Golden Age or Financial Collapse? (Uncut) 02-02-2025

Golden Age or Financial Collapse? What Will ACTUALLY Happen In Trump’s 2nd Term

This is Jay Martin. Frank, it’s great to have you in the studio. Thanks for coming in.

It’s great. You have a great setup here. Yeah, it’s fun.

There’s a ton of ground that I want to cover today. Lots happening. So, let’s start with the big news.

Recent change in administration in the U.S. just took effect. And when President Trump was elected the first time in 2016, I picked up a copy of his book called The Art of the Deal, because I wanted to understand how this guy thinks. I knew nothing about him outside of what I’d seen on TV.

And reading that book, it struck me that his negotiating style is still the same. In the book, he talks about what you want to do is you want to walk into the boardroom, you want to say something crazy, throw everybody off balance, but then you have the retention. And when you slide in your actual demand, it’s so moderate from where you started that you end up getting everything you want.

That’s exactly right. And that is his style. And he’s doing it geopolitically now.

And you know what? It does rattle some people and put them on their back foot, which allows him to then come back and, as you say, propose something more reasonable and get what he wants. It’s a negotiation tactic. But yet, you know, listen, most of the world’s already caught onto this.

So, I don’t think it’s going to have this kind of effect that he hopes, because people understand this style. And I think there are limitations to what he thinks he can achieve by using that style with the rest of the world. That’s interesting.

So, because people have seen this movie before now. They had a taste, four years. Okay.

So, maybe they know what’s coming. Simultaneously, he should be more prepared because this is his second kick at the can. And he got a four-year pause, right? To rethink the strategy, what worked, what didn’t, come back stronger.

And what do you think about this concept? So, he’s coming back more prepared. And also, you know, he’s got the House, he’s got the Senate, and he doesn’t need a second term. So, he can go for broke out the gate.

Is that the case? Is this a. I think that’s exactly what he’s thinking. You know, there are no restraints now. Do whatever it is that he believes will enrich America, enrich himself.

You know, we’ve already seen a taste of that with his meme coins that came out just before the inauguration. So, you know, listen, he’s an interesting character. And I think this first part of the presidency will be chaotic.

I think he’s going to make a lot of very bold moves to show his base that he’s going to create change. It’s all about change. So, it remains to be seen how much he actually can get accomplished versus the promises that he made during his campaign.

And as with all politicians, they say a lot of things during their campaign. And then, you know, delivering when you’re governing is a whole different can of worms. So, I certainly believe he’s going to act on immigration and deportations.

I think that was his primary campaign platform. I think on the trade relationships with the rest of the world, China, Canada, Mexico, and the rest of Europe, the rest of the world. I think, you know, he’s going to have some cold water thrown on him because, you know, you create… And by the way, I don’t think he’s going to go through a lot of the tariff threats that he made.

You saw he’s already backing off the China tariffs. You know, he was going to impose tariffs immediately. And we’re going to study it.

And I’m certain there’s been communication between President Xi and President Trump. And it’s all a negotiation. But I think the idea of reforming government, getting the deficits down are going to be almost impossible.

And even Musk was forced to admit, you know, that there’s no way you can cut $2 trillion, not even close. And when you think about it, you know, almost between non-discretionary spending, defense budget, which no one’s going to touch, it’ll go up, if anything, and interest costs, that’s 86% of your federal budget. And, you know, and the rest of it, it’s going to be a very hard exercise to cut those costs and deliver, you know, a fiscally responsible budget.

I think it’s going to actually, the deficits are going to go up. If he goes through with the tax cuts, if he goes through with tariffs, which are going to be inflationary, if he goes through with deportations, which are going to cause labor costs to go up, I think all of these moves are going to be inflationary. Re-shoring.

Re-shoring, all these things. So I think in the first number of years, in order, you know, the end goal for him was always create a manufacturing base in the U.S., to bring back manufacturing to the U.S. That’s a very long-term exercise. You know, you’re talking about restructuring an economy.

You’re talking about training and education. These things take a long, long time. So, you know, again, I think, you know, he’s made a lot of promises.

I think it’s going to be very difficult for him to deliver. And I think that a lot of the MAGA base might end up being a little bit disappointed. Okay.

So could there be a possibility? I mean, the American government is the largest employer in the world. There is got to be without question, a ton of inefficiencies and waste. Oh, a hundred percent.

Finding that waste in an organization that big is probably pretty tough. And is there a scenario, you know, one of my guests at our conference recently was talking about this, like, look how I can now take an article, feed it into ChatGPT, have it summarized to get my answers in a fraction of the time. And is there now a process that we may see overlaid on top of the United States government on the heels of Doge that provides an analysis and a clarity and a depth of where that waste is to the extent that maybe we do find a lot more than we thought we would? No, I think that there’s definitely a lot of waste and there’s a lot to be cut, but I don’t think there’s enough to make a dent in the deficit.

I don’t think you’re going to find those kinds of cuts and they’re going to be offset by, you know, more expenditures. Okay. You know, he’s talking about a military buildup.

We’re already almost at a trillion dollars of defense spending. And, you know, he wants to show the world that, you know, America’s powerful. So he’s going to invest a lot in the military and defense.

And that’s, you know, that money’s got to come from somewhere. So, interest costs are not going to go away. They’re just going to get bigger and bigger and bigger.

They’re almost a trillion dollars. I don’t know if you’ve ever heard of Ferguson’s law. Okay.

Well, it’s that whenever your interest costs become higher than your defense spending, that’s when the decline of a great power begins. And we’re already there, you know. And, you know, because of the deficits, because the rest of the world is now selling treasuries and buying gold, fear of sanctions, all of these things, I think interest costs and the fact that you’ve got to, in 2025 alone, they have to roll over $7 trillion worth of treasuries.

You’ve already got, where are your buyers going to come from? You know, Japan is selling treasuries. They never sold treasuries, but they’re defending their own currency. China’s been reducing theirs are down to 730 billion.

They sold 53 billion in the last, in the third quarter. Saudi Arabia is secretly selling. So, you have the selling pressure and lack of buyers.

You know, the fed’s going to end up being the buyer of last resort, but in the meantime, yields are going to be forced up. So, your interest costs on your debt, which has to be rolled over now, are going to skyrocket. And the deficit increases by what? Three, $4 trillion a year.

It’s $2 trillion this year. It was $2 trillion this year. It’s going to go up.

There’s no doubt in my mind it’s going up. So, you have all of these forces working against you. So, I think a four-year term does not allow anyone to deliver any kind of those promises to restructure an economy.

The amount of reforms that would actually be required. Yeah. And you’re going to have a lot of people in Congress, you know, fighting back about the cuts in certain areas of their pet projects, certainly in defense.

You know, defense, the military industrial complex has done an incredible job of spreading out all of their manufacturing base throughout every state in the union. So, every governor in the state, every congressman in the state, every senator is there to protect jobs in their state. So, they’re not going to allow a lot of cuts.

Not that Trump, I don’t think, wants to cut defense spending, although they should. Yeah. Yeah.

I know there’s already been a few lawsuits filed against Doge thus far. So, I’m curious about the future of that. I think it’s going to last a nanosecond.

You think so? Yes. I think Musk is going to figure out very quickly that, you know, there’s not a lot that… He doesn’t have the power in the first place. It’s up to Congress.

And the president only has so much power. I think he’s going to find… And I think the relationship between him and Trump is going to be short-lived regardless. Okay.

I want to go down that path before we do, just to go back to tariffs for a second. So, we covered, you know, there was threats made at on day one. And now we’re going to study those.

Threats made towards China on day one. Now we’re going to study those. And then threats made towards the BRICS countries.

Anybody trading in non-US dollars will be subject to 100% sanctions. So, again, that’s the crazy thing. What’s the real thing? That’s what I’m wondering.

Yeah. You know, first of all, again, I’m sure that if you were actually serious about the 100% tariffs on any country that even considers de-dollarizing, okay, I think is a sign of desperation. You know, when you have to make that kind of a statement, people buy the US dollar, have bought throughout the decades US dollar because it’s a safe haven asset.

You start threatening people, it’s going to have the opposite effect. It will accelerate the de-dollarization. And you can never, you know, and you can’t prevent central banks around the world from selling treasures and buying gold.

I mean, you know, that’s their own internal business. So, I think that that was a dumb threat to make. It doesn’t show any strength.

And I think he’s going to have to back off of that or it’s going to really backfire on them. So, what do you think about this? When I heard that, I was like, yeah, that’s the big announcement when you walk in the room. That’s the crazy thing.

Throw everybody off balance. It may or may not have worked to your point. But maybe the moderate thing is if I was President Trump and I wanted to destabilize the BRICS, you know, there’s angles to do that.

You look at the individual countries and say, you know, India wants some power balance to China. I can help with that. Maybe South Africa wants more foreign direct investment.

I can help with that. China, well, I’m your biggest customer, so I have some leverage here, right? Every one of those countries needs something that the United States could provide that would destabilize the union. What’s your take on that? I think they’re definitely going to try all of those.

They’re going to try sticks and carrots, okay, in terms of preventing the BRICS from unifying and becoming even larger and with their own monetary system, which we can talk about if you like. But I think that that trend is already in place. That train has left the station.

The BRICS nations are becoming more powerful and more confident. As you know, there’s 11 BRICS members now and there’s about 44 applicants waiting in line. And because the world at large has been held hostage by the U.S. global financial system that they’ve dominated, especially with the reserve currency, and it’s hurt them in many, many ways.

It hurts them economically. It hurts them from, you know, that a third of the world is under U.S. sanctions. 60% of the poorest countries in the world are under U.S. sanctions.

And by the way, sanctions achieve nothing except to hurt the population. That’s the majority of the world’s population. Yeah, it is.

And so people are tired of all of these things that they have to pay service or debt in U.S., expensive U.S. dollars that they have to trade through a system that is unnecessary if you create an alternative system that doesn’t need to go through that whole U.S. dollar system. So I think that that trend will continue. And I don’t think you can stop it.

You can slow it down a bit. You can create a little bit of a few problems for some of the BRICS members, as you mentioned India. Of course, India needs to balance its geopolitical power against China, and the U.S. obviously is helping India in that regard.

But India also is independent of any U.S. threats. They continue to buy oil from Russia. They’re creating a pay system, Rupal and Mir, to have a pay system that’s outside the SWIFT system.

And so they’re doing what’s good for India, and they’re not going to be bullied. Too big a country, too strong. And so I think that the BRICS movement in terms of trade, not so much the geopolitical side, but on the trade side will continue to evolve and grow.

Okay. So that kind of gets me to what I’ve been thinking is that this term will be a tipping point. Either these threats will work and come to some kind of destabilizing impact, maybe a deal will be made with one country and the thing kind of fractures.

But if that doesn’t work, and it instead affirms their solidarity, that becomes the escape velocity moment for the East. Do you see it that way? Yeah, I do, except then the U.S. will resort to sticks. That’s when we get the stick.

They’ll try the carrots, and they’ll get the sticks. And the sticks come in a couple of different forms. They come in terms of exclusion to U.S. markets or G7 markets, which the U.S. has already threatened the UAE and Turkey with respect to evading the Russian sanctions.

They said, well, listen, you guys keep doing that. We’re going to exclude you from G7 markets. It was an empty threat.

It was never followed up on, but they made the threat. Yeah. The big one is security guarantees.

And especially when you think about countries like Saudi Arabia, which rely on the U.S. security umbrella. And they’re walking a very, I just came back from Riyadh. I was there at the metals conference last week where I spoke on several panels.

And they’re establishing themselves as a non-aligned player to be able to have relationships with both China and the West. And it’s a very delicate balance that they’re playing. They’re still toying with joining BRICS formally.

They actually came out with a statement yesterday that they’re still considering it. And it’s all to allow them to grow. They’ve got a vision 2030, which is all about industrializing Saudi Arabia with clean energy technology and manufacturing.

And so in a way, they’re going to be a mini competitor to China, but they also have China as their biggest trading partner. And so they have to manage that while maintaining a U.S. security guarantee, and that’s, you know, which is tenuous because the U.S. has already indicated that it wants to withdraw from the Middle East and focus on the South China seas. They indicated that during the Biden administration, well actually it was during the first Trump administration.

And that’s why you saw Saudi Arabia try and make peace with Iran, which was brokered by China. So it, you know, everybody’s playing a very delicate geopolitical game and it remains to be seen how that will play out. But I think that change is coming and America’s power in the world is receding.

Okay. And you’re going to continue to see more of that. So if you’re a country like Saudi Arabia, you’re playing two games and yeah, they’re sort of like wine and dine us, right? Let’s see what you can offer.

And the two parties that they’re debating would be the U.S., which tends to think in four year terms and the rest of the BRICS, which may be thinking in forever terms, right? And it’s a different strategy. So you could maybe just like wait and see on the U.S. front that lay plans in the East. I think Saudi Arabia was trying to maintain good relationships with both, you know, they’re trying to stay non-aligned.

And, you know, and you have a lot of these middle powers now rising like Turkey and others that are, you know, not global powers and not just regional players, but they’re, you know, they’re, they’re, they’re middle powers. And Brazil is a perfect example as well. And, you know, they’re, they’re having to navigate this geopolitical competition between China and the U.S., which is the only really big competition.

And that will continue to be a competition going forward. So everybody’s got to kind of watch the chessboard and see where they fit in in this whole game. So let me ask you a question then, these conflicts that we’re seeing in Europe and the Middle East, and then I want to get to the South Pacific because it seems whenever I have anybody on the podcast who’s like one step removed from the White House or in the White House, China is always the number one concern and the South Pacific and these other hot conflicts are important, but that’s the most important one.

I’d love to know your take on that. And also if the big game right now is the U.S. versus China, that’s the lens maybe with which we should use to understand everything else. Is that the case? Yeah, it is the case.

And I think you have to understand, and if you follow history as I do, you need to understand the genesis of China’s thinking. So China went through what they call the century of humiliation, which ended in 1949 when the Communist Party took over. But for 100 years, they were subjected to some very nasty treatment from the West.

The British first and foremost, and then the U.S., Russia, and Japan. I don’t know if you’ve heard, you’ve obviously read about the opium wars. Of course.

What happened, and you have to understand, and this is really important for your audience to understand. So what happened in the 1800s was that China was selling a lot of things to the rest of the world in trade, but it wasn’t buying a lot. They were happy with their own stuff.

We’ll take your silver and that’s it. And that was it. And the Brits at first thought, well, we need to sell you something.

And they found opium. And opium had an audience in China, and it really, I think it affected up to 2 million people at the time. And the Chinese emperor was trying to stop this, so he banned the sale of opium in certain parts of China, including Shanghai in particular.

Well, what did the British do? They invaded China, they destroyed a few of their cities, and they forced the emperor to sign a treaty whereby they would be allowed to continue to sell opium, and that the Chinese had to pay them for their war costs for invading them. So the analogy I heard recently, which is an incredible analogy, pretend it’s America, that the Mexican cartel was trying to sell fentanyl or cocaine into the U.S. market, and the American government said, no, you can’t do that. And the Mexican cartel invaded the U.S., they destroyed Dallas, San Diego, a few cities.

Then they surrounded Washington, D.C., which is exactly what happened in China, surrounded them and forced the U.S. government to allow them to continue to sell these drugs, and that made them pay for the invasion. Yeah. How would you feel as a nation? And that’s the genesis of where the Chinese thinking is coming from about their, because they had 3,000 years, they were one of the premier economies in the world.

They had the best governance, they had the best system. To your point, they were selling, they weren’t buying anything the world had to offer. Exactly.

And so when you look at history, this is where I see China today. And I wrote a piece on this in 2015, long before people started talking about this. And I said, when you look at the beginning of the American system, at first, America made a decision, they did not want to be involved in anybody else’s wars, the European wars.

They were saying, keep us out, we’ll sell you stuff, we’ll build our economy, but we’re staying out of conflict, okay? And that’s how they rose to power as these European countries were destroying each other. And so, and that only started to change when they enacted the Monroe Doctrine in 1830, where they basically said to Europe, you got to stay out of our backyard. You can’t be influencing anything in Latin America, Central America, and Latin America.

And if you do, we will fight you. And so, what you’re seeing now in China is the beginnings of their own Monroe Doctrine with respect to the South China Seas. They’re saying, hey, America, get out of our sandbox, okay? Because America, you know, with 800 military bases around the world, you know, is trying to contain China for geopolitical and economic reasons.

And they’re basically, now China’s starting to become more and more forceful, you know, they’re creating the islands and all these places, military bases, they’re building up their military. So, they’re beginning to say, this is our sandbox, you guys stay out of it. And at some point, this is where the conflict may happen over Taiwan and the South China Seas between the U.S. and China.

So, that is where we’re at, and you have to look at it from a historical perspective. Okay. So, let me ask you a question directly about Taiwan then.

President Xi has come out and said that he wants his military to be in a place for a successful takeover of Taiwan by 2027. Didn’t say he’s going to invade, he wants his military ready for a successful invasion. And the history of Taiwan and China really is like a civil war that hasn’t really concluded, you know.

So, one take I’ve heard on this would be that there may be a legal case similar to Hong Kong for President Xi to claim Taiwan back under legal grounds that would give the United States the out from a defence standpoint. Say actually, you know what, they have legal grounds to this, we may not like it, but we don’t need to intervene here, we shouldn’t. And that would give them the excuse to back off of the defence promise they’ve made.

Yeah, well, I guess if you believe what Trump has said all along about meddling in creating foreign wars and staying out of foreign wars, and he said it with respect to the Middle East, perhaps he’s a business guy used to cutting deals, it’s all transactional. So, he might sit down with President Xi, I wouldn’t put it out of the question, but there’s going to be a very, very strong resistance from the military industrial complex in the US, which is very powerful. I think that’s going to be, if in fact he tries to do that, I think there’s going to be strong, strong resistance within the system, because the system is very powerful.

What’s your take on this? Okay, so I’ve heard both stances, and it’s hard to tell when you’re just, it’s hard to get the truth with, you know, maybe where sentiment lies in Taiwan, because finding honest media that actually is on the ground that understands, knows, you know, your work with the International Crisis Committee, you’ve probably got a perspective on that. Where do you think the majority sentiment in Taiwan would lie, towards independence or towards reunification? From what I’ve read and seen in independence. Yeah, yeah.

So far, you know, obviously in every place there’s, even in Canada, when Trump suggested we should be the 51st state, there were a lot of Canadians going, ah, this is a great idea, Kevin O’Leary being one of them. And, but, you know, I think the majority still wants independence. Okay.

I’ve got to pull on that then real quick. What do you think is, when I heard that again, I was like, there’s, that’s the loud thing, the real thing is we’re about to do some trade negotiations, we want to throw you off balance, right? And then I see a guy like O’Leary jump in and I’m like, he knows how to get publicity. That’s all this is.

I know Kevin O’Leary, he’s a friend of mine. Although he and I agree on nothing. We’ve known each other many, many years.

We’re friends, but I don’t, and if he’s listening to this, he knows us. He and I agree on very little, but yeah, he’s a great showman. Yeah.

Yeah. Okay. Awesome.

So back to US-China competitiveness, second Trump term, what we’re seeing, like a reinvigoration of the trade war from his first term. Yeah. How do the cards stack up elsewhere, Frank? You know, when it comes to military strength, global alliances, technological competency, right? Innovation, entrepreneurship, all these things matter.

Yeah. So if you want to go through them one by one, so on the military side, listen, China is building a very strong military, building way more ships, like way more ships than the US is. Their technology is getting better and better.

You know, you’ve got the hypersonic missile technology, you’ve got all sorts of techniques by which to match American power. They’re not there yet, but they’re certainly building up to it. Their cyber warfare is really good.

You know, because I think if there ever is a next war, it’ll be very different than what we’ve ever seen before. And I think cyber wars are going to be a big component of it. So I think there is a technological race with respect to defense at the moment taking place, not just with China, but with the US and with, you know, Israel and, you know, everybody’s trying to figure out, you know, how the next war is going to be fought.

And so, you know, I think that there’s, you know, if they have another 10 years, they’re going to have a very, very strong military, very strong, you know, ability to defend themselves, defend their region if they choose to make claims in the region. So yeah, I think in terms of technology, you know, there’s a race, there’s several races taking place right now between China and the West or China and the US. AI is one of them.

You know, China’s investing very heavily in AI. So are American companies. Quantum computing.

And whoever reaches quantum supremacy first is going to have a real advantage over the rest of the world to create chaos. Yeah. Quantum communications, which I think China is leading in, which is the ability to communicate through photons, which you cannot ever, you know, intercept.

You know, it’s a very secure, safe communication system. I think all of these things, it’s a race and it remains to be seen, you know, who the ultimate winner is. But I think, you know, I have my own opinions about AI and what that will do to society in general, which is a whole other topic.

But with respect to the US and China, it’s a race and they’re all, you know, one state-owned enterprise is spending billions, the other one is corporations, but they’re all trying to do the same thing. You know, who knows what the outcome is going to be is unpredictable. I have no way to predict.

And you mentioned a couple of times, you know, when the next war is fought. So let me ask you something. I was speaking with General Wesley Clark.

I had him on the podcast a while back. He’s a good friend of mine. Yeah, I know.

Okay. So I asked him directly, I said, what’s the probability that we’re heading towards World War III? And he said, in the eyes of our adversaries, we’ve been there for years, right? The US hasn’t realized it yet. Maybe the public hasn’t, but certainly we are in a form of World War III already, but it’s been fought through proxies.

Yes. You know, so whether there will be direct confrontation between the US and Russia, between the US and China, US and Iran remains to be seen, but we’re already fighting. Okay.

First and foremost, we’re in an age between orders. The old world order is dead. Okay.

Being the American world order. Yeah. It’s dead.

It’s going through a change. We don’t know the outcome yet, but it, and we’re living in an age where perceptions are you can get away with a lot with respect to conflicts and everybody’s misbehaving. The Europeans, the Americans, the Israelis, the Russians, because the world order is not intact.

There’s not one bully on the program. It’s not intact. So people have the perception, that’s where you’re seeing all these small proxy conflicts taking place.

So I just, I think that, you know, that changes, you know, it’s going to happen. What that new world order looks like, man, I don’t know. I really don’t know.

Can it happen without a major conflict? I don’t know. And you know, it’s very rare throughout history and you’ve seen it. I don’t know if you’ve ever read Ray Dalio’s book, The Changing World Order.

100%. It’s a great book, which kind of maps 500 years of history of how powers rise, global powers rise and fall. And the patterns are all the same and you know, they’re all exactly the same.

So you can almost plot where America’s at in today’s, you know, in its cycle of rising and falling. The only time that it’s happened in recent history was, you know, when global power shifted from the Americans after World War II, actually it was more after World War I, but it took effect after World War II. You know, the Brits kind of peacefully gave up because they were broke.

Yes. And America’s heading in the same direction. I think America’s making the same mistakes that to militarize, spend so much money that the USSR made, which brought them down.

So they’re, I think they’re making the same mistakes. And you know, and eventually, you know, gravity, you know, comes into play and you know, you can’t keep this game up forever. You know, things start to kind of fall apart.

Yeah. It’s too, the debt load is too heavy. There it is.

Okay. So let’s get into that a little bit. And maybe I’ll start with just political climate.

I feel like we’ve seen a bunch of new precedents be set in the last four or five years, whether that’s, you know, lawfare, maybe new levels of corruption that people seem to just be okay with now. I know you’re a Roman history aficionado. So would this be a moment like maybe like one, like the Gracchi brothers was like a moment in Roman history, the transition from, you know, maybe some sort of civility to a public abuse of power, which led to both the Gracchi brothers, violent ends.

And that kind of opened up a new era of violence in the Roman empire and a series of emperors that lived very short lives. And, you know, I collect Roman coins. So near the end of the Roman empire, there were so many, because every time they brought in a new emperor, they’d have to mint a coin.

So they were minting coins like every week for a while. It was crazy. No, but so what’s your question? Well, I don’t want to be hyperbolic and say that’s where we’re going, but you know, when these events happen, like lawfare, for example, wherever we land on that right or wrong, you know, I tend to see that as that’s not an event, that’s a new precedent of how things will be done in the future.

Well, certainly Trump is setting a new precedent. How it’s going to play out is anybody’s guess, but he’s kind of turning the whole thing on its head, the whole system on his head, you know, just, and I think he’s just trying everything, but it’s going to be so disruptive and a lot of people are not going to like it. You know, it’s, I think the American dilemma is partially this, that 50% of the population wants more government expenditure and the other 50% doesn’t want to pay for it.

So you’ve got this, this, this, and certainly the inequality has gone through the roof. You know, it’s not like 1% of the population owns a third of the wealth. So you, you know, you’re creating, the way I look at it, you know, when you see how the U.S. system is evolving, if you married an oligarchy with a kleptocracy, you’d have America today.

And that’s, you know, and so I think that at the end of the day, that is going to cause the masses to revolt in some fashion, whether it’s violent or not, who knows, but I’m saying they’re going to, they’re going to be a lot of very unhappy people. You know, Trump made a lot of promises to his MAGA base and, um, and if he doesn’t deliver, um, there’s going to be hell to pay. And you already have Steve Bannon, you know, out there saying, you know, you’re kind of turning your back on the MAGA base that you, you, you know, you were there to protect, uh, with this oligarchy that he’s building around him.

So I, I, I think that there, you know, there’s going to be so much change and, and that’s just a change politically and economically. And then you think about what AI is going to do to really, um, increase the inequality because AI will soon be able to do almost every job you can think of, almost anything, lawyers, doctors, anything that doesn’t require a personal touch. You know, healthcare will always need someone to take care of people and what have you, but there are very few industries or sectors that won’t be affected by AI.

And we live in an age where it’s all about productivity. It’s all about corporate profits growing. And, you know, to do that, you have to squeeze your costs to be productive and competitive and profitable with growing profits.

So I think there’s going to be an incredible disruption to the job market, which is going to put a lot of the global population in a situation where, how do you earn, how do you earn an income? You know, are we going to have a universal basic income that everybody gets enough to live on? Um, but that’s happening very quickly. It’s happening a lot faster than anybody thought. And I think by, in my lifetime, and I’m 67, but in my lifetime, we’re going to see a dramatic change in the, in the, in the global job market, which is just going to make it worse for the average, the average worker.

If there was a counterpoint to that, it would be that the amplification of productivity is just a net positive. Like I’m a small business owner, but I’ve doubled my head counts in the last 18 months without hiring anybody. And that’s because my team is so competent with AI system.

Yeah. Yeah. That’s great for people that are, have a business.

Um, but most people work for a living, they get a wage. Okay. Those are the people that are going to be affected.

And I’m just saying that that’s the majority of the population. And if they have their jobs taken away from them, their source of income, you know, how are they going to react? I mean, I think if you remember the industrial revolution caused, the after effects of the industrial revolution of the mid 1800s created all sorts of change in society. And it created a lot of conflict, you know, revolutions, wars, um, you know, uh, poverty.

Um, and so I think that the move towards AI dominance in the job market will make the industrial revolution look like a garden party. Yeah. Just because it has such a massive effect globally.

And that short term disruption is huge. You will eventually adapt to it. Yeah.

You have to look at reality. I always look at the world as it is, as it is, as opposed to how it ought to be. And the AI community is pitching the world as they envision as it ought to be.

But reality is the greed and power has always ruled this world. So, you know, those that have the power, the economic power, the AI power, they’re going to look to maintain their power and they’re not going to be paying a lot of attention to the average blue collar worker on the street. Yeah.

And that’s just the way that the world works. So I think as the world finds this new place and we’re going to reach, I think, probably by 2050, what, um, I don’t know if you’ve ever heard the futurist, uh, Kurt Weitzel? I don’t know. Um, Ray Kurzweil.

Sorry. Oh, of course. Ray Kurzweil.

So he wrote a book called, um, uh, Singularity is Near, which I read a bunch of years ago. And he predicted that, you know, there will be a point where we reach what he describes as singularity. Yeah.

Which is, uh, taken from physics. That’s the point, uh, where, after which you cannot predict an outcome, you know, it’s at the event horizon of a black hole, the quantum level. And, and so I, sorry, the big bang level.

And, uh, and I think that that there’s truth to that, that, you know, the technology is moving so quickly. We’re going to reach a point where, where we cannot predict what the world will look like after that. Yeah.

Okay. Okay. I want to, um, I want to pivot back to the fiscal situation in the U S uh, cause that’s underlying all of this.

Right. And you know, you mentioned Dalio’s book, which yeah. Walks through the Portuguese, the Spanish, the Dutch, the British, and finds the parallels between the ascent to power maintenance of it and the decline.

You can take that blueprint, put it over the U S and find all the symptoms of the decline right now. Right. And, um, so I look at some of the, the, uh, strategies that are being laid out, like the external revenue service.

This is a new idea who knows what will happen here, but to me, it looked like a tariff management system with the intention of replacing lost income from income taxes in the country. Would you say that’s like, that’s, that’s the idea. That’s the idea.

Okay. So why was something like that? Maybe put the landscape out there for me right now, like what’s striking you as most important from a U S financial health standpoint, where the biggest concerns, it’s a big question. The biggest concern is deficits.

And because there will be a revolt by treasury bond buyers. Okay. They’re going to revolt at, you know, when you go from 1 trillion to 2 trillion deficits, and now we’re going to go to three and four, maybe $5 trillion deficits.

And then you have a hundred trillion dollars of unfunded liabilities. That’s future promises. The future promises to pay, um, you know, you know, who’s going to tell the boomers that there’s nothing there for them.

It reminds me of when I lived, I lived in Argentina as a little boy and my dad had a business and he got us out of the country. Cause you see the country starting to fall apart in the sixties and he moved us out. And then he took him a long time to sell the businesses with his partners.

By the time he got his money, hyperinflation had set in and it was worthless. But he was paid in nominal dollars. He was paid, but it didn’t, it was worth nothing, like literally nothing.

Right. And, and this is, you know, this is where we’re headed eventually. And there’s no, there’s no escape hatch.

You know, the ship has left the port on this one. It’s, it’s, it’s sailed, it’s gone and there’s no way to rein it back in. It’s too out of control.

So I think that that is the primary concern that I would have about the viability of the America system as it currently is to stay in place. I just don’t think it’s possible. I think there’s just no, you know, it’s, if you just look, I mean, you know, fed policy, which I think got us here in the first place.

I mean, you know, these fed officials, you know, they, they may look like idiots and sound like it is, but don’t be fooled. They’re truly idiots. Okay.

Or they’re complicit. They’re complicit in this game to, you know, take the wealth away from the middle-class and. And they protect the status quo.

Yeah. And then protect, protect, but I think, yeah, but they’re gonna, they’re destroying it. And it’s, you know, eventually I’m telling you, I’ve been saying this for years, QE, it’ll be called something else.

Trust me, they’ll come up with another name because they don’t want to call it money printing, but it’s coming back. It’s the, the fed will be the buyer of last resort. And that’s going to cause hyperinflation and hyperinflation only comes into play when the domestic audience loses faith in their own currency.

The foreign buyers are starting to lose their faith in the American currency, but the domestic market still believes that America is exceptional and we’ll get out of this somehow where everybody’s going to succeed. So I think that that is the biggest concern by far. And, and, and, and, you know, to me, it’s too late.

I started saying this right after the 2008 crisis, when they started printing money, is that they’re in an inescapable trap now, they will never unwind this like Bernanke was promising, well, we’re going to unwind the ballot sheet. BS, it’s impossible because you would implode the economy. You know, they can’t keep rates up too high.

So what’s going to happen? You know, they, Trump was, wants lower rates. He’s made that very clear, but the market’s going to demand higher rates. So who’s going to make the difference? It’s going to be the fed.

The fed has, is the only mechanism by which to correct that. And how do you do it? You print money. That’s the only way.

You inflate the currency. You inflate the currency. And that’s how you get rid of all your obligations.

Like that, that a hundred trillion dollars, sure, they’ll pay it, but you know, what’s a hundred trillion going to buy 10 years from now. Yeah. Yeah.

And that’s kind of the concept of fiscal dominance, right? It’s the only way to make the interest payment on the debt is to print more money, which inflates the currency further and makes the problem worse. You could raise rates for the interest goes up and, and all this. Right.

So we’re there now, you figure like steadily. Oh, we’ve been there for a long while. People haven’t accepted the facts, but like I said, I started saying this in 2009.

Yeah. And you know, and it’s, I’ve not been wrong. Right.

And it’s coming back. It’s going to come back maybe in the Trump presidency. We’ll see.

What tools does the US have to push this game along a bit further, right? Is there, what are the tactics? What are the levers? Do you see any, is there any, is there any way to course correct? I think maybe we’ve covered that, that there is not, but are there any strategies to push the game a bit further down the path and kick the can? Yeah, well, there is Jay, because you never, the thing about markets, whether whatever markets, currencies, whatever, all things, bubbles can last a lot longer than you can ever imagine. Bare markets can last a lot longer than you can ever imagine. You can play this game.

I remember Doug Casey, our friend Doug Casey talking about this stuff back in 1980. Yeah. And he was on the Donahue show back then.

That’s right. Talking about the end of the American empire and whatever. Here we are, what, 40 years, something year, 45 years later, and it hasn’t happened yet.

So you can be really wrong in your time. You can be right about the trend. I’ve never, like people ask me to predict the gold price.

I’m like, I don’t know. I mean, it’s going higher. That’s all I say.

Hey, it’s going a lot higher, but I, because you don’t know how long it takes for things to unravel. And it always takes, not always, but at times it takes one event to trigger the beginning of a crisis. Okay.

So what’s, what happened in 2008, we had a private sector crisis. It was a bank private sector crisis. That’s been kicked up stairs now.

Now it’s going to be a sovereign crisis, sovereign debt crisis. That’s what we’re facing next. And that’s the last, that’s the last place to go after that.

There’s nowhere to go after that. And so I think when that crisis hits and it will hit, US dollar crisis, other fiat currency crisis, and gold’s telling, gold is the whistleblower to fiat currencies, you know, to the failure of fiat currencies. And, and it’s telling you that it, the game’s nearing the end.

And what, I mean, it’s, it’s a hard thing, impossible thing to predict, but you know, what does that end game look like if you’re, is that like some sort of currency reform? Is it a outright default? Is it a gold revaluation? Like what do you do there? Well, it either comes peacefully or not peacefully. So you either have a Plaza Accord style meeting, which happened in the eighties where, you know, the major economies sit around the table and say, okay, we’re going to re revalue these things. Yes.

Or the markets will force a change. What I, what I’m pretty sure is going to happen is that there will be a competing mechanism led by the BRICS that will compete with the US dollar. It may not displace it completely, but it will certainly reduce its value in the global markets.

And that can come in many different forms. You know, people talk about a BRICS unit, which is a BRICS currency. I think that’s going to take a long time to put together.

Talking about a petrol Yuan, you know, and that is possible if it’s backed by gold, or you could have BRICS currencies backed, partially backed by gold. I mean, the US dollar and the British pound, when they were backed by gold, it wasn’t a hundred percent backed. They were doing a 20 to 40 percent backed by gold.

So that’s a possibility. But I think in the medium term, until we get a new monetary system, which is going to have to happen, and like I said, it’s either going to happen peacefully or not, but we’re going to have a new monetary system because the old one is broken. So, but in the, in the medium term, my best guess is that you’re going to have bilateral trade agreements between countries trading in local currencies, but those local currencies are made, are central bank digital currencies, much like if you heard about the Enbridge project.

So Enbridge was launched five years ago. It was a pilot project, which was launched by the UAE, China, Hong Kong, and Thailand, where their central banks created a digital settlement system with central bank digital currencies, where they would settle all international trade through those systems. And now Saudi Arabia just joined.

And there are 31 observance watching closely. The BIS, which helped create the system has just backed out, I would imagine under US pressure. Okay.

So they’ve, they’re out, but this thing’s unstoppable. So what I think is going to happen is you’re going to have trading between countries using local central bank digital currencies outside the US dollar system. And that, and the biggest criticism when I’ve, I’ve heard about that as well, yeah, but what, what, what, what’s, you know, Saudi Arabia going to do with a whole bunch of unwanted yuans if there’s a deficit, you know? Right.

And if there’s not enough trade to balance the- Yeah, not a lot of countries have currencies that somebody else has. Yeah, that’s right. So my theory is this, all those same countries that are participating, participating in the bridge, Enbridge, and all the BRICS countries are buying gold by huge quantities.

They’re all buying it at an accelerating pace for the last 15 years now. And now it’s accelerating and, and they’re slowly selling their treasuries. And I think that if you remember back in the middle ages, there were these things called bills of exchange by merchants.

And a bill of exchange was a currency that was back really representing their gold. So gold was the method of payment, but instead of shifting gold back and forth all the time, they had these bills of exchange. And at the end of the day, if there was a deficit by one merchant with another, it would be settled in gold.

Yeah. So I think one of the mechanisms is you have Enbridge and on a periodic basis, there’s a settlement in gold. And that might be one way to have this alternative system that actually works for many countries that don’t want unwanted currency.

And so that, to me, that’s probably where we’re heading, but I may be wrong. And maybe somebody completely, maybe a petrol Yuan backed by gold. You can already, there’s a mechanism on the Shanghai futures exchange where you can exchange your Yuan’s for gold.

You can do that now. And I think Saudi Arabia has already played with that a bit, not publicly, but certainly I think there’s all sorts of efforts being made to create a system that is outside the US dollar system. And if you look at what the Chinese are doing with the BRICS, but led by the Chinese, is they’re creating a mirror system to all the global financial institutions of the West, the World Bank, the IMF.

Now you have the New Development Bank, which is a BRICS bank based in Shanghai. They have currency swap arrangements with 40 countries around the world where you can provide liquidity like the IMF, short term liquidity facilities. So they’re creating a mirror system to mirror the West’s institutions to compete.

That’s all happening as we speak. And when you look at the number of BRICS players, I mean, there were 126 countries that attended the BRICS summit in Russia just a few months ago. Like I said, there’s 44 applicants, there’s 11 now.

I think, didn’t Indonesia just get accepted? They did. Yeah. So maybe there’s 12 now.

No, maybe 11, because Saudi Arabia is still toying with the idea. They thought they were going to, but then they, I think there’s a lot of posturing between the West and the East on, and the US is obviously trying to prevent this thing from getting out of hand. Yeah.

I mean, it sounds inevitable to me. I don’t know what the outcome is. Like you, you’re like, this is an idea that could occur.

It could be something close, could be something different. You know, we referenced- It’s going to be something. It’s going to be something, right? And one thing that I loved about the book you referenced, The Rise and Fall of Empires, is that it really showed how expeditious that puck is past.

You know, we’re in our fifth empire in 600 years. So that tells you a little bit about the timeline. Yeah.

Or like what’s typical, right? Yeah. And you know, and this may be accelerated because technology moves a lot, things a lot faster than it did a hundred years ago. So who knows? I mean, it’s really anybody that tries to guess how and when or what is the end result, it’s going to be very different and there will be chaos.

And the only thing I pray for, and I pray this for my children, is that there isn’t a global conflict because that in today’s nuclear age would be not a good thing. So, you know, hopefully we can do it peacefully. I hope so.

It’s, you know, it’s very rare, but I hope so. I’m curious what else you’re telling your children, Frank. When I think about this, it’s easy to get wrapped up in the doom element of it.

This is a scary situation. Conflict is possible. All of this.

You know, I find it refreshing to step back and look at the long trend of human ingenuity and progress, and it’s directly up into the right. You know, you extend your timeline and it’s positive in every metric. I agree.

Yeah. And so when we get into these conversations and especially at my conference and people, people are like, what’s the investment angle? Like, what should I do? And I’m just like, go to work, like, you know, go build something, like go to work, like maintain, you know, but what else? I mean, that’s it, right? Like I have three little boys and my intention is like, if I arm them with creativity and confidence, they’re going to be good. Yeah.

Right. Listen, every generation thinks that their generation is coming to, you know, is going off the cliff. My parents, you know, and so, you know, there’s always this fear that the world is changing in a way that’s going to be not good for your children.

You’re always worrying about that. And the world seems to, you know, and we go through some periods where things are not good and a lot of people die. Yeah, it happens.

It happens. And that’s, again, my biggest fear. Okay.

At the end of the day, human progress, I think is going to go on the same trajectory. It’s going to continue. We’re just on the edges of scientific discovery.

We think we know it all. We don’t know anything, you know, and the quantum world, you know, all of that stuff, how that’s going to impact technology down the road if we ever get, you know, a theory of quantum gravity, which unifies general relativity with quantum mechanics. If we ever get that theory, the technological outcome of that could be transforming in a way you can’t even imagine.

Just like when quantum mechanics came to be in the 1920s. Nobody had any idea how that would change the world. Today, quantum mechanics is the basis of all technology.

Every technological piece of equipment that you have relies on quantum mechanics. We would be living in a pre, like an 18th century, 19th century industrial society were it not for quantum, but nobody knew that when that happened. You know, there was this weird thing, behavior by particles that nobody could understand, you know.

Yeah. Einstein called it, you know, spookiness at a distance and all this. That’s right.

Yeah, yeah, entanglement. But what came out of that was microchips, you know, that’s what came out of it. And that changed the world.

And so, I think that humanity will continue to evolve and at a faster and faster pace. And someday we’re going to make a discovery that, you know, I know Kip Thorne, who won the Nobel physics prize and wrote the movie Interstellar. Do you watch Interstellar? Oh yeah, I’ve seen it, of course.

That was his idea. It’s a fascinating thing. He’s part of our quantum gravity society that we launched here in Vancouver.

And he says, when asked, what are the possibilities when we have a quantum gravity, theory of quantum gravity? Time travel, anti-gravitation devices, all these things are possible. Because if you’d asked someone in the 1920s that someday you would hold a piece of equipment that would have all of the knowledge in the world in your hands, would you have believed it? They’d think you’re crazy. Exactly.

You know, we can’t imagine the technology that will come out of further scientific discovery. You know, I can get into all, I dive deep on this stuff. No, I don’t.

That takes us off the… Yeah, well, it’s tempting. But it’s fascinating stuff. You know, where does consciousness fit in with reality and how consciousness affects, you know, quantum behavior? You know, there’s a link there that we don’t understand yet.

You know, is consciousness something that exists outside of space-time? A lot of very, very smart people are starting to believe that. Is it, does it require a brand new theory that we don’t even know how to understand yet? Yeah. Does consciousness exist outside the biological self? These are things that sounded crazy.

And now, I’ve read so much of this stuff, now people are going, yeah, it’s very possible. Sir Roger Penrose, who’s also with our quantum gravity society and won the Nobel physics prize, believes that there’s a possibility that the microtubules that connect your neurons exist in a quantum state. And if they actually exist in a quantum state, does that mean that they actually can exist outside the biological system? We don’t know.

We don’t know. And just as an aside, what you got me thinking about when you were sharing this, last night I was in my hotel room, just geeking out and read, so George Washington died in 1799. The first dinosaur fossil was found in 1824, which means that George Washington lived his entire life having never heard of a dinosaur, which is a wild thing to think.

Imagine if you explained that to him, like, get out of here, right dragons? Anyways, so I should have brushed up on this prior to sitting down with you because I know how deep you are into the quantum world. But, so I’m going to botch this a little bit, but Google’s new quantum chip that recently solved the problem, 10 septillion times faster than any existing computer could have. The rationale that the engineers are using is that the only way this was possible is that this quantum chip accessed the computation of parallel universes.

How do you make, what do you think about that? It’s a theory. I mean, who knows? I mean, that was, you know, that’s, I read that article and it’s a theory. I mean, listen, we know so little about reality outside of what we can observe and experience and that our brains are equipped to understand.

That is the biggest part of it. Like our brains are not, they’ve evolved over, you know, the eons to survive, to survive in, you know, in the savannas in Africa and throughout. So we have limited ability to conceive certain ideas.

Like, can you conceive space-time what it looks like? Can you draw me space-time? I cannot. Which is a combination of space and time. You can’t, you know, it’s a mathematical formula, but, you know, to try and picture it in your head is, be impossible.

So I think there’s just so much of this that is just, but what I do believe is that there’s something that we still don’t understand about reality that’s going to blow our minds if we ever get to it. Okay? And I think a lot of it has to do with consciousness. And yes, maybe there are parallel universes or additional dimensions.

In quantum theory, M-theory, which is super string theory, predicts that for M-theory to work, you need seven additional dimensions. So you have four currently, you got three spatial and one time. That’s the four we’re aware of that we can witness and see.

But for that theory, which is a pretty good mathematical theory, that it combines relativity with quantum, but, you know, it requires seven additional dimensions that we cannot perceive. Okay. Is there that, is there a multiverse where you have the wave, the probability wave never collapses, you never get decoherence.

So every time something happens, that new parallel universe is created, who knows? And maybe something we can’t even imagine that is the reality of what this existence is. Yes. But I do believe that consciousness is the key.

And if we ever understand where, how consciousness is derived, where it comes from, how it works, and we may not, but, and we may be a simulation. There’s a, you know, I don’t know if you’ve read Nick Bostrom’s theory of- Simulation theory. Not that book, but I’m familiar with that.

Yeah, yeah. He’s out of Oxford and he basically came up with a theory saying like, there’s a one third chance that this is a simulation that’s- Sure. We’re somebody else’s game.

Yeah. Yeah. Well, that’s, you know- So we should keep them entertained in case they want to shut us off.

Look, I want to do an episode just on this. Okay. So I’m going to have to brush up- I think we’ve digressed here.

And come up, this is awesome, Frank. Okay. Yeah.

Thank you so much for sitting down with me today. My pleasure. Thanks for coming into the studio.

My pleasure. This is fascinating. Okay.

Fun. Yeah. Thank you.

Yeah.