Latest / Financial Survival Network / We Don't Need No Stinking' Recession -- Russell Stone #5870

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We Don't Need No Stinking' Recession -- Russell Stone #5870 · Financial Survival Network

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Everything going on the markets right now, that's not add up to what we've
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seen going on in the world. Right China's economy is half of what it
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was a year ago as far as their gross domestic product. Our economy is
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slowing down. Europe is slowing down drastically. What is going good? What
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is going right? What would tell you looking at the asternal figures that this
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market should be going up? Well? Tesla is doing well? Right?
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I'm your host, Carrie lets Well, what are we seeing the market?
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Is it going to melt up or is it gonna melt down? I think
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everybody is wondering about that. We're close to peak than the dow. Hey,
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let's talk with our good friend Russell Stone. Get your take on things,
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Russell. It looks like everybody has a funny thing happened on the way
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to the recession. Everybody foot, everybody has forgotten that there was going to
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be a recession. Is this just hopeful wishful thinking? Or have we dodged
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the bullet here, Russell, We have not dodged the bullet night at all.
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The metrics and the data that people chase after are very highly manipulated.
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Think about this, right back, say twenty thirty years ago, who was
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the investor competing against in the marketing place? For christ, they were competing
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against pretty much themselves in the performance of the companies that they're buying. But
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now you're competing against algorithms. They're competing against day traders, they're competing against
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high speed computers. There's competing against just thrive quite honestly in a lot of
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areas. So the average investor is looking at a rising market that they have
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no chance of really been able to be successful unless they guess correctly, or
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if they go long term and then just cross their fingers and hope for the
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best. Everything going on in the markets right now does not add up to
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what we've seem going on in the world right China's economy is half of what
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it was a year ago as far as their gross domestic product. Our economy
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is slowing down. Europe is slowing down drastically. What is going good?
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What is going right? What would tell you looking at the esternal figures that
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this market should be going out well? Tesla is doing well? Right,
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take away six stocks out of the Dow or the SMP five hundred and the
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whole thing collapses. Take away one or two stocks. You take away Tesla,
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you take away Apple, you take away any of the large six major
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drivers of the NASSAT and the down in the SMP five hundred, and everybody
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else is doing negative or flat right, There is no no impressive. Everybody's
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chasing after the six that are leading the way. You're you're sounding downright pessimistic
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here, but as we're talking, hey, it's the first day of August.
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We had a nice rally in gold. Golds down twenty three bucks announced.
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Now silver is down half a buck. Where do you do you put
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it into metals? I mean, the medals have been they have been strong
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as of late, but they're not trading at record levels right, And my
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viewing medals is this, I'm not buying metals right now, precious metals from
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my own portfolio based on what I think the price is going to do in
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the next week, two weeks, or a month or even two months.
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I'm buying it for walk term. I'm focused on the dollar. What is
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going to happen to the dollar in August twenty second when the bricks nations getting
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and decide their next move right right? If you really think that the dollars
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on solid ground, then I would think again. And if you don't.
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If you do think the dollar is a kept me that it's being attacked by
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the brick dollar or in other courses, do you really need to prepare fed?
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How do you prepare that crisis? Metals silver over gold? Because the
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ratio was eighty three to one right now? Well, whatever happened to that
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saying sound as a dollar? Well, when the elevated goal to a Tier
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one asset right next to the dollar, that was the clear signal that we
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better start moving in another direction the dollars. Where does the strength of the
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dollar come from? Is it because of the goal that backs it? Now,
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there is no goal that backs it. Plant my point the fact that
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it's accepted. It's like your credit card, your American Express or master card.
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It's accepted worldwide. Right, But why is it accepted because they have
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good faith that American Express will pay the bill? Right. Well, we're
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thirty two trillion dollars in dead The interest on the debt alone this year is
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going to exceed a trillion dollars, bigger than our military budget. Right.
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The unfunded liabilities add up to one hundred and ninety two trillion dollars. Right,
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So where's that faith going? All right? FDSC Insurance has one point
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two pennies stored up for every dollar that are obligated to protect. How much
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face do people have in the banking system? I don't know. You're making
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me feel a little downright pessimistic here or else? All yeah, but look
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at the end of my notes carry all right, what does it say?
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Right? Said? Bye bye bye? But when a year a year out,
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maybe eighteen months out, with markets shed all this excess debt and the
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world has returned to a normal valuation. Right, The valuation of the side
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market was greatly inflated when the interest rates were held low. Incorporations were buying
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back their own stock with their own money borrowed money. Yeah, a low
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rates. It guts. They can't do that orbitrage anymore. Artific should be
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boost their per share earnings, and therefore the share price would go up,
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and all sorts of great things happened if you were in management right. Correct.
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And one of the things that people throw up there all the time is
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that the government just prints money. The government can't adjust print money. They
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only can print to the demand through the commercial lending banks. So the commercial
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banks are not lending too corporations. They can't print money. Right. But
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look back at the three months and the six month friends and the treasury the
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t bills, right, and you can see last month that the Fed was
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not going to raise indust rates because the interest rates did not go up.
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You can see last month or you know, this current month when they did
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raise them, the interest rates started to go up again. The February serve
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only follows the market, they don't precede the market. Right. So if
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you just attract the three into six month treasury bills, you will understand what's
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going to happen at the Fed. They're going to raise the indust rates as
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the indust rates continue the client Okay, so you don't see any end in
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sight for interest rate increases, they're gonna be there's gonna be a series of
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increases, pauses, increases positive. But when fear enters the system and the
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fear of default within the system starts to elevate, you're going to see the
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X start to react to that, and people are going to start to demand
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a higher interest rate for the risk that they're taken within the bond market and
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stock marketing. So then that's going to result in I guess the stock market
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coming down because you're going to get a higher quote unquote risk free return in
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the bond and fixed income markets, right, yeah, because think about it.
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If you can get a higher yield by going to quality bonds, individual
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bonds that pay a higher yield, right and get a six seven eight percent
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you know, look at all the people going after government treasury funds that are
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paying five percent right now, Well, bank can compete with that, they
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can't. Hey, And we see that the amount of loans they're making is
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dropping dramatically. Loan standards are higher, and as these regional banks each one
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goes under, there's less yep. Interest in making in making wise loans to
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growing enterprises, in my mind, was a purpose of the banking system in
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the first place. Russell, right, absolutely, I mean there should have
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been higher standards. In Canada, you have to put twenty percent down and
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the longest you can finance a house for is seven in fifteen years, correct
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me if wrong, but it's no longer than fifteen. Most of the houses
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are finance on a seven year don't why you have equity in it. It's
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less likely that you're going to walk away from the property. People in America
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can still finance ninety seven percent of the properties right in a lot of cases.
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More right doesn't make sense. It just makes it easy for them to
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walk away. Think about the used car market. Right during COVID, if
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you qualified for a stimulus check, you could go in there at twenty four
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years old, say, and borrow thirty thousand dollars to buy a Mustang or
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a Camaro, and you wouldn't have to make a payment for two years.
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Those payments are now being expected, just like the student loan debt. You
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realize that the largest asset on the US balance sheet is student loan debt.
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Isn't that crazy? The largest asset is debt that is hamstringing our young people
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from being able to go out and participate in the economy. Hey, so
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what's your thought about housing, Russell. You know, so many of you
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out there bought new homes, upgraded whatever over the past five years of low
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interest rates three percent interest rates, and now like, I would like to
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downsize, but it's going to cost me more to downsize than it and it's
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costing me to stay where I am. Yeah, my convonces to those people
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buy houses in the last three years, they're in a predicament. They're gonna
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be underwater no time. Hopefully you didn't put a lot of money down on
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the house. But if you're if you're in a position where you put a
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lot of money down and you need that value to be intact, you've got
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a tough decision to make exit out of that house and into a smaller house,
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or even rent a house for a year or for a while the house
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and prices come down. Uh, that is not a bad maneuver. Sell,
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rent by Yeah, well, you know, you know then you have
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to move. You're gonna have to move two times, you know. But
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look at the long term. The biggest for stakes that people make is with
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the real estate. All right. Uh, they one day think that real
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estate is an investment. It's really just a bad savings account at the end
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of the day, unless you're flipping houses for a living. But this is
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one of those tikers where if the value of the stock market goes down to
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the percentages that we think it's going to and the real estate market goes down
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similar to what it did in twenty ten, then you really want to make
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a tough decision of bold decision as to what you want to do with your
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house, and if your kids are on the way to college, you can
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downsize. I'm going to that right now. My house is going to the
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market in a few weeks, and when it does, I'm hoping that it
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will sell at a good price, but also that the sale would get to
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the closing, because you've got to hope that something doesn't blow up in the
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world that will stop the banks from freezing those loans and saying no, yeah,
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Well, banks will always want to loan on real estate for some reason
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that I can't understand, but I guess maybe the fact that virtually all of
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the home loans, certainly in the affordable areas, are basically guaranteed by Uncle
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Sam. Yeah, but when the four closes will start to build up,
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and Uncle Sam is paying you five percent plus not to loan money out in
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the interbank lending. Right, Why on earth am I going to go out
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there and take the fault risk. When I can earn five percent and do
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nothing, I'll just come back from my staff and cut down on my expenses
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and write it out. And when I can buy those houses at rock bottom
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prices, that's fine. Well, I think one point you're missing here,
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Russell, is we're never going to have a foreclosure crisis like we had last
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time, yelling we might have millions of people underwater in their homes, but
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you know, there's no appetite in this country, uh for millions of foreclosures
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like we had last time. So just like they've normalized shoplifting and legalized it
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in a bunch of places around the country, basically you'll stay in your home
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and they'll they'll do a workout, there's just not going to be these foreclosures
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to kind of I'm telling you politically, the Congress is just not willing to
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take that hit again. Yeah, but my problem, insist is that we're
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kind of at the end of the rope of kicking the can down the road.
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Where is the government going to get money if if the foreign countries are
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not borrowing our treasury to create a pair of dollars, how is the government
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going to pay their bills? Because the world line's up to buy oil in
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our dollars. If Opex says we no longer require the world just to use
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dollars, it will allow them to use brick or euro something else. Guess
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what. The government's not gonna have a whole lot of money to work with,
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and they're gonna have to print money in order to make it happy.
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Yeah, well that's why the attriu believe is inevitable. Yeah, it's not.
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In my opinion, it's not doom loom. It's opportunity. Right.
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This correction is going to recalibrate the value of everything that we see, which
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is greatly distorted. So like watching everything with big co classes, everything's distorted,
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right, But now all of a sudden, we're gonna have twenty forty
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vision when it comes to the asset value of things, and then the investments.
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We're going to come back into the market like they did in nineteen thirty
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two, and they're gonna we'll have happier times. Cash the king guys Yeah,
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it's like Lauren Buffett said, you don't know who's swimming naked until the
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pide goes out, right, correct, absolutely, all right, great people
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go out with the time. So you've given us something to chew over here,
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Russell, appreciate you coming on. Best place to find you is Scranton
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FG dot com. Right all right, and there's a link in the show
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notes to this interview on Financial Survival Network dot com. Just go there,
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sun up for your free newsletter. Russell. Always a pleasure, Thanks so
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much, Thank you, thanks for listening to carry Lets's Financial Survival Network,
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your solution to today's trying times. For the latest, go to Financial Survival
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Network dot com. Financial Survival Network now more than ever,