The Fed Can’t Save the Market or the Economy (Uncut) 03-12-2025

The Fed Can’t Save the Market or the Economy – Ep 1016

You make no friends in the pits and you take no prisoners. One minute you’re up half a million in soybeans and the next, boom. Your kids don’t go to college and they repossess your Bentley.

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I don’t know when they decided that they wanted to make a virtue out of selfishness. Your money. Your stories.

Your freedom. The Peter Schiff Show. All right, everybody.

So I want to get today’s podcast started by talking about what’s going on in the market. So though, before I even get into that, some of you may be wondering, oh, whoa, I forgot about the mic. I just looked up and I noticed I didn’t have my mic in front of me.

So it’s a good thing I saw that. Otherwise, people are going to be complaining probably in the in the comments section. But the first thing I wanted to comment on is the fact that I’m wearing these eyeglasses.

And the reason I’m wearing these eyeglasses is I developed a sty in my right eye. And it’s getting a little better, but it’s pretty red and puffy. So I figured I might as well just put the glasses on.

And that way you don’t notice it as much. You know, I actually I wear glasses. I’m a bit nearsighted.

But I’ve never worn contacts. So I do in real life wear glasses, although I’ve found as I’ve gotten older, actually, my my distance. A vision is actually improved.

It’s reading. I have a hard time with now, you know, so I have these are bifocals. But when I’m reading like a menu, I can’t even read anything really on a on a on a medicine, you know, like label.

I got I got to take a photograph of it and then I got to blow it up. So it gets frustrating when you get older. But anyway, that’s why I’m wearing I’m wearing these eyeglasses.

But anyway, so the stock market yesterday was a big drop in the Dow at one point was down over a thousand points, which I know, you know, is not that much when you’re talking about a Dow above forty thousand. So a thousand point drop in the Dow is not, you know, what it used to be, you know, a couple of decades ago. Right.

When I was a member, the eighty seven stock market crash, the big crash was five hundred eight points. Right. Because the Dow was twenty eight hundred or something like that.

But we’ve had, you know, a lot of thousand point drops in the Dow. But, you know, they always, you know, grab the headline because it still sounds like a lot. It’s a big, big number.

But the big loss was in the Nasdaq. There, I think you had about a four percent drop, although the Dow didn’t close down a thousand. It was down about eight hundred.

But it fell another four hundred and seventy eight today. And at the lows today, it was down close to eight hundred again on the low. But we got some, you know, negative positive news on tariffs.

First, Trump is going to double the tariffs on Canadian aluminum and steel from 25 percent to 50 percent, which is a big problem for every company that needs steel and aluminum to make something. And those are important parts of automobiles, housing, you know, appliances, you know, aircraft. I mean, we use a lot of those metals and now they’re going to be a lot more expensive.

So Trump announced that the markets didn’t like that. But then later on, there were some rumors that maybe maybe the tariffs wouldn’t happen or maybe they would backtrack. I mean, whatever Trump threatens, a tariff is going to come in.

Then, you know, a few hours later, well, maybe we’re not so sure. So the market got that. Then there was also some rumors.

Maybe they’re not rumors. Maybe it’s actually true of a potential 30 day ceasefire between Russia and Ukraine. And so I think the markets like that.

So that kind of helped pair the losses. And in fact, the Nasdaq managed to eke out a small gain on the day, thanks to some of the bigger tech. You know, the Fang names, the Mag7 names that got decimated yesterday.

A lot of those stocks had a, you know, turnaround Tuesday kind of bounce today. And so that helped the overall Nasdaq, you know, QQQ ended up in positive territory. The actual Nasdaq itself, I was looking at the QQQ, the Nasdaq itself was down slightly.

But the QQQ, which has all those real big stocks in it, managed a small gain. But I don’t think the market is out of the woods. I still stand by, you know, really the call that I made on January 27th.

You know, if you haven’t listened to that podcast, you missed that one. It was podcast 1005. And the title was The Consensus Trades Are About to Unravel.

And when I talked about the consensus trades, I meant the trades that everybody agreed couldn’t lose, where everybody was, you know, piled into this trades. And so that was mainly AI. And when I did that podcast, I talked about it because it was like the next day or the day after, there was a major $500 billion investment announced in, you know, AI.

Right. And that really, like, caused these stocks. NVIDIA and a bunch of these stocks were all going up.

Even the company spending the money went up. Right. Because anything AI was, you know, you got to buy that.

And then it was also crypto because, you know, they were talking about the strategic Bitcoin reserve and a lot of hype. And, you know, when I when I did that podcast, Bitcoin was over $106,000 a token. Yesterday, it dropped as low as $76,000 and change.

Now, I mean, low, it’s all relative, but it was a 30 percent drop from where it was about the time that I did that podcast. The high was one hundred nine and change didn’t quite get to one hundred ten, but it’s now dropped 30 percent. But to give you an idea of the magnitude of the decline we’ve had so far.

So just in the last week and two days. Right. So last week, plus two days, the Dow is down three point three percent.

Not that much. But the QQQ is down seven percent. The Russell 2000 down seven point three percent.

Russell 2000 is almost in a bear market. It’s down over 17 percent from its peak. So it’s the closest index to a bear market S&P down six point four percent.

But listen to some of these consensus stocks. Tesla is down 21 percent in seven days. Twenty one percent.

Tesla is also an A.I. stock, too, because A.I. is part of the self-driving and all that stuff. But it was very much part of the Trump trade because after all, Elon Musk is in the White House. He’s practically running the White House.

Right. And he’s got a company. So clearly, if he’s got the president in his pocket, that’s got to be good for Tesla.

And that’s why Tesla had such a huge run. After Trump won, because it was like a no brainer. Right.

I mean, you got to buy Tesla. After all, he’s in good with the government. Right.

This is policies are going to favor Tesla. The government is not going to go on a war against Tesla. You know, like, you know, Kamala Harris.

Right. They would have investigated Tesla left, right and center. Right.

So everybody bought Tesla just like they were buying Nvidia. Well, Nvidia is down 15 percent in the last seven days. Everybody owned Nvidia down 15 percent.

Bitcoin is actually not down that much in those seven days, down about four and a half percent. But what’s also important is what’s up. The dollar index or no versus down the dollar index is down four percent.

That’s a huge seven day period for the dollar index to be down four percent. Almost all of that, you know, on Friday. But it was down again today.

The dollar index now is at the lowest it’s been since October of last year. So all of the Trump inspired gains have evaporated. And I said that as the dollar was rallying and everybody was saying, oh, the dollar is going to go up because Trump’s going to impose tariffs and the tariffs are good for the dollar.

And I kept saying, no, they’re not. They’re not good for the dollar. And now that we actually have the tariffs and they’ve started, the dollar is tanking.

And part of the reason that people thought that, you know, foreigners will pay the tariffs is they said, well, the dollar is going to go up. And so those imports are going to be cheaper because of the currency. And that will offset the tariff because the dollar will be so much stronger that we’ll get these products cheaper.

Well, what’s actually happening is the dollar is going down. And so instead of offsetting some of the pain of the tariffs, it makes the pain worse because now we have to pay higher prices, not just because of the tariffs, but because the dollar has gone down. And these are foreign products where the costs were in foreign currencies.

But what went up over the last seven days are gold stocks, gold, GDX, the big stocks up four and a half percent in the last seven days. The GDXJ, the juniors up six point six percent. So, you know, they they’ve been pulled down as the market goes down.

The stocks go down like the gold stocks got clobbered yesterday. They were down like four percent, but they made it all back today. Now, they never should have gone down yesterday.

Talk about throwing the baby out with the bathwater. Sure. Gold was down about 20 bucks, but it was up 30 bucks today, 35 bucks.

But even though it was down, barely went below twenty nine hundred. And I’m watching on CNBC this morning. Gold is already right back above twenty nine hundred.

It’s like twenty nine, ten. And they don’t even mention that. Right.

Gold’s up twenty five, thirty bucks. Don’t even mention it. All they do is say, well, Bitcoin is back above eighty thousand.

I mean, so what? So what? I mean, the fact that gold is holding above twenty nine hundred is far more significant than Bitcoin having a dead cat bounce back up above eighty thousand. You know, it rallied today along with, you know, some of these crypto stocks. But again, I think it was just a reversal rally.

And I think it’s it’s just going to get killed from here, because the main thing that was driving Bitcoin was the strategic reserve. And now that’s done. I mean, we got the reserve, right? It’s the same crypto they already had.

What’s in the reserve is what the government already has. What they need is buying. And that’s why MicroStrategy came out on Monday, Monday, the same day that their stock got killed by like 20 percent.

It was one of the biggest down days I can I can recall in MicroStrategy stock. Now, it was up, you know, big today. I think it was up.

It was up nine percent today, but it’s down twenty eight percent in the last seven days. Almost all of that was yesterday. Right.

But yesterday, MicroStrategy announced that they’re going to buy another twenty one billion, billion, another twenty one billion of Bitcoin and they’re going to sell their stock to pay for it. I don’t think that they’re going to be able to get that done. I think the stock is going to go below the value.

Right now, it’s still trading at about an 18 percent premium, but that’s a much lower premium than what it used to trade at relative to its Bitcoin. But the way Saylor is able to get a positive Bitcoin yield, right, the way he describes it is he sells his stock at a premium to the value of the Bitcoin. Then he takes the money and buys Bitcoin.

So the Bitcoin per share goes up. Now, also, the shares outstanding goes up. So the company’s being diluted.

And when they borrow the money to do it, the debt per share goes up. But he doesn’t care about that. Right.

He just focuses on this one Bitcoin yield. But what’s the price of of of stock? MicroStrategy trades at a discount to its Bitcoin, which it will. Then that’s MicroStrategy is out of the Bitcoin buying business, because then if it buys any Bitcoin, it will produce a negative Bitcoin yield.

And that will probably really unravel the company. So but I think MicroStrategy’s plan, the greater fool for MicroStrategy was going to be the U.S. taxpayer. But Trump said, no, the taxpayer is not buying any more Bitcoin.

We’re not going to sell the Bitcoin we have, which they should. They should get rid of it. That would be a favor to the taxpayer.

But he said they’re going to hold on to it, but they’re not going to buy. And MicroStrategy is going to buy. But look at how much the market has gone down.

Since. Since that that podcast that I did on January 27, because they’re right there. When I did that, the dollar index was at 107 and a half.

And now it’s barely holding on to 104. As I said, Bitcoin is 106. Now it’s like 82, something like that.

The NASDAQ is down 8.3 percent. The Russell 2000 down 11 percent. But look, look at the the big consensus stocks since that podcast.

Nvidia down 10 percent and Tesla down 42 percent, 42 percent on Tesla since January 27. Oh, MicroStrategy is down 28 percent. So that’s not the last seven days.

MicroStrategy is down 28 percent since my January 27 podcast. But the GDX is up 11 percent and the GDXJ is up 12 and a quarter percent. Now, you wouldn’t know that.

Right. If you just like watch CNBC, you would have no idea that this is going on. Like the gold stocks are performing like this.

And, you know, the foreign stocks continue to go up. Right. The German market, the French market, the Spanish market, the Switzerland, you know, Hong Kong, China.

The foreign markets are going up. And I’m listening on CNBC and they’re making fun of it. They’re like, what is this? This is crazy.

Why are these stocks going up? You know, the thing is, the valuations in Europe and in Asia are a fraction of the valuations here. I mean, we’re priced for perfection and we’re not going to get it. And, you know, one of the reasons that I was talking about the consensus trade unraveling in January 27th, one of the reasons I thought that that was the peak and I think that made that might have been the peak.

I don’t know if we made the Dow might have made the high record high. And he has to be that week. That might have been the actual top, I think.

And we’ve just gone down. It’s just that it’s been accelerating recently. But it was just a euphoria because everybody loaded up on U.S. stocks.

Everybody loaded up on the U.S. dollar and everybody loaded up on Bitcoin and other cryptos. Why did they do that? Well, because Trump was going to make America great again. Right.

It was America first. So you better buy American stocks. Right.

This is going to be great. It’s going to be a boom in America. We finally have a business friendly president and we’re going to have pro business policies.

So that’s good for the stock market. Now, people didn’t look at the fact that the stock market was already very expensive. They just bought it anyway.

And they just bought into the idea, oh, this is great for the dollar. Tariffs are going to be good for the dollar. Trump’s economic policy.

Some people even said that we’re going to have more economic growth under Trump. So we’re going to have higher interest rates because of the stronger economy. And that’s going to be good for the dollar.

And they even thought we’d have a little bit more inflation, which they thought was good for the dollar. So they thought everything was good for the dollar. So everybody bought the dollar.

And of course, everybody had to buy Bitcoin because we had the first Bitcoin president. We’re going to have a Bitcoin strategic reserve. And the other nonsense they were saying is it’s going to be like a race, like an arms race.

Like once the U.S. starts buying Bitcoin. Well, then every country is going to want to buy it. It’s going to be, you know, a race to see which country can get the most Bitcoin.

I mean, that’s the race that you want to lose. Right. Because whatever country has the least Bitcoin wins.

Right. Whoever has the most loses because you blow money by nothing. But if the government, the U.S. government is not going to buy any Bitcoin, then why is anybody else? And I never believed that other countries would be dumb enough to buy Bitcoin just because we did it.

You know, we would only do it because we were paid off. Our politicians got paid off by the crypto lobby. Well, the biggest crypto lobby is in the United States.

It’s unfortunate, but I don’t know the exact numbers. But Americans own more Bitcoin than anybody else. Right.

So we’ve got the lion’s share of this bubble. So when the Bitcoin and crypto bubble pops, where it does the most harm is in the United States. But nobody thought Bitcoin had anywhere to go but down, because after all, it got up to 100,000.

You know, we had, you know, enemies. The government was stifling it. The government was regulating it and suffocating it.

And now it was going to be freed from all this regulation. And so if Bitcoin did so well when the government was against it, well, just imagine how much better it’s going to do now that the government is behind it. Right.

So there was so much positivity in Bitcoin. I was like, well, it can only go down. I mean, it’s just there’s just no there’s no room to go when there’s so much optimism.

Right. What can happen? Right. What good could possibly happen when everything that could possibly happen that’s good is already factored into the price.

Right. So you’re primed for somebody to be disappointed, some news to happen. That’s not perfect.

And the market tanks. So it’s happening to crypto. It’s happening to the momentum stocks, the consensus, AI and all these overpriced stocks coming down.

The dollar is coming down. The entire Trump trade is reversing. And it’s playing out the way I believed it would in favor of foreign markets, commodities, gold, gold mining stocks, the opposite of what people expected.

And again, I mentioned on this podcast, it was very frustrating to me personally, but we had a huge outflow of money from our mutual funds. The Europe Pacific family of funds after Trump won through the end of the year and early this year through January, February, more than we’ve ever seen in the history of the funds. A lot of people closed accounts and they did that to buy into U.S. stocks.

People said, you know, I don’t I’m not worried now. Trump’s we’re going to pay down the debt. The problems are solved.

Trump’s going to make America great again. I don’t want to invest abroad. I don’t think I’m going to buy U.S. stocks.

And the absolute worst thing you could have done, because not only did you buy into the peak of an overvalued U.S. market and you’re already down considerably, but you’ve missed out on on the rise in the foreign stocks and gold stocks. And it’s just getting started. This is not a short term blip.

I think this trend is going to continue and accelerate for the rest of this decade and probably beyond. Anyway, we’ve got a quick commercial break. We’re coming right back.

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Investing involves risks, offers subject to terms and conditions. Investment advisory services offered by Stash Investments LLC have not been vetted or endorsed by me or Europacific Asset Management. Now, another thing that happened the week that I did the January 27th podcast that also made me bearish on U.S. stocks was the rate hike in Japan, where they raised rates from twenty five basis points to 50 basis points.

And I said that this was a major event. That the world was ignoring, that the rug was going to be pulled out from other risk assets around the world and treasuries, because I thought that rates had just begun to rise in Japan. And in fact, on on Monday, the yield on the 10 year Japanese government bond hit one point five seven percent.

Again, that’s a low number, but it’s the highest number in like 18 years or something like that. But it’s it’s an unstoppable train as far as I can tell. And, you know, once we get above like one and three quarters, then you got to go back to like nineteen ninety seven before the rate was higher.

But I think when we get above two percent, just looking at a chart, which I think I think the yield is going to break two percent this year. When it breaks two percent, I think it can move up quickly to three, four percent quickly. And people don’t appreciate the the extent of the yen carry trade and how much the yen has been a funding currency for investments all around the world.

And the Japanese own a lot of U.S. assets. They own a lot of our stocks. They own a lot of our bonds.

And a lot of that is is paid for through leverage with the yen. They borrow cheap in a depreciating currency, which gives them a windfall. But the yen is rising and is rising slowly right now.

I mean, at one point, the dollar yen was down to about 160. Right. That was around the low and we got it got even a little bit lower.

But right now, dollar yen is one forty eight even. So a considerable move off the low. I think where you’re going to start to see the fireworks is when we go back below 140, which I expect to happen sometime soon.

You know, the euro is at one above 109. I mean, it got down below 103 like a week and a half ago. I think the key there is going to be around 112.

I think once we get above 112, that was kind of a high within the last couple of months before Trump was was elected. But I think we go back through one of 112. I think we’ll go quickly to around 120 on the euro.

But and also, you know, German rates now, that’s another big thing. German rates are really starting to back up. And all of this is going to be bearish for the U.S. market.

You know, I mentioned how much stocks were down in the last in the last week. Right. I said in seven days, well, five days plus two this week that the S&P is down six point four percent.

That’s for Americans. But the dollar was down four percent. That means that if you’re a European, you lost ten and a half percent this in the last seven days on your S&P 500.

Now, compare that to how your market did locally, the market went up. And so the weakness now in the dollar is undermining the profits that global investors were making in our stocks. So we have a combination of rising interest rates around the world, pushing up foreign currencies and pushing up bond yields.

And foreigners now want to sell their assets that they bought in the U.S. to pay off their local debt or invest in invest locally. That is a huge problem for our markets. Our markets are propped up not just by the liquidity provided by the Fed, but by the liquidity provided by central banks all around the world.

When we were the beneficiaries of that, because a lot of our trade deficits were recycled into our financial assets. I mean, that’s part of, you know, if Trump wants us to have smaller trade deficits, that means the world is going to have less money to invest in our financial assets. So lower trade deficits means higher interest rates.

It means lower stock prices. Right. Nobody really signed up for that.

And in fact, Trump is trying to backtrack away now, you know, because the markets are going down. And Trump, you know, historically has always looked at the stock market as a barometer of of his success. And when he was president the first time, the stock market kept going up.

Well, stock market went up when Biden was president. We don’t think he was a successful president. So clearly the stock market and the success of the president or the economy, you know, have nothing to do with one another.

But when the stock market was going up and when Trump was president, he, of course, claimed credit for the stock market going up and said, this is proof that my policies are good because that’s why the stock market is going up. So now the stock market is going down. He’s like, well, you know, I never promised to be the president of Wall Street.

Right. I’m working for Main Street now. And so we may have some pain on Wall Street while we’re fixing the economy for for Main Street.

Although, you know, one thing that Trump is overlooking is a lot of people on Main Street own stocks. Right. They own crypto currencies.

They own all this stuff now that’s going down. So there is a problem for Main Street when the stock market goes down, right, when they’re betting everything on the stock market or on the crypto market, which is also going down. But the other thing that Trump is talking about is the tariffs, because a lot of the media is blaming the stock market going down on the tariffs.

And, you know, the market was going to go down anyway because it was overpriced. And we’re in recession. Right.

And so earnings are not going to live up to expectations. So there were the market needed an excuse to go down or somebody needed something to blame. The market going down.

So if it wasn’t tariffs, it would be something else. But it’s very easy to blame it on the tariffs because, you know, we’ve got the tariffs and the markets are going down. And the markets generally react negatively to tariff news, especially since they’ve been conditioned to believe that it’s the tariffs that are the reason that the markets are going down.

So it becomes a self-perpetuating spiral there. But the tariffs are not good for Main Street because it’s the people on Main Street that have to pay those tariffs. Right now, you know, Trump is talking about using the tariffs to create good, high paying jobs on Main Street.

Well, maybe they will create some good, high paying jobs, but they’re only possible because the companies that are paying those high wages are able to charge higher prices to their customers because they don’t have as much foreign competition. So that means some people on Main Street win, but other people on Main Street lose. Right.

And there’s actually going to be more losers than winners. But the problem with these tariffs is they’re not just going to create a bunch of factory jobs. Look, look at Ford and General Motors stock been crashing.

Right. Some of the weakest stocks in the market. Also, the financials, the financials have been extremely weak, not just the tech stocks.

You know, so if we’re if we’re going to have a booming economy, why aren’t the financials benefiting? Who’s going to finance this boom? We have a lot of factories to build. You know, where’s the money coming from? The banks are getting clobbered. See, the problem is that the tariffs don’t immediately do anything but raise prices.

Yes, if I’m a factory and I’ve got a lot of unused capacity and I’ve got some workers that I can recall. OK, I can ramp up production a little bit. But you’re talking about decades of supply chains and distribution, especially between the U.S. and Canada and Mexico, where U.S. companies rely so much on parts coming in from either side of the border and have shifted a lot of their production to other sides of the border.

They don’t just have the idle capacity to just make the stuff here. And so a lot of companies could end up laying off workers. I mean, some people that work at Ford and General Motors might end up losing their jobs because of these tariffs.

You know, Donald Trump earlier today said that he was going to destroy because he got really pissed off at Canada because they retaliated with some tariffs. And then they threatened some export tariffs on energy with electricity, which comes from Canada down here. You know, he got particularly offended.

And he said something like, I’m going to destroy Canada. It’s going to be like biblical. It’ll be in the history book.

Like I’m going to I’m going to destroy Canadian manufacturing. Well, how is he going to do that? Right. Just I mean, assuming that Trump made it impossible for Americans to buy anything coming out of Canada, it wouldn’t destroy Canadian manufacturing.

Yes. Most of the stuff that Canada exports comes to America because like we’re right here, we’re close. Right.

So it doesn’t cost that much to get stuff, you know, to America from Canada. Right. But if we closed off the border, it doesn’t mean that Canadian factories are just going to shut down.

Well, first of all, Canadians do buy a lot of cars made in America. Right. So they won’t buy those.

They’ll buy their own cars. Right. Because they have the capacity.

So Canadians will buy more cars made in Canada. And a lot of American brands are made up there. So it’s not like they can’t buy American cars.

They just buy American cars that are made in Canada. But there are a lot of foreign companies that make cars in Canada for both the Canadian and American market and the Mexican market. Right.

You know, they make them up in Canada and they ship them down. Well, they’re not going to close those plants, nor are they going to pick them up and move them to the U.S. What Canada is going to end up doing with its extra production. Assuming that Americans don’t want to pay the higher prices.

Oh, no. Now I’m in a world where Trump has raised the tariff so much that it’s that Canadian cars are unaffordable. Right.

Maybe it’s thousand percent tariffs or something crazy so that nobody in America has enough money to buy a car made in Canada. Right. Because he wants to destroy Canada’s manufacturing business.

Well, what’s Canada going to do? They’re going to sell their cars to Europe. They got ports, you know, on the East Coast. They can they can put their cars on there and they can ship them over to Europe.

They could they got West Coast ports. They can ship stuff over to China and Asia. They can ship stuff down to South America.

So it’s not like there aren’t any other customers. Now. Is Canada better off selling to America? Probably because they’re more competitive, because it’s cheaper transportation costs.

But if America doesn’t buy, it’s not like they’re like, oh, well, I guess we’re screwed. We don’t have America. No, they’ve got the whole world, you know, to sell to.

It’s Americans who would really be suffering if we closed off the ability of Americans to buy anything made in Canada. Because now Americans choices are diminished. We can’t buy these goods.

Why were Americans choosing to buy these goods? Because they were getting a good deal. You know, I mean, look, I was throwing a football. You know, some of you have been watching my son, Preston, you know, playing football.

You know, he’s on this tackle football team here in Puerto Rico. You know, it’s really fun. The kids have a good time.

And I, you know, on my ex, if you’re not following me on X, you got to follow me. But every week I put like one of his touchdowns, you know, that he scores, you know, it’s cute. And the little kids run around and they’re padding.

But I’m throwing a football with him in the backyard before the podcast. And, you know, I look down and it it was made was in Thailand, I think I remember made in Thailand. You know, I mean, football is an American name, American game, but we don’t make the footballs.

Right now, I mean, when I go shopping for a football, I’m not trying to buy one that’s made in Thailand. I’m just buying a football. But that’s where they’re made.

I mean, I don’t know if any footballs I haven’t looked around and we’ve actually got a whole bunch of them. I can go check the labels on each one of them. But I doubt any of them are made in America, because if they were made in America, they’d be a lot more expensive.

And they and they couldn’t compete. So the only way anyone is going to buy an American football is if we make foreign football so expensive that the only ones are American. But maybe we don’t even have a factory that makes footballs.

Maybe we don’t even have the supply chain to get, you know, the leather or the material for the laces or the rubber. We know all the stuff that goes into the football. See, they’ve already got all that stuff built up, you know, in the countries that have been making footballs for 10, 20 years.

If we haven’t made a football in that long, how are we going to do it? Trump thinks like, well, just bring your production back. Well, first of all, nobody knows how long these tariffs are going to be in place. Who the hell is going to make the investment to build the factories? Based solely on the fact that there are tariffs now that may not be there by the time your factory is completed, it’s not going to happen.

What we need to do is to make America a more competitive place to manufacture without the tariffs. Then we can we people will will make the investments. Right.

If it’s not artificial. Right. We can’t be dependent on a barrier to competition.

And of course, again, those barriers end up making a lot of our companies less competitive globally because now they have to buy their imported parts at a higher price. And now they have to export it. And they’re you know, they’re not as competitive as as foreign as foreign producers.

But we have to make America attractive on its own. And that means massive deregulation, which I know Trump is in favor of. But we need real cuts to government spending, which we’re not getting.

You know, it’s very disappointment that Donald Trump spent some of his day, you know, not just attacking Canada, but he also was attacking Thomas Massey, who’s the one the one Republican in the House of Representatives who voted against the big ugly bill. Now, Trump calls it a big, beautiful bill. But there’s nothing beautiful about a bill that increases the deficit and increases government spending.

Right. Everybody wants to focus on Doge and whatever it’s pretending to do or is doing, but they’re not paying attention to what’s actually happening on Capitol Hill. The very programs that Doge is cutting the Republicans in Congress are funding.

They haven’t turned off the spigots. The budget deficits are bigger than they were. It’s still over two trillion a year deficit.

Officially, I mean, unofficially, it’ll be a lot more than that because, you know, it has rosy economic assumptions that aren’t going to pan out. And there’s a lot of off budget stuff that they’re not counting. But Thomas Massey is like the only guy there who is willing to do the right thing instead of saying he wants to get rid of Massey.

Right. He says, we’ve got to get rid of this guy. Somebody needs to primary him.

We’ve got to get him out of Congress because he won’t play ball. Right. He’s he’s he’s an obstructionist.

What he’s trying to obstruct are the deficit spending that Trump says he wants to get rid of. Like I mentioned, I think on the prior podcast, Trump did an interview and he said he’d like to balance the budget in one year, if not sooner. Well, if he really meant what he said, Thomas Massey is his strongest ally.

He’s not as, you know, a critic. He needs to get behind Massey. We need more Massey’s.

You know, I don’t you know, we don’t need takers to run against him. We need takers to run against the other Republicans who voted for this bill. What Donald Trump should be doing is saying, I’m going to veto this bill.

Massey is right. And in fact, I’m going to veto any bill you guys send me that has an increase in the debt ceiling. That’s what I do.

You know, I’d go cold turkey on this stuff and I’d say, you know what? Let’s all get down in a room because I want to balance the budget this year. So let’s do it. But of course, it can’t be done without going after entitlements.

So we’ve got to do it and we’ve got to eliminate departments and agencies. You know, a lot of people got excited when he he put a crypto friendly guy at the head of the SEC. You know what would have gotten me excited? Get rid of the SEC.

Right. That would have been good for everybody. We don’t need the SEC.

We don’t need FINRA. We don’t need the CFTC. We don’t need the NFA.

We don’t need any of these regulatory bodies that operate in the in the financial business. I mean, I know that they don’t do anything. They run up the costs of doing business.

I mean, the justification for all this government regulation is to protect investors. But investors get screwed anyway. They do all kinds of dumb things.

Right. Like, you know, they’re buying all these crypto ETFs. Right.

Did they get protected from doing that? You know, the Ethereum ETFs are down almost 50 percent from when they came out in April of last year. Wall Street shoved those things down investors throats and, you know, they’ve already lost half their money if they bought on day one and they still they still hold it. But Bernie Madoff, right.

The biggest Ponzi scheme ever, other than the one the government does with the debt and Social Security. But Bernie Madoff was ran the biggest private Ponzi scheme in history. And he got away with that for like 20 years.

He was regulated by FINRA. He was regulated by the SEC. He was audited by those guys and they gave him their good housekeeping seal of approval.

I think the main reason that Bernie Madoff got away with that Ponzi scheme for as long as he did, was because people assumed that he was legit because of the government audits. Well, he must be legit. Otherwise, you know, the government would let him stay in business.

People let down their guard when they think the government is doing the due diligence for them. You know, the original Ponzi scheme, Charles Ponzi, his scheme didn’t even last a year. It blew up.

Now, when Ponzi ran his scheme, there was no SEC and there was no FINRA. So why did his scheme blow up so quickly? Because the free market put an end to it. The market figured it out.

Maybe had there been an SEC or FINRA around Ponzi’s day, Ponzi would have been able to get away with that for a lot longer. So the point is, we don’t need government to protect investors. The free market will protect investors.

Reputation, competition for reputation. Now, what about fraud? Do we need the SEC or FINRA? No, because fraud is already against the law. If I defraud somebody, that’s already a crime.

And it’s a state crime. It’s a crime in every state. There’s no state that says fraud’s OK.

So we don’t need the government to go after securities fraud. Fraud is fraud. If I defraud somebody, if I if I sell you a car and I tell you it’s got 10,000 miles, but it had 100,000, I roll back the odometer and you buy it thinking it’s fraud.

Right. I’ve lied to you. I’ve told you something to get you to do something that if I told you the truth, you wouldn’t have done.

Right. So if I do that with a stock, if I’m a stockbroker and I lie to you about a company and then you buy the company based on that lie and you lose a bunch of money, well, it’s fraud. We don’t need the federal government.

You know, we the way the federal government got into the stock market was after the crash of 1929. Right. Kind of blame it was like, you know what we did after the financial crisis in 2008.

Why did the stock market crash in 1929? Because it was a bubble. Well, how did how did we get a bubble? Because the Fed inflated it just like they inflate every bubble. The Fed printed too much money in the latter part of the 1920s, especially 1925 or 1929.

And they printed too much money and that created a stock market bubble and a real estate bubble. And then they finally raised rates and pricked the bubble. And a lot of people blame the Fed for the crash because they said, well, they raised rates and that caused the crash.

No, what caused the crash was the fact that they lowered them in the first place and inflated a bubble. They had to raise rates. Eventually, the longer they waited, the bigger the bubble would have been.

And so they finally did it. And we got the the stock market crash. And the government turned that into the Great Recession, not the market.

But, you know, where I first learned when I first really understood the stock market was from Alan Greenspan. I read his article, Golden Economic Freedom, in Ayn Rand’s book, Capitalism, the Unknown Ideal. Alan Greenspan blamed the entire stock market crash on the Fed.

He blamed the bubble on the Fed. And then, of course, the minute he was in charge of the Fed, he did the same thing. He did the same thing that he criticized the Fed for doing when he was, you know, writing, writing, writing that essay.

And although Ron Paul told me that when he passed by Greenspan in the halls of Congress one day, he asked him specifically. And this was while he was Fed chairman. He asked him, hey, you know, what about your article, Golden Economic Freedom? I mean, would you change it now? I mean, you know, you know.

And he said, no, I wouldn’t change a word. So in other words, he still believes exactly what he believed back then. Right.

And so he’s basically lying to the public about all this nonsense. But he’s still the same guy. He still understands Austrian economics, hard money guy and knows, you know, the dangers of this Fed monetary policy.

But the point is that the government created the conditions where a lot of investors speculated because of the cheap money of the Fed. They lost money and then they overreacted. Oh, my God, we need an SEC.

Oh, banks failed. We need the FDIC. Right.

All this crap came in during the 1930s because they said if this is why. Right. We had a stock market crash because we didn’t have this.

Banks failed because we didn’t have the FDIC. But barely any banks failed. You know, during the entirety of the Great Depression, something like two percent of the bank deposits were lost.

I mean, the banking sector did very, very well. Yes, it wasn’t perfect. There were some banks that failed, but way more banks fail now than failed then.

It’s just that the government bails them all out. But the other problem is the entire banking system is way more levered up today than it was in the 1920s and early 1930s. So the banks were sounder without the FDIC than they are now with it.

And that’s because of the moral hazard. Once the government insures the banks, well, then no one gives a damn. No one cares what the bank does with your money because the government’s got you covered.

But back in the 1920s, people cared. You didn’t just put your money in any old bank. You know, you did a little research, you know, or they had like consumer reports.

They had companies that did research and said, here’s a good bank. This bank has better lending, has a better balance sheet. Put your money there.

Right. It’s safer. Right.

They don’t have any of that now. We’ve got consumer reports telling you which TV set to buy or which cell phone. But there’s no no one tells you where to bank.

Who cares? Because the government has taken away all of the free market forces that would cause banks to compete based on soundness and safety and would cause customers to reward sounder banks by putting their money there. So because of the government, we have a far less stable, more insolvent banking system now than we had in the 1920s. So we’ve got to get rid of a lot of these government agencies and departments.

Yeah, I know they talk, you know, I’ve listened to Linda McMahon. They’re talking about, you know, getting rid of the Department of Education. I guarantee you when Trump leaves, the Department of Education is still going to be there.

You know, Ronald Reagan tried to get rid of it and it just started. It was enacted under Carter and he couldn’t get rid of it, even though it just began. It’s not going anywhere.

And, you know, I don’t like to when ever they talk about, you know, dismantling the Department of Education. They talk about sending the money to the states. Well, what good is that? So we’re going to get rid of the Department of Education, but we’re not going to get rid of the budget.

No, I want to get rid of the Department of Education and then apply all the money that they were spending towards the deficit. I don’t want to share that money with the states. Like, let the states take care of their own education.

You know, Trump said one of the problems is we’ve got the worst education in the world and we’ve got the most expensive education in the world. That’s true. Money doesn’t work.

The problems with our school system is not that they don’t have enough money. That’s not why it’s not working. There’s more than enough money already in the states and cities to handle public education.

The federal government doesn’t need to provide any. So we’re not going to even get the real benefit if we get rid of the department but divvy up the money. But, you know, Trump is afraid to say, no, we’re going to cut spending on education.

We’ve got to cut spending on education because we’re not getting anything for our money. Right. We’ve been throwing too much money at the problem for decades without realizing that the money is the problem.

Right. If we keep throwing money, right, then the problems are going to get worse because the money doesn’t solve it. So they’re not really doing what needs to be done.

That’s why I’ve been saying that I’m worried that Doge is more of a distraction. They get to pretend they’re cutting spending as they keep on increasing spending because everybody is focusing on Doge and Elon Musk and what he’s saying he’s doing. And it’s like, great, you keep doing that, Elon, and we’ll keep running up bigger deficits over here.

Right. Now, the other thing I wanted to talk about quickly is I’m hearing that the Trump administration, what they’re thinking is, look, we’re going to trade a lower stock market for lower interest rates. Like, hey, if we get the stock market to go down, we get maybe a recession.

We’re going to get rate cuts. You know, we need lower rates. Because remember, Donald Trump said that our 4 percent interest rates are sky high, you know, which, of course, they’re not.

They’re actually pretty damn low. They’re going sky high eventually. But everybody is convinced that, well, you know, there’s a silver lining to the stock market going down or there’s a silver lining to recession because it means rate cuts.

No, it doesn’t. Not when inflation is going up. That basically puts an end to it.

I think what’s going to happen and what’s already happening is the dollar is going down. Inflation is going up. And so interest rates are going up.

In fact, interest rates did not drop at all. They may have even inched higher over the past seven days. So all this rush of money out of the U.S. stock market didn’t go into the U.S. Treasury market because treasuries are not a safe haven anymore.

Where did the money go that was yanked out of U.S. stocks if it didn’t go into treasuries? It went into foreign stocks. It went into foreign currency. So it went into foreign government bonds, went into German bonds.

Right. Not our bonds. It went into gold, went into gold mining stocks.

It didn’t go into treasuries. That’s obvious. And that is going to get worse.

The markets don’t get that yet. The Trump administration doesn’t get that yet. That is going to be a major surprise when the recession doesn’t bring lower interest rates, but higher interest rates.

And of course, if the Fed goes back to quantitative easing, which is the only way we could get the long end to go down temporarily because rate cuts won’t do it. Right. Cutting rates from five and a quarter to four or whatever or four and a quarter that didn’t bring long term rates down.

They went up. And if we go from four and a quarter to three, they’ll go up another point at least. The only thing that’s going to bring rates down temporarily is going to be a new QE program.

But the minute they announced that the dollar is toast and inflation is going to take off and that is going to put an end to that QE program before they can complete it. But now you’ve got massive inflation problem, which is going to compound the recession. Everybody thinks, oh, the government can stimulate us out of a recession.

No, they can’t. And of course, if Donald Trump is serious, I don’t actually think he will be because I think he’ll buckle. But he talks about the short term pain.

The problem is the short term is going to run for years and it’s going to be not a little pain, but a lot of pain to do the right thing. Trump wants to get us where we need to be. I agree with Trump 100 percent.

We can’t be you know, we can’t just live on imports. We need to make stuff. We’re going to be forced to do it eventually.

Right now, we don’t have to because the world makes it cheaper and they’ll take our dollars. And so we could just have a service sector economy, but the world won’t take our dollars forever because we’re printing too many. We have too much debt.

And, you know, we can’t export enough services to cover our imports. So eventually foreigners are going to put an end to this party. But Trump is threatening to poop the party early, which is great.

Right. I think the sooner the better. But he’s not preparing the country for the economic pain associated with the transition.

We’ve got to stop spending. We’ve got to start saving. We’ve got to rebuild factories we don’t have.

We have to retrain kids that have philosophy degrees. We have to teach them how to do stuff. Right.

You know, so it’s a big process, a big investment that it’s going to require, which means the entire service sector economy, that’s a big bubble, has to pop. I mean, stocks have to go way down, not just a little bit. Real estate has to go down.

Bonds have to go down. Rates have to go up. I mean, a lot of money is going to get lost because a lot of money has been riding on this bubble.

Right. In unsustainable asset bubbles that are going to deflate, bonds are going to be defaulted on. People are going to lose money right now.

It’s all going to happen eventually anyway. The sooner the better, because the sooner it happens, the less we’ll lose. And the alternative, of course, is just we have hyperinflation and then everybody gets wiped out through inflation, which unfortunately is the path that we’re headed on because we never do the right thing.

But my belief is that as soon as we really see the whites of an official recession and the job losses start to mount, Trump is not going to be talking austerity. They’re going to be talking more government spending, not cuts. They’re going to be talking about big tax cuts, stimulus checks, whatever.

Right. There’s you know, there’s no atheist in a foxhole and there are no Austrians in a recession. Right.

Everybody is a Keynesian when there’s a recession. Nobody is willing to tell the voters you’re on your own. We can’t do anything.

We got to let the market work. Right. That’s not how you get elected.

You get elected by promising something to help ease the pain. We’re going to send you money, give you stimulus checks, create job programs. You know, we got we got to we got to get us out of this recession.

We got to ease the pain of the recession. No. Right.

Because all you’re doing when you’re interfering with a recession is you’re interfering with the cure. The recession is the free market’s way of fixing what the government broke, what the Federal Reserve broke. And so you have to let it happen.

Anything that you do to truncate that recession to prevent the market from doing its job, you it is detrimental to the long term health of the country. But politicians don’t care about the long term health of the country because they are they have to get reelected. Now, Trump doesn’t have to get reelected.

So maybe he could do the right thing, you know. But I think he has to start stop listening to all these people that are telling him to do the wrong thing. I mean, the tariff guys, the crypto guys that are blowing all the smoke up his ear.

Maybe he’ll you know, he’ll get some better advice and do the right thing. Anyway, that’s it for today’s podcast. Again, these gold stocks have gone up there.

They’re not even at 52 week highs yet. They haven’t even gotten back to where they were before Trump won. Even though gold is higher than it was before Trump won by a couple of hundred bucks.

The gold stocks are still cheaper. That’s not for long. I think this is going to be a huge rally.

And I think this year, 2024, again, this is my opinion. But I think this is going to be probably the best year in decades. For foreign markets beating the U.S. market.

And for gold stocks beating the Nasdaq by the widest margin we’ve seen. So you and it’s still early. I mean, it’s still only March.

We’re not even finished with the first quarter. And I think the second half of the year is going to be even better for the foreign markets and certainly for gold mining stocks than the first half of the year. So there’s plenty of time to get in, even if you’re one of my clients who pulled out.

And you may regret that decision, but you’re going to regret it more if you don’t reverse it. Right. Hey, you made a mistake.

OK, correct it. Get your money back out of the U.S. market. Take a small loss or big loss, whatever.

Take that loss and go back into these foreign markets because there’s a lot more room to the upside. Get back into these gold mining stocks and talk to your representative if you have one at Europe Pacific. Go to our Web site, Europe.com. If you’ve never had an account, well, open one up.

In fact, you know, you can go on Europe.com and buy our mutual funds directly on the Web site. But you can learn about our funds. You can buy them.

No load at any of the discount brokers. But I would be taking positions, not just buying with cash, but raising the cash by selling these overpriced U.S. stocks and getting into these undervalued international stocks and gold stocks. Also, don’t forget, keep reading the newsletters.

There’s some really good stuff that we’re putting out at Shift Sovereign dot com. If you’re not reading those newsletters, you’re missing out. The free ones are worth every penny.

You can get them at Shift Sovereign dot com, but you really should try out Shift Sovereign premium. You don’t like it. You know, you can stop paying for it, but you get a lot of extra value for Shift Sovereign premium.

Again, I’ve started to do more of these spaces. I did a couple of spaces in the last week just talking about the market. So sometimes they’re impromptu.

So make sure and just, you know, follow me on X because you never know when I might just start talking. And of course, the beauty of these spaces is you can ask me a question. Right.

I take questions, interact with people. So you got to follow me, follow me there. And if you’re listening to this and you’re not, you know, subscribe to my YouTube channel.

Make sure and subscribe to that. Bye for now.