the proceeds in US treasuries. So
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  when that established the petro dollar, it would really you know, it took
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  the dollar and eliminate the link between the dollar and goal, but it established
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  one between the dollar and oil that is now going by the wayside with the
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  bricks countries talking about developing their old currents. See. So I think that's
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  why this could accelerate again faster than people think, because Saudi Arabia has now
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  openly stated will sell oil in any currency that's reasonable to us. Right,
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  So yeah, well, interesting times ahead. So how do you prepare gold
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  silver? Obviously, their hedges against KAUS a loss of faith in the government
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  and the loss of faith in the financial system. But what else can you
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  do? Well, my book Revenue Sourcing. If you don't mind me throwing
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  out a shameless plug, I'd be happy to send any anybody about free copy
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  of the book that contains a strategy for what you just discussed. It's Revenue
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  sourcingbook dot com. Let me know where to mail it, and I'll be
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  glad to get it out to you. But I think we've got one of
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  two options moving ahead. To answer your question, I think we're going to
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  see inflation. I happen to believe that as you stated powerable pivot, we
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  will see the powerable pivot that will likely lead to some more inflation. And
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  the way that's likely cured is a deflationary collapse. As you to use the
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  term, you just use deflationary depression. Globally, I think that's where we're
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  at it. So I think that all of our viewers should think about,
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  Okay, what assets will perform well in an inflationary environment, and that leads
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  you to tangible assets, which which I think you have to have gold and
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  silver in your portfolio. I think we're seeing the beginning of what I believe
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  is going to be a big bowl run in gold and silver, not because
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  gold and silver are inherently worth more than fifty years ago, but the dollar
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  is going to continue to be devalued, so that would be my view.
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  Eventually that's going to give way to a deflationary environment. And the number one
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  performing investment in the nineteen thirties was a highly rated corporate bond, So you
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  know, very highly rated corporate bond, Keep your powder dry, get a
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  little bit of yield, and you know, live to fight another day.
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  So I think you've got to have one bucket of assets to perform well in
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  an inflationary environment. You've got to have another bucket of assets that we'll do
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  well in a deflationary environment. I think we will get both, but the
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  is a lot easier to predict than the win. And I'm not nearly smart
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  enough to predict a win. Yeah, me neither, because I thought it
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  was going to happen in the O eight oh nine financial collapse, and they
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  managed to keep the show going. You know, we're already talking another fourteen
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  years, Dennis. That kept this thing going, kept the plates in the
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  air. You know, they're like the performer who is juggling fifteen plates in
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  the information you need to throw now more than ever. Well, and if
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  someone would have told you carried three years ago, the fet is going to
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  create five trillion dollars out of thin air, and the dollar is still going
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  to be largely used in all world transactions. You know, I for one
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  would have said, boy, I don't know if that can happen. But
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  here we are again, and you know, I don't know how far this
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  rubber band can stretch to use that analogy, or how long they can keep
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  the plates in the air to use your analogy. But we do know that
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  we're on a trajectory that is unsustainable. Yeah, and something, you know,
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  the trend. The trend continues until it stops, right. Well,
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  I think it was the late economist Herbert Klein who said something very profound.
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  He said, if if something can not go on forever, it will stop.
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  And now that's a profound statement, and then that's exactly where we're headed.
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  Yeah, my friend Nick Santiago likes to say the trend is your friend,
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  except at the ends. So so real estate doesn't look like good.
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  It's going to survive the deflationary collapse either though in its current form. You
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  know, so many things denis that you look at in the economy. Prices
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  have gone up because of the debt, like auoto prices, real estate prices,
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  all these things, college student loans. The only reason there is expensive
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  as they are is because of cheap money or easy money, and the day
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  of easy money is coming to an end. So once that debt is gone,
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  then the prices actually will go down to what they should be in a
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  cash market. Right, Yeah, I completely agree with you. I always
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  say that if if you want to fuel a bubble, easy money and easy
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  credit is bubble fuel. And that's exactly what we've seen. So real estate
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  inventories are increasing. The houses that are selling are the houses that are desirable.
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  But you know, the days of escalation clauses are now over. Whereas
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  we're seeing the houses that are selling often with price cuts, you're seeing a
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  lot of houses that are that are high end that are over priced, that
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  are staying on the market. So I think we're starting this move back to
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  normalcy, although we've got a long way to go in my view. He
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  remember, once upon a time the house should sell for three times the average
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  income of the area, right, So we're going to go back to that,
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  you know, I think. So I like to use the gold analogy.
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  You know, in nineteen seventy one, to go back and visit that
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  gold was thirty five dollars an ouns. The average home in the United States
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  that's sold was about twenty five thousand, So if you had seven hundred ounces
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  as a gold, you could buy the home, or if you had twenty
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  five thousand US dollars you could buy the home. Today the average price is
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  about three hundred and eighty thousand, and if you have the same seven hundred
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  ounces as a gold, you can buy nearly four of them. So I
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  think what we're seeing here is dollar devaluation, and tangible assets are going to
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  reflect that. And yeah, when the debt comes, when the debt starts
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  to unwind, currency is debt. That means, you know, we're already
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  saying a big contraction and the M two money supply, so that that's another
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  sign to use the canary in the coal mine side again. So I believe
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  we're on the brink here and I think by the end of the year,
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  thanks could look a lot different. All right, So we're on the break
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  of massive debt or closures debt defaults rather not for closures. I don't believe
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  that the government will allow mass or closures again. It just it's too destabilizing.
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  They'd rather see the lenders take the hit. I feel like during the
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  pandemic, the debt moratoriums, the eviction moratoriums, was just setting us up
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  or what's going to happen next? Yeah, I completely agree. You know,
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  when you have a moratorium on payments that debt doesn't go away. You're
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  just kicking the can down the road. You're ultimately making the debt problem you
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  have to deal with more severe. And yeah, I think that's where we
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  are, and I agree with you. I think that there will be uh,
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  you know, lenders will take to hit. The government will try to
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  step in, but you know, as I noted government that the government doesn't
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  have any room left on their credit card either. We are going to have
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  a harsh return to reality here in my view, and maybe much needed as
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  well, where for sure productivity, we become an economy excuse me, of
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  producers rather than consumers, right, yeah, yeah, and it would bean.
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  You know, we've got this trade deficit again because of energy policy.
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  But you know, we're not a nation of producers like we once were.
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  So I mean, if you really want to have a strong economy, you
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  need to build things that other people want, and you know, we don't
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  really have that kind of an economy. And I think this might be an
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  opportunity to go through a painful reset, But I'm going to turn an optimist.
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  I think that we can we can learn from this and then have a
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  sound money system and come out, you know, better on the other side.
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  But a lot of us going to depend on what happens politically, Dennis,
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  Like, I think a lot of the issues we're seeing here widespread mental
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  health issues. People can't come to the terms with the fact that the system
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  is collapsing and keep their equilibrium at the same time. So you know,
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  drug abuse, way of alcoholism, all these bad things are way up because
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  people can't deal with it. How do you deal with it? I know
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  I deal with it. How do you deal with it. Well, I
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  went to the gym this morning. That's how I blow off stee it.
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  But you know, I think that we can all deal with this by understanding
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  that this is not the first time historically that we have been through things like
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  this. This might be more severe than anything we've seen in the last you
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  know, in US history. I think it will be, but we've been
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  through similar times like this as a civilization, and in every one of these
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  circumstances, you have certain segments of the population that do very poorly. But
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  massive change does pret a massive opportunity. I like to use the example of
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  Ulysses S. Grant, who in the Long Depression of eighteen seventy three lost
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  everything. But guys like you know, Rockefeller, Andrew Carnegie, JP Morgan
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  got wealthy because they had liquidity and they kept their powder dry, and they
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  became very, very wealthy during that same time frame. So I think educating
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  yourself, studying history, and preparing. You know, you're going to have
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  inflation and deflation, so just make sure you're prepared as best you can for
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  both. If you have debt, do what you can to get that debt
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  under control, because when the deflation kicks in that debt's going to be allowed
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  harder to pay off. I couldn't agree with you more so looking at it,
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  you know myself, hey, living your best life, getting physically fifthed,
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  getting rid of that weight, stop eating garbage. You know the concept
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  of a depression, it's just not just an economic depression. There's a mental
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  component on a mass scale. So by seeing opportunity, by not allowing the
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  situation to bring you down personally, it really can be quite empowering. Absolutely,
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  And I mean I was interviewing someone and medical professionally who said, look,
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  you know, moving ahead, taking a look at Medicare funding, I
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  mean that that will fund healthcare moving a haad. You're gonna have to at
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  some point take more responsibility for your own health. You're gonna have to be
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  your own doctor. You're gonna have to learn how to alcoholize your body.
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  So, you know, taking control is something everyone should have been doing,
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  but a lot of us as Americans, have had it really good for a
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  really long time. And you know that breeds apathy. So I think that
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  in a in a way, if if you're if you're educated, if if
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  you you know, take control of your your own destiny, it is empowering,
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  and you know we can get through this better then we went into it.
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  Yeah, exactly. And just because the country's in a depression doesn't mean
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  you have to be too, and taking some preparations, getting some silver coins,
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  things like that, stocking up on some food, although they've got the
• 20:45
  emergency food, but I don't know. You know, I'm thinking getting a
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  freezer, getting a few hundred pounds of meat and food in there. Um,
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  things like that, just basic things. Yeah, I mean I agree.
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  I think that you know, we're seeing credit contract a lot, and
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  what a lot of people don't understand is the economy runs on credit. I
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  mean we could see if credit contracts far enough, we could see trucking stop.
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  I mean, you could see empty store shelves for a few months.
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  If if the entire financial system freezes up, which I think is possible.
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  I think taking some of the precautions that you just outlined is you know what
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  will be necessary. I think that's how you're going to get through it and
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  and and cope with it. Yeah. I couldn't agree with you more.
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  Hey, Dennis, just tell us again your website where we can find you,
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  your podcast, your radio shop. Well, the best thing you do
• 21:37
  is just go to Revenue Sourcingbook dot com, request the book, and we
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  will send you all the free resources that I make available. So Revenue Sourcingbook
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  dot com will will Amelia boxes stuff for free and if there's something in there
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  that you would find to be useful that would make me happy. I view
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  it as my job is to kind of help get the message out, just
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  like you, so I appreciate you having me back on Hey. Likewise,
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  you've got a question for Dennis or myself about any of these topics or any
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  others, shoot me an email kl Atcarrylotz dot com and you can find a
• 22:07
  link to Dennis's book Revenue Sourcingbook dot com over at Financial Survival Network dot com.
• 22:15
  There's a link in the show notes this interview, and while you're there,
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  sign up free free newsletter. We cover a lot of topics like this.
• 22:22
  You need to be prepared. You need to have a plan, even
• 22:25
  though your plan might wind up. Like Mike Tyson says, everyone has a
• 22:30
  plan until you get hit in the head. But you're better off with a
• 22:33
  plan than without one. And I think you can get a lot of the
• 22:37
  wise strategies and a lot of wisdom from Dennis's book, Dennis, we'll talk
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  to you again soon. Thanks so much for stopping by. Happy to do
• 22:47
  it, caring anytime, Thank you, thanks for listening to carry Lutz's Financial
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  Survival Network, your solution to today's trying times. For the latest, go
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  to Financial Survival Network dot. Financial Survival Network now more than ever,