Episode #12 Explaining What is happening to the economy

0:04 So how's everybody feeling about the economy? Yeah, it's not looking too great on this episode. That's what we're going to talk about the economy now, don't laugh. Look, I told everybody on the first episode I ever did. I wasn't the smartest guy out there. This episode is a prime example on why I strive to have guest on the podcast of the way smarter than I am. I mean, look if you were to ask me what was happening to the economy before I have this conversation, I would have given you a totally profound answer, like, bird clean up. Arrows are good and red down. Arrows are bad now. Fortunately, my guest is way smarter than I am. I sit down and have a conversation with Kelsey Williams.

0:45 Kelsey has worked in finance in one form or another for well, over 40 years. He is the author of two books. The first one is inflation, What It Is, What It Isn't, and who's responsible for it. And his second book is all hail defect. He has also written countless articles, both for his website and other Publications. All these resources can be found in the show notes. Now, during our conversation, Kelsey breaks down exactly what is happening right now to the economy in a way that even a guy, like me can understand, we talk about some possible scenarios over the next couple months, and we even touch on a few things that you can do to help whether the economic storm. That's next on this edition of the Mormon Renegade podcast.

1:51 Your listing to the Mormon, Renegade podcast, welcome back to the Mormon Renegade podcast, as always you can get ahold of me either by email at Mormon Renegade at gmail.com. You can also get a hold of me on Instagram and Twitter and getter under the handle. Mormon Renegade. Also, Have a website up and that's Mormon Renegade.com. So go check that out. Well, Kelsey, I can't tell you how much I appreciate you being here.

2:32 I'm guessing that this is probably in some of the times we're living in now economically. I'm guessing that you're probably finding the somewhat kind of not only disturbing but fascinating at the same time, right? Well, it is and and I'm not necessarily surprised for it but I continue to be surprised by certain things that happen which It's up how difficult it is to anticipate and predict regarding these things, right? So how long have you been because your you've been a financial planner correct? Right. How long have you done that for? Well, I was a full-service financial planner for 14 years when I retired in 2005.

3:23 But my with respect to finance, Moments and anything like any kind of financial services. My career is about 50 years old. I was involved in the gold and silver in the 70s. I did accounting for five years before that and there are only 70, 70 to 75, big high ticket, limited Partnerships in the 80s and worked in a bank and actually Work with one of the wire houses for a while and then, you know, eventually the financial planning. So I figure when I look back and counted it all up. Yeah, about 50 years.

4:11 Holy cow. So what Drew you to the field, right? I mean was it just the number side of it? The map. I mean what was it that really Drew you to it? I was I was interested in it from the time. I was in college, I could See that there was potential, I thought and it was a subject that, you know, captivated me, I wasn't I wasn't interested in going out and being an accountant. All I did that for about five years, I was more interested in the gold and silver and the economy because I was reading those books back in the early 70s and a lot of people won't recognize the name.

4:57 But Some well and Harry Brown, who was one of the first people to talk about the economy for this generation and my generation. And I read his books and I got started on things. I was you know involved buying bags of silver coins and you know doing that investments in gold and silver and then got into a professionally as well and did that until About 1980. Wow, holy cow. So let me ask you this because it sounds like you were around for the Carter Administration. Correct.

5:37 Yes. How does what we're going through now? How does it feel in comparison? To what, what you remember during during Carter's Administration with stagflation and those sorts of things? I've done a little bit of research on this, I think. I think overall yeah a lot there are some similarities but I have a tendency to look at it by looking at the broad picture. You know, it's one of the things you talked about, can't see the forest for the trees, it some people focusing on right now, but when I put right now in the perspective of looking back at that period of time, there are things that are similar.

6:20 But there are things that are different and I don't think we can in Fur that just because we see certain things happening today that it's the same thing that was going on because the effects of inflation, which we're going to talk about are unpredictable. And so, you know, the effects of inflation, certainly that's there. But there's more volatility because inflation which is created by the Federal Reserve is cumulative and ongoing. It doesn't stop and that creates an element of volatility as well as the unpredictability. Okay?

7:06 So I think this is you brought up inflation. So we're seeing this inflation. I mean, I hear about it. Every time, my poor wife goes to the grocery store, right? She comes back and she's looks at me and she's like you might want to think about the gym more and eating less just because the prices continue to go up and up and up. Is is food really where most people will see inflation? Or are we seeing it in other sectors? That's a good question. And, and, you know, food and energy is where most people are going to. Notice something, the quickest on the broad, on a broad basis because that's day-to-day But a lot of what we're seeing in terms of food and energy prices has nothing to do with inflation and that is confusing people. And I don't think that that confusion is unintentional and again that gets into other spin-offs and stories about inflation and how it happens.

8:10 But which I know we're going to get to but the biggest portion of gas prices for example, that we're experiencing today, Day is not due to inflation. It's due to the fact that Russia isn't being allowed to ship, its oil out and sell it because of you know, the boycotts and things. And and part of what we're seeing with respect to food and energy to is supply chain issues, supply chain issues, have nothing to do with inflation. Those are economic issues and they're the result of The forced shutdown of the economy, a couple of years ago.

8:53 And you know, I like to use the analogy, you shut the water off to your house. You don't turn it on for a while and then you turn it on. You don't just suddenly have the same smooth flow coming out of the Taps. It takes a while for that to happen. Plus sometimes there are kinks in lines and leaks and other things that happen. But what would happen is we start, you know, we shut everything down and then use one day say okay go back to work and do this. Well, that's great, but it doesn't just happen because somebody said you can do that and that's caused a big problem.

9:35 Plus independent Decisions by laborers workers who say, hey, look, I kind of like getting my checks and not having to do anything and you can't control that see that's those are in it right or wrong people are making those kinds of decisions, we you throw all that in the hopper that has nothing to do with inflation. So we have those with economic issues got you. So so we could see kind of a compounding of right because there is a portion of the higher prices overall. It's a result of inflation but that's been ongoing and then it was Amplified with what happened in reaction to the shutdown and not the spending per se.

10:21 But the money that was created to facilitate that spending. And then you see the effects of that inflation added to all of the supply chain issues. So if you take the inflation out of it completely say the inflation effects are not a factor and you take that percentage out, we'd still be paying $4 a gallon or more for gasoline just because of the supply chain issues, I got you, I got you so real quick. Let's let's do this. Let's start at a very rudimentary level because honestly, that's Where I need to start, how would you define inflation?

11:01 What is inflation? All right, I'll we give you the short answer first and then I'll expand on that a little bit because there's some flow to it, that is important in understanding it. The simple straight answer. Is that inflation is the debasement of money by government. Now most people will hear that and it'll be like well, okay, but what does that mean? You know, the debasement of money by government government also means central banks, okay, far as I'm concerned. So, you know, we can say that the debasement of money by governments of Central and central banks government databases the money by expanding the supply of money and credit.

11:50 They do it intentionally. And they do it continually. So that that's what inflation is and I think when we talk the other night I gave you my example, if we wanted to really understand the difference between that and what everybody calls inflation, just think about pumping up a basketball or a blowing up a balloon. You inflate the object to a point where then the Integrity of the Scan or the balloon is compromised and you have a problem but that's not the inflation. The inflation is the act of putting the air into it. So the inflation is the debasement of the money. That's what inflation is.

12:40 And the responsible party is the Central Bank, the Federal Reserve. Okay. So real quick, I want to go over this here so just to make sure I've Got My Mind wrapped around this. So inflation would be. Symptoms so, to speak of the debasement of the currency. Correct, it's actually an intentional action, the reason governments and central banks inflate the currency and all governments do it. Is because it's profitable for them. Inflation started. Hundreds of years ago when monarchs used, they would collect their taxes, which did that time use coins and they would clip the coins.

13:31 They punch, I do a little punch clip on the coins and then they melt them down and create new coins with them. So we had coin circulating that were some had punched clips and some didn't, but they tell them, hey, they're the same. You. So, you know, just use them. Well, that was the origination of inflation. And then you got to substitutes for real money, paper currencies, iou's, that sort of thing. And then it was a matter of just printing it. Now we're at a digital face but the inflation is the act of debasing the money supply by expanding it, okay? Standing that supply of money and credit that's inflation everything. Helps are the effects of inflation. Okay.

14:18 Now and when you say credit as well, how does how does a government or a central bank? Free up credit went and is this the kind of credit that we're talking about where they will inject money into the system? So, you know, businesses and that sort of thing can go get loans, and my understanding. Yeah, there's there's a couple things that are happening. The first one, Is to just look at the the simple ongoing operations of the US government, they need money, they issue treasury Securities, bonds, notes and bills. That's how they get their money. They borrow it.

15:00 But what happens is the Federal Reserve makes auction, there's auctions available and whatever money is received is then there are Added to that by the Federal Reserve to make up any difference in these shortfalls so that the government is guaranteed of getting. Everything it wants. If it needs the billion dollars, they issue the treasury Securities the government. The treasury is credited in its account with a billion dollars by the Federal Reserve. Now, what happens? And this is what the breakdown, people may have, bought treasury Securities at auction, that takes money out of circulation because it's going to the fed or to the government, but the treasury, the US government.

15:54 Turns right around and spends that money, putting it back into circulation, along with the treasury Securities that it issued. So, let's say I had a million dollars of cash and a by a million dollars worth of Treasury bonds. The million dollars in treasury bonds, I have are considered gilt-edged collateral I can do anything. I want with those in terms of buying power, purchasing, whatever, I need collateral because they're considered the best. There is I didn't hurt myself financially by buying treasury Securities and giving up the cash because they're like cash.

16:35 So I have those government has the cast but the government spends the cash and puts it. Back out there. So when I say expansion of the supply of money and credit, we now have a million dollars of cash back out in circulation as well as the treasury Securities that were issued treasury securities issued. The way they are, is considered monetizing the debt, that's what the government and the FED are doing in the course of these auctions. So the government never worries about it. Because when they have to retire though, Securities. They just issue more to pay him off. They're not really. And the FED has a guarantees that the government will always have its money, which is something we can talk about when we talk about the FED, but the government will never run out of money.

17:28 Not that that's good or right? They just won't under the system the way it works right now. Okay, so in forgive me because I know I must sound. I must just sound silly asking some of these questions. I don't know. So they got the money, then they issue it in bonds, somebody buys it and then The Central Bank turns, right around and prints, the replacement money for the money, that was just kind of quote transferred. Isn't that a, my understanding that portion correctly? That's not exactly the way it works. Let me get.

18:11 Let me give you a couple of the better example, okay. They first that. There's an announcement. There's going to be a certain amount of Treasury Securities up and on an auction basis. All of them are subscribed. Okay, so the FED doesn't necessarily other than for bookkeeping purposes. The feds not involved, but the government's going to get that money, that takes that money out of circulation. So it's a reduction in the money supply. If you look at the cash that went to the treasury, but since the treasury government, turns right around and spends that money, it goes back out in the economy and circulation again in The Securities that were sold, the treasury bonds that were sold.

19:01 So now in circulation in the economy are treasury, bonds and cash. So I consider the credit because that's the way the FED increases the money supply is mostly by credit. Now, if you remember back in 2008, that's see that particular example is ordinary operations. Let's go to something extraordinary. Nari like the credit collapse in 2008. What the FED did there is two things, one they created credit. By simply making it available at an attractive rate.

19:45 Where do they get the money? They just simply said it's here. All right, here's the money. You can borrow it. And this is the rate and they made it attractive for member banks to borrow. That way, there were others that were given the opportunities and they had to fund the government spending CB government Congress authorized, you know, over a trillion dollars of immediate help at that time. As far as the what was going on well where does that come from the FED bought a lot of that and also purchased on the open market which they're always doing in order to support.

20:35 Bond prices, the Federal Reserve, and its primary dealers were involved and purchasing bonds. What that did is keep the bond market from collapsing, as well as keep interest rates down. Where did they get the money? Well, they have the authority to create money. The FED is licensed to create money. See we say well, where did they get it? Well, that's how money happens. He didn't just come into existence existence, unless you're using real money. That's accepted like gold and silver have been historically. Otherwise the FED is simply making offsetting debit and credit entries, digital format and that's creating the money and credit. So it's expanding it.

21:26 So when are and you can follow and watch it, See how the money supply continues to grow because the fat even puts it out there so people can see that's inflation. It continual increase in the supply of money and credit is inflation. Everything else are effects of inflation. Okay, so with this idea of filling, the, the basketball up or whatever twofold, let's say to the point that the, that the structure is compromised, right? How is it that they maintain a balance there, right?

22:07 Because I don't know why it hasn't popped because I see what you're saying with the expanding money supply, right? So, at some point, if that ball was to burst, so to speak, that would essentially make our dollar worthless. Great gray. So what are they doing to balance that out, right? Because I'm assuming it's some point. What's the mechanism for bringing the cash back in right to take it out of circulation? The Federal Reserve is always involved in the secondary markets. They are always buying and selling securities and they do that with the intention of moderating the effects, which they're trying to figure out just like everyone else. You can't predict a they're volatile and when there's a problem, all they can do is react to it and that continual reaction.

23:08 Its own effects. So they're in the markets buying and selling securities and that's how they moderate it. They're trying to get engage on things but they're always involved, either withdrawing, funds, by selling securities or they're buying bonds and supporting their prices trying to keep interest rates down. Okay, so when we see that the the Central Bank raised the interest rates, right? They've done. I think they've done to now you probably know better than I two or three.

23:48 Is that an effort in raising those interest rates to draw that liquidity back out of the system? Yes. Okay, what it does. It's like, you know, a good example is like spiking the punch. Once you spiked it, what if you don't put as much in the next time or you don't, you know, that has an effect on our people don't drink as much punch you. You always have cause and effect here. So the FED doesn't really control interest rates. They try to force interest rates to a certain direction and they can do have control over the discount rate and the FED funds rate, the discount rate is the rate that is charged to member banks to borrow overnight from each other, okay?

24:44 No now if it's okay, I'd like to stop there for just Second because I read something gosh, I want to say a couple months ago about the discount window just that thing where Banks would basically go in. Take out a loan and just meet their expenditures overnight. All right. I heard that that discount window. The withdrawals at that discount window had grown exponentially. Is that true? You may have I don't I don't track it all continuously, but there you do. You I'll tell you where we will see that. Clearly what you're talking about is you remember a couple of years ago, all the questions and concerns about read, Repose and overnight agreements. In the money market.

25:33 There was a lot of concern, they're fed fed funds and discount rate are Banks have the ability to lend money based on what's been deposited in their bank and every night they have to balance that they have to be within a certain ratio in order to do that they borrow from each other. That's, that's actually the FED funds rate and I think I may have reverse that when I said it, but that's the FED funds rate, and the discount rate is what it costs. Member banks to borrow directly from the fed. That's the extent of interest rate control by the FED other interest rates are set in the marketplace by people buying and selling bonds government bonds, treasury Securities, corporate bonds, whatever. And also, as those interest rates change, according to people's desire to hold certain bonds or not enough interest weight, whatever, then interest rates themselves, rise or fall, depending on that when 2008 happened, it was a collapse in the credit markets, and that's when the feds step in and started buying Securities to hold on their books, which was an experiment because they I'd never done it to the degree they did, and they went well beyond

27:04 the treasury market, and they also bought corporates in junk bonds. So, and that's what supported the market. But, and they did it because there wasn't enough demand to buy those bonds. It was, it was a wholesale dumping of bonds. And that, of course, drove interest rates up dramatically until the FED stepped in and started buying more. Doesn't sound like it was a good idea necessarily. Well it is if you're trying to keep things from collapsing and that's really where most of the efforts of the Federal Reserve, our aim today, they are reacting to the effects of their own inflation, which has been happening for 100 years.

27:51 And in the meantime, they're trying to massage all of this. So they're really more or less putting out fires. Trying to keep things from completely collapsing. And and so I think that's where you start to look at and say, okay, we're seeing this more and more often we're seeing the volatility increase and at some point they won't be able to control it, okay? And now that was where I was going next is, at some point. There's just too much out there, right? There's, there's nothing you can do in that and that's where you would see.

28:32 And again, correct me if I'm wrong either hyperinflation or even hyper deflation. Correct right. You've got a world economy that depends on cheap and easy credit. Without it. There is no economic activity. Everybody depends on credit. We see it with cars, we see it with houses corporations for expansion purposes. Economic activity is funded by cheap and easy credit. If it's there and they've been they've really been sort of lured into that because we're not dealing with things you know we're really looked at it.

29:20 It's like you cannot you overindulge in alcohol and drugs you get Used to it and then something happens and goes wrong either. Your system can't stand it anymore or you don't want to experience the effects of trying to get clean. So somewhere along the way the piper has to be paid and it's can they keep it going? Long enough to pass Kick, the Can down the road a little further, which they've been doing most of this century So are we is America the only country that has done this or are there other Western Nations or other nations period that have done? The same thing we have?

30:07 Now we have, we are an era called, modern Central Banking. So other nations, they're all doing pretty much the same thing. What makes the US the focal point is that the u.s. dollar is the world's Currency. So there's a status and there's more dollars out there than anything else. So it's more critical and everybody sort of feeds off the dollar with that's how people make decisions. They look at their own currency, the out of that currency, fare against the dollar. How is the dollar faring against other currencies? What's going on? And so as long as that's the case, then everybody's going to look at the dollar for your Clues. In indicators.

30:55 Now, that's this against, this may be too silly of a question, but at some point, this is all based on this idea that everyone agrees that the dollar is worth something, right? And in that case, that in that scenario, you just explained is that the rest of the world is basically just saying? Yeah, I'm sure America's good for it, right? So has have we seen any sort of activity, in which another country has Called into question. Our, you know, is the dollar really Really worth the dollar so to speak. There's no question people have called that particular point up many times recently over the past couple of decades and before.

31:49 But what are you going to replace the dollar with? I mean, when people people talk about it and say okay let's agree, the Dalai me. The dollar is worth one penny compared to a dollar, 100 years ago, and purchasing power. So the Federal Reserve has Lost night as caused a loss of 99% of the dollars value. And we can say, all right, that's fine. The problem is that nothing else out there has the status and ability to be a substitute for the dollar. And and until there's something that could do that, or that people are willing to accept on a worldwide basis. We're just probably going to continue with a dollar that continues to deteriorate as long as other countries. I think there's less reason to trust currencies, like, the Chinese wand, which is the talk about the Russian Ruble, every those and other countries, as much as they may have any degree of justification for criticizing the dollar, their own currencies.

33:12 Don't come close to being a potential substitute. So is there ever a possibility of pagan back to a commodity like oil or something like that? There's always a possibility. The problem is And and I would say, you know, you can Peg it to oil, but oil is a commodity. It can't really be used as money because who's gonna be able to do something with a barrel of oil. You know, that's one of the reasons oil is not really money and pegging something to anything at all. Whether it's gold or money saying it's backed by these things, isn't the issue.

33:58 The issue is convertibility. So I can tell you that, okay? We have so many dollars in circulation and this is what happened when the dollar was fixed to gold at a certain rate, there is only supposed to be x amount of dollars relative to that to come up with that ratio. So as the US government continue to make more dollars in credit available, over the decades, it got to the point where if People wanted to actually have the goal. They were entitled to Which is says on there. There wasn't enough gold to satisfy the demands because they'd issue too many dollars.

34:45 And that's the problem. When you talk about backing a currency you can back it to anything you want. But if it's not convertible to that other item, it does me no good at all. I'm just trusting you to do what you said. So it all comes down to what people are willing to believe and accept. Okay, all right, and that's that's kind of where I was going with that. Now, let's, let's talk about When when did we start? This idea of just expanding the money supply for because for and again, correct me if I'm wrong for about the first 100 Years of our are you know National existence, it was pegged to Gold correct.

35:30 So the idea being you could take a dollar into the bank and get a dollars worth of gold, right? That is correct. Whose idea was it to, to begin to inflate the money supply. Where does that come from? There was an examples of inflation that it occurred over that first century, one of the, the without getting into a lot of detail, one of the worst cases was during the Civil War and even the South tried to claim that their currency had a value and talked about gold.

36:12 The problem is, there were too many Have them out there and everybody knew they were worthless. So but the inflation is always been an issue. And that's why we talked about the clipping of coins, all governments inflate, and destroy, their currencies. That is the way it works. And we, you had an example with France in the late 18th century where they issued a synapse, which are simply paper assets, supposedly backed by real estate. That was publicly owned and they kept issuing too much and finally you know, collapsed had a hyperinflation and brought about a revolution.

36:57 You had an example with the hyperinflation and Germany are the Weimar Republic trying to recover from World War one and saw that, they would print their way out of it. And that led to the hyperinflation that we hear talked about in Germany and the 20s. So, inflation has been with us all along as far as the u.s. is concerned. I would say the concentrated effort to include inflation as policy. Happened with the origin of the Federal Reserve in 1913. Okay, so I want to stick with with, with this part here for just a few more minutes to make sure that that I'm clear on it.

37:45 So this is something that had been around for a while, right? It seems like every nation. It almost seems like a trap that Nations just can't avoid getting into. Is that wood? Is that a fair assessment? It's true. I mean think of your own individual situation is that yourself man. If I could just Prince the money or come up with something somewhere that people would take? Well, the government is no different. I mean, they have their objectives and they have their desires and they know what the or a king. You know, we were originally were talking about Kings ruling monarchs and with the clipping of coins.

38:27 So, whatever the form of government is they have their intentions, their desires, their motivations, and they're spending, and they have to fund that and the only way they can fund it, I'm actually not the only way but the way they usually resort to funding, it is because their appetites for spending are greater than the money that's available is to create inflation. So you clip the coins is more money on in circulation, you draw it back in and taxes and continually to recycle it, but it's a greater amount. and so then you go to the paper, you do the same thing, there's a conscious Stepford, the intention at least as far as the Federal Reserve is concerned, is that doing this They know it's part of the system. And what it does is by being able to continually expand the money supply, they have the license to create the money, this allows them to lend it all the member banks. Lend the money and collect interest. If you had a license to create the money that everybody you who's and so, you know, you would be making money. And that's what that's what the banks and the Federal Reserve is like a Bankers Bank.

39:56 It provides a network and an environment that allows the member banks. To create money, lend money and collect the interest. That's the purpose in origin of the Central Bank. Okay. So real quick, I know that there's been some talk about the numbers being doctored. When it comes to the inflation, we currently have now, do you know anything about that at? What are, you know, what's the inflation rate right now? Compared to what it was in? The 70s is high. Fire. Is it lower? It slower. Okay. And and it and it's lower on a nominal basis, but it's also lower on an inflation-adjusted basis.

40:43 And other words, if we were looking at 10% inflation today versus 10 percent inflation, 40 years ago, It's not that bad we're not even halfway to that. We're getting up five, six seven, you know, maybe an eight percent annual rate but I don't think we're seeing anything comparable to what was taking place 40 years ago. Okay, I think the reason it's got people's attention has more to do with the fact that what they are used to was Was not a problem.

41:23 And suddenly, oh, wait a second, you know what happened to the 1.3 6%, annual inflation rate, they call it in 2019 or 2020? Well sure, when you suddenly see the rate, jump on an annual basis to six or seven or eight percent after a 1%, or us a period of two or three decades of lower than usual, rates of Malaysian, that's going to cause a problem. People are used to something. They remember what it was like recently, and now they're paying more and that gets their attention. Are we?

42:04 And as bad as shape? Well, we're probably in worse shape if we look at the cumulative effects of everything and where we are. But in terms of, in the effects of inflation themselves, I don't think there is bad and not nearly as bad as they were in the 80s and and they're also more, an indication another indicator that things are slowing down because economic activity, I wrote an article about this a year or two ago if you go back and look on an inflation-adjusted basis, everything peaked in 1980, Ever, since then, it's downhill. So all of the efforts to inflate and create this additional money and credit and keep the price levels up. Is not sustaining or encouraging economic activity, the way it's supposed to.

43:06 So it's like a drug addict. You first time, you have the first fix is great. You have your withdrawal aside, I don't feel really good. I want to do it again. You go out and you do it again the next time. You don't get the same impact? Stay well, I need a little more, so useful more. So you lose the. So inflation works that way. Plus you really don't know how you're going to respond. And that's the unknown part and it gets a little more. Volatile, you increase the dosage, you increase the frequency, you try to avoid the downers and the withdrawal possibilities.

43:52 So, In terms of danger zones, where right there? In terms of what's happening with inflation, it's not the problem that people are saying it is because it really isn't as bad. Okay. All right, that that kind of answers that question there. And I do want to return to that at some point when we, when we get down the road here in this discussion a little more. But let's let's talk about the FED for a second. One, was the FED created. I think you said 1913 1913 and what was the impetus for that? Was that something that the government looked at, you know, existing bankers and said hey we want you guys to form a central bank?

44:36 No not exactly the The Federal Reserve a central bank is actually another name for a National Bank and the United States had experience invented with National Banks before. And most people were convinced they didn't want. So, and you had a period of time after Andrew Jackson up until the Federal Reserve, where there was no National Bank now, This is the where it gets a little sticky because some people don't want to believe it. Some people do believe it, some would say, well if he's probably some credibility to the theory and there is some historical evidence, on the other hand doesn't make any difference and that involves conspiracy There is, no, I don't think there's any question that there were a group of very secretive meeting, a group of individuals who kept some meetings, very secret. And that there were concerted efforts to bring about the Federal Reserve and it was called the Federal Reserve in order to avoid idea that it was a national bank. And also it wasn't referred to as a Federal Reserve Bank. It was for a to as the Federal

46:07 Reserve because people didn't want to hear Bank on the end of it. So you had a population who was concerned about it but you also had legislators congressman who said we don't want a national bank. So those who wanted this As we're private individuals, although some of them were politicians who had affiliations with bankers and others. And it's this group of individuals who put this program together, but they had to convince the general public that it was in their best interests. And they also had to convince Congress to authorize, so they had a two-pronged approach. Roach.

46:56 As far as the public they Enlisted, the best efforts of high-profile businessmen and others and they told the public that it was good for them because the Federal Reserve would focus on managing the stages of the economic cycle and avoiding as much as possible depressions. Panics and crashes and also hopefully extend the prosperity cycle to avoid those problems. So it got people to think that okay, this is this is in our best interest.

47:40 This will work. All right? Because we would like to have a smoother effect here than what was going on. They also had to convince Congress and the way they did that is they needed to have some reason that somebody at some level of government could use their influence to convince those who would vote against this to vote for it. So the Federal Reserve the people behind the Federal Reserve who wanted this thing to happen. Made a promise that if the Federal Reserve were Approve. And, and authorize their existence, that they would guarantee that the u.s.

48:28 government would never run out of money. But they would create make sure that the money was there for the, for the treasury to operate. That's how they got and then that element of government convinced the Senators they needed to make the vote. And that those are the two things that had to be overcome. for the Thriller, the authorization of the Federal Reserve, It sounds kind of shady. Kelsey, I'm not gonna lie and as you explain the whole thing there, I'm like, yeah, that's that sounds kind of shady, right? And then as you were saying, it's whole purpose was to prevent really big highs in really big crashes, which so far they haven't been able.

49:14 I don't know how have they been able? Have they been able to do that? Did we see more more crashes before the FED versus after? I mean, when I wrote it, Out this. And there's a you and I are both read the book, The Creature From Jekyll Island, which is about the origin of the Federal Reserve and I believe there is a great deal of credibility to that because the historical facts and the names are there and the evidence is there. And but you can just wipe that out and say, okay, let's look at it differently and let's look at in and say what was the motivation of those who wanted the FED we if it wasn't conspiracy? What did they want?

50:08 Why was it important to have? Another National Bank or something. Close to that. Why did these gentleman in particular? Feel like this is important because they were all identified with the bankers International bankers. And I said, okay, that's the conspiracy side of it. Okay, let's put that aside for a minute. So what's another reason that it might shouldn't be there? Well, one is constitutionality right, and the best, I think the most outspoken and clearest in his call for the FED to be abolished is former Congressman Rand.

50:56 Okay now and and he's he's very clear about it. And I think there's Merit to that and you can say the same thing about the end income tax, but nevertheless it they were both approved. The income tax is approved and and they were accepted whether the Constitution or not they're there so and It's interesting but the federal income tax originated in 1913. Same year as the central bank, right? Anyway. So let's so you can say, all right? So you have constitutionality, you have the conspiracy possibilities, we do. We said both of those aside and you said for the time being well, let's just look at it a different way. Does the FED have a responsibility? Two American citizens.

51:52 Are they answerable to Congress for the u.s. government? Well, there's sort of a quasi Federal agency in a certain sense and they do. Make an appearance. before Congress, on a regular basis and they answer questions but I'm not sure how answerable they are, because many did some research on this and just discuss discovered this recently that the FED has been chartered In Perpetual or perpetuity. In other words, they're the charter, for the Federal Reserve doesn't run out at some point with other National Banks, there was always a renewal call for, in this case it was about, I think nine or ten years later in the early twenties, maybe 1922 that a bill authorized the FED Charter.

52:55 Without an end or limit. So I don't know where we get to the point of, you know, That's why I think most of the things fall on, you know, falling off the way, they can't really nobody knows how to do it. How do we get rid of them? But the final thing here to consider when we're looking at, it is like, you asked, have they done any good? Have they accomplished? What they said they were going to do in terms of managing the economic cycle? The stages smoothing things out absolutely not the Federal Reserve caused the It depression the Federal Reserve caused the credit collapse in 2008. All of the effects that we're seeing in terms of volatility and threats to the financial system and our economy, our effects of inflation that was created by the fed from the beginning from its origin.

53:59 So no, they certainly aren't Justified. And yet, we keep looking to the FED to solve our problems. Hey, or trying to tell them. This is what you should do or shouldn't. Do you can't cut back now because of this, you're right there on the horns of a dilemma. If they, you keep spiking the punch bowl, sooner or later, you're still going to have bad effects and if you take away the spike, it's going to cause an immediate collapse because everybody is used to it and they depend on it. So the FED really doesn't have much Choice other than to maneuver back and forth. And when things get bad enough, they'll react, but they usually tend to overreact.

54:50 It's kind of like being in a car that's out of control and every once in a while you say you're going too fast you slam on the brakes, then you go really slow and so me, you realize you're not getting anywhere so you speed up again and as you speed up, you see a wall right ahead and then you have to slam on the brakes e and and this is the way the FED operates because they're in the dark just Just as much, they knew when they started out that some at some point it was going to be out of control. They just hope they could continue to massage it. And I think we're, you know, probably passed the point at some point, something will happen big enough and we'll just have to accept it. And the FED will too, but they'll pull out all their guns at that time.

55:38 They'll do everything they can because they're not working in our behalf. They want to save their system. Right? They have the license to print money, lend it, and collect interest, the banks do, so they don't want to lose that. So, let me ask, let me. Let me rephrase some things this way. If if America is, the is the addict cheap. Money is the heroine, then our dealer is the Fed? Is that a, is that a fair assessment? Yeah, I would say, so. Okay, supplier for sure. Okay, so They've been they've been doing this for a while now, right? Where they've been been, you know, lending the United States money and let's call it what it is. Right there.

56:26 Lending the taxpayers money, right? And then we're expected to pay back that interest. So, they've been lending US money. Who is their boss? Tis is there somebody in the federal government? Is it Janet Yellen? Who is it that the FED answers to is there anybody? The answer to this is where it can get a little dicey. Government is all areas of importance in government. We probably have people that are affiliated and part of bankers and organizations that have motivation.

57:15 That's far beyond anything we would assume or understand, it's not one person or group necessarily. Might be several groups. Might there might be an individual who has a connection with two or three different groups and then you have individuals who You wonder, maybe they probably are but they lean towards the political philosophy that would allow that implementation to happen at some point. It revolves around power and control and money, those three things but I think we can rule out the money specifically But not the power and control.

58:07 The money has to be there but that's not the goal. And those who have that influence are probably at a point where what I'm going to do with all this money, right? You know, now I say that but I also I'm not a fatalist here I don't, you know, and this is hard for people. But again, do some research Because the evidence is there, this stuff's been going on for quite some time and it's not just here in the US, it's in Europe. And so you can see that there are those in some and and the term has been used Shadow government.

58:54 I mean if you look at it the first I think the first tip-off for me came in the in the 70s when he realized that it really didn't make much difference. Whether we had a Republican Chicken in office, or a Democrat. Because the spending habits and the course of government activity and intervention and interference. Coupled with the loss of personal freedom. It goes back quite some time. And so, you see that and you have to believe is like, wait a second.

59:36 Is this the same guy that was saying what he was saying when he was running for office? Or even if he sounds like he is, is anything being accomplished. So I look at it that way and I been convinced for well, over 40 years that it doesn't make much difference at all who's in office anymore that they're not in control and if they are if they if they rebuffed those who are in control, then something happens to and you have I don't see how some people can even read a newspaper anymore, or look at headlines on their computer news feeds and think that, that we have a free and open press because, you know, it's just not. I mean, that's, that's my personal opinion, but I agree with you.

1:00:42 I think the evidence is there but we still have A measure of Freedom that allows us to be independent and take action for ourselves. So and I try to write that way. You see, I don't I have hesitated to write too much about the conspiracy thing. One is. I had trouble convincing myself that everything boils down to that and I'm still not convinced. It does is just that There's a measure of trust involved. Who am I talking to? Can I believe him?

1:01:25 And You know, where where do my best interests lie? And so, I'm not I'm not anti government other than I, don't think government is the answer. The way we're headed. Never has been. I mentioned his name before Harry Brown, but I He wrote over 40 years ago. You know, we need to start with a goal in mind. cut income taxes by 50% and cut government intervention.

1:02:08 Right. Third to a half. In other words, why? Why is the government regulating? All of these things and telling us that? Well, see that all of that goes together. I think that's a part of the financial and economic. You can't ignore those things. You have to know about them. You can make, you make your choices and your decisions, and you know, look at what's going on, you say? All right, how am I going to deal with this? If you discount the conspiracy theories, if you discount Shadow government issues and you at least look and say, you know what, the track record of the FED sucks, they haven't done much to make this worthwhile, so I'm going to protect myself. and, you know, so, you know, you do some things to do that, but we're We're closer to the end of the road then somewhere along the way, right.

1:03:08 I'd be a good way to put it before we go. See some significant change. Yeah, I know before we go there, I want to ask this question before the Federal Reserve who set the monetary policy, right? Who decided when it was time to print more money, who did that? Hey, you had a government and a treasury in office, there was no Central Bank National Bank. The experiences with the National Banks were not there. Then they would come and they would go. So the treasury was responsible but there was a direct link to gold and silver. We had a bimetallic system, so you could hand me. See gold was original money.

1:03:54 That was money before paper currencies. So in order and this is the logic is if Government wants people to accept It's Paper currency, Then it's got to convince them that it's in their best interest and in order to overcome that obstacle though they've got a trust and so in order to trust they say well let's make the dollar since we want to have what they call it is irrelevant. It's how does it function? You know, and it said will make the dollar convertible to x amount of gold or silver and and civilizations have done this, you know?

1:04:36 So because As people can say, okay, I know I have five pieces of silver here. I know I have a fraction ounce of gold. If I can take that paper dollar and turn it in and get exactly that back in exchange, I'm good to go. The problem is too many of those paper substitutes were issued such that. The convertibility became questionable. So the convertibility being the issue. As long as people knew that a dollar in gold.

1:05:21 The dollar was as good as gold, you know, paper dollar was a dollar and gold and that, that was maintained. Then it's not an issue, not a problem, doesn't mean you're not going to have stages to the economic cycle and it doesn't mean they're bad for the economy. Generally, you have to have a cleansing of some kind once in a while. And they don't all happen because of the system, they happen because of people and individuals, and other activities. So, so that's what you had, you have people, you know what's money, what people will accept the National Bank changes everything, the central bank, now everything's funneled through the Fed. Okay, that makes sense.

1:06:11 Let me let me I want to make one thing clear though. And I was thinking about this earlier and I think it's important. Government spending does not create inflation. There's been a lot of talk about Biden's. Irresponsible spending plans his administration and what happened in response to the forced shut down and covid and all his stuff. But the Federal Reserve creates the money If the money isn't there, the fact that the government can't spend it right?

1:06:52 Lesion doesn't happen. A corporation, raising prices that doesn't cause Excel inflation. Labor demands don't cause inflation. Inflation is the cheapening of the money supply because of that expansion of money and credit by the fed, that's what causes the debasement. And then that loss in purchasing power occurs and then the prices go up to reflect the loss of purchasing power. It's not because it's not a spontaneous event, it's a planned action and it starts with the Federal Reserve with the central bank and that's the way it works. So you're saying it doesn't start with with like a wish list by a president saying, hey, I need this much money to do, x, y, and z.

1:07:44 That's that's what we're playing. Some my platform that I have to get done and then he looks the fed and says, print that money. It may start there he is spending, it is reckless, there's anything it was Congress. Congress is like drunken Sailors. If there's a problem, we're going to spend some money and that's what they do. They throw money at it and create more regulations but they can't spend money that they don't have unless it's made available. So The only way it's going to be made available is if they create treasury Securities and their loan to borrow borrow the money or get it from the FED, whatever combination can get it, they're guaranteed to have it and they will, they're not going to run out.

1:08:32 They just continue to print more, treasuries to redeem everything. So if they're unable to do that it doesn't matter how much they want to spend. You know, individuals can go out and say, Hey, I want to spend things, I can be Reckless. I spent my kids college fund. I did all these other things that's not going to create inflation. Create a depression because I did all this unless I have a source from the money. Okay. But that confusion about inflation is also partly purposeful. It takes the focus off of the guilty party.

1:09:13 You see if people understood that these are effects that happen as a result of the prior creation, Of the of the inflation, the expansion of the supply of money and creating then, well, you know, don't don't blame me, I didn't do this because, you know, right now we're talking about inflation and they're trying to blame Russia. They're both stable. Inflation is bad because the oil prices are high, no, no, none of that's true but that muddies the waters. I got you and then people are more pliable and more accepting of more regulation and intervention. In order to stop what they see have been told is inflation. He just raised his price, you can't do that. And then we start coming in with all of the government, edicts, to control inflation, but the FED still printing money. Right.

1:10:17 Government still spending whatever, they can get their hands on. So again, it's not the spending habits, it's not individual greed or anything else the inflation exist because The FED created the money and continues to create it. You know, I think you brought up, I think you answered a question, I always had which was why didn't the founders put in the Constitution? A provision that said hey you can never spend more money than what you bring in. And I think it was because perhaps they didn't in ever foresee a central bank would that is that a fair assessment? Probably not, you know, as much as I read in history. That's one area that I house, have to go back and research some things again but here's what I would say and I think it's reasonable.

1:11:19 Their intention was that gold and silver was money, okay? Okay and that's why when we talk about constitutionality and it isn't so much whether there's a central bank or a National Bank it has to do with that issue. If a if there were a time when there was more than one National Bank or one in existence, At the same time or there was a national bank and a couple other Regional Banks or whatever, it still comes down to the money and the confidence and credibility there.

1:12:00 If as long as I know that I have a certain value here that stated, and then I can convert it and actually get what I believe and expect then those aren't issues the issues come into play. When somebody tells me this is worth acts and it isn't. And when I go to use it, I find out. Oh, I you mean, you can't, you can't give me an ounce. A gold. I can't have five dollars in goal for this five dollar bill or the 20 and I used to watch these things in the 60s and I say, hey, this is Pay to the bearer on demand and another one says, you know pay to the bearer on Van five dollars in gold or whatever and then the and then the next time it was paid to the bearer on demand five dollars, I can turn him my $5 and get $5 back but doesn't mean anything if still a piece of paper.

1:13:03 So the issue is what's the basis of the money supply. The system itself. The reason that the central banks exist again is because they can create money and they create the money for the purpose of lending, it, and collecting interest. Again, that's where, you know, you start to eventually erode the confidence because there is anything because you still had a fixed ratio of gold and silver to the dollar until the mid 30s. When people started saying, I don't trust the government or the money or whatever.

1:13:46 So the government says, wait a second. If people start doing gold that's going to kill us. How are we going to navigate this depression and then the silver history of price supports price depression? I mean for several hundred years the manipulation was there. And finally reached a point where The government simply said because of the amount of inflation and the cheapening of the existing dollars over time, it's like we can't maintain this and then he had all the foreign governments in the early 70s who wanted to turn their dollars back for the gold that they were told. They could have at $20 an ounce than $35 an ounce, then 42, and they just kept getting haircuts throughout that first half century like Sooner or later you say I don't trust you and I don't believe you.

1:14:46 So you know They have managed us rather than manage the stage of the cycle. They have manages to a point where the dollar is now worth one penny, compared to a dollar, a century ago, that's a crazy stat, I have another question so the FED lends money to the government and then they charge interest on it. And then we continue to borrow money Without Really Ever paying it back in full. If I was to use that same scenario in my household budget, at some point, the interest payments are going to be larger, just the interest payments. If I'm thinking about this correctly will be larger than what I actually produce true or false. We are already at a point where the ratio of At. To productivity is greater than 100%. The total debt.

1:15:56 Is over 100 percent. It means in very simple terms. That it takes a hundred and three thousand, or a hundred and some silly, fractional amount over 100. Two. Hey for a hundred thousand dollars worth of productivity you. Do you see we're already functioning that way? We're already functioning, we are not, it makes sense that if if I can borrow money at 8%, okay? And I can earn 15 or 20. Okay, I'll do that.

1:16:42 You know, I mean there's risk involved and everything else or that my total debt doesn't exceed productivity. Well, that's where we are. We've gotten to the point now where everything is funded by credit and this is the dependency of you. Take away the credit, the economy collapses, but the other choice is that you don't take it away. And we either have hyperinflation or credit. Anyway. Because it always ends in depression whether we have hyper inflation or deflation, we will still end up with a another depression and it'll be a lot worse than the last one.

1:17:25 So I'm going to can't remember who I heard it from, but it was an economist who said I should have looked this up before he got on here. But it said, the laws of economy are a lot. Like the laws of physics. You can figure out a way through propulsion to To, you know, Stave those off for a little while. But at some point, the laws of physics are going to be obeyed, the laws of economy are the same way. In that kind of sounds what you were saying at some point, there's going to be a reckoning that happened so to speak. Correct? Correct. I believe that very much. So let me ask you this.

1:18:09 What would cause? What would be the Catalyst to that Reckoning, right? What what kind of world events or whatever? What would be the trigger to start that, what kind of events does that? Is that a fair question? It's a fair question. The thing is anything, almost anything could be the trigger or the catalyst is set down in motion. And here's why when we talked about the Inflation that's created by the fed, and the bank's, there's another larger that's where all the attention goes. But the bigger risk is the fact that the cheap credit is what allows Wall Street. To continue to produce product inventory. Of dubious quality.

1:19:08 And I say that, meaning, if you can dream up a scenario in your mind, you can file probably find a security That Wall Street has out there that will that you can bet on to see that happen meaning. And it doesn't matter whether we're talking about interest rates up for the US dollar and do. for the Japanese Yen, or whether we're talking about, Federal agency rates versus others, you know, there's spreads there's options, there's future options on Futures there there are so many esoteric Investments out there that are based on credit. And you take one basic product, like a like a bond. Do you remember you skull zero coupons and we still they're still out there?

1:20:08 You use they would strip the interest. And this is just a, you know, sounds like how do you do that? But they did. And they would say here's a treasury bond. For the next 30 Years is going to pay 8% interest or whatever. The rate was 4% manner. You say, all right I don't need the income so I'm going to buy that treasury bond at a discount and the and then I'll have a capital increase over time and it'll mature gradually to the point. So I might buy that at a significantly reduced rate and I just won't collect the income, then they sell the interest income to somebody else.

1:20:52 But the problem is people are the products. A lot of the products are based on things that fluctuate volatile are very volatile based on changes in interest rates and they do this because they're looking for ways to generate income because the traditional ways won't work anymore because the interest rates are too low. So they've got to be able to attract. So how are you going to attract people to? Buy a product telling them, they look, you're going to earn a half percent over the next two years on this. What, what do I want?

1:21:34 So you have this entire level of activity will call it investment activity that nobody sees anything on understands can explain, even the people who people have Market, these they do. Don't understand them. They have somebody put this together. How they get it approved? I don't know. But so are. And it's all because it's very convoluted. And they're all based on premises that if anything happens to alter those premises, or the direction that people expect the interest rates or currency and foreign currency exchange rates, and that sort of thing. It Alters, even the slightest fraction, it can cause horrendous losses.

1:22:26 Now, what's happened recently? There are some big bets that have gone South real fast with the latest efforts by the FED to push rates up. So we're it's like a razor thin Edge. That's keeping, you know, you tilt it just a little bit this way, those kind of things can trigger and somebody says, Hey a big investor who bet big and suddenly finds. He's a couple billion. Dollars in the hole and now, how do I, how do I do that? What do and maybe? He's maybe he's the manager of a hedge fund. Maybe he's a big shareholder and I mean, the implications go on and on but but that's not the half of it and we haven't even gotten into this.

1:23:18 And I don't know whether we can tonight because it's something that gets it's very detailed, but I'm game. If you are you have all the time you want. Aunt our country operates and what is called of our banking system operates and what is called fractional Reserve basis you take 100,000 e just guy and you go to your bank and you put it in. Now, I mentioned earlier and this is what happens. Every bank at the end of each day, has to make sure that their Bank, their accounts. In terms of money, they have loaned out assets and liabilities come into a certain balanced.

1:24:05 They are allowed to loan out. As much as 90%. Of that 100,000 that you just put in, WoW, to the extent that they are already in Balance. So let's just say that all of the debits and credits that day the liabilities and everything else. They totally it up and they look at it and say okay we're in balance and and we have enough of a surplus that they can loan out. And not because that's directi requirement and I'm talking about it in pretty simple terms because I want people to understand what's really happening because it's a combination of everything. That's all the transactions going through the bank withdrawals and everything else, and it's on a system-wide basis. So but each individual Bank, I can loan out, 90% of whatever they take in and then they have to make sure that they're in balance, that way that they meet. That still, here's an extra amount they loan ninety thousand dollars out.

1:25:19 Now, your money is still on deposit, even though they've loan that 90,000, if you go in there, you can still get your hundred thousand dollars. Okay. Okay. Putting your bank, they blown it. Somebody else Somebody else gets a say, it's a small businessman. He gets his money. He's got a car dealership. He's got this 90,000, he needs. He deposits in his bank. Or he could deposit it right back in that bag, just to pet, doesn't matter. Guess what? The bank says, Hey we've got 90 thousand dollars here. We can loan out 10% of that.

1:26:05 So they do. And this goes on and on and the multiple some people have done some studies but it ends up being that from a certain point of origin. It works out to be an Eightfold increase based on that original amount. That's inflation. That money was created by the bank to land and collect interest. That's the daily activity of the banking system and that alone could cause a collapse in our system. Now, you want to talk about Bank runs and all that forget, the Federal Reserve, See, that's part of the Federal Reserve. They're there to provide an environment and a structure for the member banks.

1:26:57 They can keep an eye on them. You hear all the concern about Capital requirements. That's part of that, that creates an environment. Now, these Banks can do what they do. Best lend, money, and collect interest. They're not really lending your money. You are basing that loan on the money, you've deposited, but you have a demand on that and it's every bit as great as the 90,000 that that person took and put in his bank. And and so you know, they can say well it's offset the liabilities all said well that's how that's what happens when too many people want their money.

1:27:43 For whatever reason and they go to the bank, say Hey, where's my money? I want my money. Well, it's not your money that they loan out. They just loaned out too much, gotcha. He said you and you can look at it this way. If you give your friend money to keep for you safe, you trust him and they do this and they do some things for and maybe they're not irresponsible with it. But they'll end it and now it's in different places but you decide you need that money. Well, you go to my say, well you and everybody else leads it right now. We just don't have it. Because they have see.

1:28:26 All right. Now there's detail with this, that's important to understand it. And and there's an article on my site called the think the, the elephant in the room, fractional, Reserve banking. So, anybody wants to get a clearer picture of how banks operate, this means your bank, my bank and this is the way it's been. And this to me is a bigger risk. It's certainly as much of a concern as these other things. You know, the big picture that we've been talking about, it does seem like it's constantly. I have to admit, it seems somewhat impressive that we've been able to operate like that for so long. Right?

1:29:18 I mean, absolutely. In fact, I don't know how it's tiptoe after you explain that to me I don't know how it's tipped over thus far, right? I suppose, I suppose that's Maybe a big argument for God is that hey we haven't completely gone bankrupt yet because I don't know how it's tipped over. Yeah it's and this is the thing. This is these are the things that people most people aren't aware of and if they are they say well it's worked, you know, long enough. So maybe it's okay. You know, I don't stop and think about it every time I enter an exit, my bank but on the other hand, I think We were looking at problems with the system.

1:30:02 We can see that, you know, there's definitely a risk here and it's a big one. And if they Dove Tails, I think with all these other things. Now, you can see, you know, if you go back and look at read about the history of events in the Roaring 20s leading up to the depression. It's a real eye-opener stock market crash and everything else because you'll see how active economic activity generated by the feds willingness to extend cheap credit, you know, be Before the stock market crash occurred Banks because they were direct lenders to investors. At that time, we're Landing as much as two-thirds of the value of new Securities, purchase to Ordinary People. To invest in stocks.

1:31:00 Now, you look at today, we might not be quite that liberal in terms of direct margin loans, but the margin loan still exists. The volatility is greater the risk is greater and you also have products that are leveraged. You can buy ETFs, exchange traded funds that have leverage built into them and their purpose is to create. And affect more than one to two times, whatever. The market action is whether it's an individual stock, or a group of stocks in the market itself. So the Leverage is all through the system. And again it's not just Wall Street, but then we've got ordinary economic activity.

1:31:53 You have student loans car loans. Real estate. I mean, it goes on and on. Okay. That's, that's a pretty sobering thought. If you're willing and I understand that a lot of this is wildly unpredictable as you stated before. Do you foresee? Inflation and economic struggle. Getting worse from this point forward, or do you see a rebound? Do you think we're at the bottom of things? What does your gut tell you is a guy who's worked, you know, you've worked in this industry for 50 years.

1:32:39 You've advised clients, you know, as as a as a A financial advisor. What do you see down the road here in the next? Let's just say next 6 months. I generally don't make predictions of that kind and especially not over the next six months. But what I will tell you is this we are closer to economic cataclysm that at any other time in our history. I believe that's my personal opinion even more so than stagflation in the 70s under Carter go.

1:33:20 Absolutely absolutely. I also believe that. That the possibility is such that we could see things happen overnight anytime, or it might take a few more years. And the only reason I say that is because there have been times in the past where I can't figure out how they were able to pull a rabbit out of the Hat. Every single time I really thought 2020 was like each time it Something happens.

1:34:01 I'm like, what are they going to do now? How are they going to resolve this? We just watched everything drop by 30 to 40% in the space of a couple of weeks to years ago and I'm like and then they're going to shut the economy down. There are people not to produce what we're going to do to oppression and I really thought we were I'm amazed at the resiliency and that's the thing is, we find ourselves. No matter what seems to be happening some way to pull ourselves out of it. I don't know whether we can do that again.

1:34:43 I just don't, but I don't want to say that that possibilities off the table. I just think that we have to say more realistically that the odds of that are greater than they ever have been. And the significance will be much much greater in other words that the effects of anything like that the ability of anyone To counter that or bring us back to anything normal. Just go to me near like possible if you can. Well, I appreciate you saying that because So I work in the construction industry.

1:35:24 I'm a land surveyor and I've seen, I saw 2008 right? Hip my profession, especially hard, right? If you were an engineer and architect land surveyor developer, it just puts you flat on your butt, right? It was just the kind of the way it was. I look back at those times and I'm like, okay, so, It seems to be that, right? We see there's almost this feeling of an overheating economy, not. And again, I don't have your expertise at all, so I could be wrong. But I got this feeling of an overheating economy on top of every everything else and and, and again, I could be totally wrong because I again, I'm not as smart as you when it comes to this stuff, it just, there's a long bells in my gut and I don't do not know why.

1:36:14 And that's why I had you had you on. Um, you said something that kind of spooked me, you said we're closer to economic cataclysm than we've ever been before. Let's just say the worst happens because I want to paint the picture and then we're going to talk about some ways that we can weather this storm, right? I don't want to end it on a bad note, what does economic cataclysm look like for the average American family? I think that's largely unknown because I think our whole way of thinking will be forced to change, but even if we just go back and say, what if it was a traditional depression and you have 25% of the workforce unemployed and it stays at that level, that's my Elder than the potential were talking about. But it's significant enough.

1:37:12 That would have a much greater impact on society and economic activity than anything. We faced in this Century or anything. We faced since the Great Depression of the 1930s so suit, you think what would happen? How would things be? I mean you had millionaires who were on street corners selling apples and pencils you had People jumping out a Windows. You had ten cities, Bank bank failures bread lines. I mean, soup kitchens, but they were on every corner. It's a, you go to a certain part of town and here's the place, you can get something to eat.

1:38:00 They were on every block. I mean, it economic depression is exactly what it was and that is bad enough without it getting that point. I think. Most people when they're thinking of something bad at this point, think? Okay? Stocks could drop in half but then the federal step in and I'll just buy a bunch of stuff then and, you know, it'll go back up again but it would extend much farther than asset prices. And I think that I think we'd see defaults uncrowded that would they would make our system and structure questionable in terms of what are we doing.

1:38:47 These people, that day traders to me is the perfect example of reaching a point where We've gone too far. It's too easy. It's too easy. Nobody thinks fundamentally anymore. All I think about is what's the next big thing. And, you know, if I can if I can bet on it, I am. So they're extremely price conscious. They don't buy stocks because it's a good investment. They buy them because they think the price is going to go up or they've seen the price go up. So but but I like every wants to know all these, just throw out a question and I say, like, you know what, if there is no stock market, I mean, if people could see what the stock market and activity surrounding, it was like after the crash, they be utterly.

1:39:45 Shocked was like, you know, you're standing around on the floor and nothing's happening. Nobody nothing is happening, nobody cared, nobody wanted the price actually didn't mean anything. There were no customers right now, assumes there was a market. What if there is no Market, what happens if things get so bad. And this is where people, you know, there are a lot of people who predict, well, if you want to protect yourself, do this by this own this What happens if things are so bad that there's no market place for you to do this? How do you sell something that's important when nobody has any money to buy it?

1:40:33 I mean we can say well what's the price of it? Or what's it? How valuable is something? And see. I think this is going to call into question. People are going to learn really fast, what's valuable what has value and once just high-priced. So you look at stocks in general, All you SE. Are they overpriced? I believe they are. I think all Financial assets are, overpriced doesn't mean they don't have a value. It just means they are all over priced at this time. Severely. Overpriced where's that value? Where does that come into play? Does it come into play at a reasonable point or an unreasonable point? Because in most cases we go to The Other Extreme at some point and that Other Extreme says, The value conscious investor will be screaming wondering why?

1:41:30 The price hasn't responded. And it just sits there. And the thing is that nobody's immune to this because eventually You have a depression even hyperinflation ends in a depression. And if we go to deflation, gold and silver, they'll go in the tank to, at least, you know, you have a certain value if the system Becomes. Unworkable. So, you know, you can say, okay, what's the value of my gold or silver? What can I buy with it? A lot of that.

1:42:12 Depends on what happens when something like this occurs. But I think too many people are too. It's just too easy to. I don't want to think about it. I don't want to ignore it. I mean, I want to ignore it. So I do know they say, well, I could happen, but so fine and I think it will. And then what makes things worse? Is the government will step in and and fight it. Instead of allowing, you know, when somebody gets sick in order to really get better and heal themselves, they have to be sick because that's how the body heals, but they don't want to deal with that.

1:43:00 So they take some pills and and they try to cover up the symptoms and then they force himself to go back to work and say yeah, I can't do that. And so the illness is still there. Maybe it's in hibernation, maybe they're Strong enough and young enough that they can get you know put it off or get gets through it. But I think more and more people are going to be unable to handle what happens and then we'll see, you know the potential free-for-all really? I mean that's a possibility that most people just won't consider. I don't want to see that but you'd have to be with you. Look at the history of Money.

1:43:47 And what happens to countries when they ignore fundamental economic law for 100 years and and see what happens to their finances and their money and their economic activity. And and yet we're talking a worldwide basis. I just I don't see I think it's so great that we can't even sit here and speculate in the How bad it could be, if it happens. Yeah, you know, I agree with you when I was Back in 2008 when everything went down. I remember and again, I don't think it did me much good, but I got my hands on everything on economy. I could could grab right.

1:44:34 Adam Smith In The Wealth of Nations read, you know, articles by Keynes and Hayek, I tried to understand as much as I could. And like I said, I don't think it did much good, but in my kids were significantly younger than right? I mean, we're talking. What 2008? Now it's 2022. So gosh we you know 15 years or so on 14 years and I remember thinking if yeah I remember there was a moment where the light bulb went on whether it was a correct idea or a false idea. The I remember thinking this could end up where, where you're going back to barter apples for something else, right?

1:45:19 And, and even Even golden silver at least for a little while wouldn't necessarily have any value because it wouldn't have immediate use if that makes any sense. Sure. And so to me that's that's kind of what it always looked like but I could be all wrong. So I you know don't don't take my word for that at all. I don't think anybody really knows. I just I think we have to look at history first of Clues and recognized. As that. The potential for something significant is there. And, and, and the other thing is that we've had a system in place where there's always an attempt to suppress, or manipulate the natural consequences because nobody wants to go through.

1:46:13 So we even have a population who absolutely. If they were faced with it, would rather have the government intervenes. I mean to do what they think, will help solve or modify a problem because they don't want to deal with it, and it doesn't matter. And I'm not saying all people in general are responsible for this because I don't feel that way. It's just that we're all going to feel it. And there's not much of a way to get around that, you know, it's like be aware being psychologically prepared. Might As important as what we think we can do financially, right?

1:46:58 No, I agree with you wholeheartedly. I remember I remember you know again because it's the only thing I really have reference to right. I mean, I was born in 77. I was under my parents roof through most of the 90s, I guess. Halfway through the 90s, the only the only reference I have is 08 but I remember I remember an 08 And all the sudden I had to get real honest with myself because I could no longer Define who I was based simply on what I did for a living, right? And I think we all do that. I think it's all natural and it's very natural to do that, but I remember I just take a step back and go. So, who am I?

1:47:43 Am I a surveyor or am I my wife's husband? And my kids is father and and I think you you actually hit on a really good point there, that, that psychological I think it's going to to be as important, maybe even more. So if things do go south in a, in a bad way, Now, we've kind of talked about what that would look like, potentially right. My next question is what's a I come to you. I have two kids, a wife, two kids at home. I should say there that are under the age of 16. I do want to be able to help out my adult kids.

1:48:25 And I come to you, and I say, Kelsey, I want to protect myself as much as I can to weather. An economic storm coming, right? What would you recommend me to do part of this has to do with how strongly you believe or fear that particular event and its occurrence sooner rather than later? It's a combination of several things. Someone comes to me and says, look, I absolutely am convinced. We're going to have a crash, it's going to be a crash. We're not going to recover from, it's going to affect everything and everybody in a significant way, it's going to last a long time and there's a lot of unknowns and I just simply want to put all my efforts into protecting myself as well as possible against that scenario and event.

1:49:23 Okay, then I would advise you a certain way, okay? But to the extent, you have family. And to the extent, you recognize that. The probability might not be 100% that it's going to happen in the next 10 or 20 years or maybe your lifetime. And and so we look at all of those and then we say Okay based on and you've got Young children in a responsibility. There is like, you know, you got to look at things say, is that realistic to plan that way? Give it to where you are.

1:50:06 I'm not saying it is and I'm just saying you got to look at all that. So this is where the psychology enters in and where the convictions of the person relatives to what they're trying to accomplish. And all that, having said all that and recognizing everybody's Is going to vary on how they do that. I'd probably still lean towards saying, you can't bet the farm on one outcome. It just it's unrealistic and I told people most people don't make the mistake Of betting on the wrong thing. They make the mistake of betting on something to the exclusion of other things.

1:50:54 So, no matter how strongly someone feels about that, I would be hard pressed to say, okay, well, you know, let's put it all here and do this, you know, let's, let's function that way and so I think, you know, generally speaking, I'd say what's real is, giving are given our environment, how can you accomplish some of that or most of it and still recognize your other responsibilities and the possibility that maybe it won't all just come down at once right away?

1:51:36 So I would say, well, alright, and I would never have said this. 25 years ago. But I would say, if you've got the assets and the primary the money, And you're comfortable with where you live and pay off your mortgage and own your house. Outright I was always tell people carries big and mortgages possible, do something else with the money that's still might be reasonable depending on an individual situation. And what they're trying to accomplish, but I would be thinking like well what am I going to do with? Because you have to look at what you're going to do with it. And given the scenario, we're talking about where is value. Is there value in your house, your home? Yeah, I'd say their value, provide you a place to stay if you pay it off the mortgage.

1:52:34 You generate income. You don't have to make a mortgage payment so you've generated income by paying off the mortgage. So I would consider that versus telling someone To maintain a mortgage, unless they were in a position where they said, no, I'm just going to get up my helicopter and I'm going to go to my retreat on my private island. You know, you don't need to do need to do that. So what am I looking at how I want to make sure that my money is in value? Not just something that's high priced. So I'm going to get actual value out of my house, which says, here's a place. I can put some money.

1:53:17 Since I'm not sure what to do with it otherwise so you got that. I would pay off my car and my dad's never would have told people that never. Now, let's say, well, I'm looking at myself personally and say, pay off the car live in a house. You don't have a mortgage payment that nobody's going to come and say, throwing you out or I'm taking this house or whatever. I don't want anything to get in the way there. So you want privacy and seclusion and confidence that this is your place, pay it off, pay off the car, there's value to those things I would want.

1:54:02 Some cash reserves, just cash on hand somewhere that I can get my hands on it. I don't have to, I just need to know that there isn't somebody that's going to be in the way of that in terms of doing it. And I don't know what the system you know what what what the actual outcome whole. So I can't say I wouldn't want those hands. So I want some cash reserves. I want some a few silver coins. And then for larger portions of, well, I want to own physical gold, not gold, mining shares, and not ETFs.

1:54:42 And any of that I want physical gold and I want to make sure that I'm in control of it, that I can be comfortable that I'm in control of it. I'm not saying how that would work because they don't do individual stuff. I just, I look at it abroad by, I can give some suggestions, you know, and stuff like that. But Primarily the point is owning the physical commodity and knowing that you're in control of it. So you have to trust your sources and stuff like that. A point beyond that. I would like okay do you want to say like out of your total? Net worth, somebody feels comfortable, putting 20% into traditional Investments, 10%, nothing, and on that basis.

1:55:31 Carve out a portion and say, okay, I want, I want something that I can rely on more so than most things at, you know, as much as I said it and it's so ironic. But I would have to say short From treasury Securities, they're not going to default. I mean, if it ever gets to the point that they do, everything else is gone. So but I don't want to do long term because then I have the risk of volatility with the market value as interest rates change, but the reliability of the income stream and and default or not at issue. So short-term treasuries, you know, they have those And you know, beyond that again I would say that that depends on individuals circumstances.

1:56:26 So let's talk about gold here for a minute. I know a lot of guys will buy gold on paper, right. They'll just they'll just buy it in paper and say look I can always go down and redeem this that's not necessarily the case, right? Correct. I know the conditions. You think about it? What are the conditions that might? Trigger someone to want to go get it they're usually not good conditions and those are the time when the vulnerability is the greatest so I realize it's convenient but that's where I think it comes into play. It's easy to Market and sell products. That are tied to Gold but aren't really go. So and that's wall Street's answer, you want gold will give you gold.

1:57:31 So I do. And then what are they buying it for? Are they buying it? Because they want to own some physical gold or some gold related items or are they speculating? About the price. That would determine if you're just speculating on the price short or long term and not necessarily long-term. But shorter, then you know, a paper product is probably okay. If you understand what you're doing, do that, if you want to know that you own goal for gold sake, then you need to think about what you're buying and your access to it. Okay, so if I was to put that in a different way, maybe if you're looking at trading gold, right?

1:58:25 The paper stuff is fine. But if you're buying gold is like an insurance policy, you want, the physical stuff we want, the physical stuff. Yeah, because and it's for exactly the reasons we're talking about, you don't want to be dependent upon a scenario of events. That could get in the way of you being able to accomplish your goal. Because you didn't get the physical thing if you're if you're looking at trading and speculation, you think okay. I portion of this, I'm betting that goals going to go up or go down x amount and this this scenario is enough of a possibility and I want to protect against that. And I'm willing to put this here with the understanding when you're doing something like that. That's money that you don't feel, you have to have That's how I approach when people get to the more risky portions of their Investment Portfolio.

1:59:38 Is this money? You really need? No. It's just an element of the diversification. Could be a big payoff but if I lose it all, it doesn't affect everything. If I take in these other steps, Gotcha. Okay. So I know your website is called Kelsey's goal.com. Right Kelsey's goal, facts is the name of the website. The URL is Kelsey Williams goal.com And what kind of stuff can folks? Find on there and about gold? I write it from an educational standpoint so when people go there they can read something that's going to help explain an issue and it's fundamentally based. I've included some technical things but the technical is always to support or and corroboration with fundamental arguments, I'm not a traitor or a Later, I don't like to predict the price.

2:00:48 I like people to understand why the price moves and most people who are involved in the markets today. I don't think they have a clue. I do not think they really understand what is happening with gold, no matter how much people talk about the economy and inflation and all these other things. So I try to write so that they get a little bit better understanding of that. So when they do something, they're not going to be prized and disappointed because their assumption was incorrect. Correct about gold or right? I've written about silver. I write about inflation, the Federal Reserve, I've written a couple articles on cryptocurrencies, couple and real estate written about interest rates.

2:01:36 Modern monetary Theory. You know, there's a search bar and it has categories, and people can just go to it and say, I want to read. What did you say about crypto? They can click on that, and read them. So, that's there, there's a, there's probably, well as well over 200 articles on different subjects there, that's pretty prolific, and that's in addition to your book, kale the FED, right? Yeah, actually. All hail the fed and then the other book, the first one I wrote was Three months before that was inflation. What it is, what it is and and who's responsible for it, and they're both of them, I did 2018.

2:02:22 And what I wrote at the time, the material they're really, they're booklets their ebooks and paperback, they're not lengthy, but the material is from articles. I had written up to that time. And then I went in, you know reworked it, get it in a book form and stuff. So I've got four years of Articles since that. So there's a, quite a bit that I could write, if I wanted to revise, or do another book or something, but the basics are the same. They're right there. They explained. A lot of the things we've talked about very clearly. That's awesome.

2:03:03 Including the fractional, Reserve banking. That's awesome. So I just want to say right now that as you and I talked, you you invited me on on to go, look at your website and I read through it. The nice thing about it was that it was so easy to understand, right? And look, if I can understand it, anybody can understand it. So, I'm like, if I, this, this is the perfect site for, for a guy like me, just trying to figure out what exactly is going on is See, was there anything else that you want to touch on tonight that we didn't get a chance to do? I don't feel so.

2:03:43 I know there's subjects that in the back of our heads will probably say hey you know what, we need to talk more about this on a another time or something like that. I feel like we've made done a good overview here. And I certainly duction for people because what we have talked about should raise questions in people's minds and if it does, that means they're going to go do some research. Search and by all means they should read other things. But they need to think beyond the what seems logical and presumptive and that's where I try to bring out on the in the articles that I write. So that see people are seeing a different picture that it's not so easy to just assume that if this happens and the FED does this.

2:04:33 And so and so and then we'll see such and such I don't think you could say that because the one thing we haven't talked about is we haven't really gotten into gold and how it reflects the effects of inflation and all that. And it is a long takes a while so and that's something for the future. But that's the kind of stuff that's on the website. Perfect, well, that brings me to another Point. As we continue to go through this with the economy, would you be willing to come back on and have more of these conversations with Me. Absolutely. I'd love to perfect. We'll stick around and you and I will maybe look at setting something up for down the road, a little ways.

2:05:18 Glad to all right. Appreciate being on you. Kelsey, you're the man, I appreciate it. Thanks, alright, bye everybody.