Inflation, Debt, and the Dollar’s Fate: Peter Schiff’s Economic Forecast

Speaker 1 0:00
Powell is cutting rates, because the government needs lower rates in order to finance the debt. And not just the government. I mean, because rates were so low for so long, we have an entire economy and financial system that is built on the foundation of extremely low rates. And if that foundation goes then everything that we’ve built on top of it collapses.

Anthony Scaramucci 0:30
Joining us now on speaker with Anthony Scaramucci, the legendary Peter Schiff, he is the founder and CEO of Euro Pacific Asset Management. He’s a best selling author. I’ve read several of his books, by the way, all of which are incredibly well written and a lot of things that Peter has said in these books over the last several decades. It’s actually come true. We are the intellectual lots. In the Bitcoin situation. I will point out that about a year and a half ago, I debated Peter, I think it was on intelligence. It was a London based debate, gold versus Bitcoin. I lost that debate. And so I just want to point that out to people. And so we’ll talk a little bit about that. I know, Peter enjoys the fact that I lost that debate. Well,

Speaker 1 1:18
it’s, it’s just based on the audience. So you know, as far as far as the Bitcoiners are concerned, I’ve lost every Bitcoin debate. So that would

Anthony Scaramucci 1:27
include I’m in the Bill Parcells camp, you know, we let our records speak for ourselves. So I was obviously a Dodge in 2022 seem to be more of a genius right now. But who knows what’s in store? Maybe you know better than me. But I want to, I want to start with a couple of things about you. I think you have understood the debt cycle, frankly, about as well as anybody. And this is a deep dive show, Peter. So I’d like you to tell the audience out there about the debt cycle, what’s going on with the United States, how we went from $7 trillion of debt just 16 years ago, to $34 trillion of debt. And with 6% of our GDP going to the debt, now we’re deficit spending is 6% of our GDP. Where could that go? And when will people start to care? Because the your of the theory, just to paraphrase really briefly, for our audience, that at some point, you know, nobody cares. And then all of a sudden, they have to care because you’re in the middle of an Armageddon, like crisis. But please tell us your thoughts on this stuff. Yeah, well,

Speaker 1 2:40
I mean, I’ve cared about it for a long time, because I know how it’s going to end up. And so I’m concerned about the ultimate consequence of what we’re doing. But the politicians, they’re just concerned about postponing those consequences for as long as they can. They don’t really care, ultimately, what happens to the country. They’re more concerned about what happens to themselves, you know, in the moment, their political careers. But I have a bigger concern with with these, you know, with these problems. But, you know, the reason that we have so much debt, and it’s now closer to 35,000,000,000,030 4 trillion, is because we’ve been able to get away with borrowing it. And we’ve been able to do that, in large part because we’ve had a complicit fed that has monetized this debt, and has kept interest rates artificially low, including the rates we have right now. I think the rates are still too low. And now Powell is going to be cutting them not because inflation is back to 2%. It’s nowhere near there. And in fact, it’s headed much higher. But Powell is cutting rates, because the government needs lower rates in order to finance the debt. And not just the government. I mean, because rates were so low for so long, we have an entire economy and financial system that is built on the foundation of extremely low rates. And if that foundation goes then everything that we’ve built on top of it collapses, which ultimately needs to happen, you know, we have to let this phony economy collapse so that we can replace it with something viable, and that could last longer. But it’s not gonna happen. And the other reason we’ve been able to get away with this and probably even more so than the Fed is the dollars role internationally as the primary reserve currency and the willingness of foreign central banks to hoard dollars and foreign entities companies to transact in dollars. even when they’re not buying products that were made in the United States, and so we’ve created a large external demand for dollars, which has enabled us to run trillion dollar a year trade deficits. No normal country could get away with that. But we’ve been able to do it. And so we’ve been able to export a lot of our inflation. I mean, as bad as it is, it is, it’d be so much worse if we didn’t have these trade deficits. But I think that we’re getting close to the point where the world is not going to go along with this anymore. And I think you can see that in what’s happening with gold purchases by the central banks, particularly the central banks, of the countries that enjoy the largest trade surpluses with the United States, they’re the biggest buyers of gold. And I think they are preparing for a post US dollar, a world where America is unable to run these trade deficits, and therefore, we’re not able to function in our current form, and we’re not going to be able to have the low interest rates that we’ve enjoyed, we’re not going to have the low consumer prices, even though the prices have gone up a lot in the last few years, they’re still a lot lower than they otherwise would be. Absent the dollars status in the world, I mean, dollar loses that status, and it’s going to collapse against these other currencies. And that means prices are gonna go up dramatically.

Anthony Scaramucci 6:33
Okay, so listen, we’re in the same camp on this, I’m very worried about it. I don’t understand how we can sustain it. I’m going to be the contrarian here for a moment, I’m going to ask you to respond to the following things. Over the course of human history, we’ve had people say, Something bad’s coming, and then it doesn’t come. I’ll give two quick examples. One is Thomas Malthus, he basically said we were going to run out of food, the population was growing faster than we could produce food. The technology made him wrong, Peter. And so we had all this induction of fertilization and irrigation, we have more people dying from obesity related disease than we do from starvation. A second thing, and you and I are contemporaries, we had Peak Oil theory. Now that was the mid 80s. People said by the year 2010, we’d be running out of oil. Again, technology bailed us out. And so the first question I have is, Can technology bail us out and things like AI and productivity unleash a tremendous, more greater than expected growth so that we can out pace the deficit spending? And then the second question is related to China, I think you and I, as I listen to your interviews, I’m worried about China, they feel like they’re also in a debt crisis, they feel like they could trigger some deflation at a global deflation at a moment when the US is monetizing debt and creating inflation. So the first question, technology, what’s your response to that? And then what do you think of the situation in China? Are there any black swans that could come out of that?

Speaker 1 8:19
Well, first of all, I mean, technological advancement has has been helping us all along. I mean, imagine where we would be today, if we had all this debt, but we had the technology of the 1960s, or 1970s, if we hadn’t come up with all these advancements, it would have been even more difficult. And so everything would have probably collapsed. even sooner. So yeah, you have the ingenuity of individuals in a, you know, relatively capitalists, you know, economy, innovating and producing, and helping us to absorb all the damage that’s being done, you know, by governments. And, yes, I mean, AI, robotics, the combination of those two, potentially, could really increase human productivity. And yeah, that will help. Now, clearly, if we didn’t have all the debt, we’d be much better off, right? Because we’d have all that technology, and we wouldn’t have this debt problem. So if you’re saying, will the technology prevent a crisis? But even if it does, it still robs us of a lot of the benefits that we might have had that instead simply diffused a bomb that was gonna go off. But, you know, I don’t think that all of these benefits from AI are necessarily going to fully mature and deliver their potential in time to spare us these consequences. I think if you Look at where the debt is, it’s already spiraling out of control right now, where, you know, we’re almost adding about a trillion dollars a year. I mean, it’s a quarter to the national debt. You know, they the government came out with their February spending numbers last week. And spending is 50%, higher than it was in February of 2020, which is the last pre COVID February. And so government has grown by 50%, in a four year time period. I mean, that is enormous. And the trajectory is increasing. And, you know, the Fed is already doing exactly what I said it was going to do, I mean, it’s ignoring evidence that inflation is still a big problem, and is going to get worse, and has called off the rate hikes, and is now signaling an end to quantitative tightening, which is really a precursor to a resumption of quantitative easing. And so the inflation problem is about to get substantially worse, even though it’s already been bad. And so this, I think, is going to accelerate a currency and sovereign debt crisis that I think will come too soon, for, you know, the benefits of AI to somehow render all this debt payable. And you know, you have to remember to it’s, you know, the AI is not just America, I mean, the whole world is going to benefit from this. It’s not some uniquely American phenomenon.

Anthony Scaramucci 11:34
So I’m going to put my Keynesian hat on. I’m John Maynard Keynes, why wouldn’t the government just print or create a $37 trillion dollar coin? And just pay off all the debt and just tell everybody, hey, all your debt is now paid off? And our balance is down to zero from a deficit point of view? Well, I

Speaker 1 11:58
mean, that’s basically default, it’s there’s no difference. And if they did that,

Anthony Scaramucci 12:04
but aren’t we gradually defaulting isn’t? This isn’t this like a slow motion demolition right now of the

Speaker 1 12:11
fight. But if we did what you just suggest, then it would almost amount to a, a default right away, like, because we would destroy the value of the dollar, if we were to print if create such a coin, and claim that it had that much value. So we would all of a sudden put, you know, trillions and trillions of dollars into circulation with no ability to ever withdraw them. You know, I mean, the Fed would not be able to suck up that liquidity, it would be a permanent increase in base money supply, that would crash the dollar. And so, I mean, yeah, I mean, I mean, that is the problem. And you know, and we don’t even have to do the coin, right, we just print up enough money, as long as the Fed goes along with it. Right. The Fed has stuff asked to participate. But yeah, I mean, we could do what, you know, why Mar Republic, Germany, did you know with Zimbabwe, or Venezuela? Sure, we could do that. But I mean, that’s not?

Anthony Scaramucci 13:13
I’m not I’m not suggesting me. I’m just trying that. So that’s

Speaker 1 13:17
what that’s what $34 trillion? Coin is? It’s? Yeah.

Anthony Scaramucci 13:25
So I’m just trying to choose out of you so people can understand that calamity of doing something like that.

Speaker 1 13:30
Yeah, look, we eat we have to choose, do we want to destroy the currency? Or do we want to default on the debt? Because, you know, we can’t pay the debt without destroying the currency. So we’ve got to, we’ve got to pick the poison. Now, unfortunately, politicians tend to pick the poison that is the least damaging to themselves. And so I think they will always choose inflation and devaluation, over deflation and default, even though deflation in default is a healthier and better solution to the problems that we have. That’s not the choice that our leaders are going to make.

Anthony Scaramucci 14:12
Okay, but I’m gonna put you in charge your, your, your Tsar Schiff, you’ve been installed into the Oval Office. And the Congress has decided that in your infinite wisdom, you’re going to pass legislation pursuant to what you want. And so you don’t have to deal with the morass and tribalism of politics. list off some of the things that you would do to try to save the country from this debt crisis.

Speaker 1 14:39
Yeah, well, you know, I mean, I know you work with Trump for was it eight days? So how many how many days? Were you in the

Anthony Scaramucci 14:44
heat around me? Don’t get me out of that much. I might, I might say bring up on the 7% of my career away from it. It was 11 base brother Don’t 11 days all right. I know my feelings. I

Speaker 1 14:56
know I might hurt your feelings. I mean that you work with a maybe you still have a zero So I’ll tell you a few things. I don’t

Anthony Scaramucci 15:01
have as your I haven’t talked to him in almost five years, Easter Sunday will be five years, but he racked up $7.8 trillion worth of debt. And oh, yeah, you know, he was I was signing wild omnibus spending bills. Yeah, one after the other. And the Democrats are almost laughing that he gave them every single thing that they wanted.

Speaker 1 15:22
Yeah, I was very critical of Trump, while he was president, for doing that, for his spending, and, you know, increasing government, the last thing we needed was a Space Force, you know, we could, we can’t even afford the military we have. But, you know, to the extent that he wants to do something good with the second term that he very well may have. Because I do think the economy, which is lousy, is going to be even worse on election day. And so the worse the economy is, the more likely Trump

Anthony Scaramucci 16:00
usages think Trump will win. It’s gonna be, do you think Trump will win?

Speaker 1 16:05
I do think he will. I thought he was going to win the first time, I thought he was going to lose the second time. So I’ve been pretty good at it. And I think he’s gonna gonna win this time, I did vote for him the first time, I wasn’t able to vote for him the second time, nor am I able to vote for him this time, because I live in Puerto Rico. But what Trump needs to do, if he if he really wants to make a difference, if you want America to be great, again, for real, not just a fantasy where you pretend everything was great, but if he actually wants to do it, right, you know, one of the first things he needs to do is level with the American public about the position that we’re in, because there’s gonna be a lot of short term pain, right, a lot of austerity. And people have to know why they’re gonna go through it. Like, why, why we’re doing this. And, and, and they have to know that there’s light at the end of the tunnel, right? So he’s got to, like, have a heart to heart with the public, he probably can’t do that before he’s elected because they won’t vote for him. But once he’s in office, right, it’s hard to get rid of, but he

Anthony Scaramucci 17:15
can, but he’s not going to touch any of these entitlements. And him and Joe Biden, who said the entitlements are off the table, senior citizens out there, we’re, we’re going to keep pumping the Social Security and Medicare, he’s not your bait and switch the public.

Speaker 1 17:33
Now, there’s no money for these entitlements, they’re broke their Social Security is a Ponzi scheme. And he has to level with the public, the government never should have started Social Security. And for the reasons that, you know, apart from it being unconstitutional, it is a Ponzi scheme. And, you know, the current generation is left holding the bag. But if we don’t make serious cuts, I would rather than to say look, we’re just going to phase out. So security, there is no more so security is no more Medicare’s no more Obamacare. But we can come up with a transitional program to pay older people, some type of, you know, annuity stream, to, you know, help them get by, to the extent that, you know, they’re, they’re destitute, because the government squandered all their Social Security money on on spending, and it’s gone. But I think we have to means test it, and not just based on income, but based on assets. So if you’ve got a lot of assets, you can’t just leave them to your kids, you need to sell them and spend the money. You can’t ask other people to pay for your retirement, just so you can leave assets to your kids, right, because a lot of people were paying these social security taxes, don’t have any assets. Any social security today is a transfer in many cases, from the poor and the middle class to the rich, and the poor, and the middle class can’t afford to pay the bill, nor could they afford to pay the much higher bills that are coming. If politicians intend to keep these commitments to my generation, the baby boom, the generations that come after are gonna get clobbered with massive increases in the payroll tax. And I don’t want that to happen. So we got to have that discussion. We got to get rid of these things. The money is gone. No one’s entitled to anything. It’s a giant welfare system. That’s that’s what it is right now. So we have to have a means tested way of taking care of people who unfortunately, but for Social Security would have nothing. But the only reason people are in this position is because the government tax them so heavily while they were working. If there was never a Social Security, then people would be in in better shape, but I want to get rid of a lot of taxes, I want to get rid of the income tax and the payroll tax. But to do that, we need to get rid of most of the federal government. And that is the bigger conversation that we need to have. Most of the things the federal government does should not be done at all, or should be done by the states or local governments. So the federal government has to start getting rid of agencies and departments, slashing the payroll, and repealing all sorts of regulations that have been inhibiting, you know, our freedoms and our prosperity. You know, ironically, the Justice Department today is filing antitrust charges against Apple. And, you know, I would repeal these antitrust laws, you know, I use Apple products, I’ve got no problem with those products, if I don’t like them, there’s other products I could use. But they’re going after Apple, because they’re claiming that Apple’s monopoly power is causing consumers to pay higher prices. I mean, come on, it’s the government that’s causing everybody to pay higher prices for everything, by creating all this inflation. And by imposing all sorts of regulations that dramatically reduce the efficiency of businesses, and all the added costs are passed on to the consumer. So we need to dramatically shrink government to restore freedom and prosperity. You know, 100 years ago, the US government didn’t even spend 5% of our GDP, there was no income tax, there was no payroll tax, we were free people. And you know, we had an industrial revolution, you know, we became a very rich nation, we built the middle class, without all this government, it’s the government that’s been destroyed the middle class. That’s why husbands and wives both have to work. In fact, now they both have to work multiple jobs, just to get by, and they barely get by, because they got a mountain of debt. Whereas before we had all this government, one guy without a high school diploma, could support his wife and four kids without having to borrow any money and still save for retirement. So we need to have a more prosperous society, and we can, you know, we can build one, but we have to tear all this government down. And we have to, you know, we have to allow bad debts to default, which is going to happen, there’s you know, we have to let interest rates go up, because they’re much too low. And when interest rates go up, so that we can encourage savings, which we need to have a real economy, we have to allow businesses to fail, we have to allow that to go into default, we have to allow asset prices to come down, and some people are gonna lose money, that’s just the way it’s gonna go. But if we don’t do this, everybody’s gonna lose a lot more inflation is going to do so much more damage than, you know, what would happen if we did the right thing. Right? I mean, there’s there’s no way to escape the pain. But if we, if we deal with it on our own terms, there’ll be actually a lot less pain. Yes, it may happen sooner, but we’ll get we’ll get over it. And then we’ll have a much more vibrant recovery. I mean, we may never recover if we stay on the course raw. Now.

Anthony Scaramucci 23:09
Let me let me let me test something on you because I read your work. And pursuant to what you’re currently saying. The system right now, though, is working for the very wealthy and just hear me out for a second. They’re very well, they have assets. And so their assets go up pursuant to the fiat currency, if you own oceanfront property, you bought it for 4 million in 1980, it’s worth $80 million now. And so you know, the, the worker and the middle class person who’s using their time and labor, sort of getting stolen from them. So if I, if I if I’m working on a crane, I get paid $1,000. And one year later, I only have $920 with a purchasing power. And then a year after that, it goes down to $850. But the rich person in the society, they’re buying stocks, they’re able to buy assets, and they’re able to protect themselves from levels of the monetization Now the bad news for them. Unfortunately, as we know, from a society when you have this level of discontent, you usually get some type of upheaval. You know, the, I don’t want to live in a barbed wire McMansion while my fellow neighbors are suffering. Yeah. So I comment about that for a second, if you don’t mind. Yeah,

Speaker 1 24:29
I agree that the tax system that we have now is not the tax system that our founding fathers envisioned. It’s not even the tax system that Congress or Woodrow Wilson envisioned when they when they passed the income tax following the 16th Amendment. The income tax was supposed to only apply to the Rockefellers, the Vanderbilts and Carnegie’s. It was never meant to apply to the wages and salaries of the middle class. So you know, I’d like to get rid of the income tax entirely for everybody. But at a minimum, wages and salaries should not be taxed. I mean, we can’t tax people’s labor, that’s their most sacred and important asset. And it isn’t even really a game. Because you can’t even deduct the value of your labor from the wages that you earn. I mean, if I do a day’s labor, and somebody pays me $1,000, I gave up a day’s worth of my time, what’s that worth, the government says, your, your, your labor is worth nothing. If you’re a businessman, you get to deduct all your costs, and you only pay an income tax on your gate. But if you’re a worker, you can’t deduct any of your cost, your labor has zero value. And that is a big problem. So we need to get rid of the whole concept that your your labor has no value, I own my labor. And if I exchange my labor for wages, I have no income, I’ve gained nothing. And it shouldn’t be taxable. Taxes should be imposed on consumption. So when I go and spend the money I earned to buy stuff, that’s where the taxes are supposed to be. And that’s what the Founding Fathers intended. The only reason they even gave the federal government taxing power was in case there was a war. They were worried about, well, what if we get invaded, and we need to fund an army? You know, it wasn’t supposed to be for a peacetime economy, we need to restore that? Well, I

Anthony Scaramucci 26:26
mean, you know, the problem was, the problem is if you have an income tax, and then you put in a vat, which is effectively a consumption tax, they’re never getting rid of the income tax, you know, Oh, yeah. I

Speaker 1 26:38
don’t want I want to replace it. I want to replace Yeah, no,

Anthony Scaramucci 26:41
I listen to this while I listen, your you know, I mean, we intellectually disagree on Bitcoin, but a lot of things you’ve said, have really provoked me. And it really pushed me. You weirdly, you’re probably not gonna like me say this. But weirdly, you push me into bitcoin in some ways, because everything that you’re saying, I believe you disagree, but I believe I believe that Bitcoin represents because of its digital properties and represents a hard asset. Yeah, I

Unknown Speaker 27:11
mean, there’s a lot you can do with that. I

Anthony Scaramucci 27:13
hear that. But, you know, the truth of the matter is because of the networking effect, it’s not whether you remember what Cain said, right? It’s not me guessing who’s beautiful. I have to guess what the other judges view is beautiful. Remember, you said that about the stock market? But go ahead. I’m sorry.

Speaker 1 27:30
Yeah, no, I mean, a lot of people that are in Bitcoin, for the sake For those reasons, right? They see the same problems that I see. In fact, I may be the reason that they see those problems, right. They just

Anthony Scaramucci 27:42
gave you credit. I, you know, yeah, we wrote a book about 10 years ago, I think it was called Crash economics or something. Well,

Speaker 1 27:48
there was crash proof, the real crash, crash and the title. Yeah.

Anthony Scaramucci 27:57
Pretty crazy. So of course, I bought, I think I bought two of those books, maybe in Crash proof, 2.0, or something like that. But the

Speaker 1 28:03
one that has all the all the solutions, is real crash, how to save yourself and your country. So I put all the solutions to the problems, which, of course, you know, haven’t been adopted, and a lot of the problems that I that I, you know, brought up and that book have gotten much worse in the years since since I wrote it. But you know, there are solutions. And, you know, capitalism is a very dynamic economic system that has capability of delivering tremendous gains to the population. And, you know, the more tools we have, you know, AI and robotics and all this stuff, is going to make it easier to, you know, to rebuild, what the government really, really destroyed. But we have to recognize where we are, and make the changes and accept the short term losses, instead of trying to bail everybody out, and prevent everybody from losing money, like, you know, like we did during COVID, where we just told people to stay at home. And then we just gave them money to go shopping. That was about the worst combination of economic policies. And Donald Trump signed on to it. You know, he he started it. And of course, Biden took the baton and ran even faster. But it the precedent was established while while Trump was still in office. So we have to recognize that you can get these Republicans that want to blame everything on the Democrats without accepting any responsibility for what they’ve done. And it’s, you know, it’s not just what now Yes, I agree that Democrats are worse, but that doesn’t excuse what the Republicans have done. Yeah. So everybody has to accept the rsum share the responsibility and and take the political heat for doing the right thing, including the Fed but you know, you got to coward. You You’re at running the Fed, who refuses to call out the mistakes that Congress and the President make says, Oh, I’m not allowed to criticize anything that the government does, who said that? He’s exactly that’s what he’s supposed to do. That’s what Paul Volcker did criticize government spending. Alright, so it’s just what we take whatever fiscal policy we got, we don’t really care. We’re, I mean, how could you say that? You’re the head of the Central Bank? Well, I mean, it was,

Anthony Scaramucci 30:29
it was a tough thing to say, because you’ve got, you’re trying to tame inflation, but the fiscal spending is out of control. So the aggregate demand is getting pumped up, which is creating the inflation. So yeah, you tapping even if you’re tapping the brakes, not gonna really matter. But I owe it to our viewers and listeners to hear them out. So we’re going to play a few of them, we’re going to show a few of their questions. So what’s your take on the Justice Department’s monopoly case against Apple, you gave us a little bit of it. And so you’re against the case, I want to I’m going to test the theory on you though, I want you to get your reaction. This is Bethany from Florida. Um, you know, we broke up a TNT and it unleashed a tremendous amount of innovation. Are you worried that they’re six or seven monolithic tech giants? And if we don’t break them up, or we don’t for some type of antitrust measure, that we won’t get the innovation, or the cost savings that we’ve gotten in the past when this happens once a year?

Speaker 1 31:32
But first of all, I mean, the antitrust laws started with Sherman and Clayton, all this was part of a populist era where people, you know, there was a backlash to get backlash against the so called robber barons, you know, it started with Standard Oil, Alcoa, aluminum. But I disagreed with all that. I don’t think Standard Oil was a problem. I don’t think alcohol was a problem. I think the government has done a lot more harm than good. By breaking up companies that it believed to be monopolies. And then they’re usually wrong. I mean, they at one point, they wanted to break up General Motors because they thought it was a monopoly. I mean, they’re barely

Anthony Scaramucci 32:14
remember, remember the IBM antitrust case, when for 25 years?

Speaker 1 32:18
I mean, I remember, Hollywood Video wanted to merge with

Anthony Scaramucci 32:25
us it was

Speaker 1 32:27
a blockbuster. And they stopped it because they said you’re gonna have a monopoly on video rentals. When a few years later, nobody rented videos at all. Yet. I mean, it was, I mean, these guys, they don’t know. They’re just trying to justify their existence. I just think that in a free market, you know, let businesses operate. If Apple is overcharging, its customers, it will lose its customers. Nobody forces me to use Apple products. And I’ve tried other products, I’ve tried, you know, different phones. And I always ended up coming back to the iPhone. And if somebody comes up with something better while I’ll use it, but you know, I got no problem with Apple, Apple doesn’t have a gun to my head, forcing me to buy their products. The government’s got the gun, but the government is the one that forces me to do stuff I got a problem with.

Anthony Scaramucci 33:22
There’s only two phones that are out there right now. And they have a little bit of a duopoly and I have an app. And I want to put it on the Apple app, and I want to put it on the Samsung AG. I’m getting charged 30% Vig from Apple. Is that fair to the smaller businesses now? Epic Games? The maker fortnight actually beat Apple in court related to this?

Speaker 1 33:46
Yeah, you know, again, it’s about what’s fair. If I own Apple, right, it’s a private business. And I get to decide the services that I want to offer, the way I want to offer them, and how much I want to charge. But the ultimate arbitrator is the customer who can accept or reject what I’m offering.

Anthony Scaramucci 34:12
Yeah, but at, you know, I, again, I’m not gonna

Speaker 1 34:15
is going to screw up more often than I appreciate

Anthony Scaramucci 34:19
that I just, I just making the intellectual point, once these things scale, and they become monolithic. They can suppress smaller businesses. And I’ve given you the example of the app and they can, they can do that. But I but I hear you on this case,

Speaker 1 34:36
I think the free market will will find a way around it. You know, it’s if you look at where you have the most monopoly power, where you have people getting ripped off, it’s where government has intervened and created a monopoly or government regulation that comes in and outlaws competition and protects me particular business, that is giving them a bunch of money, like look at the Jones Act, and look at how a small group of us shipping companies is preventing the American public a lot certainly hurts people here in Puerto Rico, probably more than anybody else in the country. But people are hurt, because the government is protecting a monopoly on us shipping routes from very, you know, inefficient, overpriced, US shipping cartel is protected from all kinds of foreign competition. And if the government just simply allowed competition, then shipping costs would would would collapse and goods would be a lot cheaper throughout the country, but the government won’t let that happen. So it’s it’s pure hypocrisy for the government to waste time and money going after Apple when the low hanging fruit is to just eliminate all the laws, and it’s already passed, that are stifling competition and driving up prices.

Anthony Scaramucci 36:03
Okay, let’s go to the next question. Then a couple more questions. So we talked about the Fed monetizing the debt. Yet the Fed is not allowed to directly buy treasuries, how do they monetize the debt?

Speaker 1 36:15
Well, if you think about the word monetize, you’re turning debt into money. And so how does a central bank do that? Well, it goes into the market, and it buys government debt. And it has to go into the market, because the Fed is not allowed to buy the debt directly from the Treasury. So it goes into the secondary market, and, you know, operates through these big banks, Goldman Sachs, Morgan Stanley, they act as the broker. So they actually earn a commission on all this debts, these debt sales, right? That’s pretty good money, if you could get it right. But the Fed goes into the market and buys these bots. And where does it get the money to buy the bonds? Well, it creates it out of thin air, right, it just, you know, credits it to a bank account. And so it takes this debt and turns it into money. Because now there’s money in the economy that that wasn’t there. And now the Fed takes that bond, and sticks it on its balance sheet. So now, its books balance, because the currency, the money that it created, is counted as a liability. But the bond that it bought, is counted as an asset. And, and so at some point, right, if the government needs to withdraw that money from circulation, because it needs to fight inflation, it would then take that bond, sell it, and withdraw the liquidity but withdraw the money and then destroy it. And so then the money would go away, and the bond would return to to circulation instead. But you know, and they’re doing that somewhat now with quantitative tightening, right? The Federal Reserve is trying to shrink its balance sheet and withdraw some money from circulation. But it’s, it’s going to stop doing that. And it’s going to reverse the process, I think, this year, which is unfortunate. It shouldn’t do that. But it will. So so

Anthony Scaramucci 38:06
it’s it’s a great answer way better than I could have come up with myself. That’s correct. From Ohio. Let’s go to the next one. Huge court ruling against the 6% real estate agent fees. Among other things in an industry, how do you see this impacting the housing markets from Jesse from Boston?

Speaker 1 38:27
Yeah, well, I think that the, the way they’ve been we’re operating the MLL. listings, and the way certain, I guess, homes or if you’re selling your home yourself, you can’t get on there. And you have to go through one of these these agents. You know, that’s obviously kept prices, the commission is high. But I think people have been finding ways around that for quite some time. And I think the Commission’s have been coming down. I mean, it was 6% at one time, and I see a lot of the deals now going at 4% 3%. So they’ve already been going down. So I think that trend was already there. And I think obviously this will probably accelerate the trend towards lower commissions as more people are able to access that service. And I think you know, more homeowners to the extent that they want to sell will be able to sell without a broker. I mean, for sale by owner, it’s a lot easier. You know, in the age of the internet, where you can, you know, you don’t have to pay I mean, that is it’s a big number to pay somebody a 6% of a home. I mean, and it’s not just you know, when you buy a home, or you you know you sell a house, you may not own it for all cash, you may have a big mortgage on that house, and that 6% is not 6% of your equity. It’s 6% of the whole value of the home. So it’s possible that if you don’t have a lot of equity in your house, the realtors can make more money off the sale than you could.

Anthony Scaramucci 40:09
Yeah, listen, I a lot of money on the margin certainly will hopefully help liquidity in the housing market. Let’s go to the next question. How might the potential fire sale of Trump’s property such as 40, Wall Street impact commercial real estate values? And then your financial district and broader market trends isn’t Bobby from Brooklyn?

Speaker 1 40:33
Yeah, well, obviously, to the extent that Donald Trump were forced to liquidate some properties, I guess to fund the bond. Yeah, I mean, he was he wouldn’t get a great price. I mean, obviously, I mean, if, if you knew he, the seller was Trump, and pretty much everybody knows, the buildings that Trump owns, he usually puts a big T audit or something. But you know, it was yes. If you know Trump is selling, I mean, you know, he’s, you know, he’s, he’s in a bind. And so you’re, you know, you’re not going to offer a lot. But yeah, I mean, I don’t know how much how many properties he has. I mean, the commercial market is already in bad shape. I mean, look at all the we were property that’s probably up there for sale and everybody else. Yeah. So it’s not a good time to be forced to sell commercial real estate in New York City or any major city, for that matter. But I don’t know, on the margin, how much worse it would make it. But I mean, what they’re doing to Donald Trump is, is horrible. It’s illegal. You know, and hopefully, it does backfire. Because, you know, I would like to see him win. And part of the reason is because of what the government and the media have been doing to him.

Anthony Scaramucci 41:46
I don’t I don’t I mean, listen, I’ve read through the complaints on that case. I think that that case is a bogus case. I’ve said that openly. I don’t like Mr. Trump. I don’t think he has the right temperament to be the president. That’s my opinion. Other people can have other opinions. But

Speaker 1 42:01
he’s not my first choice, Anthony, but he’s better than Biden.

Anthony Scaramucci 42:06
Well, I mean, well, we’ll respectfully disagree, I promise you. For Biden, I would take a forgetful elderly man, over an absolute crazy person, if I’m choosing between Weekend at Bernie’s, and One Flew Over the Cuckoo’s Nest, I’ll go with the half dead person over somebody that needs to lithotomy me, you know, we were there. And you have to remember, you know, we have 45, senior officials that are sending out a warning alarm to the American people about how crazy the person is and how it’s not just

Speaker 1 42:44
Biden, who’s pulling the strings behind the Biden puppet, I mean, who’s really running the show and calling the shots?

Anthony Scaramucci 42:50
To me, I’m going with the institutions of the democracy over a maniac, but that’s me. And the good news is, you know, I believe there’ll be more people that will do that than others. But, you know, listen, you’re a smart guy. Maybe it’ll be right, who the hell knows? Let’s go to the next question. I think we have two more, and then I’ll leave you alone. A small business owner. I’m on pins and needles. Is there a recession? Ed? Will there be a soft landing? Is 24 going to be better than 23? What’s your take on that? Peters? From Alex from Arizona? Yep.

Speaker 1 43:22
No, I don’t think there will be a soft landing at all. And of course, there’s going to be a recession, there’s always a recession. The question is, How soon does it start? My money is that it’s already started. I mean, I think we are in a recession. I think that is the main reason that Biden’s popularity is so low. In fact, he scores lowest on the economy. And so if the economy were so good, the voters would be giving him credit for that instead of blaming him for how lousy everything is, because, you know, they can’t afford food. They can’t afford rent, and they’re working three jobs. And

Anthony Scaramucci 44:03
one Trump, Trump caused a lot of the problems that Biden is facing. By the way, Biden is not doing us any favors either. I’m just saying it’s the combination of why called the demo publicans it’s a Yeah, it’s an oligarchic duopoly that’s causing the problem. It’s not just

Speaker 1 44:21
That’s true. I’m not, I’m not excusing Trump, I’m just trying to put myself into the position of the voter. He’s just going to blame whoever is in charge at the time. Right. And so that happens to be Biden. But I’m saying that the reason that Americans feel so bad about Biden is because the economy is horrible. And I think that that’s really the case. I mean, if you look at the jobs numbers, forget about the establishment survey, look at these household surveys that show huge job losses month after month after month. Look at the fact that all of the net new jobs that have been Created under Biden other than the restoration of the COVID jobs that were temporarily on hold, but all the really new jobs on net are all part time, we haven’t really created any full time jobs, we’ve destroyed full time jobs and replaced them with two or three lower paying part time jobs. And the debt numbers are off the charts. Consumers are drowning in debt, in addition to all the debt that they’re obligated to pay that’s been accumulated in their name by the government. And, you know, I think that after the election, they’re going to come back. And they’re going to revise a lot of this economic data. And they’re going to come say, hey, you know, we’ve been in a recession, since, you know, q1 of 2024, or q3 of 2023. I mean, I think we’ve been there, just you know, if you remember, the Great Recession of 2000, and 789. I mean, that recession started in December of Oh, seven. But they didn’t call the recession until December of Oh, eight. And what they did in December of Oh, eight, is they came out and said, all the economic data that we’ve released over the last year has been wrong. Here’s the new data. And instead of this growing economy that we were reporting, we were actually in a recession the entire time. And all these people can

Anthony Scaramucci 46:24
feel it. I mean, you know, look, what you’re describing, I may have made money, my stock market and Bitcoin account. But those are people that are have money. The average person on the street feels like the price of gasoline, a eggs, milk, maybe gases down recently, but I’m just talking about the totality of the pie chart of their consumption, they feel very tight. And

Speaker 1 46:51
remember, the reason that investors are so happy, is the reason that everybody else is so miserable. It’s the same thing. It’s inflation. So inflation is causing stock prices to go up. But it’s also causing food prices to go up. So if you don’t own stocks, but you have to do grocery shopping every week, you’re you’re a big loser from inflation. Well, but if you just got a bunch of assets, then you’re a winner, right? It’s because there are winners and losers. In inflation. It’s a transfer of, of wealth and purchasing power. So the people who are losing are the ones who are the most upset. And that’s the lower class and the middle class. They just don’t know who to blame. I mean, now they’re blaming Biden, and the government likes to blame inflation on Putin or on greedy corporations. They never accept responsibility. You just said we have a 50% increase in government spending, where’s that money coming from? It’s, it’s causing the inflation. All that spending is bidding up prices and the money that was printed, that the government spent, right, there is no free lunch. We’re paying for all this government. Every time we go to the grocery store, every time you go to the gas station, every time you buy anything, you’re paying for these Biden deficits. And yes, we’re also paying for the Trump deficits. Right. And and the Obama deficits and the bush deficits, right, this has been going on, regardless of who’s in power, and the only Republicans seem to care about the deficit is when they can’t do anything about it. Right, the minute they cut back their military in charge, they do nothing. They are out of power.

Anthony Scaramucci 48:29
To your point about it. Your your point was we were okay with it for several decades, because the economy was growing faster than it. But now, it’s almost impossible to grow the economy faster, because you’ve got interest charges that are feeding into a plus entitlement programs that are feeding into it. And so the inflation that you just described, is creating a vicious circle because and think about going up, Anthony.

Speaker 1 48:58
So the big buyers of US debt. A were foreign central banks, the Fed, and government trust funds, Social Security, Medicare, we’re buying treasuries, all three are now selling, right foreign central banks or net sellers. The Fed is the seller. And so Security trust fund our sellers, they’ve already done that. So security is right now collecting less in taxes than it pays in benefits. So everybody that used to buy treasuries is now solid. I mean, there’s no way to finance this, unless the Federal Reserve, you know, comes back to the table, which is what they’re doing. And they just laid the foundation for that by saying they’re going to slow down quantitative tightening. Yeah, yeah, well, the next step, the next thing is to reinstitute quantitative easing. And so inflation is going to go up and then you look at these charts of commodity prices. To me they look explosive. I think you’re gonna see across the board. Big, big bull market and agriculture, industrial metals in energy, all these prices are about to, you know, party, you know, you know and roar like the 1970s. And there’s no way that’s consistent with 2% inflation.

Anthony Scaramucci 50:16
Alright, we’re gonna make this the last question, you’ve been very generous with your time, of course, I could talk to you for several hours. And this is one of your mantras. And again, I love bringing on guests that have different views than me. So let’s hear your view is big Bitcoin, the new gold? This is from Phil from LA now Now, Phil, I’m gonna let Peter talk. I think it is. Peter doesn’t. So go ahead, Peter.

Speaker 1 50:42
Yeah, you know, obviously, that’s what Bitcoin proponents are selling. And in fact, Bitcoin is deliberately designed to, you know, appear like gold, it’s represented as a gold colored coin. When Bitcoin itself it has no color, and it’s not a coin. It’s just a string of numbers. And so, you know, there’s nothing about Bitcoin that would resemble a coin, although the name coin is in there. And the way they come into existence is their mind. But there’s nobody with a pick and a shovel, you solve a math problem. So that doesn’t sound like a mining operation. To me. It’s a mathematics equation, it’s computation. So but they use these words, and these images to try to create the false impression that when you’re buying Bitcoin, you’re buying a digital version of gold, but you’re not. And because gold can’t be digital, some things can be digital, you know, music can be digital, I can listen to my music, digitally, I don’t need to have a record, I can read a digital book, I don’t have to have a physical book in my hand, I can read it. But I can’t eat digital food. I if I if I don’t want to starve to death, I need real food. So digital food isn’t gonna work. It’s the same thing with gold, gold can’t be digital. Gold is a metal, right? That is used in all sorts of industries and for all sorts of things. And gold is the most useful metal that we have. And the only reason we’re not using it even more is because it’s very scarce and very expensive. So oftentimes, we substitute metals of a lower quality, because we can’t afford to use gold. But gold is a very rare, very valuable, actual metal. And if you just make a digital representation of it, it’s not the same thing. Right? It’s like a digital house, I can’t live in it, it’s not going to keep me dry when it rains, you know. So it’s some things have to be in the real world, they can’t just exist in a digital world. Now, what you can do with gold, if you want is you can transfer ownership of gold digitally, you can have a storage facility that has gold instead, like a like a bank, whatever a blacksmith, and you can write a digital, you can tokenize it

Anthony Scaramucci 53:05
on international gvi you

Speaker 1 53:09
can create a token that is backed by that gold and you can you can transfer the ownership of that physical gold digitally electronically, but with Bitcoin, when I send my bitcoin to somebody that Bitcoin doesn’t represent ownership of anything other than the Bitcoin, which has has no intrinsic value, it doesn’t do anything. But you know, yes, there’s a limited supply of Bitcoin. There’s an unlimited supply of cryptocurrencies, but there’s a limited supply of Bitcoin. And so if people want to buy bitcoin, and other people don’t want to sell it, well, then the price will go up. But if people want to sell it, and they don’t want to buy it, well, then the price will go down. The question is, why do people want to buy it? I think they want to buy it because they think it’s going to go up, and other people will pay more. But I think when that changes, and people no longer expect the price of Bitcoin to go up, everyone’s gonna want to get out. And then the market is going to crash, because there’s no on the underlying fundamental buyer for Bitcoin, other than the speculator, and if the speculators Alright, well want to sell. And so again, I if you’re buying Bitcoin, because you think it’s an alternative to gold, I mean, it’s not a store of value, because it doesn’t have value. It’s not a safe haven. It’s a highly speculative token, it’s the ultimate risk asset, because it’s, there’s nothing there, right? You’re just buying hype. You’re buying sizzle, when there’s no state. So you know, if you want to trade and you want to gamble on momentum, and other people’s willingness to overpay, you know, to keep buying stuff, you can trade it, you have to know what you’re doing and recognize that you’re playing with a hot potato that could collapse and you know, at any time, so recognize what it is but if you really want to store value, and then An alternative to the fiat system, then you want to buy actual gold, you can buy actual silver, or you can buy real assets, you can buy stocks, I mean, that’s what I do. I mean, I buy foreign stocks, I buy emerging markets, I think there’s a lot more value there. And I’ve thought that for a while, I mean, the US market has been overpriced for a long time, in my opinion. And it’s gotten more overpriced, but I’ve been buying value internationally, I’ve been focusing a lot and I do with my clients on resources, on stocks that you know, own, you know, resources and will benefit from this bull market that I think we’re going to see in commodities and natural resources. But I also think there’s gonna be a major devaluation of the dollar, due to a loss of reserve status. And I think that a lot of foreign currencies are going to gain against the dollar. And so I want to own businesses that earn those currencies, so that when I get my dividends, I get more dollars that I can that I can spend here. So you know, that’s where I think you’re people’s money should be in quality, dividend paying value stocks, and in and commodities and precious metals and mining stocks. I don’t think Bitcoin is a substitute. You know, you got Michael Sandler saying, Oh, it’s the greatest property in the world. I think I think real estate is better. I think stocks are better. Come on, gold is better. That’s the property that I want to own not just some digital string of numbers. And that you know what, listen,

Anthony Scaramucci 56:28
I mean, you know, we’re in different camps on this, but I invited you on You’re my guest. My control room as one quick questions. I’ll let them run it. What percentage of GDP do I spend on my hair products? And do I pay for that in crypto, you see that I mean, these guys are mean men the mean, but let me tell you something, they Hey, you got iced air. They’re great. Okay. And it’s well died as well collared. Okay. And these are like two bald slumps in the control room. Okay. They’re giving me grief. But, you know, endless and I don’t disclose the percentage of the GDP, but it’s close to the budget deficit. I’ll just leave it at that. But Peter, you’re phenomenal. I appreciate you coming on. I enjoy our spirited discourse, even our intellectual debates. I appreciate where you’re coming from. On a lot of things, I just think it’s an irony. I see the same things you see, I like gold, but I also like Bitcoin, you like gold and you don’t like Bitcoin? And maybe one day over a drink? I’ll convince you to buy your first Bitcoin. Well,

Speaker 1 57:32
I mean those I know you made a lot of money in Bitcoin so far. So I guess that’s what you like about it. You know, I

Anthony Scaramucci 57:37
have made money on Bitcoin. I’m not gonna I’m not gonna dispute that no question, but we’ll

Speaker 1 57:42
see what but you may not you may not keep it I mean, hopefully, hopefully you sell I’m

Anthony Scaramucci 57:46
I’m I’m I’m a prudent guy. So I have some money in Bitcoin. I have some money in gold, and other assets. And so we’ll have to see who’s right. You know, maybe, like I said, Maybe someday you’ll buy one who the hell knows? Federico, I gotta get down and I haven’t been there in a while. But you got all your crypto buddies down here. So I know I gotta I gotta go down there. They understand the taxation system better than me. I’m, I’m a taxpaying New Yorker. But Peter, thank you so much for joining us on speak up as a phenomenal conversation. I hope I get a chance to see you soon.

Unknown Speaker 58:19
All right. Take care.