 Yeah, there we go. Yeah. Can you hear me? Yes. Okay. All right. I just want to pick off on the subject you talked about The other day with supply chains and I wanted to take it a step further In terms of talking about inflation because it has major inflation implications So the classic example of inflation is Too much money chasing too few goods correct. Yep. All right So in here in this in this circumstance with these supply chains We're getting it from the other end. Not only do we have too much money chasing too few goods Now we got too few goods even fewer goods Right because a they're not getting there Because of transportation issues labor shortages Now we also have input costs Such as oil going through the roof So there's all these factors And all the misallocations you talked about I listened to your talk in terms of covid Misallocations of essentials versus non essential You know the constraints So what i'm trying to get at what i'm trying to figure i'm trying to figure out is this going to be inflation Like this sounds like it's going to be inflation on steroids It's like it's like a different type of inflation. It's not like I mean I'm looking at the history of inflationary periods the weimar republic than the 1970s when we when we got to 20 percent hyperinflation in argentina So, I mean i'm trying to understand this particular type We're the particular type of circumstances. We have what you talked about any implications Uh, because we're getting it from both ends. Not only are we getting it from the money supply We're getting it from the other end in terms of goods are not getting the market and goods Input costs of goods are going through the roof The real question is uh prices could go up, but the real question is is it Permanent is it is the inflation sustainable. So let's say Um, I don't know something happens the supply chains have broken There are too few goods people are demanding them. So there's They're bidding the prices up so prices go up But then as soon as the goods come in right as soon as the supply chains are fixed Prices will drop Right prices will adjust back down because now Uh, you you know, there's there's more supply and therefore supply and demand will meet and and and and prices prices will therefore come down That's what's meant by when the when the bite administration where many economists say They expect this inflation to be transitory. That is that it is Only going to be uh as a consequence of the shock to the system that it's not sustainable that it won't Keep going right now Even if it's transient, what does transient mean? Does that mean a few months? Does that mean a few years? Does that mean does it go up to 15% and then come down? Does it go up to 4% and then come down if we peaked? um, there is a ton of Questions associated with what the what is going on right now in the economy There's a ton of questions associated with whether we're going to have inflation how big of inflation it's going to be and for how long I've been trying to figure this out and I don't have an answer It well, is there a historical is there a historical president? Uh in terms of past You know, I gave you the five examples the Weimar Republic the uh the inflation of the 70s the argentinian hardware inflation Is there anything that mimics? Certainly similarities today There's certainly similarities to the 1970s, but the 1970s You know, there are also things that are different about the 1970s There is a big controversy about how much money Is actually being created by the fed whether there is a lot of money circulating or whether there isn't um, certain money measures Are not have not spiked But m3 for example has is m3 the right number other m m numbers the right number look In a sense the whole field of inflation And and the measures of money and control of money We've only been doing this for about 50 years In in the current form with a with a sophisticated Global financial market that is since since 1971 when we went off, uh, Bretton Woods and I think the economic knowledge is not quite there if you look at financial markets who are pretty smart people, right? They don't think there's inflation The the the inflation premium on inflation adjusted bonds It pegs long term long run inflation long run being the next few years at two point something It doesn't peg it very high now markets can be wrong Markets are often wrong indeed with regard to inflation markets are often wrong You know somebody like Peter Schiff thinks we're heading towards hyperinflation tomorrow um You know, this wouldn't be the first time that many economists Particularly libertarian economists think we're heading towards hyperinflation tomorrow, so You know, my answer is the one that is least media friendly I don't know I don't know You know, um, the world is screwed up The monetary system screwed up We've got screwed up supply chains. We've got mismatches With regard to supply and demand how that exactly Manifests itself in prices Over the long run because that's what we're talking about. We're talking about price inflation not monetary inflation We don't even have a good measure of monetary inflation. We don't know how to measure it um I don't know and I don't think and I and I now long term We're gonna have to have inflation because the government can't keep up with the debt But is that now? Is that in five years? Is that you know in 10 years? I you know I don't know it could be tomorrow. It could be now. This could be the big one This could be the the complete collapse of the dollar I don't think so But it could be You know and and you know These these supply chain issues are not Going to permanently raise prices because the supply chain issues are not permanent the ships out there They haven't sunk They're just not being efficiently um Yeah, but but they're coming from everywhere. We got chip shortages. So use cars or go not ship. They're no ship shortages Chips chip shortages Chips chips computer chips, but again, this is all an aspect of the distortions that happened During covid the chip shortages will be fixed At some point and at that point You know, uh at that point Prices of chips will come down and so will all the things that use chips Yes, but oil and copper Well, hold on because there are 20 miles of ships with an s at the beginning Yep, uh waiting to be unloaded around the port of los angeles Yes, and the reason for this is that one of trump's Attempts To get people to buy american was to institute Uh a host of regulations Against unloading imports in american ports And those regulations have not gone away Uh Widen somehow I don't know whether it's the influence of the unions whether um Biden's always been The democrats are not pro free trade, but look all those all those things exist Um, but that is not the problem right now. The problem is not import restrictions. Those exist They're gonna make it they're gonna make prices in the u.s. Higher not for monetary inflation reasons But just because uh when you when you tax american people and goods and when you make it more difficult to transport them And when you create barriers to entry that happens the the the long trail of ships outside of los angeles Is almost directly related To covet and to the restrictions and lockdowns and and mask regulations and all that It's not only in the u.s. Other countries have the same kind of um backlogs of of uh incoming and outgoing ships uh containers are in the wrong places Because there was a shortage of dry of truck drivers during covet because they wouldn't go out and drive So they didn't move the containers to the right places Uh there's just a mess created by government policy during covet That is going to take probably a year or two to clear And while trump's tariffs and trumps all the stuff that trump administration did Is a barrier to speeding that up It is not something that the market can't you know, the market will adjust and prices will be higher and you know, that's it And and our standard living will be marginally lower But the supply chain won't be hurt the supply chain will continue to function It'll just continue to function or whatever level these new prices will dictate That what we're seeing right now and the oil shortages All shortages are primarily a product of again policy and uh under European primarily administrations. There's no shortage of gas in the united states the shortages are all in europe And uh the the the the reason there's a shortage is regulation in the united states Not to export gas so we can't relieve the shortages overseas Even though we have a surplus because when our lateral or the big restrictions on export um and in addition which which the trump administration supported these restrictions um, but there's also It has to do with the fact that OPEC is not increasing supply It has to do with the fact that pipelines were never built It has to do with the fact that germany went off of nuclear It has to do with the fact that britain Uh is invested gazillions of dollars in windmills in the north sea And the wind the wind is not blowing when they want it to blow when they need electricity It only blows when it blows The fact that in germany and in the uk they've invested heavily in solar panels If anybody's ever been to the uk in germany knows that the sun never literally shines in these places ever You know Except one week, you know, you know last month when I was actually in london and the sunshine I mean these uh policy mistakes It has to do with the conflict or with russia and not enough gas and the fact that russia doesn't want to pump all this gas Voluntarily, they don't mind europe having a crisis right now And it's just mind about me. It's gonna be a very cold winter Well, unless unless suddenly and I wouldn't be surprised at all if this happens They discover that oh this was all exaggerated and actually plenty of natural gas Which I wouldn't be surprised because our media and everybody else tends to exaggerate these things until To turn everything into catastrophe And if you look at the us the us is not pumping any additional Natural gas because the natural gas companies don't have an incentive to do it if they do they'll be accused of taking advantage of a crisis And of polluting the air and they'd rather sit in their reserves and wait their time and buy their time You know prices are going up. You'd think they'd be more drilling. There isn't much again because People like black rock won't provide capital To drill more oil because it's anti esg and it's not socially responsible to actually drill for her She's got all these things overlaid one on top of the other all happening at once which are resulting in major global shortfalls and It's a problem and of course The whole world is and I think entering a period Of slow to no economic growth We just saw in numbers out of china Where the economic growth is very is way lower than it has been historically in china And if you this is if you believe the chinese numbers Generally china is doing everything in its power to slow economic growth And it might be on purpose because they might want to spend some time Redistributing wealth because they've decided that they want more wealth equality rather than allowing for wealth creation Who knows what's going on in those crazy dictators minds? Um But all I can all we can say is We're heading towards real economic turbulence. We're heading towards really economic bad times Um, there's the gold price is not indicating super inflation gold is not going through the roof right now um If you believe the bitcoiners then bitcoin is the ultimate hedge against inflation it is going up So maybe maybe that's the inflationary sign. I don't know. I don't get it. Um, but I think all we can say right now is the world's in a mess Economic growth is is going to be constrained Uh prices are probably going up in the short run how to tell what's going to happen in the long run and You know wages are also going up So most of the american people will not see a decline in the standard of living because wages are going up because the fact is There's a job shortage unions are emboldened Unions are going on strike not because of the bite administration, but because there's a labor shortage So unions feel like they have upper hand in terms of boggling power Caterpillar the america. What's the labor union that does auto? This is the first strike in like 35 years Uh at the caterpillar plants That's because they feel emboldened by the shortage of labor That is a direct result of of trumps And now biden's restrictions and immigration the fact that they're not enough immigrants coming in We've got massive shortage of labor across the entire country Uh, particularly in construction, but across all these industries And women in economic mess, but that shouldn't surprise anybody Uh, they're women economic mess at the uk Did brexit they got all excited about brexit. This is great. We'll set our own economic policy They got a free trade deal with canada new zealand in australia And they said great We are now uh independent free trade island. They didn't kind of free trade deal with anybody else They didn't lower tariff to zero as i recommended And then all the regulations that they considered a burden from the european union. They've imposed on themselves Right, so they just they just took all the regulations of european union they imposed on and then the conservative the conservative government of of the uk Wants to be more aggressive than the eu In achieving carbon neutrality, whatever the hell that means. I guess death for everybody is what it means So they are building more windmills in the north sea to provide even less electricity The world's insane. I mean and and the european union I mean is is a complete and utter disaster the only country in good shape in the european union as as strikingly Nutty as that may be is france because france produces 70 to 80 percent of its electricity from nuclear power and it is exporting power to the uk that's how that's how Nutty the world is that You know, it goes under the under the channel and and the uk is getting nuclear power from france But it's a mess. It's a mess but to I think one of the things that i've learned over many many years of trying to do this Is that macroeconomic prediction is a fool's game Now maybe somebody out there is good at it, but I haven't met them You know, if you cry wolf every year Sometimes you'll be right If you if you're an optimist every single year Mostly you'll be right. That's the amazing things right if you actually think that the stock market's going to go up every year And technology is going to be better and human life is going to be better almost always you're right because the stock market almost never goes down That's a reality So I you know, we'll have a day of reckoning I don't know how long it'll be. I don't know when it's going to be it will happen stock markets will go down Economic disasters will happen But i'm not i'm not gonna i'm not gonna predict it And say with inflation I i'm reading economists. I really admire Across the spectrum of kind of free market economists Some are predicting 15 inflation by the end of the year by the end of this year Others are saying now the the money supply is actually hasn't increased that much Maybe we'll get a small spike, but the Fed is actually doing a decent job at at increasing the money supply in in accordance with demand for money And I see everything in between and And then you've got people like you know people who say it's not going to just be 15 percent The dollar is going to be collapsed And the whole world is going to abandon the dollar as They as as the standard and and you know the era of the dollar is over I don't I don't think that's gonna happen anytime soon But in the spectrum of zero to 15 percent I doubt 15 percent. I doubt zero But I don't know where inflation is going to be and how long it's going to last And how many economists I still don't know so This is an evolving situation, but if you have any thoughts as this thing evolves with the I know that we've covered the supply chain. Let us Absolutely, I tend to update you on the state on the state of these things As they happen and try to figure out from you know, try to figure out if there's an economist out there, you know John Cochran who I have a huge amount of respect for and is Seems to be always level-minded and really really rational about these things and not I mean, he believes we're heading at some point towards 70s like inflation He believes that the government right now is behaving like the 70s government did That the Fed is behaving very similar to the government. So, you know, that's John Cochran I really respect him and by him, you know, and if you think about the 70s A lot, you know the inflation begun, but then the real kicker was the oil crisis the 73 The oil crisis in the 70s didn't cause inflation, but it kind of Accelerated trends that were already doing it. We've got a kind of crisis right now. The supply chain might be it Things that trigger inflation expectations Could really change things and and of course Markets didn't expect inflation back then either and if we got it. That's another thing John Cochran always says Bond markets never anticipated. It's always a surprise inflation always surprises people and it's a surprise because It's exposed. It's easy to see but while you're living it It's very difficult to identify the causes and the chain reaction that brings it about. I have thought We've had ridiculously low interest rates for 20 For 30 years basically Luckily, I didn't invest based on those that thought because if I had I would have lost my sugar, right? I wanted to short bonds in the mid 90s. God talk about a bad trade All right, Daniel who knows about trading. Yeah Thank you for listening or watching the Iran book show If you'd like to support the show We make it as easy as possible for you to trade with me. You get value from listening. You get value from watching Show your appreciation. 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