Economists Uncut

Peter Schiff (Uncut) 01-16-2025

đź”´ Wall Street Celebrates Low Inflation as Prices Soar – Ep 1003

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As you can see, winter break is over. Back to work. It seems like all the equipment here is working and hopefully it’s stable.

 

Anyway, I was going to see this podcast about half an hour ago. I realized that Joe Biden was going to be delivering his farewell address to the nation. I’m not listening to it, but even if none of you did, I wanted to listen to myself.

 

Not really because I really cared too much about what he was going to say, but I didn’t want to react to it. On his podcast, I listened to about 18 minutes. I think that’s about as much as you can get for Joe Biden reading on a teleprompter.

 

He is farewell address to the nation. I kind of want to sum up what he spoke about. So in case you missed it, there’s no point in going to YouTube and watching it.

 

I’m just basically going to give you a clip of those on it. So first of all, Biden began his address by taking credit for the ceasefire between Israel and Hamas that was announced earlier today, including the release of the hostages. I’m not sure of the time table for the release, but apparently they’re going to be released.

 

Biden took credit for this. Now, I don’t think it’s a coincidence that Donald Trump is going to be inaugurated in five days. And this is when the ceasefire was agreed to in the hostage bill released, was agreed.

 

The Biden administration, what they’ve been working on this, or I don’t know how many months, six months, something like that, they haven’t gotten anywhere, and now it’s happened. So I have a feeling that Donald Trump and his team had a lot more to do with this than Joe Biden realized. Of course, there’s a lot of things that Joe Biden doesn’t realize.

 

In fact, there’s not many things that he does realize. So maybe he has no idea. Maybe he actually thinks that his team is responsible for the deal, even though I have a feeling that he was Trump.

 

You know, I criticize Trump when criticism is due, and believe me, there’s a lot of criticism that is due, and I’m going to be criticizing him later in this podcast. But I do want to get credit for credit to do. And it’s my feeling that he has a lot to do with this.

 

And there won’t be some successes during the Trump presidency. Unfortunately, economically, there’s going to be a lot of failures. And it’s not necessarily because of what Trump’s going to do.

 

It’s kind of free or gained, it’s made the decay here. There’s a serious problem, and it’s not just that Trump is inheriting it, because he was president for four years, and he helped make the problem bigger. And now he’s inheriting a much bigger problem than the one he originally inherited from Obama and the one that he gave worse despite his claims to the contrary.

 

But anyway, let me continue with talking about Biden’s farewell address here. I mean, obviously, it was not like George Washington addressed it. Of course, you know, it’s not televised.

 

That’s probably the most famous of farewell addresses. But you know, he began after he talked about the ceasefire. He started talking about the statute of liberty.

 

And I thought that’s a little ironic, because his presidency was very anti-liberty. You know, liberty is about freedom. And when you talk about freedom, you’re talking about freedom from government.

 

That’s what liberty means. And Biden’s presidency was all about more government control, bigger government, more regulations, anti-liberty. So it doesn’t make sense that he’s talking about the statute of liberty and everything that it’s supposed to be stands for when he doesn’t stand for any of that.

 

He wants government control rather than individual liberty. He also talked about his 50 years of government service, as if that was a good thing. That’s a problem.

 

Nobody should work in government for 50 years. Biden is 82. So that means he’s been in government since he was 32.

 

That’s pretty much his entire adult life. And I know he went to law school. And so that’s how long it was, how long it was, three years, he went to college.

 

So he probably didn’t even really graduate from law school. I’m guessing maybe 25, 26. So what, what did he work? Maybe five years.

 

He spent having an actual job, in fact. And then his entire life was spent in government, in Congress versus the house. And in the White House, the Vice President, the President, this is not the way it’s supposed to be.

 

You’re not supposed to be there for life. You’re supposed to be a citizen, you go to government for a while, after you have experience in the private sector. And then you go back to the private sector, right? Because you have to have some experience in the real world to understand legislation and the impact that it has on the real world.

 

And you should have to live with the regulations that you pass. You know, if you stay in government your entire life, you have no idea what it’s like to operate under the rules of regulations that you vote for. But if you actually have to go back to the private sector and live under the laws that you help pass, well, that’s a lot better.

 

You know, I know there was an famous story, I think, of Hubert Humphrey, I think, wrote about it in this book. Because, you know, after he left government, he was a big liberal. I think he opened up a bed and breakfast or something in Vermont.

 

And there was so much government regulation. I think he eventually went out of business because he put it in the handle. And he said, you know, I really wish I had better understanding of how rules and regulations worked, you know, while I was in Congress.

 

Because when he finally left after a lifetime of service and tried to run a small business, he couldn’t do it. Because of all the rules and regulations that he had been passing his entire life. But he had to live and abide by it.

 

But that’s why we need to have, you know, talk about criminal limits for Supreme Court justices. That’s not where we need it. You know, Supreme Court justices, I don’t care if they stay there.

 

For a long time, by the time you get to Supreme Court, you’re generally in your 50s anyway. Because you’ve got to work your way up, you’ve got to start out as a lawyer. And then you’ve got to get, you know, appointed as a judge.

 

And then you’ve got to get elevated, you know, to the appeals court. This takes a long time. And so, you know, you’ve got to be a lawyer, you’ve got to understand the Constitution and all this stuff and the law and how it all works.

 

So I’ve got no problem with people who make the law a career being on the Supreme Court. But the legislators in Congress who are writing rules and regulations that are going to apply to private citizens, they need to be private citizens themselves. They need to have experience in the private sector.

 

And then they need to go back to the private sector and live with their own rule. Because if they know they’re going to have to be subject to the laws that they passed, they’ll be a lot more careful about the laws that they do pass. You know, but if they’re just going to live in this fishbowl, exempt from everything that they do, you know, they’re more like a royalty, right? There’s a nobility that we have now in the United States government.

 

You know, we don’t want numerals. We want common men and women. And so, you know, it’s a disgrace, unfortunately, that Joe Biden was 50 years.

 

He’s in office until he’s senile, basically. That’s what happened to him. So he also talked about his accomplishments in his four years as president, which of course, you know, he doesn’t really have any accomplishments.

 

These are made up. I mean, the things that he’s bragging about actually undermined the economy during his four years. That’s why the public didn’t vote for four more.

 

That’s why Harris, you know, is going to be, I guess, she presides or does something with the inauguration. But then, you know, she’s out of here. Or no, she’s certified the election results.

 

I forget the role of the vice president, but she’s gone, right? And the reason is because the public didn’t feel that the Biden presidency was a success. They didn’t want four more years of that. They wanted four more years of Trump.

 

And that’s because they thought the economy was better when Trump was president than it was when Biden was president. And so there is no successes. It’s all failures as far as I’m concerned.

 

He talked again about the 17 million jobs that he supposedly created. You know, these jobs were the jobs that were there before he became president. All this is the COVID jobs where people left their jobs.

 

And then they came back to their same jobs. And Biden wants to claim credit for creating jobs that already existed. And that people just temporarily left because they had to, you know, go home and, you know, quarantine themselves for the pandemic.

 

So anyway, then I guess, and one of the last things he did is he managed to get in that climate change is the reason we have the fires in California. And I’m going to talk more about these California fires later in the podcast. But clearly, climate change is not the reason for the California fires.

 

They’re not even really natural disasters if they’re not a creation of nature. If the fires are set by arson, or even if they’re set by a downed power line, that’s man-made. It’s not a natural disaster.

 

And especially if the main reason that the fires are so big and are doing so much damage is because of incompetent in government. If you’ve got a government that doesn’t manage the forests or manage their water resources and creates this, you can hardly call it a natural disaster. It is a failure of government and not a failure of nature and having nothing to do with climate change.

 

But I’m going to get into that a little bit later in the podcast. But the first thing I want to talk about is the market’s reaction today to what is what was purported to be good news on inflation. And then I want to talk about the supposed strong jobs report we got on Friday.

 

So two key economic reports that I’m going to discuss coming up right after this quick commercial break. So stick around. We’ll be right back.

 

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That’s expressvpn expresvpn.com slash gold and you can get an extra four months free expressvpn.com slash gold. All right. So we got a big rally in the markets today.

 

That was up just over 700 points. It’s about 1.6%. Russell 2000 did even better up 2%. The star was the Nasdaq up two and a half percent.

 

Of course we had a rally in the bond market as well. The bond market yesterday made new lows and yields made new highs. We had the yield on the 10-year government bond at Treasury at 4.8%. And the 30-year was back at 5%.

 

But we had a rally today which sparked a rally in the stock market because the government released what was purported to be good news on inflation. We got a benign inflation report. We got a report that was better than expected.

 

And by better, I mean lower. We was expected and this is what ignited the boom. We had a big increase in the probability that we’re going to get I guess what a March rate cut now that we got this good news on inflation.

 

Well what was the good news on inflation because the expectation and this is the December number so it is the final number of 2024. And the estimate was for an increase of 0.3. And we got an increase of 0.4. What’s the good news about that? 0.4 is higher than 0.3. Now the range of estimates was anywhere from 0.2 to 0.4. So it wasn’t above the highest estimate but it was the highest estimate and it was higher than the previous month. And I think more significantly if you take 0.4 which is one month and you analyze that.

 

Let’s say the next 12 months are the same as the report we just got. That’s 5% inflation. 5%.

 

That’s a big number. That’s more than double the Fed’s 2% target. So how are we celebrating? Why did Wall Street look at what is a bad number and somehow decide that it was a good number and have a big rally party? Well it’s because the core number.

 

And before I get to the core let’s talk about the year over year CPI which was up 2.9%. That is 0.2 tenths hotter than the year over year from November. So we’re moving in the wrong direction. Now yes the expectation was 2.9 and we got 2.9 but 2.9 is a long way from 2. Remember when inflation was below 2 and the Fed was like oh my god this is an emergency we’re below target we need 0% interest rates we need to do quantitative easing we really need to get inflation higher.

 

It was like 1.5, 1.6, 1.7 and the Fed was like that’s not enough we need to get to 2. Well we were a lot closer to 2 then from the downside than we are now from the upside. So why isn’t the Fed equally as vigilant when we’re 0.9 away from 2?

We’re 2.9 right I don’t even know if he ever got as low as 1.1 right so we’re at 2.9 we’re almost a full percentage point away from the target where why aren’t they being as aggressive to get inflation down as they were to get inflation up it just shows you how disingenuous this whole thing is they’re actually cutting rates you know when inflation is 2.9 and it’s heading in the wrong direction but you know more significantly forget about what the government claims is happening to prices.

I talked about this on the last podcast look at commodity prices look at the CRB in 2024 the CRB was up 17 percent does that sound like a year of low inflation when commodity prices as a group were up 17 percent in the year and most of those gains happened in the last quarter in fact over the last four months which includes the last you know two weeks which is the first two weeks of 2025 the CRB is up 21 percent this is a boom in commodity prices we’re up five and a half percent so far in 2025 then we’re only two weeks into the year this is a big big move oil price is close today above 80 dollars a barrel we’re up almost four percent right wall street is celebrating low inflation at the same time oil prices are surging by four percent and that’s despite the fact that we got a ceasefire in the Middle East right you know that that should have brought oil prices down but they went up so oil is is going to be booming

I think we’re going to be back over a hundred you know maybe by the end of the of the first quarter the CRB index was up 1.6 percent today it’s at a 17 year high the last time commodity prices were this high was 2008 before the financial crisis and it took the financial crisis to bring prices down but the main reason that the CRB is still about 20 below its record high from 2008 is because oil was over 140 dollars a barrel back then it’s only 80 dollars now oil is cheap but it’s not going to stay cheap all prices are going up so wall street is oblivious these are leading indicators if you remember commodity prices really started to boom in the second half of 2020 and

I was talking about that on this podcast constantly how we were going to have a big move up in inflation just look at commodity prices and that’s when the Fed was not worried about it at all it still was worried that we didn’t have enough inflation and then even after we started to see these big jumps in the CPI in 2021 and the commodity prices kept going up the Fed was saying it’s transitory don’t worry about it and I

was saying it’s not transitory look at commodity prices they are a leading indicator and the big increase that we have in commodity prices in 2024 that’s not going to show up in the CPI until 2025 this year so CPI was up 2.9 percent last year now we have soaring commodity prices so what’s the odds that the CPI is going to be up less in 2025 than it was in 2024 before we had this big run up in commodity prices I love you’re paying attention to what’s happened in some of these prices

I jotted these things down yesterday or before today’s rally but year over year cocoa natural gas 50 percent wheat 45 percent sugar and oil 40 percent soybeans and copper 30 percent gold and silver up more than 25 percent I mean this is inflation you know I looked at a chart of live cattle cattle is only up about 15 percent in the last year but it’s at an all-time record high look at that chart I mean cattle is going to stand P I mean one afternoon look at these commodities these are incredible looking charts and what’s even more significant is that it’s happening with a strong dollar which is very rare normally you get big moves in commodities when you have a wheat dollar because commodities are priced in dollars so what that means is that if you want to know what’s happening to commodities in Europe in Japan in Canada in you know in Australia in South America you got to add at least another four or five percent to all these numbers

you know that’s why I’m talking about inflation is going to be you know running all over the world you know in Japan and I’ve been talking about the yield on the Japanese government bonds well now the yield on the 10 year JGB is one and a quarter which I we just broke one percent you know a month ago and now we’re at one and a quarter look we’re going to be at one and a half then we’re going to be at two and once we break to Katie bar the door right yields are going to spike in Japan because there’s a big inflation problem it they just came out this before I did this the show with their PPI numbers and year over year producer prices in Japan are 3.8 percent their consumer prices are 3.4 percent you know we’re way above two they remember the goal was to get inflation up to two and now it is way above two and it is heading a lot higher in fact if you look at the yield curve in in in Japan the yield even on a 20 year Japanese government bond is 2 percent and a third year it’s 2.35

that’s way below the inflation rate the yields can’t stay down here yields have got to go up they’re going to go way up and of course the problem is they have a lot of debt in Japan so what are they going to do about this as they have to finance this debt they’re going to need some significant government spending cuts in Japan they’re going to need big tax hikes in Japan we need the same thing here we’re not going to get it they might have it in Japan J

apan can afford it you know there people still have a lot of savings they can pay higher taxes the government can cut spending and one thing the Japanese can do that we can’t they’re the biggest holder of US treasuries they can dump those treasuries and use the money to repay some of their own debt which is what they’re going to have to do right nobody’s talking about that but I think you’re going to see a lot of treasuries selling out of Japan but again the bigger problem too is the unwinding of the Japanese carry trade right everybody’s been borrowing in yen and buying risk assets around the world including US treasuries right well all that stuff is going to have to be sold you’re going to have a global margin call as interest rates really start to go up people are going to have to repay the yen that they borrowed and they can’t do that until they sell the stuff they bought with that borrowed yen

so I think this is also going to be playing out in 2025 as you know inflation is rearing its ugly head not just in the United States but all around the world and that doesn’t mean that the inflation isn’t the fault of the US government in the Fed just because we’re having inflation in Europe and Japan it’s because the Japanese and the European central banks and governments made the same mistakes that we did and so since we all made the same mistakes we’re all experiencing the same consequences which is inflation

so you know while we’re looking at these phony numbers that the government is telling us right well the government is telling us that inflation is low but prices are telling us that inflation is high right who are you going to believe a biased government were just prices right commodity prices are real they are what they are right the government has a ulterior motive in the in the giving us this kind of uh this kind of spin but anyway so let me get back to uh what was better than expected in the CPI and that was the core now

I’m not making this stuff up so the expectation was for the core to go up by 0.3 and instead it went up by 0.2 and the year over year increase in the core was 3.2 and it was expected to be 3.3 that’s it so the core was a little bit better than expected but the overall headline number was a little bit worse than expected and Wall Street spun this into great news that you know resulted in this 700 point Dow rally this two and a half percent Nasdaq rally and if you look at you know how we got to 3.2 first of all they rounded down the actual number is 3.223 so you know they they got rid of the you know almost a quarter of a point they just you know truncated that or rounded it down so it wasn’t really a full 110th beat it was less than that but the reason for it there was a you know kind of like outlier in that medical services costs went down now that’s rare that those costs go down they generally go up so you got one off month where they go down big deal will probably make it up next month when they go up extra

and then there was a decline in use car prices and that’s kind of a volatile number sometimes it’s up sometimes it’s down but that’s it but there’s nothing real there right it used car prices could just as easily be up quite a bit next month so it’s a statistical non-event instead of looking at these you know lagging indicators just look at the boom in commodity prices that was going on today yesterday the day before i’ve never seen commodity prices rising like this you know gold prices were up about 20 bucks today we’re back at 2700 silver

I had a really strong day was up about 70 cents we’re up about another dime this evening we’re almost at 31 dollars again we’re at 30 dollars and 80 cents so back up up 30 despite that most silver stocks were down you know one two three percent today you know gold stocks were barely up again you know nobody wants to buy gold stocks because everybody is so optimistic on the economy uh because they think everything is going to be great uh now that we’ve reelected trump again everybody is in for a huge disappointment when the problems that got trump elected get worse after he’s elected right they were going to get worse anyway i’m not saying it’s trump that’s going to make them worse it was going to happen and trump isn’t going to do anything uh to stop that but what’s happening with inflation is very good for gold it’s very good for gold stocks uh because it’s going to result in a fall in real interest rates see everybody is focused on what’s going to happen the nominal rates is the fed going to cut are they not going to cut what i’m focused on and what they should be looking on at is real race real race are going to be falling because inflation is going to be rising and the fed’s not going to hike there’s no way that the fed is going to start hiking during trump’s first term it’s it’s just not going to happen and can you imagine uh you know what would happen uh the vitriol uh the rhetoric what trump would be saying about pal if you know he steps in the office and Biden all the and and and pal just starts hiking rates right trump immediately comes in and they start hiking rates so it’s not going to happen rates aren’t going up they may hold off on the cuts until we really get a big you know collapse in the in the jobs market and i’m going to talk about that you know after this next break uh but um we’re not going to get hikes and the fact that we’re not going to get hikes when we should get hikes because inflation is going up means real rates are going down and that is very good for gold it’s bad for the dollar the markets have got this completely wrong and that’s the opportunity again uh for my listeners to keep buying gold it’s a steal at uh 2700 silvers and even bigger steel at 31 dollars so make sure and contact shift gold and buy before the next big move up you know go to shift gold.com you could just fill up your shopping cart and check out or you could talk to the representatives and make sure to contact your pacific asset management to get these mining stocks to get into our mining sma accounts separately managed accounts buy the euro pacific gold fund i mean these are the cheapest stocks that i can find there’s a bubble in almost every asset class that you could imagine right included bitcoin which is still you know hanging out at 100 000 there’s a bubble in everything except gold mining stocks in fact it’s the opposite of a bubble there’s extreme pessimism even today they couldn’t get a rally with a big rallying gold and a big rallying silver they are giving these stocks away nobody wants them and of course when nobody wants something that’s when you want to buy it when everybody wants something that’s when you want to sell it that’s what’s going on uh with a lot of these cryptocurrencies uh so you need to be a contrarian if you want to make money in the long run anyway we got a quick commercial break i’m going to go over some more inflation news and get into the jobs numbers that came out on friday and a few more things i want to talk about so stick around we’ll be right back.

 

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look as far as i’m concerned all the data confirms stagflation that is the economy that trump is being handed you know they’re talking about media trump is being handed this great economy this booming economy from biden they’re just setting them up for a fall because if everybody agrees trump is being handed a great economy when it’s not great later this year well clearly trump screwed it up and you know also on the producer prices that came out yesterday we didn’t get any good news there although the headline number was slightly better than estimates it was supposed to be up point two it was up it was supposed to be up point three it was up point two but the year over year headline number was right on estimates of three point three but what’s more significant is that it was three percent the month before so sequentially we went from three percent year over year to three point three we’re going in the wrong direction we’re not going down we’re going up

and we’re going to go up a lot more when the boom in commodity prices starts to factor in to the ppi which will remember this time was the core so we celebrated today because the core ppi was one tenth better well yesterday the core ppi was one tenth worse right they were looking for three point four and we got three point five so we got a worse number there on the core right so inflation is a problem the fed should not be cutting it all the fed should be hiking the fed is completely wrong on their policy the fed is pursuing a inflationary easy money policy the government is pursuing pursuing an inflationary fiscal policy the most fiscal stimulus we’ve ever had we’re running more than three trillion a year in annual deficits that is you know stimulus that is in a severe recession right that’s when the government is supposed to stimulate by running deficits when we’ve got all this excess capacity when we got a high unemployment that’s when the Keynesians argue we need to run these stimulative deficits right you’re when we when you have a strong economy you’re supposed to have a surplus to pay off the deficits that you ran up when the economy was weak we are pursuing stimulative fiscal policy and we still have stimulative monetary policy how is wrong they’re not restrictive we never got restrictive i’ve already went into that uh

and the numbers that we’re getting uh prove that anyway i wanted to go back to friday’s jobs report because there we got another stronger than expected report which really shouldn’t be a big shock because pretty much all the reports come out stronger than expected i mean that’s just how they do it then they revise them down either the next month or six months or a year later they come back and they revise it down when no one’s paying attention but when everybody is focused on the jobs report they come up with a good number and the report we got on friday was the last jobs report of the Biden presidency so it makes sense that it would be a good one right

and so it didn’t be a shocker that it was way above estimates they were looking for 155,000 jobs and we got 256,000 right a hundred thousand more than expected big beat right and of course you know bonds got clobber the dollar went up goal went down he oh this is a great number and of course they’re talking about how this you know we had a great um the Biden jobs uh you know presidency creating all these jobs again these are phony jobs these are part-time jobs these are service sector jobs manufacturing lost 13,000 jobs again so for the entire year now of 2024 we lost a total of 87,000 manufacturing jobs those are the good jobs those are the jobs we need the jobs we lost or the jobs we gain rather are the jobs a lot of people don’t want they’re the jobs that people are forced to take because the jobs they still have couldn’t pay the bills because the cost of living went up so much people had a moonlight people needed second and third jobs

and again a lot of these jobs went to immigrants now of course a lot of these immigrants trump is going to theoretically deport them so i guess those jobs will have to be lost but you know and i i would not be surprised now that donald trump is president whoever was cooking the books at the labor department trying to make biden look good assuming they’re the same people you know i don’t think they’re going to feel the need to try to make trump look good so we might finally start seeing some negative numbers on the jobs front unless you know somehow trump could get his own people in there to do whatever the biden people were doing but i don’t know that that’s going to be the case so i think we’re going to start to see somewhat more honest numbers and of course the media is going to waste no time at all in blaming blaming that on on trump

anyway i want to talk about some comments that jana yellow made i happen to catch an interview she did i think it was was a cnbc or what are these you know she was interviewed by one of these news commentators and and a couple of points she made i thought were were worth worth discussing one of them was that she kind of acknowledged almost kind of you know she was backed into a corner to admit this but she said that the massive deficit spending uh you know during the covid years may may have contributed somewhat to the inflation may have contributed somewhat it caused the entire thing it wasn’t like it just happened you know to make a problem that was already there worse it was the reason for the problem the deficit spending financed by fed money printing that was the inflation so it wasn’t that the deficit spending may have contributed to it

it was it it was part of it right it takes two to tango and in fact uh chairman powell actually asked for these deficits he told congress run big deficits spend a bunch of money i’ll i’ll buy the bonds right he was encouraging the inflationary fiscal policy uh during covid so it didn’t just have a casual incidental effect that was it now of course part of it was ordering people not to work right that was the other dumb thing they did at the same time they printed a bunch of money and gave it the people to spend they told people to stop producing all right well then you know when they get a buy you’re gonna buy imports right or you know or the prices have to go way up because we’re producing less stuff they kept saying well the problem is the supply no yeah well sure because people stopped working that was part of the supply problem but had the government not doled out all that money there wouldn’t have been the demand so both supply and demand would have come down and so prices would have been

okay the dumb thing the government did is at the same time they turned off the supply spigots they opened up the monetary spigots and so that’s why we had all this inflation so you know she still doesn’t understand that then the other thing that she said that i thought was rich is you know advice to the incoming administration and her advice was that we need to get our fiscal uh policy on a sustainable course well yeah we do why didn’t you do that when you were secretary of the treasury you’ve been there for four years and you’re saying that it’s up to trump to put the government on a fiscally sustainable course why didn’t you do that when you were uh but you know secretary of the treasury why didn’t you tell your boss you know a joe biden that we needed to get on a fiscally sustainable course why are you telling uh you know trump to do that when you’re not even going to be his uh secretary treasury right so she she couldn’t tell biden that we need to be on a sustainable path

but she’s willing to give that advice to trump you know and where was she when she was uh fed chairman why was she telling uh uh the biden administration uh to get congress on a sustainable path right you know uh when she was uh uh fed chair why should keep interest rates at zero for so long allowing the government to go further down the unsustainable path she enabled the very path that she’s now saying is unsustainable and we need to do something about it yeah that she’s all talked that’s always politician right there they’re always willing to talk about what needs to be done but they’re never willing to actually do what what needs to be done

anyway i want to move forward and talk about the tariffs a lot more talk about tariffs trump was out talking about this new government department agency that he wants to create right so supposedly he wants to eliminate governments and departments but the first thing he’s going to do on day one is create a new one and the new department or out of this not really a department but he called it one he wants to create uh the external revenue service right we have the internal revenue service that collects the income tax he says we need an external revenue service to collect the tariffs because according to trump the tariffs are paid externally right it’s the foreigners it’s the chinese it’s the mexicans it’s the canadians they’re going to pay these tariffs so we need a new agency to collect these tariffs from the chinese which is laughable we don’t need a new agency and they’re not external they’re all collected internally the tariffs are paid by the importers in the united states right the money isn’t paid to the government until the goods get here and they’re paid by the importer they’re not paid by the jap the chinese exporter

they’re paid by the us company that imports the products they send the money to the us government and then they get it back from americans by raising their prices it’s the same as the sales tax you know it’s ridiculous people think well you know the the chinese companies are just going to absorb the tariff well do you think stores absorb the sales taxes do you think they just say oh there’s a sales tax on this item let’s just eat it let’s just lower our prices because we don’t want the consumer to have to pay the sales tax of course not whatever the sales tax is they just tack it right on the same thing with a tariff it’s there is no difference they are excise taxes and so it’s not external it’s internal

you know donald trump again said that america has been the engine of growth we’ve been exporting all this growth to the rest of the world uh by consuming all their stuff and now they have to start paying for it right it’s about time they start paying their fair share because you know they’re not paying the taxes americans are paying taxes they’re playing penny it’s they’re paying plenty of taxes in their own countries right you don’t think that the canadians are paying taxes yeah they pay high taxes in canada

and then pay higher taxes than we do they pay canadian taxes they just don’t pay our taxes but they’re not going to pay our taxes the tariffs are our tariffs yeah if the canada is dumb enough to retaliate and tax their own citizens because america is taxing its citizens yes then the canadians are going to pay higher taxes but because the canadian government tariffs the not because trump did it but he’s got it backwards right the world is not growing because of our trade deficits we’re growing because of our trade deficits or we’re phony growing we have a bubble the us economy is unfortunately a service economy right because we you know it’s mostly services everybody will acknowledge that right manufacturing is small right we don’t produce much you never on a podcast

i did not too long ago i went over all of the um the goods that we import all the categories 80 percent 90 percent 95 percent you know of stuff that we import right the reason that we have a service sector economy the reason that we can is because the world supplies us with the goods that service workers don’t produce all the jobs that were created under biden we’re in the service sector we lost manufacturing jobs so where did we get all these jobs we got them because we were able to import all the stuff we didn’t produce so our economy depends on those imports so it’s the world that is responsible for our growth it’s not the other way around and the world doesn’t have to pay to subsidize our economy they’re already paying right so we are exacting attacks on the rest of the world right now by running these trade deficits because goods that were could have been consumed by foreigners are instead consumed by americans or resources that could have been used to satisfy the needs of foreigners have been used to satisfy the needs of americans so we’re already benefiting they’re already paying the cost so trump has got it backwards and if we impose these tariffs yes it will be harder for foreigners to sell american stuff they can’t afford because that stuff is going to be more expensive but you know maybe the tariffs will be like a wake-up call you know

i heard another person interviewed on cmbc talking about the american consumer and i i think it was a woman she said that we’re the prize that everybody wants right everybody wants access to the american consumer and so we should they should have to pay a tariff to get that access which i mean i’m laughing as i’m listening to this but why do people value the american consumer because we got the dollars well where we get the dollars to fed printed them but what value do they have no value normally the only reason you export to a country is to import something else initially the reason that americans were valuable consumers was because we were valuable producers we produced the stuff that everybody wanted and if you wanted to stop that americans made you had to make some stuff on your own so you had something to trade but right now foreigners are not trading with us because they want our stuff because we don’t make the stuff they they will they buy the same stuff that you know from foreigners that we buy they’re trading with us because they want our dollars well what the hell are they right well they’re the reserve currency right now so everybody thinks earning dollars is a good goal even though ultimately the dollar is going to collapse so we just get to be the beneficiaries to fed prince dollars but the way those dollars go into circulation is through the american consumer so if you’re a foreigner and you want to get dollars that the american consumer has well then you sell the americans consumer stop to get dollars but once the world doesn’t want dollars anymore because they realize they’re worthless right they’re just going to keep on depreciating as we keep on inflating the currency supply then the world’s not going to want dollars they’re going to move away from dollars and then the you american consumers got nothing right we’re not going to be some price possession we have what we’re not making uh what they need right if you’re in a service sector

let’s say you’re a barber you think someone in china cares that you use a barber in the united states they’re not going to fly over here for a haircut right so a u.s barber has nothing to offer somebody in china right you got to produce something that you can put on a ship and send to china right we’re not doing that we’re doing all this service sector stuff now there are some services sure you know that you can export right

i mean i guess if you’re a psychiatrist and you speak chinese you know you you can do a virtual session right so there’s going to be some services that could be exported but most of the stuff you know the the the bartenders the waitress is what are they doing that somebody in china or canada you know unless you come here on vacation right it doesn’t do you any good uh so the whole thing is going to class people who are thinking that the u.s. consumer is just this great thing you know no you know they don’t understand it’s the producers the producers drive the economic train the consumers are at the caboose right and if you cut off the caboose the train could still go but if you if you cut off the engine the caboose ain’t going anywhere and that’s the situation in the united states now i also want to talk about the fires the horrible fires going on in california and i used to live in southern california for a long time i i finished up high school uh in in the l a area and then i lived in the l a area for many many years before i eventually moved back back east to connecticut in 2004 so i spent about 20 years in california about four years in northern california because i went to uc berkeley but the rest of the time i was in southern california mostly in in l a in that area although i spent about four or five years in orange county but the majority was was in the l a and so right around the area a lot of friends i i have friends uh that look that lost their houses in these in these fires um but i wanted to talk about the economic consequences uh here uh not so much you know on this podcast it’s already you know running late so i don’t have a lot of time um to talk about the the abysmal failure of the the the the socialist governments uh you know the socialist mayor of los angeles and uh the you know the um the fire the head of the the fire department you know they care more that the head of the fire department you know she cared more about virtue signaling than she did about fighting fires right that’s all they cared about over there is diversity and and and uh you know inclusion and all that nonsense instead of focusing on you know protecting uh lost you know angelenos uh from from fires right and so this is not just some climate change fluke this is a complete failure of of government uh and of the government institutions out in california

but i want to talk about the economic consequence so number one the fires are still going on the winds are still blowing the sananas there’s a few fires three or four still you know mostly not contained more fires can start up especially since you know people are lighting them like vandalism which is a horrible a horrible a crime that should be i mean as far as i’m concerned i mean it’s not worse than just murder this you know obviously people can die and have died at least i think twenty five people are confirmed dead probably more that they don’t know about but that’s still i think a relatively low number compared to you know how horrific these fires are i forget how many uh structures have burned uh you know thousands and thousands of of structures have burned uh twenty thousand i’m not sure what that what the number is obviously it keeps it keeps going going higher but um so they’re estimating right now maybe a quarter of a billion i mean a quarter of a trillion two hundred and fifty billion in in losses this is a huge staggering number could easily be the most costly disaster again i don’t want to say natural because it’s made but the costliest disaster in in the country um where’s the money to come from to pay for all this and how is it going to impact the economy first of all right i’m not sure what percentage of the losses are insured because you know a lot of insurance companies pulled out of california because the government basically try to claim well you know cap insurance rates or uh prevent insurance companies from canceling policies well they just pull out and in fact a lot more insurance companies are going to pull out

i mean they’ve already now passed a law that there’s a one-year moratorium on cancellations or or premium hikes uh but as soon as that’s over they’re going to pull out right there’s it’s it’s the whole state’s going to be uninsured but i don’t know what the the insured losses are maybe twenty fifty billion something like that where the insurance companies are going to get that money well they got to sell some bonds they got to sell some stocks to raise the money right that puts downward pressure on bonds upward pressure on rates and then what are they going to spend the money on they got to they got to buy raw materials they got to buy lumber you know i talked to my one of my last podcast uh donald trump says oh we don’t need Canada’s lumber sure we do we need it now more than ever how are we going to rebuild these houses without lumber you know we need a lot of raw material the copper right so this is going to put even more upward pressure on um raw material prices this is going to put more upward pressure on rents rents are already going up dramatically in southern california people have to rent they’re scrambling to rent uh properties you know a friend of mine whose house burned down he rented an Airbnb and that burned down right so then he had to go to another one uh but you know so rents are going where of course people are talking about oh price gouging it’s not price gouging it’s supply and demand you know and some of the people who are renting their homes their only reason they’re renting them is because they can get a lot of money some people might say you know for that much money i’ll go someplace else like

i’ll rent out my house but rents are going up commodity so this is very inflationary but it’s also inflationary because i know that there’s a big federal disaster relief bailout coming you know despite what trump might say or you know we don’t like you know it’s their own fault it’s california look the government bales out voters even in california for any natural disaster it’s coming i’m sure it’s going to be at least a hundred billion dollar check that the federal government is going to write to california right to pay for this in fact biden has already set a lot of these costs in motion and that’s going to be there uh with trump but there’s going to be more now maybe donald trump will try to put some strings on this oh you got to do something about you know forest management or control burns you got to do something with your water and you know they probably won’t even do it

you know whatever the mandates are they probably won’t even happen but what’s going to happen is the money where is the money going to come from well bigger deficits right that’s where it’s going to come from like they’re not going to appropriate any money they’re not going to raise taxes in order to cover this they’re not going to cut any other government spending it’s all going to be paid for with inflation and of course you know it’s going to be disruptive people are going to lose jobs people’s uh you know place of employment were burned down and also where the workers going to come from to to rebuild all these structures right because a lot of these workers were probably illegal in california that we’re working on the building and trump’s going to deport them so you’re going to canesians that are going to say oh it’s going to stimulate the economy

because we have to rebuild all the houses and so we have to rebuild what we already had it is a net loss to society there is no silver lining to this cloud it is all cloud and any resources that we have to divert to rebuilding the houses we already had has to come at the expense of something else so we’re going to lose something else that we would have had to replace the houses that we already had again it’s the it’s vastier the broken window right if somebody breaks your window and now you have to pay money to replace the window that you used to have that doesn’t help the economy yes it might create a job for the guy that fixes your window but what about the pair of shoes that you were going to buy but now you can’t afford it because you had to replace your window right it’s the scene and the unseen

so I can’t buy those shoes so that’s a loss for the shoemaker right the window repairman makes something but the shoe the shoe man loses something right so there’s going to be a net loss and everybody’s going to pay higher premiums because these insurance companies after they pay out all these claims in california well they can have to raise everybody’s rates not just to people in california everybody’s insurance rates are going to go up because the insurance companies have to recover what they just paid out and insurance rates were already going up in fact in california it’s again a lot of people can’t even buy homes now forget about the mortgage they can’t afford the insurance on the home because if you’re going to have a mortgage you need insurance now if you don’t have a mortgage you can take your chances but if the bank lands you might have buy a house you know they require you to have insurance because it kicked the houses they’re collateral and so if it burns down they have to know that there’s there’s insurance there and you know this is not the end of the wildfires in in california um you know they could get worse

i mean a lot of these places should be rebuilt but they probably will be refilled with government subsidies anyway that’s it for today’s podcast just um if you enjoy today’s podcast make sure and give it a thumbs up give it a like leave me a comment again don’t forget we got a lot more good stuff coming this year we should really have a big year at shift sovereign a lot of good content is going to be coming your way a lot of it is free all you got to do is sign up so you go to shift sovereign dot com and sign up for the free newsletter as i said earlier in the podcast make sure and contact shift all get your gold and silver before this next spike that is coming i think it’s coming soon and position yourself the dollar is up that’s a great time to be using those overpriced dollars to buy these undervalued foreign stocks value is on a deep sale right now nobody wants that everybody is chasing the momentum everybody expects the good times will never end well the times aren’t even good they’re only good on wall street they’re not good on main street they’re going to get worse but that is going to spill over into wall street so get prepared uh before uh the tide turns anyway that’s it

i’ll be back again uh with more podcasts i’m probably not going to be going anywhere until maybe spring break and then even then who does i might i might sit that out and just work all the way through the summer not really sure yet what my plans are going to be but a lot more podcasts are coming your way in 2025 so make sure and tune in and tell your friends there’s going to be a lot of misinformation out there in the mainstream media people need to know the truth they need to know what’s happening and more important why it’s happening and i’m going to be here telling the truth and so help make sure i have as big an audience as possible thanks a lot good night everybody

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