 the radical, fundamental principles of freedom, rational self-interest, and individual rights. This is the Iran Book Show. All right, everybody. Welcome to Iran Book Show on this Monday night. Little off schedule. Usually, this would be a Sunday show. But I got, anyway, got busy Sunday and couldn't make the show Sunday. So I added a Monday show to compensate you. We will also be doing a show tomorrow. Lighting is kind of different today. Let me know if you like it or not. Is the volume low? I don't think the volume's low. The volume's normal, right? Anybody else complaining about volume or is just Tozi complaining about light? Anyway, lighting is a little different. Let me know what you think. It's kind of cool. I kind of like it. But basically, something's wrong with electricity and my lights won't come on. So this is what we have. But if you want me to, if you think the room needs light, then when I get electricity back, when it starts working again, we'll light up the back as well. All right, I look good. Of course I look good. What else could there be? All right, so I know we've been talking a lot about inflation and the economy and the stock market. But it seems like this is the most important thing to be talking about these days. It seems to dominate the news. It should dominate the news, even when it's not. It's, I think what's happening right now is not just like a flash in the pan. It's not just momentary. It's not just quick. Something fundamental is happening in the US economy and in markets. I think it's important to talk about it. I think it's important to prepare for it. I think it's important to consider it because this could be quite painful as we move forward in here. So I figured we do another show on the stock market and on the economy and inflation. And just to put a recall in there, zombie companies, zombie companies. So we'll talk about what zombie companies are and what role they play in the economy and what we can expect in the future and how all this is going to play out. You know, the stock market today took a beating. We'll talk about that. Is that something that you should worry about? Is it something you should worry about? All right. Oh, and Bitcoin crashed today. Bitcoin went down like 18%. I haven't looked recently, but at least as of five o'clock this afternoon, Bitcoin was down over 24 hours, something like 16, 17%. Crypto index that I follow was down like 10% so we'll talk about that as well. So yeah, things are moving. Things are happening. Exciting times. Exciting times. All right. Let's see. Yes. You know, we fund this show with the support that you provide us on a monthly basis that you're on bookshow.com slash support, Patreon or subscribe star. Just put your on bookshow in there. But a significant source of funding is also the Super Chat that we do right here. So, you know, feel free to ask questions, make comments, yell at me, complain about Bitcoin, do whatever you want, but just put a dollar amount to it using the Super Chat feature that way you support the show and that way you can get, I promise to read anything you post if you put a dollar amount next to it. I might have to bleep out some of the things you guys might wanna say, but I'll promise to read it. So yeah, you can use it as questions, make comments or just support the show. We have a goal every show that is to raise $650 during the show. We almost always make it. It's like really, you guys are really pretty good about this and yeah, I hugely appreciate it. And I know for some of you, it's a significant amount of money that you put into your on bookshow and I appreciate the value that you are giving me and in appreciation, I assume, for the value I'm providing you. So, I love trading, isn't trading fun. Did I ever tell you on how to play Monopoly in a more rational way? You can ask me. I think I've told the story about how to play Monopoly where you get more trading done and where you, it's more skill than luck, but you can ask me in the super chat and I'll tell you again if anybody's interested. All right, so I love trading. I think this is a trade. Thank you, Stephen. Thank you, Daniel, for starting us off with the super chat. So we're off and running. We've already got two questions and I'm sure more will accumulate as we move forward. The reason, a big reason for why I decided to do kind of an economic topic again and to again talk about the markets and finance is because of what happened today in the markets. It is not quite a complete meltdown. It's certainly not 1987. It's not March of 2000 yet. It doesn't come close yet to the devastation of 2008, particularly that month to September after Lehman was when bankrupt, but it was a big move. The Nasdaq was down. Nasdaq, which is heavily weighted towards tech stock, stocks, the ones that you guys are constantly buying on dips. I hope you still have money left over because there are going to be quite a few dips happening here for you to buy in. The Nasdaq was down over 4%. That's almost 5%. 4.5%, 4. something percent. That's a big move. 5% move in the stock market index. Now, a particular stock can move 5% in particular day. That we were not shocked at, although that's still unusual. But for an entire index to move down 5% close to 5%, that's big news. That is significant. That is a lot of wealth got destroyed today. A lot of wealth got wiped out. The S&P 500 was down, I think, three. Bank stocks were down about three. So generally across the board, I think the Russell 2000, which is mainly small companies in the US, small publicly traded companies in the US, was also down about close to five. As I said, Bitcoin was down 18%. It's now trading, somebody says it's now trading at 22,371, down 18% in 24 hours. It's down way over 50% since its peak in late 2021. Crypto was down today around 10%. It depends on the crypto, but in index, some cryptos are down to zero now. The markets took a real beating today. It wasn't a major crash, but it was a major beating. Tanya bonds were way down, which means the yield on the bond, the interest on the bond went way up. So bond yields and prices are inversely related. So the higher the interest rate goes, the lower the price of the bond is. That is just a mathematical relationship. It just has to happen that way. It's just the way they're priced. So interest rates went up at some point this morning, and the interest rates went up at some point this morning, at some point this morning, the two-year interest rate was higher than the 10-year interest rate. We call that an inverted yield curve, although how you exactly define inverted, what you compare to what people disagree about. But clearly the two-year was higher than the 10-year, which often signifies a recession coming, but then the two-year went down and the 10-year went up even more, so it wasn't voted by the end of the day. But the two-year interest rate has gone way up, the 10-year interest rate has gone way up. The dollar has gotten significantly stronger. I mean, the dollar-euro, I don't know if you guys are watching dollar-euro. It is a great time to go to Europe. Your dollars can buy a lot right now in Europe. It's almost parity. Traditionally, historically, the euro has always been more valuable than the dollar, so it took about $1.2 to buy euros, sometimes 1.1. It's 1.04 right now, heading to one-to-one. You know, I remember the days, and I know I'm old, but I remember the days where it took $2 to buy a British pound sterling. You guys remember those days? To buy a British pound sterling? $2, for a long time, it was about $50. It fluctuated about $40, about $50, about $60, up and down. Now it's 1.2, it's 1.2. So again, great time to go to UK, great time to go spend your dollars overseas, and maybe the best place is Japan. God, the Japanese yen, the dollar is so strong relative to the yen. You could buy a lot of stuff in Japan right now. Again, it's a good time to be holding dollars. Now who would have expected that? We've got inflation. Dollar should be declining. But you see, the markets are always forward-looking, not backward-looking, they're not present-looking, they're forward-looking. So the reason the dollar is strong is because everybody expects interest rates in the US to go up, significantly. And if interest rates go up significantly in the US when in Japan, interest rates are basically zero or 1%, then if you hold yen, you'll only get X interest rate on it. But if you hold dollars, you'll get a much higher interest on it. So people want the higher interest return that the dollar potentially affords them. They can hedge the currency risk. And so they're converting it to dollars. Everybody wants to hold dollars right now. Which is not what I think most people would have expected. So you've got pretty much, so you've got the bond market collapsing, you've got the stock market collapsing, you've got crypto markets collapsing. Again, I said this the other day, but so much for crypto being a hedge against inflation. But what's interesting, again, that shows you that markets are forward-looking is that gold is going down. Gold was down about 2% today. And if you think about gold, we're sitting on an 8% annual inflation. Every time a new record in inflation is recorded, again, price inflation, not monetary inflation, price inflation, every time a new number is reported, gold goes, seems to be either flat or down, is gold still an inflation hedge? Well, if you believe that people bought gold a few years ago in anticipation that inflation one day was coming. And so it's a hedge to the inflation now, based on the price back then, then yes, maybe, maybe. Right now, I think it's going down because the expectation, again, is that the Fed is going to increase interest rates and crush inflation, but also crush the economy at the same time. And we're heading towards a recession which could lead to deflationary pressures, although I'm skeptical, I think we're much more likely to head towards stagflation, but gold is going down. So is gold really a hedge against inflation? When it's used in such speculative manner, are people really buying gold based on their inflation expectations or based on speculation in gold? Gold no longer is money, so yeah, not clear at all, not clear at all. So silver was down a lot today as well. Silver and gold, both were down today. So a lot is moving and things are moving fast and things are not moving slow, right? Oil was kind of flat. Oil was the only thing that wasn't moving dramatically today. Things are moving. Let me just say, I don't expect this to stop. I don't think suddenly everything is gonna recover, we've reached the bottom and then tomorrow we're gonna start on one of these, like we did during COVID, everything collapsed and then starting in April, at least in the broader market, everything started going up and up and up and up and kept going up. I don't see any signs that that's gonna happen and I think the primary reason for that is the massive uncertainty in the world right now, the massive uncertainty regarding monetary policy, physical policy, war, trade, supply chains, massive uncertainty about China. I don't know if you saw recently again today, I think it was, so yesterday, that there's a huge spike in COVID cases in Beijing. So they basically are starting one of these massive testing campaigns again and if they're gonna get a huge spike, they're gonna test a lot of positive, then what are they gonna do? They're gonna shut down Beijing and Shanghai so it's not over in China in a sense of the disruptions to production, which is a huge force when it comes to all of this. There's no energy in the United States, no energy in the United States to do the one thing that is necessary to help spur supply, which will ultimately help reduce inflation, partially help reduce inflation. And that would be deregulation, no spur to deregulate. I didn't see nobody talking about deregulation, nobody talking about spurring supply, spurring production by deregulating American business, by deregulating American labor, by getting the government out of business, not Republicans, not Democrats. They're too busy, who knows, they're too busy with Trump, they're too busy with guns, they're too busy with abortion, they're too busy with a whole bunch of stuff. Nobody, nobody, nobody, nobody out there is talking about actually deregulating the economy. I mean, getting rid of the Jones Act and getting rid of the millions and millions of regulations that are placed in American business, the licensing laws that would actually lower prices because they would take away an increased competition. Nothing, not a single. By the way, last show, somebody mentioned that Ron DeSantis had was giving Florida a one-year reprieve of sales taxes. And wow, that would be pretty amazing, although again, not the kind of thing that I think is of the highest importance, right? I don't think taxes are the problem right now. You probably didn't hear that right. I don't think taxes are the problem right now. It's regulations and subsidies and controls that are much more harmful to the US economy than taxes. But hey, getting rid of sales taxes for a year in Florida, that seemed like a good idea. Why not? Particularly given that Florida is running a surplus. But this is the issue. He didn't do it. So whoever told me this on the show, it never happened. So Ron DeSantis signed a bill that selectively for particular periods of time reduces sales taxes on specific particular goods that the governors decided they're important. It's more central planning. It's more they know what's good for you. It's more then telling you. It's ridiculous. So I don't know before school starts, no sales tax on notebooks and writing materials and back to school stuff. That's bullshit. Why is that more important than I don't know food or electricity or I don't know. Or so they're 10, they're 10 different things and each one is like a tax holiday for a particular period of time, sales tax holiday at a particular period of time. And it's more government manipulation, government trying to determine your values for you, what's important to you, what you should be buying incentivize you to buy this, not that choosing sectors of the economy they wanna help. So they don't say we wanna help these people, they just give them stuff. It's pitched by the way as a, in a way to help the middle class. Everything today, everything today is pitched as a way to help the middle class. They've even gotten away from the idea that they wanna help the poor. They don't really care about the poor. Everybody knows they don't care about the poor. So it's not even pitched as a way to help the poor. It's all about the middle class because it's all about buying votes. It's all about buying votes. So the idea that this is Reagan, Nask that this is following Reagan, just ridiculous. Sorry, but just ridiculous. It's more desantis acting like a central planner to manipulate people, trying to give them little goodies and little favors and little things that he thinks will get them excited and get them to vote. The more he does, the more he does, the more the Florida legislature does, I'm sorry, but the lower my opinion of him is I guess this is not ancient news because the tax bill was only signed yesterday. Or today, no, today. I read it today in the paper. Anyway, but this is something that somebody brought up on the show on Saturday. So markets are down. Institutes are going up. The Fed is meeting on Wednesday. And on Wednesday, the Federal Reserve will decide if Federal Reserve will decide how much to raise short-term interest rates by, how much they will raise their overnight lending rates by. You know, they had originally said that they would raise them by 50 basis points. That's half a percent. Today, the news reports are that they are just talking at the Federal Reserve about raising interest rates by three quarters of a percent instead of just by half a percent. So three quarters is more, right? This is why I think partially the market responded the way it did today, is to those rumors of three quarters of a percent hike. So let's walk through what it means to raise interest rates by three quarters of a percent. Or what it, no, sorry. What it means to raise interest rates. Why higher interest rates are thought to fight inflation? In what way do they reduce inflation? And what likely impact they are going to have on the economy, on jobs, on your standard of living, and ultimately on prices as well, right? So the Fed might raise by 50 basis points. It might be raised by 75 basis points. It doesn't really matter. They're going to raise interest rates. They're going to raise interest rates significantly over the next year. What impact does that have on the economy? Well, think about kind of how the economy in the world in which we live works. How businesses work. Businesses typically borrow money when they want to expand. They use that borrowed money to maybe buy real estate, maybe construct real estate. They use that borrow money to buy machinery, invest in capital, to hire employees, pay their salaries. And then once the new facility is running, it starts generating revenue. Some of that revenue goes to paying off the debt. And hopefully, if they've done this well and if they've got a good loan and the interest rate is low and the amount of money they're paying for the debt plus all their other expenses is less than the revenue that they're receiving, they make a profit. But most businesses, both in the private sector, but also public sector in the sector where firms are traded in the stock market. In both sectors, firms use debt to expand, to hire new employees, to get capital equipment, to grow the business. Now, not all businesses do that. And not all businesses have to do that. A company like Apple could just use the cash that it has. It is so profitable. It has so much cash that it could just use that money to expand, to buy other businesses, to give employees raises, to go into new ventures, to fund R&D. But the fact is that very few companies are that profitable. And many companies, in order to grow, in order to expand, borrow money. Now, in order to borrow money, you have to believe you're going to be profitable and one factor in being profitable is the cost of that money, the interest you're gonna have to pay on the debt that you just borrowed. The lower the interest, all else constant, the lower the interest, the less revenue you need in order to be profitable. Or for a given level of revenue, the more profitable you will be. So the lower interest rates are, the cheaper credit is, the cheaper it is to expand, to buy capital, to employ people, to grow the business. So with interest rates artificially low, real interest rates, negative. Companies can get very cheap capital. They can therefore build, expand, grow, employ. And there's a sense in which that's partially why we have, we have such low unemployment. Because over the last 10 years, interest rates have been so low, the business is gonna afford to buy it, build another factory, open another store, hire more people. And they can pay it off because the money coming in is greater than what they have to pay on debt. And they keep doing this. And look, it's not true that these companies are raising money at zero. It's just that zero, the zero that the Federal Reserve is pushing interest rates down to, lowers all interest rates. Even say if the company in a normal time with interest rates of two, three, four percent would have to pay, I don't know, eight, nine, 10, 12 percent. Now because interest rates are zero, are paying four, five percent less than what they otherwise would, which makes it possible for them to do more. Now, if the interest rate is low artificially, which is what it is, given that the Federal Reserve controls it, it's artificial at any level that it's at, then this creates distortions. Companies are raising capital that shouldn't in a proper world be raising capital. Investments are going into areas that are not optimal, that don't maximize our well-being or economic well-being, that don't maximize economic efficiency, they're being driven by an artificially low interest rates. And this results in a misallocation of capital. But you see, misallocation of capital is something that's very difficult to point at. It's very difficult to show the problem. It's very difficult to show the problem with a misallocation of capital until you get a crisis. And suddenly, all this misallocated capital, all these companies that misallocate capital, some of them go bankrupt, many of them get in financial distress, some of them just turns out a lot less profitable than they used to be. And given that they're gonna be a lot less profitable than they used to be, guess what happens to their stock price if they're publicly traded? It goes down. So as interest rates go up, not only are future cash flows discounted at a higher rate, so the value of the money today, the value of those, you know, I'm getting, oh, this company is gonna generate profits of a billion dollars in five years. Well, that billion dollars in five years is worth X if interest rates are zero. It's worth five billion. And it's worth less than that amount if interest rates are 10%. I'll have to do a finance 101 to explain that one for you at some point, right? But in addition, the other impact that interest rates going up has is that in and of itself, it reduces the cash flows. More of the company's money is gonna go to debt service. And for some companies, as interest rates go up, the debt that they have to pay, the amount of money they have to pay in interest on the debt goes up and might make them unprofitable. We'll get to zombie companies in a minute. So the probability of bankruptcy, the probability of default comes down. I have an echo, I have an echo. Nothing's changed. Audio has become echo-y. I didn't change anything. I sound like a Iran bot. All right, let me see. What can we do about that? I'm not sure what to do about that. Let me know when it gets better. If it gets better, huh. Now it's back. Okay, we're back. I fixed it. No, I didn't. I didn't fix it because I didn't know what went wrong. It must have been a cook in the matrix in the internet. Some things going on in the internet. Maybe somebody, anyway. So, and suddenly goes up, risk goes up, profitability goes down, and your discounting cash flows at a higher interest rate, all of that results in a lower stock price today. All of that is why you saw the stock market go down as much as it did. As interest rates go up, that becomes riskier and riskier, and right now, the market thinks the Fed is gonna raise interest rates to about 3%, and it's pricing that, but what if it turns out that the Fed raises interest rates to 5%? Well, that's not priced yet. And that's where you get a lot of downside still in the stock market. A lot of downside potential in the stock market. Why is tech getting hammered more than the rest of the economy? Partially because tech was so expensive before all of this started. The assumption for tech was they could borrow it zero forever and they would be unbelievably profitable forever. They were priced for just the most rosy, positive scenario possible in ways that other sectors were not. So when it became clear that, ooh, the rosy scenario is not gonna become a reality, well, tech adjusted. Prices, investors adjusted the pricing of tech. So tech has come down significantly because it was so expensive. It's still expensive. It's still priced for a rosy scenario. It still doesn't really have fully the possibility of recession, the possibility of bankruptcies, the possibility of layoffs, the possibility of increased, of really bad economic times. Now, of course, what happens when interest rates go up and businesses start struggling because they can't repay the debt or they just can't borrow money to expand so they stop expanding or consumers can't borrow money. They can't take out, I don't know a home, what do you call it, line of credit to go buy stuff or consumers can't get that auto loan or they can't get that loan that they take on less credit card debt because some of the credit card debt is so expensive, people stop using it. So consumption comes down but business investment goes down, business expansion goes down and businesses start laying people off. And some businesses at the margin go bankrupt. And this is how, this is why rising interest rates can bring about a recession. But it also is true that rising interest rates can reduce demand. They reduce demand by the fact that you have less money because you're unemployed. You have less money because you can't borrow any. You have less money because you're not getting that raise. And as a consequence, as this demand, less demands put less pressure on prices, prices don't keep going up at the same fast rate as they used to. This is why interest rates and interest rates high enough causing a recession is one way in which you can slow inflation down. How much you slow it, different question but you can slow it down. Savio says you need a good clocking device to keep all your audio, video equipment in sync. I don't know what you're talking about. I don't know what a clocking device is, but I don't know, it usually works pretty well. Sometimes it goes nuts. You know, if you wanna recommend a clocking device for me that I can buy and install, send it over. But I think that the echo, suddenly the echo happening is that when I step back, is this it? I think it's either the electric grid, probably not. I think in this case it's just the internet. I think it's my internet connection not being super stable at a particular moment. And there's little I can do about that. Okay, so we've kind of gone through how interest rates affect the economy, how interest rates or somewhat, how interest rates affect markets, why rising interest rates result in stock prices going down and why expectation of future interest rate rises cause the stock market to go down and can cause the stock market to go down a lot. A lot. Let's talk a little bit about the companies that, some of the companies that are most susceptible to this, although they're not necessarily the only companies that are susceptible to this, but the companies that are most susceptible to this. There's something called zombie companies out there. Now, I came across the term zombie in the 1980s, early 19, well, really in the night, yeah. 1980s, early 1990s. And in those days, it was referred to zombie banks. And what is a zombie? A zombie is the living dead. That is, it's something that's dead, but it somehow remains animated, remains somehow quote alive. Zombie companies are companies that basically should be bankrupt and has somehow still running. And I'd say that in the 80s and 90s when zombie banks were being talked about, the reason that these companies were not bankrupt even though they should have been bankrupt was purely regulatory. So in the case of banks, for example, a bank can't go bankrupt unless the government decides that the bank is bankrupt. That is the decision of whether a bank is bankrupt or not is purely political. So there have been during financial crises and during economic crises, there have been many times banks that have been basically, from an economic perspective, bankrupt. Bankrupt means they couldn't pay off their liabilities. That is, if they sold all their assets, if they liquidated everything they had, they couldn't actually pay back their liabilities. They'd still owe more. That's bankruptcy. That's the definition of bankruptcy. And usually what happens in a situation like that is, you know, you fall for bankruptcy, you go into, there's a whole process. There's usually a committee of the bondholders, the people who you owe money to, and they basically take over the company and they start running it and they try to sell off the assets in a way that they get as much as they can. And the stockholders, shareholders, owners, get zero. Get zero. Banks on the other hand, because the primary people they owe money to are depositors. Right? You go to the bank, you deposit your money, put it in a checking account, the bank takes that money and lends it out, and they owe you the money. Well, you are guaranteed. You have a government guarantee until $250,000 in your bank account. And if you're a big bank and you have too big to fail, then the government is guaranteed all your deposits. And if that's the case, then who's gonna push you into bankruptcy? Nobody. Because the people who you owe money to know they're gonna get their money because if you can't pay it, well, they're in the government war. So banks that couldn't pay their depositors, the money back without government help, are zombie banks. They continue to run because nobody has an incentive to stop them from running. Sometimes the government does, but for the most part they just let them run. And when the government of course bails them out, that's socializing the losses. That's diffusing the losses across all of us, not just the depositors. But zombie banks are banks that are bankrupt, but it kept alive through regulation, through government. Now the term has been expanded to zombie companies. An idea of zombie companies is these are companies that don't make enough money and don't have enough growth prospects, but have a lot of debt that owe a lot of money. In some cases, their debt servicing costs, the interest that they pay on the debt that they have is larger than their profitability. So the only way they can pay off the debt is by taking on more debt. Now there are not a lot of companies that are that bad, but there are a variety of different definitions of zombie, but the basic idea is it's a company that cannot really pay off its debt, and to pay off its debt has to raise other debt to pay it off. Other debt to pay it off. Now notice that as interest rates go up, debt gets more and more expensive. More and more companies have the potential to become zombies. If their revenues are not matching the rise in interest rates, but their debt service is going to, because the interest rates are going up, so they have to pay more, then more and more companies as interest rates go up become zombie companies. Become companies that can only repay their debt by taking on more debt. And as the economy starts softening, how are they gonna get more debt? Banks are not gonna lend them, bondholders are not gonna buy their debt, and more and more of these companies are gonna go bankrupt. Now in a free market, you'd expect a few companies to be zombie-like, maybe, hard to tell. But what creates, I think the fact that zombie companies are a thing, is government regulations and government control of interest rates, and the low, low, low interest rates that we have. So for example, Japan is known for zombie companies, companies that shouldn't be around, but because the banks in Japan historically are being arms of the government, the banks won't force these companies into bankruptcy and they'll keep feeding them credit to keep them going. State-owned enterprises in China are zombie companies, many of them are zombie companies. They cannot pay their debt. The only way they pay off their debt is by taking on more debt. And why are the banks lending them more money? Well, because the government forces them to, because they are basically parts of the government. Banks in Europe are funded zombie companies when they're in trouble. So banks that are in distress have an incentive to do risky things for a variety of reasons, which I can get to if somebody wants to ask, but banks when they approach bankruptcy, when they approach trouble, they tend to do very risky things. Well, in Europe, banks are being distressed for quite a long time, particularly in the mid-2000s after the Greek financial crisis, and banks funded a lot of zombie companies. But the fact is in the United States, because banks are not on the credit side, not arms of government, they don't actually follow the guidelines of government or who to lend for the most part. There's some of that going on, but for the most part. Banks will not lend to zombie companies once interest rates start going up and they think that the zombie companies can't afford to pay it back. And we might be heading to a recession and the revenues might go down. So banks in the U.S. are less susceptible to funding and bond markets in the U.S. are less susceptible to funding zombie companies than other countries. The exception to that of course is when the Federal Reserve is bailing out everybody, but the Federal Reserve is trying to do the exact opposite, exact opposite. So what we can expect is, it's about, oh, in terms of how many, it depends, about 10 to 20%. A publicly traded bank, publicly traded companies in the United States are zombie firms. Now they tend to be smaller, they tend to be manufacturing in retail. About 5% of private companies are zombie bank, are zombie companies. You know, it depends on how you define zombie, different people define it differently. So somewhere between 10 to 20% are public. Somewhere between four to 8% are private. That's a significant number. Particularly if that number grows as interest rates go up, as it will, because again, that servicing cost will increase as interest rates go up. So that piece of expenses for companies will increase. So we can expect over the next year as interest rates are going up, bankruptcies to start itching up, at some point accelerating up. A lot of these zombie companies going away. A lot of other companies that might not be zombies today becoming zombies and then ultimately going away. A lot of companies that today are distressed, becoming really distressed by going bankrupt. And I think that the crisis you're going to see is a crisis of bankruptcy, which means people being laid off, which means unemployment going up, which means people having less money to spend, which is, you know, and companies not being able to borrow to produce, and which results in a spiral that creates really economic distress. So I don't usually do economic forecast, but I am predicting a recession late this year, early next year. I don't think it's going to be a minor recession. You know, economic prediction is a fool's game, but what the hell? I won't be surprised if this is a deep recession. I won't be surprised if the stock market has quite a bit more to fall. It could, you know, it could easily see the markets go down another 30%, which is a lot. So if you have money to buy on dips, hold onto it, because there are going to be some dips. Interest rates are going to go up dramatically if they want to have the kind of impact on inflation, that they want them to have. Small increases in interest rates will not have the impact. You know, because part of the problem is supply has continued to be constrained because of China, because of the war in, because of Russia, because of regulations in the United States. If you really want to combat inflation, what you would do right now, what I would do right now, if I were president of the United States, there's a job for me, I would lower tariffs to zero, that will reduce prices across the board in the United States and make American companies more competitive. Across the board, doesn't matter what country it's coming from, doesn't matter what product it is, I would reduce tariffs, all tariffs to zero, unilaterally. I would start massive deregulation. I would pick whole sectors and deregulate them on large scale, particularly in, you know, in business, I would leave, you know, banking is more complicated to deregulate, you'd have to do that as well, but banking is more complicated to deregulate. Those are the things I would do, those are the first things I would do. I would get rid of all business subsidies, I would get rid of all business favors, but more importantly, I would get rid of all of the, as many regulations as I could, as quickly as I could, that would create economic expansion in spite of the fact that interest rates were going up, it would create business activity in spite of the fact that interest rates were going up, it would create new businesses in spite of the fact that interest rates were going up, and encourage all governors in all states, instead of, I don't know, giving people a tax holiday, how about eliminating licensing laws? I would eliminate the federal minimum wage law minimum wage law, and encourage states to eliminate the minimum wage laws. I'd eliminate a lot of the labor laws so that we could have a more flexible labor economy. These are the kind of things that have to happen so that inflation gets reduced. I've said before, a big part of the health economy coming out of the 80s and certainly in the 90s was the deregulation that happened in the late 1970s, early 1980s. So get the government out of the way. Taxes is the last thing I would deal with. And even there, my main priority with taxes would be to make them simple and flat, less interested in lowering them while we've got this massive deficit, and more interested in not using taxes like DeSantis's in Florida to incentivize them, motivate to get people to do this or that or something rather than just abolishing the income taxes way down the road. It's not a high priority. Cutting them at spending is a high priority, so, you know, but that's a different story. You'd have to restructure, so security and Medicare, that would be, after deregulation, my second highest priority is to restructure the entitlements so that you can slowly phase them out. And only then would you talk about cutting taxes. All right, I think that's enough, right? I've gone for almost an hour, just me talking. So let's turn to your questions. We have quite a few of them. I'll start with the ones that are relevant to the topic. And then we'll go generally. Just to give you a heads up, we are, you know, quite a distance away from reaching our $650 goal. We've still got $428 to go, so we've reached $220. So, you know, if you like the stuff that I produce, if you like what I'm, my spiel, if you like the values I produce on the show, please show your support by using the super chat, ask a question. You can just give money. You don't even have to ask a question. You can make a comment. You can call me names. You can do whatever you want. If there's dollars attached to it, I appreciate it, so thank you all. So we're about 400 short. Hopefully you guys can step up. All right, I'm gonna do the $20 questions first. And be great if those of you who ask questions, we've got a lot of questions. So let's do a lot of $20 questions, $50 questions, $100 questions, because I've got a lot of five and $10 questions. So if you've got a $5 question, wait till next time. Let's try to do $20, $50, $100 questions. So we can get to our number and I can go watch the basketball because it is game five of the Celtics Warriors. And I predicted the Celtics would win game four and I was wrong. I admit I was completely wrong. They blew it in the fourth quarter. It was awful, depressing, horrible. They have to do better today. Unfortunately, my wishes and my thoughts have no impact on the actual game. I've learned that inductively. Don't forget to like the show. We've got 150 people watching live. We should have a lot more thumbs up. Don't forget to like the show. It helps the algorithm. It helps elevate the show in the streams. It increases the number of people coming in. So please like the show before you leave. If you liked it, of course, if you didn't like it, don't. All right. John asks, why isn't housing also crashing? Mortgage rates are much higher. Saving rates, collapsing and consumer debt is higher due to higher cost of living. So why isn't housing crashing? The main reason housing is not crashing is that we have a massive imbalance between demand and supply in the United States. So there is a massive shortage of housing units in the US. We've had the amount of construction over the last 10 years has been super slow relative to the new household creation, people moving, particular areas seeing an incredible rise in demand for housing. That's why it's not crashing. Now it's stagnating. People are taking their homes off the market because they won't sell. So I think what you're going to see is people are now moving, people staying put, people struggling, and prices will come down. But they won't crash because of the supply demand imbalance. There's just not enough houses being built in the US. And as long as that's particularly in attractive areas like certain places in California, not everyone California, but certain places in California, Austin, Texas, other places where people are moving into, but in large swaths of the country, prices will come down dramatically because people will not be able to afford to buy anything in those places. So housing has not crashed because of the supply demand imbalances, but housing is likely to go down at least soon. It's just not sustainable. It's just a matter of time. And remember, mortgage rates now are 5%. They're going to be at 8% soon. With the 10-year bond today going up to 3.3%, that'll have a profound impact. You'll see tomorrow and the rest of this week, you'll see mortgage rates go up significantly. Ryan says, how are you on? If increased interest rates cause widespread bankruptcy of zombie companies, will the fire sale on capital result in a vastly more efficient economy and a rebound in purchasing power? I'm looking for a silver lining. Yeah, ultimately, yes. And look, ultimately, recessions are healthy. Recessions get rid of the misallocation of resources, misallocation of capital. They get rid of companies that shouldn't be around. They reallocate capital to places where it can be better used and can be more productively used, and then you get a rise. But it's also true that they destroy real wealth. They hurt individual people. And again, because our economy is so heavily regulated, because our economy is so heavily controlled, it's harder for the economy to recover from one of these collapses. It's harder for capital to get allocated appropriately. It's harder for things to recover. So this is why the 80s were so good, is because of deregulation was easier. What we need, what we need now, what the Biden administration needs to do right now, is to deregulate so when these zombie companies and other companies go bankrupt. And it's not just going to be zombies, go bankrupt. It's easier to reallocate the capital and it's easier to form new businesses. It's easier to get going. It's easier to produce. It's easier to employ. It's easier to create, and then you get the boom. But if they don't deregulate, it's going to be slow. It's going to be slow. The recovery from whatever is going to happen is not going to be fast, at least I don't expect it to. And that's because of regulations and controls. I mean, our only hope is, I don't know, a good Republican gets elected as president in 2024. A good Republican, at least an economic policy who understands the basic economic principles and 2024 is not too late to kind of deregulate and decontrol and allow for this rebound. Yeah, just to finish the answer on home prices, the more mortgage rates go up, the less people can afford to buy, the less houses will be put on the market and ultimately the lower existing sales will be. So yes, there'll be fewer sales and prices will start going down and they will start going down faster. But it just takes time for all of that to filter through people's incentives, people's motivations and the whole consequences of how this plays out. Ludwig asks, what's in? Will we continue to see a trend of companies going private? The alternative investment category is on a massive growth trend. Is that because being a public company contains too many headaches? No, I don't think you're gonna see the trend of companies going private continue because to go private, you need to raise a lot of debt. This is why the whole Twitter thing is kind of unholt. It's not because of what Elon Musk says, which is they're not giving me the data or whatever. That's just an excuse. The fact is that he's overpaying for it because he put a price on it before the market, before tech stocks have crashed recently. And any debt that he takes in order to finance the deal is gonna cost him a lot more than it did before. So the deal now, given the money that he's putting together, the deal now is just not profitable. So he's trying to find any excuse he can to back out of it. But the fact is that is the cost of financing is interest rates go up. You know, most going private deals are some form of a leverage buyout. Well, where are you gonna get the leverage? You're gonna pay 8%, you know, 12% interest rates. The higher the interest, the more profitable the deal has to be, the lower the price you're willing to pay for the company. So it's gonna be interesting. It's gonna be interesting. So no, I don't expect the trend towards private companies to increase in this environment. I expect it to decrease. I think it'll come back on the other side of it when interest rates come back down. And when the risk of bankruptcy goes away and banks are more open to lending you money, you know, and interest rates are reasonable. I mean, if companies going private continues, it'll be because valuations have come down dramatically and valuations are gonna have to come down dramatically to make it profitable to do the deal at 12% interest rates. This is the problem with Twitter. They've already got a valuation and it's way too high. It just doesn't make any sense. Now you're right in the sense that being a public company is a hassle. It's expensive. It's a hassle for a lot of different reasons of political reasons because of ESG, but also for regulatory reasons. It's much cheaper for a variety of reasons to be private. And that is driving the tendency towards basically taking public companies private. And I think that will continue if you isolate, you know, all things health constant, that is if you can isolate the fact of interest rates going up out of there. But interest rates going up will make deals harder to finance and will lower valuations dramatically and make some deals undoable as a consequence. Let's see. All right, we're gonna do that later. So I see the question of sports, James. I see the question on anti-concepts, Jeffrey. Thank you for the contribution, I'm gonna stick now to the finance questions and then we'll move to that. Ludwig Gask, being a young person, new middle class, McMansions are everywhere, but not a lot of these 70 size starter homes on the market and a lot of empty nesters, especially those who don't save a downsizing. Yeah, I mean, maybe, you know, I'm not familiar enough with the dynamics of the real estate market to know, sector by sector, where is the shortage of housing? Clearly, as I talked in the homeless show, there's a shortage of low income housing, all right. But there's also shortage of starter housing, houses. But from what I can tell, there's a shortage of housing across the entire spectrum. Shortage of rental property, there's a shortage of condos, there's just a shortage in housing. There just hasn't been enough, there just hasn't been enough building and that is a consequence of a lot of different things that has to do with the fact that they're not enough workers who are in construction, the workers that are in construction, they tended in the past to be illegal immigrants when we clamped down on illegal immigrants, we clamped down on the ability to build a lot of homes that happened in the, in the 2008, we started getting negative, illegal immigrant movement. And as a consequence, it became more and more difficult to build homes. We've got this labor shortage is a problem, lack of immigration is a problem, but regulation, not a mad backyard, zoning, all of these things limit the number of houses being built. And that has resulted in prices going up and it's resulted in certain segments, maybe starter homes, I don't know, they're just not being enough homes for people to move into. Real problem for young people who wanna live in a house. Richard Cunningham asked, massive deregulation would flood the streets with unemployed zombie bureaucrats, who would hire them? How would you deal with them? I don't want them wandering through my town, groaning, pan, shard, pan. No, we'll send them all to you, Richard, they'll all go and work for you. I'm not worried about zombie bureaucrats. If you slap a bureaucrat a few times with reality, they can work, they can get a productive job, they can do something, maybe not super productive, maybe not super efficient, maybe not super good, but they can do something. And we need all kinds of things to get done, particularly if we're not gonna open up immigration, that's another thing I would do if I were president, open up legal immigration on a massive scale, which would increase the standard of living here. But, yeah, I would force them to get a job. Lots of jobs, maybe not in the immediate sea of the downturn as all these bureaucrats are fired from the regulatory positions, but very quickly jobs will be created. It's amazing how quickly the market will respond to a decline in regulations. How quickly the market will respond to more freedom. All right, let's see. All right, Stefan asks, I see posts online saying that if the housing market crashes, the price of houses will go down, is this true? Well, that's what it means. Housing market crash means price of housing going down. That's a tautology, that's just the same thing, with different words. So, that's what it is. All right, let's see. All right, Ludwig asks, the zero commissions will be interesting for asset managers since almost all revenue is now AUM. Your thoughts on the asset management industry's reaction to a bear market. It is gonna be very interesting because a lot of firms, they might not be running at zero commissions, zero fees. A lot of them have cut fee income dramatically and have been living on fantastic, what's called carried interest on the percentage of profits that they make. But when they're no profits, when markets are down and financial asset management don't have any profits, what do they do? How long can they survive without any fee income? I think that model is an impossible model. I think some of these asset managers are gonna go out of business. If this is sustained for a lengthy period of time, you can't just live off of profits. It's too speculative, too uncertain, too volatile. So, the asset management business will have to adjust to a world where the stock market is not only going up forever, which is what it looked like from 2009 or 2011, 2012 or whenever it was, it just looks like it only goes up. And when it comes down during COVID, it immediately goes up. So, who cares? It's on an annual basis, you still make money. All right, James G. asks, what do you think will happen to all the SPACs? It appears a lot of them are underwater. Therefore, what is the next with the market? Will more hedge funds go under water as well or switch asset classes? I mean, hedge funds, some of the hedge funds are having real problems. I mean, Taigo, which is a famous hedge funds, is a phenomenally well over the years, run by super investors, is down over 50% this year. I don't know what it's down after today, but it was down 52% last time they reported. I don't know how you survive that. Now, if they expect it, then make it all back up because the market's just gonna jump up and go up 100% tomorrow. Remember, if you lose 50%, to make it up, you have to go up 100%. That's how percentages work. If you go from 10 to five, that's 50% decline, but to go to five to 10, that's a 10% increase. So, it's definitely, you're gonna see some hedge funds struggle and some hedge funds close. I haven't followed the SPACs closely enough, but special entities that raise money and then buy a company, it depends how much debt they have. To the extent that they funded themselves using debt, they're gonna be in trouble. To the extent that any company funded itself using debt, it's gonna be in trouble. This is true of private equity. This is true of all the leverage buyouts out there. Any company out there that is heavily indebted, that has relied on debt for its financing, is gonna be in trouble. So, that's what I'd look for. It's not any particular sector. Where's the debt? Where's the debt? And which sectors of the economy, which parts of the economy depend on, rely on, low interest rates for their survival? Doesn't have to be zombie, but just rely on them for their survival. All right guys, we're about halfway to the 650 mark. So, I don't know if we have any whales in the house who can help us get there, because I'd like to go see the game soon. But, you know, we're still going because there's a lot of questions. Okay, so only 20 and above questions, no more $5, $10 questions. Ludwig says, Ned Johnson, former CEO of Fidelity, died recently. Your thoughts on his legacy Fidelity currently still ran by his daughter and still owned privately by the family. Look, they've done phenomenally. It's one of, if not the most successful mutual fund companies in the world. I haven't really followed them in recent years, you know, but I used to have money with them a long time ago. They've been super successful. Going back to the 70s and the 80s, they were incredibly innovative back then. Ned Johnson was a leader, an innovator in the mutual fund business, a great financier who has created a lot of value out there in the world for a lot of people. So, you know, good for Ned Johnson. It's sad to hear that he passed away, but the company that created it will continue and his daughter has been involved in management for many years, for many decades, I think. So I'm sure she will continue, you know, the positive path that Ned started the company on. All right, other related questions. Okay, Michael asks, if we don't sell anything and hold onto our stocks, which is what I'm doing, will we see a massive rebound in a few years or will it take a decade? After 2008, it didn't take that long to recover our losses. No, but after 2001 and two, it did. It took a long time. And it depends on what stocks you were in. Were you in the S&P 500? Were you in, I don't know whether you'll get a sharp rebound or not. A lot of that will depend on how government responds to the recession, what it does. Does it print up a gazillion more dollars? Does it deregulate? What does it actually do in response to a recession? If it does the right thing, yes, it can get a significant steep recovery. If it does the wrong things, you could get stagflation for a long time. Remember that 2008 didn't have inflation associated with it. Now you have both stock declines and inflation and rising interest rates. Again, you didn't have that in 2008. 2008, you had the Fed reduced interest rates dramatically, we're in a unique circumstance which I don't think 2008 fits into and I would not bet on a sharp rebound. A given everything that's happening right now, I would not bet on that without significantly positive action from Washington DC which I do not expect. Ryan says deregulate, shut down government agencies, lay off government employees so they can fill all the vacancies in the private sector. Amen to that. Michael asks, do high levels of inflation, high crime rates go together like the US in the 70s in South America today? I don't know. They go together, crime in the United States peaked in the early 1990s by then inflation was quite low, relatively speaking. It's hard to tell what results in high crime rates. I think generally cultural nihilism, a sense of futility, a lack of any kind of expectations about the future, a belief that we're doomed. You know, dark culture I think leads to, dark culture leads to more crime, it leads to more desperation, it leads to more nihilism which is what we're getting today. So I don't think it's just inflation. Inflation, obviously often is at the same time as we get this dark culture, we get a culture of desperation, a culture of pessimism. Pessimism is also a big, I think leads to crime is no future, helplessness. I think that's part of what happens in South America, helplessness. But then anarchy, the lack of actual policing which is the big defund the police was leading to more crime because crooks can get away with it. So why not? But I'll do a show on crime soon and we can talk about causes of crime, why crime went down, how much it went down. Is crime going up in New York? How much is it going up in New York? Is New York safer than, is New York safer than most cities in the United States or more dangerous than most cities in the United States? Is New York more dangerous or less dangerous than rural America? We'll talk about that. All right, how much political will does it take to deregulate? With 174,000 pages of federal regulation and 4.7 million restrictions, surely they can cut out a few. Yeah, but to do it systematically, to do it properly, you have to do it through legislation. You have to design a bill that actually takes all this stuff out. It's a massive political project. It's very hard. You probably need bipartisan support because to pass the Senate, you need 60 votes. So unless Republicans sweep in and take 60 votes, which is unlikely, how do you get it without some democratic votes? In the 1970s, Democrats voted for deregulation and Jimmy Carter passed those bills. So we're not just talking about regulatory agencies chipping away a little bit here and there. You're talking about completely restructuring businesses away from, away from, away from the regulatory regime to a more free market regime. And the only period in American history that we've really done that in a systemic basis is from the mid-70s to the early 80s. We did a piecemeal. We did a little bit in other places, but that was, you know, we deregulated trucking and railroads and airplanes and we deregulated finance in a bunch of different ways, brokerage firms. It was a massive, massive scale. And to do that, you need a lot of political will. And that's what it's gonna take. All right, Matthew says, Yuan, just wanted to say thanks. I love your formal econ and finance speeches and you inspire me to roll an MBA. Hopefully I can adjunct and teach some finance or econ one day. Wish me luck. Absolutely. Good luck, Matthew. And thank you. Thank you for the support. Ludwig says, Ludwig says, zombie company equals GE without Jack Welch. Well, yes. As it turned out, because of the type of CEO that replaced them and the type of people that replaced them, Jack Welch was brilliant. Oh, I've got some $50 questions. Jesus, sorry. All right, thank you, Richard. Thank you, Ludwig. So let's take those questions quickly. Richard asks, do you think that the China bubble return statism will harm Apple? Companies like Apple have doubled down on China despite these negative trends and despite large increases in labor costs. Do you see any sign that it would wisen up in the near future? Well, on the production side, they're wising up because they're definitely trying to diversify production away from China to Vietnam and to India, maybe to some other places around Asia as well. But they do rely on China for quite a bit of consumption. Tesla does as well. Tesla produces cars and relies on China to buy those cars and the Chinese to be consumers of the cars. So a lot of American companies are heavily dependent and I think it's gonna hurt them. There's no question it's gonna hurt them. I think, again, that's part of the repricing of these stocks is, should be, if it's not, it should be, will Chinese consumers be able to continue to afford to buy all these amazing American products from American companies and what kind of hit to their profitability will be involved when the China consumer market collapses and collapses. So yes, I definitely, China's gonna hurt companies like Apple as it slowly declines as a consumption engine. Lidu Gas, credit card debt balances are on all time high. Is that an indicator of problem down the road, particularly as price inflation and consumables takes up a lot of people's budgets rather than, yeah, rather than over the long-term items like TVs and mattresses, yes. I mean, look, the more people borrow on credit card, the more susceptible they are to rising interest rates, the more vulnerable they are to the interest rates rising. The more problematic it is. So this personal bankruptcies could potentially increase as well. So yes, the more debt you take on, you better be able to pay it off and you better be able to pay it off. You don't never take on debt at variable rates. Never take on debt at variable rates. If you, you know, particularly get rid of any variable rate debt that you have right now. So it's a real problem, credit card debt. All right, Richard asks, you've compared finance to a body circulatory system. Do you think systemic financial deregulation, Dodd-Frank, SOX, et cetera, would be the most simple, impactful way to deregulate the US economy in terms of individual bills? Yes, not the simplest, the hardest. It's the hardest politically, but it's the hardest economically, because you have to do it right. Otherwise, you could cause massive damage if you do it wrong, because you can't get rid of all the regulations all at the same time. And you've still got a Fed reserve, which is the worst of all the regulations, right? Because the Fed is regulation. It's controlling the money, which is the product, the banking. So you have to do it right. You can't get rid of deposit insurance until you deregulate other aspects. So you have to, the timing of it, the sequence of it, super complicated, super difficult, super challenging. But as you say, maybe the most important part of the US economy that needs to be deregulated, but the hardest and the most challenging and the one that requires the most political will because it will be very unpopular. Oh, you're benefiting those evil financiers. Can't do that. All right, Mike says, I'm a technologist with no confidence in using a blockchain as a currency. What is the mindset that is driving the crypto market? Do you think it will go out with a bang, slowly burn out or actually go to the moon? I don't know. I really don't. You know, a lot of really, really smart people, smarter than me, I think, when it comes to technology, certainly, are investing a lot of money in crypto. They see something there. They see the possibilities. They see some use for crypto that I just can't get my head around and I can't really fully understand. And I'm not arrogant enough to say, well, if I don't understand it, then it's crap. I don't understand it, but there are amazing people out there who are smarter than me in certain areas. And we'll see where it goes, right? We'll see what happens to it. I do think it has some uses, particularly with regard to privacy. And if we value privacy, that's a good question. Do we value privacy? Does the market value privacy? We'll find out, because crypto is a solution to privacy. Is it gonna become money? No. Is it gonna make new forms of business formation, new forms of organizing governance around businesses? Is it gonna make that possible? Yes. I think new forms of all that is, it's gonna bring about some interesting things. Exactly what that looks like, I really, really don't know. And I struggle with it, because I'd like to know, I'd like to understand a better, but I still don't know. Again, I don't think it's gonna become money. I don't think it's gonna become money anytime soon. So it's a question of, what is it? I don't have an answer. And how it's gonna go out, I don't know exactly. All right, Richard asks, thanks for the answer, Iran. By the way, in case you haven't seen my email, you're a hero of mine, and I benefited enormously from the show and other work you do. Happy I have the money to trade with you and repay you now. Thank you, Richard. I really, really appreciate that. That's, I love to hear that I'm having an impact. It's great. Ludwig asked, will we continue to see the financial sector move to the south? JPMorgan and Goldman Sachs have more employees in Texas than in New York City. With the old money in New York City, NYC NASDAQ in New York, the distancing is important. Will that change? No, I still think New York City will remain the financial set of the United States. I still think that is gonna be the hub. You know, operations will move to places like Florida and Texas for a variety of reasons, partially because people wanna live there. But I still view New York as gonna be the center of where the action is. It's hard to compete. But, and I think New York is going to, hopefully, again, make itself more hospitable to business and the financial sector. How exactly does it, we'll see. But that's the goal. And I mean, I think that's the goal of this new mayor. I think he's gonna try to make New York safer, try to make it more livable, and ultimately try to make New York a place where business wants to be in and doesn't escape. We'll see if he succeeds in doing that. It's gonna be interesting. All right, I see the Celtics are doing their utmost to lose while I'm on the show, while I'm doing the show right now. So it's losing 22 to eight in the first quarter. They're just pathetic in the first quarter. Hopefully, when I go watch, things'll get better. Let's see. All right, Ludwig asks, FDAC mostly does an investment bank can do nowadays. They prefer to facilitate acquisitions, a bankrupt bank than bailout. Acquisitions of bankrupt banks than bailout deposit. Yes, but the difference is that what the FDAC does is it guarantees, it caps the losses for the buying bank, which an investment bank would never do. So it's still true that the FDAC, because of its ability, because it's got an infinite pool of money, it can guarantee losses, it can facilitate bank mergers, bank acquisitions where private investment banks can do it, because the FDAC actually guarantees the downside, whereas the private banks would not guarantee the downside. Richard says, I first met your honor, I ran con in 2016 when I was a make America great idiot. Wow, I ran con in 2016. I don't remember that. He corrected me on national security, rationalizations for protectionism. Everyone make arrangements for Ocon if you can go this year. Absolutely, come on guys. You gotta come to Ocon. I mean, I'd love to have 200 Iranbrook show listeners come to Ocon and be at Ocon. So I hope you guys join me there. All right, quickly. Let's see. Well, the market buttons back when Republicans win big in November. I don't think so, because what are they gonna do Republicans? I mean, they might slow down spending, but they can't do much more than that, because now unless there's a sense that Republicans and Biden would together, and I guess there's some possibilities this would happen, together come up with some de-regulatory bills and do some things that would actually help the economy. So it would have to involve actual actions right out the gate and the Biden administration being willing to work with Republicans to do things that free up the economy. It free up the economy. So it really depends on what they do and what they do quickly. Ludwig Gass doesn't increase in bankruptcies mean companies assets are going on sale. People think when a company is liquidated liberal buildings are sold for scrap when in fact these businesses units are sold off. It depends. Some business units are sold off, some stuff is sold for scrap, and some companies just restructure. They basically restructure their debt, the bondholders, the ownership structure and they go on most bankruptcies. Chapter 11 is a restructuring process. It's not a liquidation process. So most bankruptcies of big companies result in the big company not going away. I mean, look at how many times American Airlines, American Airlines, not the company, but Airlines in America have gone bankrupt or and they're still around. You know, a lot of companies go bankrupt and they're still around because they restructure. They restructure their debt, but there is losses. People do lose money during these bankruptcies. James says, well, it looks like a zombie company to me thought, I don't know. I'd have to look at their finances. I'm not sure they are. They're losing money, that's true, but I don't know if I call them a zombie. They certainly have upside in terms of growth potential. We're looking for 45 bucks to get to our 650 goal. All right, let's see. All right, Richard says, come on guys, help get you on to the daily goal so we can go and watch the Celtics today. Thank you, thank you, Richard. All right, let's do these last questions that are unrelated and I'm gonna give a quick answer, sorry guys. James G says, oh, this is for his $2 questions. So let's find James G's $2 question. Why does Asia, okay, so why does Asia have lower crime than South America? You know, I don't know. I mean, this would be good for a show that I do on crime. It has a lot to do with culture. It has a lot to do with a culture, a nonviolent culture, a culture that abhors violence. It has to do with economic policy, with corruption at every part of the government, all the way businesses, government, everything is corrupt so that people feel like everybody's stealing from them anyway, they might as well get in on it so they have a sense that they live in a place where theft, everybody does it, including the people at the top, including the people who are in power. I think it has to do with the fact that in the South America happens to be the place where cocaine and other drugs are grown. It happens to have the right weather and be in the right location and close to America, which is the largest consumer of such drugs. And that makes it possible for cartels to get established in South America. Not so easy in Asia. Although Afghanistan is an example of where that is not the case, where there is a huge drug trade and as a consequence, it's a very violent place. James G. says, how do you see the Middle East versus Southeast Asia? Well, Southeast Asia is 50 years ahead of the Middle East. The Middle East is backward. The Middle East produces nothing, creates nothing. They don't read, they don't read books, unfortunately. There's very little innovation. They've got a pretty backward business culture. So in so many ways, the Middle East is way behind Southeast Asia, which was one of the most dynamic economic areas in the world. All right, Ludwig asks, Ludwig put us over the $650. Thank you, Ludwig. Okay, no more questions, guys, we're done. So I'm just gonna answer the current question list and that's it. So Neb, you have the last question. Ludwig says, should there be more chapter seven back of season, chapter 11? No, chapter 11 is very healthy. It's very productive. It's a great process. I think it's good law. I think it's completely up to the market whether they are more or less chapter seven or chapter 11. So that's completely an issue for the marketplace to determine. I don't think the government should get involved. I don't think we should decide. I have no thoughts about whether there should be more of one or the other. I think they both serve an important purpose. Geoffrey writes, you're shown homelessness was exceptional, thank you. I love any episode that includes history lessons, unrelated. Can you explain the meaning of anti-concept? An anti-concept is a concept that means the opposite of or that negates the true meaning of, so holds within it the negation of the concept itself. So for example, a package deal is an anti-concept. So a package deal is a concept like self-interest, right? Self-interest is the way it's used in the culture is an anti-concept. Because on the one hand, it means pursuing your self-interest, pursuing the best life that you can pursue. And then it also means lying, cheating, stealing. So the opposite of pursuing the best life that you can pursue. So it becomes a meaningless term that doesn't really, you know, is useful. So it replaces a proper conception of selfish, which is pursue your rational long-term self-interest or just the pursuit of your own interest. With the pursuit of your own interest, somebody else's expenses, which is a BS concept. So anti-concepts undermine a valid concept. They undermine something good, something valid. And again, a great topic to do a whole show on. I think that Peter Schwartz is writing a book on anti-concepts, and maybe I'll have him on the show to talk about it. Jason asks, what do you prefer? A well-thought-out movie suggestion that is about the topic at hand for $10 and just giving it a one-to-five star rating or sitting through a movie you probably will not like and doing a review for $500. I mean, the $500, I'll take the $500. I don't mind watching movies I don't like. It broadens my horizons. I'm not a person who, you know, so I like the money and I don't mind watching new movies that I've never heard of. I'm not sure who gives it a one-to-five rating. I have to, so for me to give a movie a one-to-five rating, I still have to see the movie. So in both cases, I have to see the movie. So, does that make sense, Jason? I hope that makes sense. All right, these are gonna be quick. What do you think about involuntary admission into mental institutions when the person is a clear threat to other people? Does the state have a wall in institutions similar to that of persons? Yes, if the person is a clear threat, but you'd have to prove that in a court of law and then you'd have to send the person to an asylum under certain conditions where he could get released if he was better, but you'd have to prove it in a court of law. So it couldn't be just something random the state did. That doodle bunny, there will never be another amount of a count once we defeat this one, it's smooth sailing humanity is on for eternal paradise, starting 300 years from now. Too bad I won't live to see it. I hope that's true. Michael says, did you watch Donald Hoffman's interview with Lex Friedman yesterday? He seems like a measured, thoughtful, intelligent guy, spotting completely evil nonsense. I have not seen it. I don't think I can bring myself to see it, but I will. I have met Donald Hoffman. He is exactly that. He's a thoughtful, a nice, pleasant, intelligent guy who spouts complete and utter Kantian nonsense as if he's an original thinker. Liam says, it's frustrating how early we are in the movement, but I do think the culture slowly and incrementally beginning to see objectivism in an option. I agree. I think that's absolutely right. I'm generally favorable towards the future. Hoppe Campbell, I think racism is making a comeback because people are more miserable and purposeless and not getting laid. Yeah, and they're looking for excuses and they're looking for somebody to blame. They're looking for somebody, it must be somebody's fault that they were having a hard time. So yes, racism tends to increase as people feel more miserable and more pessimistic about the future. James says, are people actually afraid of failure or afraid of judgment, criticism for the people? I think many people are afraid of both and then some people are afraid of the failure itself and some people are afraid of the criticism. So it splinters, but I think a lot of people are afraid of both and I think you have both kinds. And Rick, scenarios for Putin's succeeding in Ukraine, expecting Western nations withdrawing material support because of economic downturn. I don't expect the Western nations to withdraw support. We'll see, I might be disappointed. Europeans are more likely to, but I, because the support is not that expensive, but I think Putin succeeds if the West doesn't get the, if the West doesn't supply the kind of weapons to Ukraine that they need fast enough, Putin succeeds if the Ukrainians can't push him back from where he is today. Putin, as I've said many times, is already lost. So it doesn't matter because if the issue is NATO, then he's already lost. He's lost because he's economically crippled. He's lost because Sweden and Finland are going to join NATO. So in that sense, I think Putin's already lost to the war. He can succeed in Ukraine if the West holds back on weapon supplies. Cook says he likes the lighting of the setup with the dark background. I think you're in a minority, Cook. Jeff, he says New York is really, really safe between St. Mark's and 9th on Avenue A. I'm sure it is because that's where the restaurant is. All right, Colt, I will go to Ocon if it's held in North Carolina in the future. Also, you probably won't read this, but whatever, it's better than nothing. Go Celtics. I agree, go Celtics. Neb writes, and this is the final question, Tucker had Brian read it right now on tonight with nine things to improve inflation, cut-gum and spending, end student loan, moratorium, repeal tariffs, repeal by America, repeal Davis Bacon, repeal ethanol rules, sounds like the Iran book show. Yeah, I mean, that was Brian. That certainly wasn't Tucker. Tucker doesn't believe in repealing tariffs. He doesn't believe in repealing by America. He doesn't believe in repealing a lot of these things. Good for Brian. So yeah, maybe we're having some influence out there while some people are listening and doing the right thing. All right, I'm gonna run. Celtics is still down 12 points in the second quarter. Maybe if I go and start yelling, it will help them. Thanks, everybody. We made our target. Really, really appreciate it. I will see you all tomorrow at 8 p.m. And yeah, we'll hopefully have a great topic for you then. Bye, everybody. I'll see you tomorrow.