 Jason welcome to the show. How you doing pretty good Amir nice to meet you likewise you and I connect I didn't know how we connected actually I started following your channel Main Street the and your Educational videos for a while which I commend you man great job on that Thanks. It's it's over a decade of hard work taking over 500 books on business investing the economy Thousands of articles interviewing over 500 experts and then condensing it into easier to understand Information for people on Main Street. Well talking about easier to understand information Let's talk about what's happening currently because lots going on we have obviously the pandemic is happening We have oil wars, but you and I before the show we're talking about this Anybody who was following this space could see exactly what was going to happen It's not like this was a black swan event where it's like, oh my god. I'm so shocked at what's happened to the economy So what's your take on this? Yeah, the mainstream financial media is making it like it was a black swan But in actuality the global economy in terms of exports whether it was South Korean exports Germany They were in recession for at least six months. Germany was in recession all of 2019 South Korea was having really bad export data for really since the end of 2018 And a lot of it had to do with how much the Chinese economy the real economy in China and the data is tough to get Especially from the Chinese government the National Bureau statistics occasionally you'd get some information about stagflation higher food prices But from reliable sources like Leland Miller China beige book He's done interviews on real vision TV and also hidden forces podcast to great free sources for your listeners The Chinese economy had really started to stall the tariffs the trade war that Trump started China was totally caught off guard and a lot of Chinese manufacturing was Uneconomic, let's just say and so they're a call head of manufacturing a lot of stuff and for profit now The Chinese government and the Chinese banking system was subsidizing and bailing out manufacturers not all of them in the bailouts Were different. It's been going on for a while But the balance had increased but a lot of the Chinese economy had shifted over the last ten years from Manufacturing things for a profit and really the last five or six years is when things really accelerated Into paper trading both management products dummy corporations by local government financing vehicles That started dummy corporations and then over borrowed and the Chinese economy had gotten it had basically, you know petershift and Jim Rogers very pro very pro china very pro long-term China growth Ten years ago so ten years ago the Chinese economy had very little debt There was a very high savings rate in the Chinese economy and then in the last five or six years That has totally been flipped where the amount of speculative real estate and go cities in China It just and the credit in China and the lack of savings. It it's just all exploded It's gone exponential the to give you some examples a mirror you and your listeners the amount of credit in the Chinese economy It went from I think barely five trillion in total credit in their economy about ten years ago And they had four trillion dollars at that time in foreign exchange reserves So they had a lot of reserves There was a very high savings rate about 40% in for Chinese households at that time and then the credit over Only a ten-year span went up over 8x in the China's economy and the average salary for a lot of people in the Chinese economy is only Honestly, there's more affluent people in China But there's also a lot of poor people in China and their version of the middle class is not making the same salary as People your listeners up there in Canada people here in the US and people in the European Union So China's economy was sputtering long before The global pandemic and the global the global pandemic a mirror I think in my opinion was really the last thing they needed because they were already having immense economic problems The Chinese banking system started to melt down in May 2019 And we had there was at least from what we know publicly There was at least five or six bank failures in a two or three month span And I was doing videos about this on my channel showing the different stories The bailouts were just getting crazier and weirder and larger And it got to a point where one of China's two largest state-owned enterprise banks China construction bank I think this was August 2019 But the people's Bank of China their central bank and the Chinese government ordered this large massive bank to bail out Hunan Province for 300 billion dollars over a five-year span And that would be the equivalent if the US federal government asked JP Morgan to bail out the state of Illinois For the coronavirus so China was having really bad banking system problems Interbank lending problems They were dealing with a lot of stuff bad things in their economy and the global economy was suffering Long before the coronavirus and the coronavirus was really in my opinion just the knockout blow Yeah, like I have a Interesting thoughts though. So two things number one earlier in the year China was pushing hard in Hong Kong Would you say one of the reasons why is because Hong Kong is that satellite? Exchange that they can have liquidity or access to USD greenback Yeah, yeah, but also, you know, Hong Kong has some freedoms So Hong Kong people protesting that makes Beijing look bad the puppet politician that they put in Hong Kong The protesters that makes that makes them that makes Beijing look bad. So Beijing was looking bad But yes, you're correct. Kyle Bass has talked about this a lot The Hong Kong banking system is used for money laundering also Hong Kong banks have a real problem there Kyle Bass has talked about the dollar peg might break and they are extremely levered the Hong Kong banking system both to Hong Kong real estate high values and Also real estate loans into mainland China. So that's really the problem with the Chinese economy is how much credit is in the economy the dollar denominated debt and the dollar denominated debt and this is another big problem Why the coronavirus is creating these massive massive Interventions by central banks all this dollar denominated debt a lot of it was from emerging market governments emerging market private companies and Well over a trillion dollars of it was in China, especially from the Chinese real estate sector on speculative Real estate construction. So Jim chain knows has estimated that about 20 depending upon how you measure it about 25% of China's GDP was solely on speculative real estate. So they have their housing bubble To what happened in the US from 2002 to 2007 The mentality in mainland China from a lot of people speaking a lot of people was at real estate prices would not be allowed to go Down, you know very similar to the attitude Americans had Except that the people in China were saying that the government wouldn't allow housing prices to go down And there was some anecdotal evidence that the government had canceled some sales in some different Provinces that were below different levels of the Chinese government had canceled some sales below market But a lot of that credit in the Chinese economy was tied to speculative real estate And the real estate was there propagating that to keep up with their so-called 6% GDP growth that they promised everybody Yep, yep Yep, so it's all about it's all about infrastructure It's all about construction and a lot of the real estate building after they had already built out a lot of the infras There's only so many infrastructure projects you can do So now it's just getting excessive There's bullet trains in China to tier 3 and tier 4 cities a lot of them not every single one but a lot So there's only so much infrastructure projects you can do before it becomes excessive the Japanese Excessive excuse me the Japanese government ran into the same problem with their Economic central planning. I know you follow the Austrian school So you can misallocate capital if you're doing infrastructure investments if you're subsidizing your manufacturers Peter Schiff would disagree with me on that. I respectfully disagree would disagree with him about that So capital can still be misallocated on an infrastructure and with manufacturing. So manufacturers can be It's it's it's called the unions and the back shady deals They get misappropriated the most Do you think there's unions in China? We call them unions here. You can you can call it organized Official or official organized parties of the CPP Well, the thing is in China if you if you have an union you start protesting if you march with pick up a pick up with Picket lines. There we go picket lines We're seeing some protests now over rent is too high because the Chinese economy it has imploded From a bunch of different factors before their coronavirus and now afterwards they've done a lot of different bailouts a lot of capital injections I think they were injecting hundreds of billions of dollars in just a month or two, but that was going on for most of 2019 too I did a video on my YouTube channel showing a lot of the different types of bailouts There was at one point according to the New York Times in August 2019 There was an extensive article interviewing a bunch of Chinese business owners There was two hundred billion dollars worth of IOUs circulating in the Chinese economy that these these state-owned enterprises This local and city governments were not paying teachers. We're not paying government workers They were getting paid maybe a couple months late, but they weren't getting paid any interest for waiting So it was it was a mess the Chinese economy was a mess Thanks to Trump and the tariffs and the trade war and also stagflation on higher food prices Especially pork and some vegetables and then we had a ground zero in Wuhan. So that made things a lot worse How do you think this is going to affect them with the you know if you follow Brett Johnson's theory of the milkshake theory? So short-term medium-term us becomes a liquidity can't spend the liquidity king or the king of currencies for since World War 2 how does this how how's that going to affect China? Okay, so I agree with a good amount of what Brent Johnson says except I think a lot of it has already occurred So Brent Johnson has said that all this flight capital From china from europe from emerging markets will all come here to the u.s Well, what happened in 2019 with our stock market if you look at a chart of apple And charts of Boeing and other companies before they crashed in the last couple months Those stock charts were going parabolic. Meanwhile, the earnings were horrible We're mediocre or horrible. So I think we already had over the last two years A lot of what Brent Johnson described the problem is the dollar index didn't get to 110 120 or higher and that's because these governments The whether it's the treasury departments or the finance the finance ministries of these different governments and or the central banks Like the federal reserve, they're all trying to manipulate their currency exchange rate Or devalue their currency so they don't want most people to notice. Um, I'm in the For right now. Anyway, I'm in the dollar tug-of-war camp. So I am neutral on the dollar against the other currencies I think all the currencies are garbage, but I think most professional money managers Um, they want to retreat into they view still view the dollar and u.s. Treasuries as safer And other countries on a relative basis But overall, um, the fed has intervened massively There's been an unbelievable amount of trillions one of the common themes that I was talking to you about before You know when we first met on twitter was rules changes And this is something your listeners are really going to have to pay attention to It is really tough even for financial professionals because of all the different rules changes Um, there's so many of them. So I'll just give some examples So it is illegal for the federal reserve to actually buy anything but u.s. Treasuries And mortgage back securities. That's it. That's all they're legally allowed to buy So what did they do to get around the rules to move the goalposts to have? Um, lucy pulled the football when charlie brown was trying to kick it They created a dummy corporation similar to what enron did. I interviewed daniel d martino booth The reserve recently and she said basically it was illegal. So they Created with the with the u.s. Treasury coordinating a special purpose vehicle, which is a dummy corporation And then they went and they started financing. So technically the u.s. Treasury owns all these things that the fed has been buying so these um Municipal bonds these investment grade corporate bonds that are not going to be investment grade for much longer There was 150 billion in investment grade corporate bonds that were downgraded recently You have junk bonds. You have junk bond ETFs. You have leveraged loans. You have collateralized loan obligations You know, um, the the fed's official balance sheet amir is up two trillion dollars in a very short amount of time But that's not the real story the real story Is what daniel d martino booth and I were discussing how all the shenanigans the real shenanigans and many many trillions Was off balance sheet that people will not see if they go to the fed's different websites and look at the official balance sheet So even though the official balance sheet looks like a hockey stick the reality is much much worse Now you have that's one side of it So you have all these bailouts and you think the dollar would be devaluing quickly and collapsing And this is why i'm in For now the tug of war camp because there's two powerful forces You have the fed and the treasury president trump trump administration who all want a weaker dollar If the dollar rises too quickly like when it got to 103 on the dollar index I think a couple weeks ago and then they just panicked and there was all these announcements Another i called it another day another bailout fast and for your fast and furious rules changes And on the other side of that is how much dollar denominated debt? And this is what brend johnson is talking about when you have all this dollar denominated debt You need dollars to pay it back so you don't default So maybe you can't pay the whole thing back, but it's like your credit card bill, right? If or your mortgage if you don't at least make the minimum payment you're in big big trouble So people need dollars, but the problem is that the global economy is not functioning There's a cash flow problem. So you don't have american torus You don't have american companies buying goods and services outside the us and those foreign companies Getting those dollars those other countries that relied on tourism getting those dollars So that's why you're what you're having now on the other side of this and that's why it's a tug of war Because that's a powerful force on one side with the demand for dollars to prevent default On that 12 13, but why wouldn't I as the as an investor or as a company go to another country? Like for example the US dollar versus Canadian dollar has a premium or even better example US dollar versus Australian dollar Where I can get a premium on old assets in that country It's a good question. So normally what other private foreign companies did was The investment banks or banks that they borrowed from were offering them less interest So also the loans were taken out. George gammon was on your show. He talked about this extensively I listened to that interview. Good job He said that a lot of these loans were taken out when the dollar index was actually really weak And they expected that trend to continue. So this was a monumental screw up By foreign governments and foreign banks foreign private banks and foreign private companies So this was betting that that trend of weak dollar would continue So that that's part of it. The other reason is dollars are more liquid. We're on a dollar standard So if in other countries Dollars are or more easily accepted than other currencies So if you're in Japan and you have Canadian dollars the odds of a company in Like a taxi cab driver taking Canadian dollars probably nobody wants Canadian dollars I'm sorry. I singled out your currency But if if it was Australian dollars if it was euros A your Japanese taxi cab driver if you're going to tip him might not accept that But if you have us dollars, he might say okay fine. So us dollars are kind of viewed. We're on a That's the best way to think about the current system. The current system is heavily flawed But it's it's the shitty system we've got for now. So we're on a dollar standard and the u.s Takes advantage of that incredibly So the you have two powerful forces here. You actually have the the fed the treasury President trump trump administration all want a weaker dollar if the dollar gets too strong They want to weaken the dollar which means they might purchase more and more assets to try to get the dollar weak And the other side of it in this tug of war that i view of things for now now eventually this rope will break I think the fed will ultimately win because that's what history says Eventually the fed the fed and the treasury will win they will weaken the dollar But we're going to have a probably a lot more volatility in the near future with currencies The other side is the amount of dollar to nominate debt But what most financial professionals miss is the extra dollar derivatives So these are dollar liabilities. This is the currency Of adjustable rate mortgages. These are called forward dollar swaps. These are what countries Did so they didn't have to Blow through their foreign exchange reserves. So if you're have you ever known currency trading? Or x Yeah, yeah, yeah Okay, so if you're looking at the fundamentals of a country right with the currency You want to see if the country has a lot of foreign exchange reserves You want to see if they're if the country is running if they have a government budget deficit problems You want to see if the country is doing a good job managing government finances if the central bank has foreign exchange reserves to defend the currency and the exchange rate And normally and we know this through history with the asian tiger crisis the mexican peso problems other currency crises Normally when these countries that are running dollar pegs or other currency pegs When they blow through their foreign exchange reserves So the foreign exchange reserves go from a respectable amount the currencies in in the currency is not moving around violently in a volatile way to all of a sudden the foreign exchange reserves are the Treasury departments in these different countries are running through their foreign exchange reserves defending the currency exchange rate And then uh currency traders are starting to question whether the currency peg is going to break And that's a lot what happened to the during the asian tiger crisis, and then you had after net capital outflows So there was an enormous amount of hot money that came into Thailand and other asian countries during the asian tiger crisis And then as soon as the foreign exchange reserves were blown through people started worrying about the currency pegs The government budget deficits the finances problems with dollar denominated debt. This is an occurring theme here This is why the plaza cord was done to in 1985 was japan and germany were having problems too So the u.s to to refresh people's memory the plaza's cord was to reduce the value of the u.s dollar It was it was a 50 devaluation that was agreed now in exchange for that So the u.s. Did want to devalue dollar because all these people running These central banks these governments these treasury departments They all kind of have the same playbook. It's all canxian or neo canxian They all think with a version of mercantilism the austrian school would call it mercantilism anyway That if they have a devalued currency That's good because that benefits their economy for exporters So if everyone wants to have a weak currency to boost exports to see that's a problem then So the u.s. Do you have triphan's dilemma? You have all these other countries that want a weaker currency for exports and in the u.s Government wants a weaker currency too, but it's a reserve currency So that's triphan's dilemma. Yeah, well, it's importing issues too Like i'll give you examples since the u.s. Dollar has popped against the canadian. We have a lot of companies who have Remote freelancers around the world, but they're denominated in u.s currency They don't want to take any other currency But the forex exchange for canadian to us isn't i mean worth it anymore not even worth the exchange rate anymore No, like if you're looking at the value that you get is like you can find the same type of value In canada as opposed to now exporting that type of labor before Yeah, well, there's other competitive advantages besides just labor and currency So canada might have canada might have cheap energy at some point. I mean you guys have oh, we do We got cheap energy. Yeah, yeah, you guys have you guys have plenty of cheap energy We'll see what the government decides to do with protecting your oil industry Although uh trudeau what he's a very radical environmentalist, right? Oh that guy. He's the best businessman in the world, man. Oh my god Oh It's ridiculous. So what do you see how? Let's kind of reduce this or simplify it. How does this affect everyday working class joe? It puts more monetary inflation It creates distortions in in the global economy in the supply chain with all these currencies being devalued So it creates misallocations of capital. It creates the canteone effect So whoever is getting that extra currency whoever is benefiting from the currency devaluation is Not the average joe or average chain So it's creating stagflation. I would say And it's going to be a common theme in the real economy and the government economic data saying there's no inflation Is not going to reflect this but people see this with their bills So either your bills are going up or when you go to the grocery store Um, well now I was going to say go into the restaurant, but now I used to take that for granted Um, when you go to the grocery store or you order take out or delivery from a restaurant given the circumstances We have you're going to be getting less portion of food So you're going to get less goods and services for more currency. It's it screws over the average person By devaluing currencies like that you get less purchasing power And so what can a regular person do? How can they protect themselves or help themselves? They have to hustle they have to maybe build an online business They have to grow they have to grow their income and they have to have inflation hedges in place. Let's talk about that inflation hedges Okay, so in uh inflation hedges gold and silver are normal inflation hedges. They're not investments though So they're just for insurance wealth preservation and savings So you can't save because the goal of all these governments now is to weaken their currencies And some of them are going to be weakening their currencies faster than others But you can't save in the currencies long term. Anyway, you're not getting interest paint You're not being paid any interest to save. So what's what's the point in saving? Soon it might be negative interest someone to take your money Yep, yep, or they or they do what similar to what f dr. Franklin Delano Roosevelt did in 1934 and Is he the president that took the gold as well? I think he was yes, and he devalued the dollar So not only did he take your gold. He also weakened the currency devalued it against the dollar substantially So it was a double whammy now not everyone complied with that Yeah, so i'm glad he brought up gold and silver as a hedge most people view it as investment Which is not the very notion of gold and silver is to keep is to hold your value as opposed to as an actual financial investment Well, the problem here in the u.s. For americans is the way golden silver taxed So the government has already thought of this They already realized that they were going to be devaluing the currency and there is no tax advantages to buying gold and silver and holding it You don't lock in you don't lock you guys get capital gains tax, right? Yes, it's um this guy named daniel amerman. He did excellent dan i el am er man Over the last 10 years. He's written excellent blog article showing that when gold goes to 5000 and silver goes to 200 150 200 if you go to sell it your tax bill is going to be enormous. So I think it actually it's taxes I think ordinary income is taxed as taxes a collectible Which is taxes ordinary income so the higher it goes income. So it's not even capital gains Correct, you don't so um if you buy a stock here in the u.s. And you hold it for at least a year I think that's still the tax laws you get to lock in long-term capital gains taxes So if you trade stocks you trade you trade other types of Other types of assets you don't get long-term capital gains taxes the lowest tax on an asset You get as long-term capital gains taxes with buying and holding real estate here in the u.s And buying and holding stocks and then you can lock in I think a 10 percent long-term capital gains tax rate There is none of those benefits for gold and silver A book not an investment now gold stocks are an investment There are good gold stocks and then there are really really bad gold stocks I just had jim rick is on there and he's really He's really uh his only suggestion is as physical gold nothing nothing but well here here's the danger with that amir I know you love bitcoin and cryptocurrencies and I do own some so for full disclosure I own some bitcoin. I own some like coin. I haven't been buying any lately But I think it's really dangerous for anyone to go all in on any one thing Because we're in an environment now where the central bankers the politicians the bureaucrats with too much power in these different countries They can be changing the rules all the time So they can do tons of different rules changes. I only gave one example Early in the interview about the special purpose vehicles But if the banks are in trouble they change the leverage ratios for the banks to make them look more solvent You know, they can do a ton of different rules changes And that's the danger we're in so if you have all of your asset all of your net worth or most of your net worth in just Gold or silver they can put an extra windfall profits tax They can potentially put extra taxes on the gold miners or silver miners They can if you own a lot of bitcoin or cryptocurrency, let's say you are smart and you have a treasure or nano ledger, right? You've taken it off of coinbase They can still x post facto they can say anyone because we saw you bought it on coinbase They can say that we know you have some and that you're going to have to pay a capital gains Windfall profits tax or something because now bitcoin, this is hypothetical now bitcoin's at $50,000. Yeah And they would say that I lost though my ledger with my seed phrase. So I don't know where those things are at But you would you would know all the different storage options. Um, there was what cold storage with I got it into boat. I got I got into a boating accident. So I lost all my crypto You did are you are you kidding? I thought you had it. Oh, that's people have to figure that out You know boating accident, but uh, okay gold silver as a hedge Okay, so so um, one of the smartest yes one of the smartest hedge fund managers rile pal He managed a lot of money at Goldman Sachs for a long time. He's he's rich. He started real vision tv Which has real vision. Yeah. Yes. Yes So he recently said because all the rules changes and this is a really smart guy He pays attention to all the rules. He has a lot of experience. He said with his own personal net worth 25 cash so us dollars in case the stock market crashes And then he has cash for an opportunity in case of let's say rental properties Um in certain areas, maybe the Dallas metro area or Houston metro area Let's say oil tens of thousands of oil jobs are lost After oil continues to go bust and there's rental really good starter rental properties on sale So he has cash 25 of his net worth and cash for an opportunity. He has 25 in gold I would I would probably have some gold stocks in there or silver stocks in there He just has gold though and then he has 24 25 bitcoin and 25 for trading opportunities because he likes to trade Monday through friday So that's what he has for his personal but again that example he's not all in on any one thing So he realizes the environment we're in where you could have good investments and Or you could be short stocks because Of six weeks ago. It was smart to short stocks. Yep the stocks were crashing But look at all the rules changes that trump isn't president trump is announcing So the restaurant stocks were not included in congress's initial coronavirus bailouts And now president trump was just doing press conferences talking about how people are going to be able to deduct entire Penses or entertainment. So either if you order takeout or delivery from some of these restaurants now You're going to be able to write the whole thing off. So this is rules changes with taxes rules changes with taxes rules changes with capital gains And this is the environment we're in it really sucks the average person It's going to give them a headache and there's a lot of financial professionals I speak to who who don't keep track of the rules changes and they're Directing people into only one or two asset classes. That's the danger of things right now Yeah, also, we're entering a weird period of you mentioned the treasury and the fed I will leave china out of this because I I think there's a whole issue with supply chain around the world And as you mentioned inflation of of products mainland It's going to be interesting because in canada. They're rolling out this Semi quasi welfare checks. It's convoluted. I always say in the government They must have a they must have a department the government that's like reverse logic department because they never have any logic It's the most it's like it's like jason and amir get in the room It's like how can we make the thing most complicated possible? And this is what we're going to give out to the people and so united states you guys have a stimulus check I forget what it was like 12 1300 dollars in canada's this weird convoluted thing you can get up to $2,000 Originally, they say it's for four months. That's it's going to go on much longer than four months politicians Premier senators are going to use that for voting privileges. We're entering a weird stage of this quasi ubi Almost very similar to you can even call it communistic socialistic properties Where I think it's our whole economy is going to be very skewed and it's going to I think people really are going to underestimate or they really don't understand that If I was going to if I'm a betting man, and I'm looking at everything And everything we talked about we talked about fed printing trillions of dollars fed having spvs buying out all these ship bonds stuff happening in china The milkshake theory we talked about No matter what all these data points are leading to great inflation Yes, um Eventually great inflation now if for now the dollar index is still pretty strong And that's because all these dollar denominates are defaulting and you have these derivatives these forward dollar swaps were A mirror when things break this bad in the global economy like in 2008 It was over five trillion dollars in derivatives And so when housing housing prices fell people fell upside down on their mortgages It was five trillion dollars on derivatives that broke this system So all the equity of all the u.s. Banks did not total five trillion So the banking system was wiped out all the rules were changed. They did these currency swaps Massive amounts of them we found out about them from the one-time partial audit that ron paul got that bernie sanders and john mccain Both agreed to and then there was a bloomberg news freedom of information act request a 29,000 data dump document And the levy institute went through it and found out that actually 29 trillion In emergency bailout loans was given out all over the globe by the fed and in the fed afterwards Waved a lot of the loans so the loans were given out as temporary a lot of people ended up not paying them back The fed bailed out their friends the fed picked winners and losers Whoever the fed was Most friends with so china look how china with these currency swap press releases That came out that were two of them china didn't get any currency swaps china didn't get any more dollars Mm-hmm Yeah, so that so you have you have the tug of war for now Where this dollar dynamite debt is imploding because a global economy is not sending those dollars to where they were needed People had cash flow assumptions And then you have these derivatives which are imploding and that's why the dollar looks stable for now Because people are trying to figure out what's happening to the dollar and the market's looking at both of the both of these things And the dollar's kind of stuck in the tug of war and it's not moving too much right now Yeah, I don't know man. I just feel sorry for how badly people are gonna get fucked on taxes man And taxes being inflation as the number one tax Well, all all the taxa, excuse me. Um, all the taxes are gonna go up. I mean, we're Andrew yang he he obviously isn't gonna win the democrat nomination. He's not gonna be president That doesn't mean his ideas are not gonna be implemented. He was talking you you said universal basic income I think that's for government dependence Of course. Yes. So so the more freebies that governments give out The more dependent people become on government Well, I was I was looking more into i've been diving more deeply into modern monetary theory But not only on the economic side, but they have a whole section there to talk about Guaranteed fucking jobs. I'm like, this is out of the fucking communist marx's red handbook yep Yeah, I mean oh In here in the u.s history fdr did it too. Look at those make work programs that happened during the great depression There's a lot of misinformation about what actually happened After the october 1929 stock market crash So the narrative is that herbert hoover was this evil greedy capitalist as free marketeer There wasn't enough regulation and that's why the stock market crashed and that's why the economy didn't recover When herbert hoover was still president. That's not the reality of the situation There was an enormous amount of tinkering going on by All the different government agencies that were created at the time president herbert hoover Was putting in wage and price controls. Uh trump has talked now I just this just came out and it's not guaranteed legislation yet, but he's talked I think about paying oil producers To not produce oil. I saw that Well, well, this is a mirror. This is right out of the playbook from Right after the great right after the october 1929 stock market crash So what did herbert hoover and fdr do farmers were paid to not Send their produce oranges and other crops. They were paid to let it die. Yeah Very similar history is repeating The the difference this time is there's a lot more currency out there a lot more and way more debt I think this is also going to be a precipice for the digitization of the dollar Well, I I think I think there's a couple different camps Different power factions here in the washington dc metro area. I've been living in outside washington dc now for metro And in new york city. So I think there's one camp that paid nancy polosi to stick in that cashless society digital dollar Legislation into the congress's coronavirus bailout. So I think that's one camp. I think that's probably Backed by the chinese government and then also the big tech companies in silicon valley. So I think that's what they want They want that that gives If people criticize the government or the wrong corporations like you and me they can they can um ding us They can either tax us more for speaking up or criticizing or they can shut down our credit cards or a bank account So I think that's one faction. I think there's another faction that wants to maintain the status quo And jim rickards. Did you read his new book aftermath? No, I didn't read it. It's actually sitting on my desk. Okay, so I'll just summarize one of the key points Um, he talks about a discussion he had with timothy Head of the new york federal reserve and I think he was also assistant treasurer secretary And timothy geitner says that they're just going to keep the same status quo system or most of it It's not going to change very much So maybe they do some some bailouts of the airlines right and then a couple years later The stock market is right back up when we're the economy gets back to eat somewhat close pre coronavirus levels in a couple years And so they're just going to do all these temporary bailouts and then the stocks are going to rally The government's going to sell them off at a profit after they manipulate the stock market higher And the government's just going to keep releasing their u.s. Government since we have the world reserve currency still Is just going to keep releasing new press releases every day if they have to guarantee Guaranteeing uh bank accounts with the fdic guaranteeing Corporations or in industries, you know all this tinkering all these guarantees We know the government doesn't have the money right? It's all inflation It's all monetary inflation right they're creating it out of thin air But the average person doesn't know what the federal reserve is doesn't understand and and still a lot of people still trust government Unfortunately because they don't know how the system really works Because they don't a lot of people don't even know what the federal reserve is what it does or who's the fed chairman And those people if the government So the federal reserve or the treasury president trump different government agencies issue press releases saying we guarantee everything So there's nothing to worry about So that percentage of people will go along to get along with that system their herd mentality So that that's the other camp is that this current system we have which i don't like I'm sure you don't like it either many or listeners don't like it if they're buying gold in bitcoin They probably either are don't like They're buying insurance to protect themselves so the other the second camp is that they uh The second camp wants to maintain the status quo and they will just issue all these press releases as guarantees with trillions of dollars that they may or may not print and They may end up printing more a lot more than people really know because of all that off balance sheets All that all that I need a water all of that off balance sheet shenanigans And then what we know from 2008 how the real number like I discussed earlier It was not a couple trillion dollars like people think in 2008 It was not even 19 trillion. It was 29 trillion To save the to save the system And then the third camp is what trump bringing in what judy shelton is some type of gold backing So I think there's three camps in washington dc and new york city debating What the us What the us's version of the financial system is going to be in the next couple years So there's a big big power struggle there And I don't know who wins. You're actually talking about bringing it back to gold standard Um, I don't know about a full gold standard But maybe some type of partial fractional gold standard So they would say that the currency is partially backed by gold Maybe it's like similar to how us citizens couldn't own gold, but they allow international exchange of gold. So Yeah, so that wasn't a real gold standard what fdr did in 1934 american citizens were banned from owning gold But foreign governments could exchange their dollars for gold So it wasn't it was a partial international gold standard not a real gold standard because american citizens were screwed Yeah, so that is that is on the table. I don't think the gold I don't think the gold group is winning right now. Let's just say that I think I think the cashless society power struggle and the And the uh cashless society and the status quo Are in the lead So I think those are the two main factions now and the the third camp the gold camp From partial gold backing with a currency. I think they're far behind there's also uh Another player in here that's going to change how perception of the digital dollar is no matter what I I think for I think no matter what the facebook libra dollar will be launched And it will use a basket of different currencies Forex currencies, whether it's the u.s. Dollar the euro The british pound whatever And this is going to open up a billion plus people In the world to the idea of a digital dollar And this is going to be the precipice kind of like the uh The opening for people to get sucked up into this whole digital way of of of money Well the the government currencies are are very very different because then they could track and tax every single transaction If the government wants they can put a value out of You add a tax on all transactions In media very quickly. I don't know about immediately, but very quickly I think it's going to happen regardless, but I think this is also The opening for counter markets. This is where bitcoin comes in. This is where cryptocurrency comes in This is where the whole web 3 ecosystem comes in and it's funny because You know, bitcoin was born post-08 and this is its first economic turmoil that it's facing And it still has some correlation to the equities and s and p. They say so But if you're comparing it to the stocks, it's a 24 7 free market. There's no breakers. There's no bailouts Hardcore austrian economics, you know supply and demand is 21 million three four million is lost something like that And it's holding up it's holding up And uh, I think a lot of people who are intelligent Like yourself and people who understand these very simple principles I think people are going to flock in hordes within the crypto space Yeah, I think crypto is an interesting hedge. I don't have a lot of my money in it, but a lot of my savings in it, but It's really tough to say what the loss changes are going to be with governments because We could see some governments going after that. I mean in china The china's really try to crack down on bitcoin and cryptocurrencies a lot They kicked they've been kicking the bitcoin miners out of the country now for years But that actually benefits bitcoin Oh, really? I'd like to hear that explanation how that benefits One point is quite centralized in china miners for the hash power In fact, canada's becoming more and more a big player because we're getting really cheap You can get cheap as energy and kind of like some places I even saw 2.9 cents a kilowatt And most places around the world around six cents a kilowatt There's even places almost will give it to free They have a like dirty natural gas in lberta We have to have a license and they're pretty much burning that anyways if you can tap into generators You're pretty much getting free electricity and so Since bitcoin is proof of work So you need electricity you need these miners the miners have a half life They last whatever eight months to a year and a half depending on how frequently used and what type of miners you buy The proof of work mechanism in bitcoin has created the greatest manhunt For the cheapest most efficient use of energy And so people because it's a margins game, right? You have all this overhead capital You're like I have to buy the machines. I have to rent that warehouse. I have to pay engineers And my major cost is I have to pay energy per kilowatt per hour And so there's people running around the world different locations. Canada's a great great location because these miners they produce a lot of heat You can go places in northern Alberta, northern Saskatchewan, northern British Columbia, and it's very cold there And since and get this too, it's a two for one since cana has federalized weed I know mining operations in Canada take the heat from the miners into a greenhouse and grow weed as well Oh, wow. Yeah, it's a two for one. You got you got a cool the miners anyway So miners will suck that heat into a greenhouse Now they need like a government rebate or subsidy now Yeah, yeah, yeah, yeah And so like one of the biggest miners are in Quebec over here It's block stream is like a hundred million dollar mining operation So mining is actually becoming extremely decentralized around the world And it's actually a good thing that a lot of these miners aren't in China anymore Oh, thank you for that that was very interesting I may have to re-listen to that again after this interview is over that was a very interesting My favorite businesses with highest margins that I found on a publicly traded stock exchange are gold precious metals royalty and streaming companies So they don't actually mine and their business model is actually set up similar to a rental property owner Where they just collect checks and they finance mines and they take a very small portion of the revenues of a mine And if there's exploration successes these royalties or streams that they buy Could run for 10 20 30 40 years Franklin, Nevada, which is the largest royalty precious Over 16 billion dollar market cap 600 million dollars per year in annual cash flows they have over 100 assets online Generating cash flow for them. They have royalties in their portfolio that have thrown off cash flow for over 40 years Really, do you know the ticker? FNV so yeah, yep, but there's there's a handful of these companies So these companies Franklin, Nevada is the largest of them and most diversified with the cash flows Franklin Nevada just lost my chair and thought we've been talking a long time Franklin, Nevada has 90 gross margins and good luck trying to find a lot of businesses that have anything close to that So this 90 90 percent. Yes 90 percent. So this company they only have 40 people Working at the company and all they do is look for new deals. So they're looking for more growth They're looking for more investments looking for more cash flow. That's one of the as an investment That's one of the safest ways to get golden silver exposure are with these larger royalty and streaming companies As long as the management teams don't deviate from the business model Or put too much debt on the balance sheet use too much leverage or do a string of bad deals in a row That puts um with with debt on the balance sheet So those are really the only ways that management can actually screw it up Otherwise the business is unbelievably good at generating cash flow And if the management team has some geologists or either on staff or hire some good consulting geologists They can do these tiny little deals with junior junior miners right for a million dollars or two million Heirs of some of these junior miners that everyone likes to speculate on and they get a royalty So they buy this they buy the equity they buy the shares to help these junior miners So they can go drill on large land packages and the royalty and streaming companies get a royalty on often the entire land package for For forever the land the land the royalties on the land for forever So if the junior miner drills and that becomes a gold mine with 40 years of reserves That tiny little one million dollar speculative investment that call option Optionality that turns into a steady stream of cash flow now for 10 20 30 40 years And somebody's pump. This is a dividend stock Franco Nevada is a dividend stock. They're they're a more mature company. They re IPO'd in 2007 and every year they increase dividends Wow, did you hear cost did you hear cost go today a percent? Yep, uh cost at my day job when I was a uh investment analyst and I was covering uh oil stocks and dividend stocks Uh, I wrote a stensive article on cost code. This was 2013 when it was 110 dollars a share Yep, so it's it's doing what it's supposed to do I love their business model, man. What their margins are so small one to two, but Their model is it's I love it Well, they they generate all their free cash flow from uh memberships membership. I know it's it's you've cash you have cash Every day it's a sass model been real life It's a it's a win win win business model because the shareholders are benefiting Paid more money and have better benefits and have better and have stock options if they stay there Customers are happy because on a lot of items they feel like they're getting a good deal Now not everything's a good deal because something you don't know Some people don't need like a lot of catch up in bulk or other things But if you know what to buy there you can really reduce your cost per unit So I think like it's one of those a few businesses out there That has win win win for shareholders employees investors and management I'm surprised other industries having tried to do that like physically like Creating something of a membership model like that. I Well amazon prime. What do you think amazon prime is the online? Online online. I'm talking about offline, you know Yeah, it's it's really hard to do that because You're not going to make much money off the other see costco does it at scale And they have a proven brand name and they know they have good products there and not smaller companies might not be able to negotiate With some of these larger other companies to get the deals costco does I think clothing might have the option. So like you look at zara, which is like a beast He like ridiculous a size company And they already have decently cheaper Prices compared to their competitors. They pretty much whip off designer type of Fashion and then make it on their own Yeah, I'm not familiar with zara. I don't cover a lot of the retail companies I did an interview with a hedge fund manager kevin duffy a bearing asset management And he's a hardcore contrarian. He's been shorting All the different bubbles now for 20 or 30 years the tech stock bubble 2008 and And over the last couple months he was shorting that too and he's actually in there buying some of these retail stocks now Where the bricks and mortars business is not obviously not doing The stocks have totally cratered 90 percent, but they're actually selling online still Exactly and plus especially clothing people always buy clothing the funniest thing is like, you know, my family's from former yugoslavia and like everyone's poorer with their own you don't have middle class either rich or you're poor and People rather spend money on like fancy clothes and anything else because of a status symbol It's the most fucked up thing you can possibly think about interesting Yeah, because you don't have anything else. It's like You know, it's it's very like, um In your face, it's like, you know, if you see me wearing it this this represents and symbolizes my status in society So it's just more than taking pride in your appearance. It has nothing to do with pride at all It's literally making face, you know, it's it's a theater if I had to call it anything But any other questions you wanted to ask me here? I think we covered a lot man I was gonna ask a question about oil, but that's a whole different fucking podcast oil wars Yeah, I was I was an oil analyst and I called I called the oil price crash I was getting information from my friend who I've known for over a year who was trapped inside wuhan So I was getting reports every day or two really really detailed stuff About how the chinese economy was totally on lockdown way before it hit the news And I was seeing the oil stocks and I was watching the airline stocks and the cruise ship stocks And I was saying there's no way these stocks should be that high When when china shut down the other parts of asia are shutting down And flights at that time, you know at the end of january flights were being canceled to asia And I was just hearing that all these other business people are canceling. I was like, this is gonna hurt the oil China is the main demand driver for oil Merging markets in china china is the main demand driver This is not gonna be and I was already as you know earlier in the interview bearish on the chinese economy I was covering a lot of this that their economy was contracting pretty violently long before the coronavirus So that was the last thing they needed. So I'm you know, I'm not a rocket scientist I just do hard work research And then I tried to do good analysis. Um combining the the research Oh, I lost you Oh, you can now you're back talking about analysis Like I said at the beginning of the interview I think your content that you put out you put a lot of work into it Like both your free stuff that you have on youtube and I know you have a patreon account um If people can if people want to know more about you and look at your work What's the best resource for them to check out? Oh, the youtube channel, which is free and I've interviewed over 500 experts there on a lot of different topics I've actually known trace meyer for many many years since 2009 before he ever owned a single bitcoin He was trying to tell me but he was trying to tell me about Yeah, so I've known trace meyer for a long time when he was just a lawyer and he ran the website run to gold and he wrote The book the great credit contraction. I was doing interviews with him then like those are in the archives I was still like learning how to do interviews and still reading and learning a lot on my own. So I like to I like to think I've improved a lot. Um, they could go to wall street from Uh the youtube channel the the website right now I need to there's some technical issues with it, but the youtube channel is free It's a lot of great content on there W. A. L. S. T. F. O. R. M. A. N. S. T. Dot com And the patreon is I I think it's a bargain other people have told me that It's an immense value. I only charge five dollars a month really that's it. They're all you gotta put it up Yeah, I only yep there is there is really high level content and analysis there I was warning people I predicted The first major oil stock that would go bankrupt. I predicted it two months ago a whiting petroleum There was an audio podcast um end of january first week of february When I said that whiting petroleum would be probably the first oil company major US oil company to go bankrupt. I was warning people to stay away from oil stocks and um, there was a lot of other chart And call analysis chart work. Um, I'm also a fundamental guy So I do a lot of fundamental research um with the company's balance sheet and cash flows As people can probably tell from some of the stuff I was talking about during the interview So there's a combination of things behind the pay wall. It's only five bucks a month again I'm just trying to move a lot of the income that I was making before youtube censorship I mean my channel is not really growing anymore Moving that away from youtube And hopefully patreon doesn't censor me. If not, I have to come up with another plan Direct man. You don't need no middleman make a website. He can use a bunch of different software It's member mouse. It's a million different software plug-and-play. No coding necessary Well, I'm not very tech savvy. So I just focus on being a good financial analyst. That's all you need You don't need to be tech savvy. I'll help you out on that. That's a whole different After the show I will talk about it. But guys, uh, jason, thank you so much for sharing We covered so much today guys if you're watching this or listening this or wherever you Wherever you are go check out his channel Go check out his patreon. Listen, it's five bucks like five. That's like a it's like a cup of coffee now these days with inflation And uh, the the knowledge is crazy man I've been following jason for a while and it's just the depth like the girth and the depth of everything covers is insane Jason once again, thank you so much You're welcome. Keep up the good work, man. You're doing a great job too. Thank you