The Not So Secret Word Is Stagflation (Uncut) 03-31-2025

The Not So Secret Word Is Stagflation – Ep 1019

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Good evening, everybody. I know some of you have been wondering where I’ve been. It’s been 10 days since my last podcast.

The reason that it’s taken me so long to do the podcast, and you can probably still hear it, is I came down with a bad case of laryngitis. At one point, I couldn’t even talk. One day, I couldn’t say a word.

I think it started, I did this X-Spaces like Monday or Tuesday. I should have done that. Because as soon as I started talking, I realized I was having a problem.

But I had already kind of promoted, so I did the thing. But then in the morning, I woke up and I had no voice at all. I haven’t really done anything.

I had to cancel some interviews. I was going to do this debate, this Zero’s Hedge thing I wanted to do. But I couldn’t do that because I couldn’t talk.

So hopefully, I can make it through this podcast. I’ve been pretty quiet all day. Also, I’ve had a birthday since the last time I did the podcast.

I didn’t have the laryngitis for my birthday, so I was healthy. I turned 62 on March 23. So I’m now old enough to collect Social Security, assuming it’s going to even be there.

I mean I could start collecting it right now, right, if you can take it early and get 70% of your benefits. But I did the math. I think if I live to 74, I’m better off.

And I’m planning on living a lot longer than that. So I’m going to wait. Hopefully, they’ll cancel my Social Security, and I won’t get anything.

I think that’d be the right thing to do, but they probably won’t do that. They’re talking about increasing Social Security benefits, not taxing them, not cutting them. But anyway, so I’m 62 years old now.

But I wanted to do a podcast sooner, but I didn’t want to do it with my voice because a lot went on during the week, and I was very anxious to talk about it. But I kind of kept quiet until this evening. Anyway, so we got a big stock market sell-off on Friday.

And looking at the stock futures right now, it’s continuing. The Dow futures are off about 180 points. That’s about a half a percent.

NASDAQ futures are down one and a half percent. So the NASDAQ is considerably weaker. I’ll start off.

I’ll go over what happened in the market, and then I’ll talk about the whys. Because I’ve been talking about the weakness in the market for a while on the podcast, so it’s not a surprise. But anyway, so on Friday, the Dow was down 1.7% on the day.

Pretty big drop. 2% decline for the week. So almost all the week’s declines happen on Friday.

S&P dropped 2% on Friday, but 2.6% on the week. Now, the Dow and S&P are down 7.8% and 7.6%, respectively, from their highs. So not quite correction territory.

I think we’ll be there soon, but we’re not there yet. The NASDAQ is in correction territory. It was down 2.7% on Friday and 4% on the week.

And as I just said, it’s down another one and a half percent Sunday night. So it’s down 14.3%, not counting tonight’s action, 14.3%. So halfway, really, between a correction and a bear market. Russell 2000 is doing the worst.

And that one is probably the closest to the domestic economy. A lot of multinationals in the S&P, the Dow. But the Russell 2000 is very much domestic.

And that was down 2% on Friday, 3.3% on the week. And it’s 18% below its high that it just hit not too long ago. So we’re almost in a bear market.

In fact, we could be in a bear market in the Russell 2000 maybe by tomorrow. But certainly by next week, we could be there. Now, Bitcoin, not to leave Bitcoin out, also had a bad week.

Down 3.8% on Friday. I’m looking at the ETFs now, because Bitcoin trades 24-7. But just looking at the ETFs that trade, so it’s apples to apples with the market.

The Bitcoin ETFs were down 3.8% on Friday, 4.3% for the week. Now, Bitcoin itself is down 25% from its high. So it’s in a bear market.

Now, the interesting thing about that is that it’s been touted as digital gold. Well, actual gold hit a new record high on Friday. It closed at $3,085 an ounce.

Gold was up 0.75% on Friday. And it closed up 1.85% on the week. And in fact, this evening, as Bitcoin is down again, barely holding on to $82,000, gold is at a new record high.

It’s trading at $30,090. It hit $30,097 earlier today. You know, it would be interesting if we hit $3,100.

Maybe we’ll hit it tonight, maybe we’ll hit it tomorrow. But when gold hit $2,000 for the first time, it was during COVID. It was in 2020.

April or August of 2020. Yeah, August. It didn’t hit $2,100 for three and a half years.

So it took three and a half years all the way until December of 2023 to get that extra $100. That’s how much resistance there was at $2,000. That it took three and a half years to get to $2,100.

And then, of course, once it hit $2,100, it really started to climb and hasn’t looked back. But if we hit $3,100 tonight, it’ll be two weeks, two weeks to go from $3,000 to $3,100 versus three and a half years to go from $2,000 to $2,100. So this is a huge bull market.

But the point is, Bitcoin is behaving nothing like gold. Bitcoin is going down with stocks, except it’s going down more than stocks. So how is it digital gold? I mean, if it’s digital gold, it should have something in common with gold.

It should trade similar to gold. It should have some kind of positive correlation. It doesn’t have any.

It’s the opposite. It’s anti-gold. And so why do we need a strategic reserve of it? We don’t.

The whole idea was, hey, we have a reserve of gold, so we should have a reserve of digital gold. But Bitcoin is not digital gold. It’s digital risk.

So we don’t have a reserve of penny stocks. So if we don’t have a reserve of penny stocks, then why should we have a reserve of Bitcoin? We shouldn’t. And so I think this whole narrative is going to fall apart.

By the way, silver had a better week than gold, but it was down on Friday. Silver was down 1% Friday, while gold was up 0.75%. But on the week, silver was up 2.7%. Now, the reason for that is silver and gold are very highly correlated. But on extreme risk off days, where all the risk assets are tanking, people still sell silver and buy gold.

But silver should recover that shortly, probably maybe early next week. Same thing with gold stocks. Gold stocks were down on Friday, but up on the week, even though gold was up.

The GDX was down 0.4% on Friday. GDXJ did even worse, was down 1% on Friday. That’s the smaller companies.

But both of those indexes were up 2% on the week. So they went up. But the reason I think they went down is on big down days, risk off days, the mining stocks seem to follow silver, not gold.

And so that’s what happened. But they are great buys. I mean, on Monday morning, if these stocks are down again because the stock market opens way down, you got to buy them.

I mean, you know, the miners, I think, are much better buy than the metal itself. I mean, gold’s going up. No question about that in my mind.

But the gold stocks are going up much more. Silver’s going up much more. But you should be buying those.

And again, EPIGX is the Euro-Pacific Gold Fund. You know, that fund obviously was also up on the week. You should be buying that.

Buy that on Monday. Read the prospectus. But I think it’s the best gold fund out there.

Of course, I’m biased because it’s my fund. But I don’t manage it myself, so I can’t take the credit. I’ve got Adrian Day to do that.

But also, to give you an idea, I’ve been talking about this. So the Euro-Pacific Dividend Payer Fund and Value Fund were both down on Friday, but not nearly as much as the U.S. market. And on the week, the Dividend Payer Fund was up three-quarters of a percent.

And the Value Fund was up about a tenth of a percent. But the key is it wasn’t down. It was up.

Even my Emerging Market Fund, because the emerging markets normally get really beat up when the U.S. market is down. The NASDAQ down 4 percent. My Emerging Market Fund was down 0.4 percent.

So the NASDAQ was down 10 times as much as emerging markets. So this is the shift that’s going on. It is a massive shift out of U.S. financial assets, out of dollars, into foreign stocks, into gold, into commodities.

Copper hit new record highs this week. That’s what’s going on. And again, it’s also movement out of digital fool’s gold into the real thing.

You know, I was watching briefly CNBC. They finally, you know, I’m watching and gold’s making a record high. And they’re talking about it.

And, you know, almost fell off my chair listening to them when they talk about it. Because they were saying, you know, everybody’s buying gold. Gold’s at a record high.

It’s a very crowded trade because too many people have bought. And they were saying that it’s probably too risky to buy now. Like, you know, so many people already bought it.

It’s really crowded. Who are they talking about? Certainly not their audience. The CNBC audience doesn’t own any gold.

They own Bitcoin. And, of course, when Bitcoin was $110,000, right, going straight up, almost $110,000, and they were talking about it nonstop on CNBC, nobody ever said that was a crowded trade when everybody crowded into it. Nobody talked about how risky it was to buy Bitcoin over $100,000.

No, you have to buy it because it’s going to a million. Yet they finally talk about gold above $3,000. Oh, it’s too risky.

Oh, it’s crazy. You can’t buy it, right? I mean, that’s music to my ears because it just means that it’s got no place to go but up. So, anyway, I want to take a quick commercial break.

I’ll be right back. We got a lot more to talk about. I’m going to drink some water during the break and be right back.

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Investment advisory services offered by Stash Investments LLC have not been vetted or endorsed by me or Euro Pacific Asset Management. All right. So the markets sold off particularly hard on Friday, but there was pressure on the markets all week.

And a couple of reasons for that. One is the economic data. And the other are the tariffs.

So first, let me talk about the economic data, because all the economic data points to stagflation. And, of course, I’ve been out in front of the stagflation scenario for a long time. I’ve been very critical of the Fed, Powell in particular, for dismissing stagflation.

In fact, during his May press conference a year ago, 2024, so almost a year ago, May 1st, he was asked about stagflation. And then he kind of joked and he says, I don’t know what people are talking about. I don’t see the stag and I don’t see the flation.

And that kind of made him laugh and everybody else laughed. And I pointed out on this podcast that it’s no laughing matter. I said that the Fed’s blindness to stagflation and the comment that there’s no sign of stagflation.

I said it’s going to go down like subprime is contained and inflation is transitory. To me, it was obvious that stagflation was coming. And then at another press conference around the same time, I forget, maybe a few months earlier or later.

He was asked again, you know, what’s your policy for stagflation? And he said, well, you know, we don’t think we’re going to have stagflation. That’s not, you know, in our outlook. So we don’t have a policy for it.

Right. They don’t even have a contingency plan. And he said that, you know, we just hope we don’t have it.

Right. And I said the reason they hope they don’t have it is because they can’t deal with it. There’s there’s no tool in their shed that will work for stagflation.

Because all the Fed can do is ease or tighten. It can’t do both at the same time. Right.

So it fights recession by easing. It fights inflation by tightening. So what if you do what do you do if you have both at the same time? Right.

You’re you cancel each other out. So you got nothing. And that’s what they had.

Nothing. And so, you know, they said, we don’t have a plan. We have hope.

I think he knocked wood or something like that on the podium. But at the time I was saying, all right, well, you know, we’re in a lot of trouble because the one thing that the Fed has no plan for is exactly what we’re going to have. And now everybody is talking about stagflation.

It’s all over the place. Watching television, stagflation, stagflation, stagflation. Right.

That’s that’s that’s what we got. It’s here. Right.

But still, the Fed has not acknowledged it. The Fed is like going to be the last one to acknowledge the obvious. But if you look at the data and I’ll go over some of the economic data, the worst of the data points, I think, on the week was the Philly Fed for March, which came out at minus thirty two and a half.

Just decimation. It’s the weakest the Philly Fed has been since May of 2020. Now, the difference is in May of 2020, the economy was locked down for covid.

What’s the excuse now? We’re not in lockdown, but the Philly Fed is as weak now as it was then. In fact, it’s the second lowest number for the Philly Fed in 14 years. Right.

So that was that was one of the weak data points. But here’s some of the other ones I’m going to go over. I forget the date.

We got the PMI number for March. Now, the services number wasn’t that bad. It was fifty four point three.

That one jumped up. But manufacturing went back below 50 into contraction. It had moved up to fifty two point seven last month.

Which that was an upper revision because it was fifty one point six. But the estimate for March was fifty one point eight. And it tanked back down to forty nine point eight.

Right. Not a good time for a trade war. Not a good time for tariffs when your domestic manufacturing is back in contraction mode.

The consumer confidence number. For March. Dropped for the fourth month in a row.

It was supposed to go to ninety four point two. They thought it was going to drop. It was at one hundred the prior month.

And it dropped down at ninety two point nine. I think that’s like a 12 year low or something like that. So consumers are losing confidence.

The Richmond Fed manufacturing index also in the negative down a point down for minus four for Richmond Fed. It was at six the prior month and the consensus was five positive five. Not we got negative four.

We got the GDP numbers for the final for Q4 of last year. So this is what they’re going to compare, you know, Trump, because this was the last quarter of Biden and it was two point four as expected for the last quarter. Q1 is going to be negative and probably Q2.

So they’re going to blame this whole recession on Trump. Now, I think eventually they’re going to have to go back and revise down all the GDP for last year because we were probably in a recession for all of last year. They just haven’t acknowledged that yet.

The trade deficit again, and this is one of the reasons that we’re going to get negative GDP in Q1. The February goods trade deficit. Was not an all time record high.

That was last month, January, which was originally reported at one hundred fifty three point three billion. It was revised up to one hundred fifty five point six billion. That’s that is the record.

It is a horrible economic performance. And February was almost as bad. Minus one hundred forty seven point nine billion over 10 billion or 12 billion worse than they thought it was going to be.

And they thought it was going to be pretty bad. So these are horrible numbers. Our imports.

We’re actually down, that’s because they were up so much, right? Yeah, they were up twelve and a half percent. No wonder they were up twelve and a half percent in January. Obviously, a lot of tariff front running going on in January.

But our exports were up as well. Four point one percent. They were up.

But, you know, I mean, our exports are so much smaller than our imports. So the trade deficit was enormous for. For February.

But here’s some of the bad numbers that we got. On Friday, that really spooked the market. So we got personal income.

And spending. And personal income was a little bit stronger. At point eight, actually double, they were looking for point four, but they revised down the January number from up point nine to point seven.

So the overall beat was point two when you take the two months. But the interesting thing was the personal spending number. Last month, January, which was reported as minus point two, went to minus point three.

And this month, instead of up point five, we got up point four. So what’s going on? Consumers are spending less even though they’re earning a bit more. So they’re saving more, which, of course, we need more savings.

Right. So that’s a good thing. But when you have a bubble economy based on everybody’s spending and you want to keep that bubble going.

It’s a bad thing. But also, why are people spending less and saving a little more? Because they’re worried. Right.

Economic times are getting bad. And so they’re you know, they’re keeping some of their money in their pocket instead of spending it. So that’s a bad sign as far as Wall Street is concerned.

But compounding the problem were the inflation numbers. The personal consumption, the PCE, which is what the Fed looks at, right, that’s their preferred measure for the month. The PCE was up point four.

That’s a tenth above. What they thought and a tenth above the prior month and year over year. The core PCE was up two point eight.

They were looking for two point seven and last month, which was originally two point six, was revised up to two point seven. So the Fed’s favorite measure of inflation that it’s trying to bring down to two percent went up to two point seven the prior month and now up again to two point eight. So clearly headed in the wrong direction.

And so inflation is hotter than expected, yet the economy is cooler than expected. That’s the stagflation. And by the way, I forgot to mention last podcast when I went over the presser from Powell after the Fed, you know, left race alone.

Powell actually said now he pushed back the year where inflation is supposed to be back at the two percent target. Now he’s saying 2027. So 2027 is when inflation is is going to be back to two percent.

Now, the last time inflation was two percent or lower was 2020. So if Powell is right, of course he’s not. But if we actually got down to two percent in 2027, we would be above target for six years.

That’s a long time, especially considering how far above target we’ve been. It’s not like we barely missed it. It’s not like we had two point one or two point two.

Right. Because we were when we were below two percent, we were barely below it. I think the lowest we got was like one point to one year.

That might have been 2020, like earlier in covid. That was it normally is like one point five, one point six. But we’re so far above it.

You know, so the average is so far above two percent. But think about this. If Powell is telling the American public, we’re not going to get back to two percent inflation until 2027.

And of course, they have no idea what we’re going to be doing in 2027. They couldn’t even see this stagflation. They were less than a year away from that.

So how the hell do they know what inflation is going to be like two years from now? They don’t. But assuming that’s what they believe, why are they cutting rates at all? Why are they telling the markets we got two or three rate cuts coming when they’re also telling us that inflation is not going to be two percent for two more years? They should be hiking. Right.

They speak out of both sides of their mouth. But anyway, so the stagflation fears are hurting the market because the stock market doesn’t like stagflation because it’s bad for earnings. Your earnings aren’t good when the economy is weak, but gold loves stagflation, especially when the Fed’s not going to hike.

Because the Fed should hike, but they won’t, right, because inflation argues for a hike, but a weakening economy argues for cuts. So at most, the Fed is going to be holding tight and doing nothing, which will destroy the markets because the markets want cuts. But it will also destroy the dollar and cause inflation because they need hikes.

So in stagflation, you don’t get any hikes to fight inflation because of the damage it would do to the economy. The Fed is like a deer in the headlight. Now, I think eventually they’re going to cut despite rising inflation.

That’s the nail in the coffin for the dollar. And gold goes through the roof because that means real interest rates are plunging. But Bitcoin is going to go down.

Like if we have a bear market in stocks, if stocks keep going down, Bitcoin is going to keep going down more. Gold is what’s going up and just, again, obliterating this whole narrative. But there’s another thing that was weighing on the markets, and that’s tariffs.

And we’ve got, you know, Liberation Day coming up on Tuesday. That’s the day that Trump wants to liberate Americans from low-cost goods. He also might be liberating Americans from the unrealized gains in their portfolios.

But anyway, I’m going to talk about the tariff talk and a few other things on the other side of this break. So we’ve got a quick commercial. Stick around.

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All right, so the other threat hanging over the market are the tariffs. Liberation Day, again, Trump didn’t want to make it on Monday because that’s April Fool’s Day. But that might have been the more appropriate day, because you really have to be a fool to believe that these tariffs are going to work, because they’re not.

But anyway, we got some tariffs already announced, and those were 25 percent tariffs on imported cars and imported auto parts. And the car companies went down, especially GM, because, of course, a lot of GM’s cars are imported, right? Even though they’re American cars, they don’t make them here. And so GM is going to have to pay the tariffs to bring those cars into the country or bring the parts in.

So even the industries that we’re supposed to be protecting are getting hit by the tariffs. I think Tesla actually is one of the only car companies that rose on the tariffs. But Tesla had already gone down so much.

So, I mean, there’s going to be a bounce in Tesla. But, you know, one of the things that Trump said when he announced these car tariffs, he talked about Congress coming up with a proposal to allow Americans to deduct the interest on their car loans if they buy an American car, which, again, I think is a bad idea to do that. But he wants to do that to offset the fact that cars are going to be more expensive.

But, hey, if you can write off the interest on your car loan, then that’ll take some of the cost out of it. Well, the government made the same mistake with housing. You can deduct mortgage interest when you buy a house.

But that means or that’s how pushed up real estate prices. So, yes, you can deduct the interest, but because you can deduct the interest, the house is more expensive. So you end up borrowing more money.

You have a bigger loan. And so you can deduct the interest, but you have more interest to pay because the government is subsidizing housing when they give you a deduction on the interest. They’re subsidizing you to borrow money to buy a house.

So that means the house price is higher. So they’re going to do the same thing with cars. Hey, let’s make cars more expensive, but we’ll give you a subsidy to borrow money to buy these more expensive cars.

It’s a bad idea. I’d rather just not have the tariffs and then let people borrow less money to buy cheaper cars than to let them go into more debt. And, of course, you know, part of the problem is going to be the residual value because people don’t know how long the tariffs are going to be in.

So that’s going to make loans more expensive, leases more expensive. Trump is claiming that the tariffs are going to be there permanently. But who the hell knows? But, of course, you know, they might not necessarily be there after Trump is not there.

But if Trump is there, you know, for his whole term, that’s that’s four years of tariffs. But again, it’s still not long enough for anybody to build an auto plant. Right.

We’re not going to start building a bunch of auto plants based on these tariffs. Yes, we will probably ramp up some production because car prices are going to go up and there will be more production. Yes, some Americans are going to get higher paying jobs that work in these car plants.

But a lot of Americans are going to lose their jobs because cars are more expensive and the other tariffs are coming. More jobs will be lost as a result of these tariffs than gain. So, you know, the people in the Trump administration have no clue as to what’s going to go on with these tariffs.

You know, the chairman of the Council of Economic Advisors, Stephen Moran, proving again that we should abolish the entire council because we didn’t have a Council of Economic Advisors until 1946. And so the country made it to 1946. We had plenty of presidents and none of them had economic advisors.

We had a much better economy. So these guys don’t know what they’re talking about. Trump should just fire them all.

Right. Save some money. Get rid of them.

But his chair said that China’s got no choice but to eat our tariffs. Yeah. Yeah.

China’s going to shove our tariffs right down our throats. They’re not going to eat the tariffs. Vice President Vance said that Donald Trump wants to undo 40 years of globalization.

Right. The globalization, meaning where we’ve been exporting or are manufacturing jobs so that we can import all the stuff that we used to produce. Yes, we need to do that.

We need to reverse a lot of that. But what Moran doesn’t get, what Vance doesn’t get, what Trump doesn’t get, you know, what any of his advisors don’t get is how painful that is going to be. And, you know, a lot of people, you know, are saying like, you know, Ludnick and Bessett.

Oh, the tariffs aren’t inflationary because inflation is caused by an expansion of the money supply. So we’re not going to get inflation because of the tariffs. That’s true, but only to a limited sense.

Yes, the tariffs in and of themselves don’t expand the money supply. The Fed is going to do that, especially when the tariffs help create a recession. We’re going to get more inflation because the Fed is going to create it.

But this is something that nobody is talking about but me. Right. And you’re not going to hear this any place but here.

The domestic money supply will go way up because of tariffs. And that means consumer prices go up. Here’s why.

If we import less stuff from abroad because the prices go way up and we can’t afford it, the money that we used to send abroad stays here. And what does that money do? It bids up the prices of what’s here without all the goods coming in. So domestically, we have more money chasing fewer goods.

That puts upward pressure on prices, goods and services. So domestic money supply, more of our inflation stays here. We don’t export it.

We export less inflation. And so we have to deal with it ourselves. On the flip side, what are foreigners doing with the dollars that we export, with our inflation? They take those dollars and they buy bonds.

They buy treasuries. They buy stocks. They buy our financial assets.

So where does the inflation show up? In financial assets, in higher stock prices, higher bond prices, which means lower interest rates. So what do the tariffs do? They cause the inflation to shift from financial assets to consumer goods. That’s what’s going to happen.

The inflation is going to be redirected back here. All those chickens come home to roost. So stock prices come down, bond prices come down, meaning interest rates go up and consumer goods go up more.

The opposite of what we’ve had, where we had inflation pushing up financial prices more than it pushed up the cost of living. Now it’s going to be pushing up the cost of living as the financial assets are coming down. So the cost of living goes up as you get poorer.

You watch your wealth go away, but everything you want to buy is getting more expensive. That is what’s happening. And in fact, I forgot to mention when I went over the personal income and spending numbers, it was the consumer sentiment number that came out on Friday, which was down again.

This is different than the consumer confidence. Consumer sentiment was the lowest since mid 2022. And the reason it went down again was because year ahead inflation expectations are now 5%.

That’s the highest they’ve been since mid 2022 when inflation was much higher. But more than just that, because remember Powell at his last press conference, and I talked about this on my last podcast, Powell said there’s no signs that long term inflation expectations are rising. No signs.

They’re still anchored at 2%, according to Powell. Guess what? Less than two weeks ago. Well, the long term inflation expectations that we got on Friday moved up to 3.9, almost double the Fed’s 2% target, the highest in 30 years.

So it’s been 30 years since long term inflation expectations were this high. And the Fed is claiming that there’s no evidence that they’re going up. So this is the economic news that is coming out.

But getting back to the tariffs. So we got these car tariffs, which are going to significantly increase the price of cars in the United States. We’ve got these reciprocal tariffs, whatever they’re going to be, that are going to be announced on Tuesday.

And so the market is bracing for this. But nobody is going to eat these tariffs but Americans. We’re going to be paying these higher prices.

We’re going to have a stagflation. And nobody is prepared for this. Now, I know you’ve still got people talking about, oh, a little pain, but we’re going to have this great gain.

Trump is still talking about the boom. He said just I listened to him last week. He said after Liberation Day, the economy is going to boom like it’s never boomed.

It’s going to bust. Now, it needs to bust before it’s going to boom. But if Trump doesn’t prepare us for that, there’s something called managing expectations.

You’ve got to set the bar low so you can clear it. Trump is like everything is going to be great immediately. No, it’s not.

It’s going to be a complete disaster. Oh, you know, by the way, I also wanted to mention Trump now kind of conceded that when they extend the tax cuts, they may not extend it at the top end. So the marginal tax rate might go up from 37 to 39.6. Right.

It’s the marginal rate that on the margin stimulates investment and growth. The taxes that Trump wants to cut are taxes on Social Security benefits and tips and overtime. Those taxes, just those cuts spur consumption, not economic growth and investment.

So they just fuel the inflation fire. A couple of other points I want to make. These guys still don’t get it.

I was listening to an interview with Howard Ludnick and he started talking about U.S. cruise ships. I guess he’s coming after them because he says that they’re running a tax scam. According to Ludnick, Carnival Cruise and Princess and all these American companies are scamming the government out of taxes because their ships are foreign flagged.

No, they’re not. They’re U.S. companies. They’re paying U.S. taxes.

They’re just trying to operate the cruise ship without the Jones Act and without the maritime labor unions. That’s what they’re doing. They’re paying U.S. taxes on their profits.

And there are a lot of people that work for Carnival or Princess here in the U.S. right in offices that are getting salaries. They’re paying taxes. It’s just the people that work on the cruise ships that aren’t American.

And it’s not a tax scam. The problem is. If they had to put an American flag on that ship, the ships would have to be made in America, which we don’t make any ships.

The the crew would have to be American. We can’t afford to put them on on the ships. So if we put American flags on those ships, there’d be no cruise industry in America, because most people who cruise, you know, these they’re not rich people.

Right. I mean. Yeah.

I mean, if you’re going to be in the most expensive cabin. But, you know, the typical cruise ship vacation is pretty cheap. Right.

It’s cheaper than getting on an airplane and staying in hotels and doing it. It’s a it’s a it’s a bargain vacation. So it’s middle income people that are on these cruise ships and young people.

And then really, really old people to cruise because, you know, it’s easy. Right. So you get you get older people, too, but not rich.

But if they had to put American flags on these ships, the cost of passage would be so high that hardly anybody could buy a ticket. So, I mean, yeah, you could probably have a cruise ship, but you’d have to go down to Canada or up to Canada or down to Mexico to get on. You couldn’t get on the cruise ship in in Florida.

Right. You couldn’t get on in in Puerto Rico. You couldn’t get on, you know, in the Northeast.

Right. So all these areas where these in America that, you know, all the jobs there, they’d be gone. So does Ludnick not understand this? You know, one good thing that Trump did, a lot of people like, you know, you’re always bashing Trump.

You know, I mean, I like I mean, I helped get him elected. I mean, I doubt that I was the difference, but I was, you know, telling people, vote for him, vote for him on my podcast, on my ex account. So, you know, I helped.

But he did issue an executive order. To eliminate public sector unions for a lot of federal workers. And that is fantastic.

I mean, I mean, there should be no unionized government employees, federal government, state government, city government. I mean, even FDR, right, who gave us the whole welfare state, the New Deal, all this stuff, even FDR was against public sector unions. That’s how bad they are.

Right. I mean, if you want to work for the government, then you can’t be in a union. Right.

That’s you know, you want you want to be in a union, get a job in the private sector. You can’t be in a union and work for the government because you can’t go on strike against the taxpayer. And the problem is, at least when there’s a union, the unions are negotiating with the boss, the employer.

And so, you know, they’re on opposite sides of the bargaining table. Right. The workers want higher wages and the employers want to pay them lower wages so they can have higher profits.

And so they compromise. They negotiate. But when government workers negotiate with the employer, there is no negotiation because the employer doesn’t give a damn.

The government doesn’t care what it pays the workers because the government doesn’t have a profit. The government doesn’t have to answer to shareholders. It’s not their money.

It’s taxpayer money. So the people that are on the other side of the bargaining table table have nothing to lose if they overpay the workers. But it’s worse because what happens is the politicians that are sitting on the other side of the bargaining table are beholden to the labor unions that elected them.

The labor unions donate to these politicians. They give money to their campaigns. The unions are out there working to get votes and they vote for the people that they’re now bargaining with.

And so then they reward their constituents with these huge raises and huge pensions that they don’t fund. So it’s a disaster. Right.

All of them. There should be no on the local level. Teachers shouldn’t be unionized in the public schools and private schools.

OK, public schools. No firemen, policemen, anybody. You know, any of these jobs.

But of course, there’s a lot of these jobs that are these desk jobs. There’s so many bureaucrats that are in these government unions. In fact, there’s a lot more public sector unions than private sector.

Why? Because the private sector unions destroyed a lot of their companies because the unions drove out of business. But unfortunately, you can’t drive the government out of business because they just keep raising taxes. They just keep borrowing money, at least in the private sector.

The unions can destroy the employer and then the union goes away. Right. Well, the employer goes away, too.

But then more and more employers don’t have unions because they want to stay in business. And then more people don’t want to join unions because they don’t want to put their employers out of business because they want jobs. But everybody in the government wants to be in the union.

Because, you know, it’s car blush. You can’t destroy the government because they have unlimited pockets and then you can elect those guys. And now they’re beholden to you and they give you whatever you want.

So at least Trump is making some making some progress there. But, you know, so much of what’s going on right now, it’s really bothered me to see all these Republicans just cheerleading everything Trump is doing, talking about how great it is. It reminds me of George Bush’s second term.

You know, when they had the financial crisis and I was going on all these shows that won’t have me on anymore. Now, I was forty five back in 2008. Much younger man.

Time flies. But I remember all these guys on Kudlow and, you know, the laughers and Stephen Moore as a friend of mine. But a lot of other people, too, that were just cheerleading the Republicans.

And I didn’t like it. And I told Kudlow, you know, we’re going to you know, this is the economy is bad. It’s not Goldilocks, like you’re saying.

And then we had the financial crisis. And of course, then we had eight years of Obama. Same thing is happening now.

It says the Republicans are going to look very bad when this whole thing blows up because they didn’t promise this. So they’re going to own this and it’s going to be blamed on the tariffs. It’s going to be blamed on Doge, even though, you know, Doge is doing a good job, but they’re not cutting nearly enough.

But they’re acting like these we’ve got these draconian cuts and they’re going to blame this recession on these cuts. You know, the crazy thing about all the heat that Elon Musk has taken from the Democrats. I mean, first of all.

If the Democrats were sincere, which they’re not, right. It’s impossible to have a government program without waste, fraud and abuse. That’s why libertarians, conservatives, one of the reasons they oppose the programs, because they know there’s going to be fraud.

They know they’re going to be abused. They know there’s going to be wastes. The Democrats are like, look, they’re so important.

It doesn’t matter. And of course, they even argue what I try to talk about, the moral hazard and how people will exploit these programs. They say, oh, you know, no, they won’t.

You just you know, you’re just a mean person. How dare you say that? How dare you say that people would would cheat in order to qualify for government program? Like, of course they do. What do you mean? How can you deny that? Right.

The Democrats should love the fact that somebody is going after waste, fraud and abuse, because that means the programs can operate the way they’re intended to. Right. They’re not intended to be abused and to be defrauded.

Right. That’s not the intent. Right.

They say, oh, that’s not going to happen. So if Trump is that I mean, if Musk is actually finding waste, fraud and abuse, then the Democrats should be the ones that are most in favor of what they’re doing. See, I would rather see Elon Musk eliminate all these programs.

But what he’s saying is I want to save them by making them more efficient. I want to save them by getting rid of the waste and the fraud so that people who really deserve the benefits can get up. The Democrats should be loving all this.

The fact that they’re not really shows their true their true colors. And here’s the reason. The Democrats know that the programs are going to be defrauded and abused and they don’t care because it’s their constituents who are doing the fraud, who are abusing them.

And so they want their votes. And so they’re pandering to their base. They know that there are a lot of people out there that are defrauding the government who are voting for the Democrats because they want to continue defrauding the government.

So they have to come out and they have to oppose this. Plus, a lot of the waste is specifically benefiting the Democratic establishment who’s in office. That’s their gravy train that that Musk is threatening to derail.

Right. So this really shows you how it’s all hypocrisy. They don’t really believe in these programs.

They know there’s a fraud. There’s they know there’s abuse and they don’t give a damn because it’s getting them votes and it’s it’s making them money. Meanwhile, you know, he’s being vilified.

He’s, you know, getting death threats and stuff like that. It’s absolutely ridiculous. Another ridiculous thing.

And I wanted to get back to that again. A Bitcoin, some of the comments that I’ve seen trying to hype up Bitcoin one, you had Bo Hines, who is on the president’s council of digital assets. Right.

What a waste that is. I just said we should have abolished the economic advisers. Well, we shouldn’t have established a council on digital assets.

What the hell do we need that for? I mean, again, that’s just Trump pandering to the crypto community that helped get him elected. But he came out and said. That selling our gold reserves to buy Bitcoin is on the table.

Now, why did he say that? To get the price of Bitcoin to go up. That’s all. I mean, if it’s on the table, it’s going to be there forever.

They’re not going to do that. The government is not going to sell our gold to buy Bitcoin. So why is he saying that to help his friends sell their Bitcoin, maybe to buy gold? Who the hell knows? But the interesting thing is, with all this talk about the government buying Bitcoin, Bitcoin is down 25 percent.

With all this talk about the government selling gold, gold keeps hitting new record highs. Right. Also, that Senator Loomis, who I really she needs to be beat in the primary and out of the U.S. Senate because she’s all about Bitcoin and I can’t take it anymore.

She said something so dumb. Right. So she was talking about how we could get more Bitcoin on the government’s balance sheet without it costing the taxpayer any money.

So what she wants is she wants the government, the Fed or government to revalue the gold from the forty two dollars and twenty two cents that it’s on the books now. That’s where it was before we left the gold standard. Nineteen seventy one after a couple of devaluations by Nixon.

She wants to market to almost thirty one hundred where it is now. And then she wants to take those gold certificates that the Fed owns. And convert them into Bitcoin.

Well, how do you do that? The certificates have no market value. They’re not worth anything. There’s certificates that can’t be redeemed in gold.

So what’s that? Right. If you have if you have a check that can’t be cashed, what’s the check worth? It’s not worth anything. Right.

At one time, the gold certificates were redeemable in gold. Now they’re not redeemable in anything. So what difference does it make if we want to say gold’s forty two dollars an ounce or gold’s three thousand dollars an ounce? You can’t get any gold with your gold certificates.

So how do you convert them into Bitcoin? Now, I guess what she wants the Federal Reserve to do is take the value of these theoretical value of worthless gold certificates. Right. And print money, print eight hundred billion dollars.

So the government could take that money that was just printed and use it to buy Bitcoin. Well, if they do that, it’s going to cost the taxpayer a fortune because that’s massive inflation. So the taxpayers are going to have to pay higher prices for everything so the government can buy Bitcoin.

But why should they buy Bitcoin? I mean, it’s going down. It’s not digital gold. And if they buy it, it’s still going to go down.

It’s just that it may be higher so that the people who want to sell it can sell it. But one more scam that I want to talk about. And a lot of people say, hey, why do you always talk about this at the end of the podcast? I don’t know.

But anyway. Today is the thirty three months to this day that the OSIF shut down my bank. So we’re now three months and it’ll be three years.

Right. It was June 30th, 2022, when they took my perfectly solvent bank. And for no reason, put it into receivership.

Now, I know the reason, but the OSIF commissioner claimed that she did it to protect customers who were in no danger. All of them could have taken their money out the day that she shut the bank on the same day. No problem, because all the money was there in cash.

So to protect customers, she locked their money up and not one customer has gotten a penny in 33 months. And interestingly enough, and I put this on on X. So I went to Grok and I had a conversation and I’d started. I said, hey, is there any evidence that your Pacific Bank ever helped customers launder money or, you know, evade taxes? But it went into a long conversation and basically Grok on its own figured out the whole scam.

And you can see the whole conversation and you can see how it thinks and how it reasons. But according to Grok, my bank was shut down simply as a publicity stunt for the J5 and the IRS, because their investigation that had all kinds of fanfare came up completely empty. It ended up being a nothing burger.

There was no money laundering or tax evasion going on at my bank. And they had to pretend that there was Grok figured this out. Grok wrote all this stuff.

I mean, you look at it, you would think, gee, Peter, you must have written it. No, I didn’t write any of it. Grok came up with it immediately and said that the OSF commissioner, you know, yes, she didn’t act properly, that she was obviously pressured by the IRS, the press conference.

I actually uploaded into Grok. I didn’t upload. I gave it the website for my nine fraud where I put a lot of my FOIA requests and a lot of information.

And so it quickly read everything on the site and came to its own conclusion that the bank was completely innocent and that it was framed by the government and that the politicians were corrupt. It got the whole thing. And then I had a separate conversation, actually, with it, where I uploaded to Grok.

And I also did it with chat GPT and I got the same result. I put the lawsuit that I filed against the IRS and OSF, their motion to dismiss. My response to their motion to dismiss their response to that and my response.

So I uploaded five legal pleadings. It immediately analyzed them. And basically it gave, you know, because the government’s trying to dismiss my lawsuit.

And I think Grok ultimately said, I have a 97 percent chance of the lawsuit not being dismissed. Right. It looked it basically analyzed everything.

And it said that the government’s arguments were completely weak, that I overcame everything, that there’s no way this case should be thrown out. In fact, they think I’m going to win the case. But then when I went back and I said, hey, what about political pressure, you know, on the judge? And it said, yeah, you know, you’re right.

I mean, there could be a lot of pressure on the judge because this could be a major thing. You know, if this case goes to trial. So then it said you only have a 75 percent chance is a 25 percent chance of dismissal, but not on the merits.

Grok said that the reason the case might be dismissed is because the judge might be pressured to dismiss it, even though she shouldn’t. And then I but it’s that Grok reassured me that if I appeal it to the First Circuit, they think that that’s, you know, and it analyzed like every judge on the circuit who appointed them their path. And they said and Grok gave me like an 80, 85 percent chance of reversing.

So if the federal judge in Puerto Rico is intimidated and pressured to throwing out my lawsuit, that there’s an 85 percent chance that the First Circuit reverses that and and reinstates it. But, you know, I mean, my experience, I mean, it was just really Grok and the way it the language and the way it talks and the way it figured it out. You really can appreciate the power of of artificial intelligence, the way the way it reasons things out.

Right. And how quickly it can it can formulate its opinion and then and then build a case and tell you like why it thinks the way it thinks, like, you know, how it put two and two together. So I put that link for the conversation with Grok, not on my case, but because I don’t want to.

I was told by the lawyer, you know, not to put all the legal stuff out there and not to talk about it because, you know, the judges and stuff and the other side, they don’t like that too much. So I just talked about, you know, the PR stuff, the reporters, the press conference, all that kind of stuff. But you got to read it.

I’ll put the link to that conversation, but you can go to my my ex account and you can find it. But I’ll try to put the link in the podcast, too, and just read the whole thing. It’s really long, but it’s great to show how it’s able to just with public information.

Right. A couple of times I had to fill in a couple of blanks because it didn’t have some of the information. But the information I gave it was accurate, but I didn’t really have to coach it.

It thinks all by itself and came to this conclusion. Anyway, that’s it for today’s podcast. Don’t forget, if you’re not currently a subscriber at Shift Sovereign, some of the newsletters that have been coming into my inbox have been phenomenal.

Again, I don’t write all these myself. I got my partner working on them and they’re excellent letters. And I look forward to reading them.

And you should get them, too. They’re free at Shift Sovereign. James Hickman used to be known as Simon Black, but real name is James Hickman.

Writes that letter for us. Sometimes we discuss them before he writes them. A lot of times he just writes them, but they’re great.

So they’re all free. We have some premium products as well. Again, you know, get some silver.

I’d say it’s shift gold. But most importantly, get some of these gold and silver mining stocks. It is amazing how cheap they are.

They may be even cheaper tomorrow with the stock market getting beat up again. They won’t stay down. They could reverse even as early as tomorrow.

You could get my gold fund, Europe Pacific Gold Fund, EPIGX. Or, you know, go to your Europac.com website to get information, get the prospectus and stuff like that. Again, if you like the podcast, don’t forget, give me the thumbs up.

Put a comment on there. Hopefully my voice will get better and it wasn’t too bad this time for the next podcast. But until then, take care and I’ll be back soon.

Sometime after Liberation Day to do the tail of the tape and take stock of the damage. Bye for now.