 This is Jeff Deist, and you're listening to the Human Action Podcast. Ladies and gentlemen, welcome back once again to the Human Action Podcast. This week we are in Vienna. We are coming off the heels of an event here in town sponsored by Scalarium, which is a private independent school here in Vienna which promotes Austrian economics. So in that sense it is very much like the Mises Institute in the U.S. It is run by our friend Rahim Tehizadegan, one of four co-authors that many of you will remember for a book we showcased on the old podcast called The Austrian School for Investors Investing Between Inflation and Deflation. He has a new book out, again with some co-authors dealing with negative interest rates and zero interest rates and the cultural effects of that phenomenon. In particular, talking to him offline, he suggests that the book is in many ways an elaboration of Guido Halsman's great book, The Ethics of Money Production. He featured that book in the past as well. So I know that many of you are going to be interested in our topic today. But first and foremost, I just want to mention that we had an excellent event in Vienna over the past weekend at the Coburg Palace featured Hans Hoppe. We were commemorating the 70th anniversary of Human Action. There was also an award given to Professor Hoppe, the Roland Bader Award. Lou Rockwell has received that in the past. And the man behind all of this is Rahim who has really put together the brain and the funding and the logistic support for what is in effect a very strong and vibrant working Mises Institute here in the home of Austrian economics in Vienna. So all that said, Rahim, it is wonderful to see you again. Welcome to Vienna. Well, it was an excellent conference. Just tell us briefly, we were talking earlier, offline your vision for Scholarium and what it should be and what it means. Well, Scholarium is from the old term for the university was the Universitas Magisturum at Scholarium. And so it's supposed to be what the university could have been but was never allowed to be. So a center of interdisciplinary understanding of what's going on in our world and understanding society and learning together. And that tends to be replaced by a focus on teaching and the certificates and curricula and nowadays safe spaces for not thinking, not being pushed to thinking, being prevented from thinking and understanding. And so we think it's a very important niche to somehow continue the tradition of very realistic down to earth social sciences of which the Austrian School of Economics is a very important part. And how do you feel the Austrian School is faring in Austria today? In today's Austria, how well-known are Hayek and Mises? Is this something where in the business world, in the banking world people are aware of their own birthright, so to speak? When we started 13 years ago, not at all. Hayek has a literary noun as the noble laureate. Sure. And then interest was increasing in 2007 and 2008 as usual with economic crises, people are looking for alternatives. And there seems to be an increase in interest right now which potentially isn't a very good sign about the state of the economy and society, I'd say, but still a good sign for the Austrian School. So interest is increasing and what's more important is not the quantity of people really looking into it, being interested in it. I think more important is the quality of the people that are part of, that we attract, I think, the brightest people that are still here, the best entrepreneurs, investors, but also some of the best social scientists, I'd say, who are taking an active interest in Austrian economics and that's wonderful. Well, the irony, of course, is that here we are just a few blocks away across the street from the University of Vienna, not too far from the Viennese Chamber of Commerce, all these places. I'm staying near a couple of Mises' coffee shops. They are, and for those of us who are so-called American Austrians, of course, it's exciting and interesting to come here. So we appreciate it, and I'm sure some of our listeners would enjoy maybe having a Mises Institute event in Vienna in the future and having more of us fly over to really spend some time here. Of course, you wrote a book called Austrian Economics for Investors, Investing Between Inflation and Deflation, and our listeners may recall that Rahim is also a principal in an investment house called Inkramennum in Liechtenstein. Just briefly refresh our memory on that book and the goal when you wrote it. Well, it's really bridging theory and practice and that I think was crucial in the original Austrian school. It was never just academics. It was always a mix of academics, entrepreneurs and investors and the bankers of the time. So that's what we try to do. It's make practical investors understand the value of theory while at the same time try to apply theory, the current events and current financial markets and show how they can be used not only to understand what's going on in the markets but how even advice for investors can be deduced from that. So we discovered quite a lot of wisdom and insights within the tradition of the Austrian school which are very relevant for day-to-day investors. Well, of course, you and I both get this a lot. The big criticism of the Austrian school too theoretical. What's the practical application? Of course, people also want to know if you can't time the booms and busts, what good is it? That's sort of the devil's advocate critique. Yes, yes. I think it's crucial to know what you can't know and the Austrian school helps a lot. So even if you know that you can't time, of course, you can apply that insight and it's important insight and that's all about that. I mean, realizing what you can know, what other people can know and how you apply that to investing and I think those are some of the most crucial insights. They lead you to certain mix of portfolios, lead you thinking in scenarios and really try to look into the consequences for portfolios by different scenarios and try to remain liquid when no one else is. So your new book is called Zero Interest Rates. Tell us about it. Why did you write it and what's the goal behind the book? Of course, in the European Union, the ECP has already gone to zero interest rates, something that had most likely will go to soon or next. And what we wanted to look at is not only describe this new normality in monetary economics and what it means and how it's got there, but also see at the consequences. And I think those consequences are overseen to a very large extent. The economic consequences are more obvious, but even those aren't really seen and discussed as they should. What's more important, more profound is that the more we looked into it, we've discovered a lot of social phenomena and political phenomena of our times are quite related to monetary politics and are in a sense aggravated by this kind of monetary policy. And that's what really drew our interest. And I think that's the most original part of our book, is really the most comprehensive and detailed analysis of the social, economic, and political consequences of this kind of monetary policy. And of course, then the question of where this monetary policy is heading and what it means for society and the economy. Well, it's a big question. I mean, it might be the biggest unwritten story of our times. Now, you mentioned that negative interest rates are probably coming to the United States. Alan Greenspan has said as much, they're not here yet. But I want to talk about the idea. I mean, have Europeans really grasped this? Because it hasn't come down to the retail bank deposit level yet. This is in the form of both sovereign and corporate debt that is yielding negative interest. No, right now it's reaching retail deposits. Because people talk about, for instance, Germans being famous as savers. Psychologically, how are Europeans going to respond to this? Once we reach negative nominal interest rates at the retail level, of course, that increases the pressure on trying to invest in wealth assets. But most people are reluctant to do so. And particularly in Austria, but to a lesser case in Germany, people are reluctant to engage in the financial markets. They tend to be conservative. They tend to be afraid of the volatility in the markets. And I think it's not too irrational to react to that. It has also prevented those places from some of the distortions that you have in the markets right now, I'd say. So I think we'll see, of course, people shifting into cash and other cash-like assets like gold, even potentially it'll be good for cryptocurrencies and so on. And when people move into cash, which is already happening, I know entrepreneurs who are withdrawing money and really having big cash deposits in safe places. And that way, of course, you escape the nominal negative interest rates. And that's why the ECB has already discussed the length, how to react on to that. And there's a paper proposing how to impose these kind of negative interest rates by artificial exchange rates between cash and digital money or by going full way and producing kind of central bank digital currency and so on. So they tend to see that there's a problem. And the problem is more psychological, is that once people go the whole way in withdrawing from the banking system, that of course is a show of distrust and it may catch on, it may even become a domino effect. And of course, the banks are under a lot of pressure under these zero interest rates, low interest rates surroundings. So that might just kick, you know, final kick for some of those banks. So that's I think what we'll see a moving to cash and there's quite an awareness that there'll be a challenge. So in Austria, even the politics has reacted in a way under popular pressure to ensure by law that cash will remain to be used. Right. But isn't it possible to start removing large bills from circulation? The ECB could just start pulling 100 euro notes or whatever it is and make it very difficult to have much in cash? Yes, that it could do. Of course, I don't think that that's too likely because at the same time, that's really a psychological push and most people here aren't ready to go fully without cash. Now, of course, I mean, if you're a young digital native, there's no problem with that, but we tend to have a very high turnover of cash. So if it's a very drastic break with that tradition by law or by really withdrawing banknotes from circulation, I think they'll push the movement to distrust not only banks, but the political authorities, the central bank and so on. And that's, of course, what they are afraid of. So they try to... And it's, I think, what's all monetary policies about right now to don't push the psychological triggers too much. So it's a kind of like behind the facades trying to be creative in a way. And I think that's dangerous, of course, because it's under the surface. You want to increase the temperature of the water slowly. So that the frog doesn't jump out in a way. And that's what we're trying to do. And that's why, unfortunately, since we're living in interesting times in monetary economics, and Ms. Lagarde, who is now heading the ECB, is a very bright person, but tends to be of the creative sort, which means she's really thinking about how to continue that kind of direction of monetary policy in an innovative way, which means in a way which most people don't realize what's going on until it's too late. Now, do you think she's an ideologue, a true believer, or do you think she's more of a technocrat who just wants to sort of kick the can down the road? Definitely. She's a technocrat. She's an opportunist that we know from her engagement in French politics. There's a letter revealed that she wrote to Macron before. She's like, I'm really a technocrat who wants to make a career. But she is, of course, as a technocrat, she's a priceless competent person. So she knows a lot of what there is to know about the current levels of monetary policy, and she will continue this technocratic way of do everything it takes to steer this kind of broken plane that current monetary policy is. Because, of course, it's not working, and the whole theoretical premise is flawed, but still it seems that there's no alternative, and that's what technocrats do. If there seems to be no alternative, they just try to push the levers and keep it going as long as they can. What's interesting to me as an American, obviously there's a lot of cultural diversity within the eurozone. So in Sweden, virtually everything's cashless. I've noticed to my great pleasure in Vienna there are a lot of places that are cash-only. There seems to be much more of a cash-centric society here, but yes, it won't be so simple to do away with and make everyone pay for things with their phones. Right now, about half of all European sovereign debt, something like 5 trillion US out there, trades negative. Something like 20% of European corporate debt, something like 12% worldwide debt, which is both European, sovereign, Japanese, corporate in both. So who's buying this 12 trillion in negative yielding debt? Institutional investors, central banks? It's certainly not individuals, presumably. Individuals as well. Individuals are pushed by their banks, basically, because once you have certain negative interest rates, once you reach a certain amount in your account, you get a call by your bank and they tell you politely that you should do something with that. There are even like limits. I've been called if there's more than 100,000 euro on some accounts, it's impossible. You need to move it to another place. You can have more than 100,000 on that account. And then, of course, there's just either you take risk and if you don't want to take risk, you buy a sovereign debt. It's like it replaces, basically, bank accounts and deposits. So it's the modern way to have a deposit. It's not really an investment. I'd say it's just a way of hoarding if hoarding is made impossible by monetary policy. And a very odd thing is that one of the best performing assets in the last year was the 100-year sovereign debt by Austria, issued by Austria, which is of course a very absurd idea to have for 100 years. Such a low interest they're offering right now, which is absurd, but it's absurd as an investment. It's not absurd if you realize that it's really, that's where modern monetary theory wants us to go. It's basically central bank money, because the central bank is monetizing all sovereign debt. It's basically issuing a guarantee. It's like a bank guarantee. And that's what has been happening since 2007-2008 that basically there's a central bank guarantee for all kinds of sovereign debt. So if you're a saver, if you're saving sooner or later, you reach the level where you realize, oh my God, even just to hold cash that nowadays means I got to buy sovereign debt if I like it or not. And then of course people are happy about the performance as well because the more people are pushed into those kinds of assets, the better development of the courses, of the prices of those instruments. And of course you know what you're losing. You lock in the rate of your loss. So uncertainty is reduced. Yes, yes, in a way, but it's not really about the interest. So it's not an investment. It's not like a dividend. It's just holding it. And the same happens in the stock market. It's not really about the dividends. It's just holding on to something that's carset than money that's produced. So I think that's the main point. It's really hoarding papers which are more limited in a way than the digital central bank money that's produced. It's the exponential lengthening of the balance sheets of the central banks. So while the ECB has actual nominal interest rates on reserves at the ECB and in the U.S., the Fed funds rate is still positive. It's 1.75 percent interest on excess reserves, which the Fed pays to on bank reserves is still positive as well. But if you believe, as I certainly do, that real inflation in the U.S. is tighter than 1.75 percent, in effect, we have negative interest rates of assets. Yeah, definitely you have real negative real interest rates and we've had that for a long time. And the difference is not this big. It looks as if the difference was large with the Fed being able to increase interest rates and that of course is seen in the EU and by the ECB as a potential upside effect they say, well, look at the U.S. It's possible to reduce this outstanding liquidity, but I think that's really a big misunderstanding of what's going on. I think the main reason that the U.S. looked better than the European Union was for errors happening within the European Union is like the saying goes, among the blind the one-eyed is king and I think the U.S. for a while seemed to be more one-eyed because we have some self-imposed blindness in the European Union, particularly by its elite and you see it in the direction to the Brexit where really like risking a fallout with one of the most important economies of Europe, the U.K. and it's really as colossal damage that's happening there a very short-sighted interest instead of just like understanding where the British are coming from and where they'll be going and still remain friendly and open their all kinds of potential I believe you have created and then most crucially, I think the typical reaction by the EU leads to seeing of course that they are problems and they are challenged by those problems and one of the most important efforts they've done was to persecute what they presume the problems of tax evasion in the EU so they're really afraid of like people withdrawing money and moving away with their assets as a kind of we don't have capital controls yet but they're afraid of like people moving out of the high tax countries in the EU and we obviously have a big brain drain happening right now it's a big brain drain from Germany and France in particular Austria to a slight extent but as well happening was this brain drain means like best entrepreneurs, investors particularly young among them tend to leave those countries and they are leaving with their assets if they're able to and what the EU elites try to do is to really push down hard on this kind of offshore banking and what they've created without I mean really stupid pressure they build up what they've created in the end and the last remaining tax haven in the world is the United States so I think that's one of the main big advantages for the US compared to the EU so the EU has really improved the situation for the US I think that was the reason why there was a move of assets into the dollar and I know I mean most companies created offshore now are LLC companies in the United States because of course the US is one of the big cheaply blocks that you can't force to reveal all kind of data about their citizens so that's the reason that has happened and I think that shift in assets wasn't really like a sign of the US economy showing any kind of sustainable recovery or anything else I was really just self-imposed blindness by the EU elites and self-destruction of wealth, capital and industries within Europe and that somehow made the dollar look much better in the short and medium term and I think that's the reason but now we are seeing and realizing that there was no sustainable economic recovery within the United States and we see that the central banks I mean we have no alternative to just continue what they've been doing and we've seen in the repo markets recently that there is no sign that they can just go on and withdraw liquidity from the markets to the opposite they have to even just keep it going and continue in checking liquidity, continue quantitative easing and obviously there's political pressure as well I mean if you stop that kind of bonanza obviously there'll be drastic reactions on the markets and that of course isn't the best circumstance to be reelected wherever you're coming from and as I'm sure some of our listeners know in just the past couple months with the repo liquidity offerings from the Fed they've undone a significant amount of the tapering of QE which they supposedly started a couple of years ago it's interesting that you bring up the artificiality of money flowing into the United States as the least dirty shirt in the laundry as we say but of course this also affects in other words a 10-year Treasury note is still positive it's 1.75 compared to Euro debt there's an artificial market created for US Treasury debt that I think gives us a false impression of the market for that debt and also the overall health I think without the virtual guarantee by the Fed for its kind of assets I mean if the rest of the world were to look at the United States and our debt and entitlement promises and our future and our balance sheet and our income statement and say and then Congress politically they'd say this country is never going to its act together and if I'm going to invest in its debt I need junk bond rates that's what would happen in a rational world you know earlier you said that individuals in fact do buy negative yield debt but there's also institutions and banks that buy that sometimes they're required by charter a certain amount of let's say Swiss francs or bonds from a particular country so when a bank but even an individual when a bank calls them up and says well we have 100,000 euro limit or something like that I mean that's not a market for negative interest I mean these are machinations which are causing people to buy these this isn't the market of course what you just mentioned is quite important in the EU I mean the sovereign debt is considered one of the most conservative ways to invest and there was some truth to it and before it tended to be not correlated with the stock market right now of course that has changed so it's really an artificial asset class right now and it's highly correlated with the stock market and that's part of why we talk about everything bubble right now but of course laws don't change when reality changes so you're still, you're legally obliged as a pension fund and so on all kinds of institutional investors all kinds of banks who need to remain liquidity remain liquid and have liquidity you have no alternative no legal alternative to sovereign debt and of course Austrians argue that interest rates represent a meeting of time preference between a saver and a borrower and so interest rates can never be negative some of our friends I'm sure will guard I'm sure Paul Krugman dispute this but what we have to understand I think here is that they don't really believe that there are laws of economics in other words economies can be commanded by legislative fiat by central banks and these things can just be imposed yes yes that's something Böhm-Bawerk had realized a long time ago that is basically power against economic law but power of course in the short term and medium term is powerful so it seems that they've been right for a long time and they may continue to be right for quite a while now one thing that's interesting about the ECB and the Eurozone is that there is still this tension between one currency one central control currency for all the Eurozone countries but yet they are still issuing their own sovereign debt we still have Greek bonds we still have German bonds you know we have one dollar in a sense we have the same thing we have state bonds in the US but it's quite different I mean how does this tension work are there still profligate countries and conservative countries do the Germans still sort of feel like the Greeks are taking advantage of that these kind of tensions that I always thought the ECB made worse not better yes definitely I mean the Euro is a political project and it was a project to unify the continent but of course the opposite is happening and that's the same story with almost every government intervention where you have power trying to replace economic law so the opposite happens of what you intend and then it's not obviously if they're really that stupid or some evil behind that of course I mean the EU was never so fragmented as it's before there's not only Brexit, there's many countries quite a reluctance and skepticism towards the EU elites and there's even talk about moving out of the Euro moving out even of the European Union among representative political parties so these tensions are very high and unfortunately these tensions then get the nationalistic overtone so in Greece we had of course they tried to portray the Germans as the Nazis because they're imposing this austerity this austerity in a certain way and I think had quite an impact on Merkel who is the opportunist by definition and I think this kind of migration policy that she imposed in other countries was in a way a reaction to these kinds of tensions and perception as the Germans as being too austere, too strict and in a way the fascists of the continent and there you see without understanding economics and politicizing all those things you create tensions and we see that on the national level and I think a lot about the political polarization that's happening in Europe can really be explained to a large extent by monetary policy we were speaking earlier offline of the rural versus urban tension particularly in Austria where Vienna is truly the only big city we see this in the UK of course there's lots of cities there we see this in Germany but in Austria the average Viennese feel about Brussels I mean it can't be any better than how they feel about Vienna well the average Viennese is part of well let's say the influential average Viennese about which you read who is publishing potentially is part of the urban elite and of course he's very thankful for this kind of cosmopolitan liberty he or she thinks the EU has made possible that of course is a very short-term memory in history because passports are fairly recent invention in the continent so it's just like after the second world war trying to open up again what was normal before of course and then we had the experience with the iron curtain here in Austria where our sister cities were really separated from us and so that's a profound influence on the thinking of the Viennese who are of course happy they can go to Pratyslava and Prague and Hungary and so on now without crossing borders without stopping even the car and so on but it's a wrong attribution to the EU because it's something that would have happened anyway it's not even the essential part of the EU because the EU is a continuation of course we had the economic union before and we had the sense of trying to get together on a national supranational level which of course makes sense you want to open up for trade you want to maybe even have common standards you need to have common standards for railways and so on but you don't need a Brussels lead imposing that from the pot because it's something it's obvious even from the bottom up getting there but the Viennese are not typical for the Austrians I'd say and that's the urban rural divide and I think one major reason for the urban rural divide is of course the Kantillon effect that the monetary policy starts in the urban centers the financial centers and that really leads to different interests of the classes on the countryside among the last recipients of that created money so a lot of the people here living in Vienna are not really productive entrepreneurial sense so I want to advise if you want to have create income as an entrepreneur to move to Vienna if Vienna is a great place as Paris but Vienna is of course much higher quality of life if you have wealth if you don't need to generate your income here if you're just here for spending that's wonderful place to be but that's a large part of the population of course recipients of transfers but what's more important is the unseen transfers that are happening to the monetary policy and that is of course that the whole production structure shifts away from a market economy I think the definition of the market economy by Ludwig von Mises is a very profound insight he compared it to a kind of dollar or cent democracy and maybe misleading to term it that way but what he wanted to express is that it's basically a decision of the consumers and the savers by their individual decisions that determine the production structure and of course the monetary policy we have right now is moving away rigging this kind of voting mechanism so the production structure represents less and less individual decisions it still rather represents consumers decisions but the saver is like kicked out of the game and really what Keynes maybe predicted the way he made it happen as we always have in economics if the model and reality don't match the worst for reality because power is influenced of course by bad economists and bad economics so Keynes wrote about the euthanasia of the saver and that's what's happening so the saver in a sense is like buying out in the markets as a voice so it's a consumption oriented place and that are parts of the Keynes economy that are thriving still tourism and so on and then you have a whole new field in the production structure which is not really related to any investment or saving decisions it's subsidies it's what David Kraber calls the bullshit chops of course he has no clue about sound economics so he doesn't really see where they're coming from but those are basically of NGO style but not really NGO bodies and institutions and pseudo companies doing things which don't really have value in the long term because it's not the choice of savers no one would ever invest his own money in those things that are happening but they are happening anyways and they provide chops for short term and I'd say a lot of the we and ease of today are in those kinds of bullshit chops which are either really like close to the city administration but we have a huge aura around that pseudo companies and pseudo NGOs and stuff like that which do cultural artistic things educational things no one really cares about no one would really go for if it wasn't highly subsidized and so that's the way it happens in Vienna and of course in other places it tends to be worse but still on the countryside we have real people doing real work hard working people of course are within the misallocations misallocations of the production structure and the monetary system but still there's a kind of impression that they are losing out and if they compare themselves to the urban elites it's hard for them to understand that you have a hard working craft man and he compares himself to the sociologist living in Vienna and being employed in some kind of bullshit project of course you tend to have a tendency to react against those kind of elites and ask yourself what's going on there is a big con game what are they doing in the cities and of course part of that is misunderstanding that even be like anti-intellectual anti-city sentiments but you can't separate that he's deplorable yeah you have to term deplorables right and that's how then the urban elites of course see those uneducated unwashed masses but the problem is they are not really an elite in a productive sense it's not an elite not in a natural sense it's so difficult to trace all of these non-economic jobs that perhaps wouldn't exist absolute monetary policy it's very hard to trace and connect and that's the reason why it plays into this and I worry about that you talk about farther away from city centers and monetary centers I live in Auburn, Alabama and we have an absolute building boom going on condos everywhere in my town I think Auburn, Alabama is pretty far from New York City and Washington DC maybe I should be worried I think I'm at that tail end of the high water mark of the boom that you're bringing up but I want to talk about the cultural impact of zero interest rates or negative interest rates which is what your new book is about so give us the English subtitle for the book it's about the zombification of society we change the subtitles even the noise by heart it's the zero interest and then I think it's about we change the subtitle to make it more relevant for the U.S. audience and how the fat I can give you the detail in my mind how the fat won't be able to help itself going the same way the ECB is going so that's basically what can you learn from the European experience so far in monetary policy and what does it mean for the U.S. and what to expect but a large part is really detailed analysis of those cultural societal is hard to trace questions and trying to see the real phenomenon what's happening right now, what markets look like how people behave what chops they are having and trying to look at those hard to trace dynamics behind it David Sackman points out that when we have a rigged Fed funds rate or a rigged ECB reserve bank rate we don't know the real price of anything so you're talking only about Bolshevich University of Vienna how many of them do we need and how many farmers do we need making cheese, we don't know but we know we have too many one I don't know if we have too few of the other so what are some of the cultural consequences I think a lot of our listeners have read Gido Halsman's book I think it's a money production if you haven't please email me, ping me to get yourself a copy it's a pretty thin book Rahim's new book is being translated in English and German so we're going to be selling that at some point soon in the Mises.org bookstore so we think about the cultural impact on lazy government when governments are able to monetize debt and democratic voters want lots of stuff now, sure, give it to the mass we see how that corrupts government but culturally and socially how do zero or negative interest rates affect us of course obviously it's short termism that we'll see but it's not as easy as that because it's not really what one would expect is that you really have people now living in the moment and enjoying the consumption possibilities they have and that's not really what we're seeing long term it's a kind of stress for short termism that's happening and of course it's a quite complicated economic explanation behind that and we try to trace this kind of short term hedonism happening at the same time kind of being stressed out and these kind of shocks or unequal devaluation that's happening and that's pushing people and in particular the young of course are seeing with the asset price inflation that is getting more and more difficult to set yourself up in a typical lifestyle having your car, having your home and so on and just financed that by being a hardworking person and we see phenomena like that everywhere so we have a kind of artificial stress on people which is not due to their own decisions to be like saving and prudent but they have a possibility to consume beforehand and then of course they feel the kind of pressure which they can really understand where it's coming from and a lot of it is coming through this kind of devaluation of pressures that are happening and to cope with those pressures we see a lot of interesting social phenomena which we call deviance phenomena where even like middle class sell people go for things that tend to be at the fringe of society like they imitate against the styles, tattoos are exploding in a way and we try to understand those exaggeration of social trends and we can learn a lot from Japan of course totally different culture but we can see how monetary policy there has exaggerated some of those of course only in the cultural context of Japan to be understood but very similar style like phenomena that we see in the west so we try to build on that experience that we can have by really observing Japanese society what's happening there and there of course we see a big cultural patterns emerging like particular very odd industries in Japan it's a whole branch of this kind of platonic prostitution you have happening you have people who have jobs as actors playing out parents ideal parents and they are hired for that and that of course only happens in Japan in a way to the peculiarities of Japanese societies but there are lots of things interesting little seem to be anecdotes but they are happening more frequently so people are asking what's happening there is really liking the society going on the train it's going on there and then you have the powerful counter reactions to that of course as well and I think some of that is behind the left right split which of course tends to look like a cultural war even right now and I think this cultural war aspect is due to the accessoration of some potential cultural patterns which are in a way evolved safety valves for the pressure that's built up by monetary policy and there's ways of people coping with those pressures and one of the way of coping with it is kind of conspicuous consumption we see in hyper morality it's like people really in a way consuming virtuousness by signaling as it's called virtuous signaling in English I think it's a misnomer because it's not really like signaling from evolutionary theory it's something more complex or odd in a certain way but I think phenomena like that are closely linked to the accessorations produced by monetary policy and then you can see if you compare what a society would be like if it really had very low interest rates and then you see of course the imposition of intervention as usual the results by intervention are paradoxical the opposite of what you'd expect in a low interest rate society and by seeing this mismatch you can understand a lot of the pressures and how they would work it's their way through society and that helps us to explain a lot of current phenomena which you'll see if you're following like social media bubbles and so on and you understand how these kind of bubbles those bubbles emerging are not really just due to social media they are really there on a more profound level it's things happening faster than they would happen on a natural scale and people reacting to those things and then people reacting to the people reacting onto those things and I think these kind of dynamics explain a lot of the atrocity in the political discourse that we are seeing and in lifestyle decisions so we look a lot into lifestyle even fashion and so on and try to really analyze this detailed phenomena and how they may be linked not in a causal not in a monocausal deterministic way of course we're not claiming that monetary policy explains everything we want to see what is it densifying exaggerating and how are people reacting to that understanding that they are not understanding the economic background of why those things are happening and we've realized that you can really explain a lot by doing that and I think that's the value of the zero interest trap the book we've written together and of course the Japanese have been at this since about 1990 so we have several decades there and one thing that is definitely infected the west via Japan in a sense fewer kids lower birth rates there's no question about that now when you bring up the ideas is interesting to me of a middle class guy maybe adopting the look or the jargon of street culture sometimes the middle class guy will also go the other way and even though he has a middle class income he maybe buys an Audi or a Mercedes on credit when he should be buying a Ford or a more modest car so it works a lot of different ways of course I mean those are the more obvious ways of short termism of capital consumption and so on but what's really interesting is the more complex paradoxical things which you don't see on the first order analysis and on the second or third order analysis well realistically when when might we expect this book in English pretty soon I mean it's translations finished so I think maybe next week oh okay okay so ladies and gentlemen we might have that by Christmas even New Year's in English so final question for you you know what can average people do this is sort of where the rubber meets the road I'm sure everyone asks you this and I'm sure some of your answer involves precious metals or cryptos or whatever it might be but but beyond that give us your thoughts the most important thing is to reduce of correlated risk is like having everything in the same basket and in Europe it's quite common that you earn maybe you're a bank employee and you earn all your money by being an employee for the bank in Euro and you keep those Euro at the same bank in yours as deposits and there you can see of course you have kind of lumping together of risks and that makes it very fragile as a person and that I think then add to that that you're probably in debt in Euro and that of course I think explains a lot of the cowardice of the middle class and not daring to like really react to the more lunatic things we see happening and politics right now at the universities and so on so try to of course increase your portfolio and that of course try to reduce currency risk foremost and of course for someone in the US I won't have everything in dollar assets so you try you need to increase this kind of range and then of course you have that's the first thing to reduce those risks and that's the hoarding part I'd say and then you'd go for the permanent portfolio approach if you don't have the time to really follow markets and have your own more entrepreneurial decisions which of course you can do if you say no I'm just a simple guy I just want to reduce this kind of agility then of course that's one of the main parts of our last book the Austrian school for investors in looking how to really set up a kind of portfolio which takes least amount of thinking and active management but still somehow set yourself up in a way that you're not to not 100% affected by the cyclical patterns we see emerging and I think it becomes more and more important to the high and historically unprecedented level of correlation between asset classes and of course then you look for uncorrelated asset classes and precious metal play a role in that crypto credit play a role in that I think that's one of the reasons we've seen the crypto thing is because people are really looking for uncorrelated assets and looking everywhere on a worldwide level and that's of course maybe one of the more entrepreneurial uncertain answers to that kind of quest and of course no one has the crystal ball and can tell you what in the long run will be an uncorrelated asset but that's the way a bit shifting your mind view from the just performance and to look at the correlation of the assets in your portfolio and your portfolio of course is much more than just what you have money it's your career decisions it's your life decisions and so on and if you look that through look for correlations and how you can reduce them and set you up in a less fragile way Well Raheem that's I think that's excellent really appreciate your time today and we will provide a link ladies and gentlemen to the podcast both to his current book and his new book so you can get them for yourself so thank you so much Raheem Thanks a lot The Human Action Podcast is available on iTunes, SoundCloud, Stitcher Spotify, Google Play and on Mises.org Subscribe to get new episodes every week and find more content like this on Mises.org